-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UNjjV5KvnE4Y37NPgMA4XG66u1sU9akVLCx46Q4PY1YvnSs5VVpAwJdvovtqbNHX DBx0nWxBjIWe3BFyzcYjng== 0000065984-10-000135.txt : 20100806 0000065984-10-000135.hdr.sgml : 20100806 20100806152002 ACCESSION NUMBER: 0000065984-10-000135 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 42 CONFORMED PERIOD OF REPORT: 20100630 FILED AS OF DATE: 20100806 DATE AS OF CHANGE: 20100806 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERGY ARKANSAS INC CENTRAL INDEX KEY: 0000007323 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 710005900 STATE OF INCORPORATION: AR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10764 FILM NUMBER: 10998149 BUSINESS ADDRESS: STREET 1: 425 WEST CAPITOL AVE STREET 2: 40TH FLOOR CITY: LITTLE ROCK STATE: AR ZIP: 72201 BUSINESS PHONE: 501-377-4000 MAIL ADDRESS: STREET 1: P O BOX 551 CITY: LITTLE ROCK STATE: AR ZIP: 72203 FORMER COMPANY: FORMER CONFORMED NAME: ARKANSAS POWER & LIGHT CO DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERGY GULF STATES LOUISIANA, LLC CENTRAL INDEX KEY: 0000044570 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 740662730 STATE OF INCORPORATION: LA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-20371 FILM NUMBER: 10998148 BUSINESS ADDRESS: STREET 1: 446 NORTH BOULEVARD CITY: BATON ROUGE STATE: LA ZIP: 70802-5717 BUSINESS PHONE: 800-368-3749 MAIL ADDRESS: STREET 1: 446 NORTH BOULEVARD CITY: BATON ROUGE STATE: LA ZIP: 70802-5717 FORMER COMPANY: FORMER CONFORMED NAME: ENTERGY GULF STATES INC DATE OF NAME CHANGE: 19960610 FORMER COMPANY: FORMER CONFORMED NAME: GULF STATES UTILITIES CO DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERGY CORP /DE/ CENTRAL INDEX KEY: 0000065984 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 721229752 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11299 FILM NUMBER: 10998142 BUSINESS ADDRESS: STREET 1: 639 LOYOLA AVE CITY: NEW ORLEANS STATE: LA ZIP: 70113 BUSINESS PHONE: 5045764000 MAIL ADDRESS: STREET 1: PO BOX 61000 CITY: NEW ORLEANS STATE: LA ZIP: 70161 FORMER COMPANY: FORMER CONFORMED NAME: ENTERGY CORP /FL/ DATE OF NAME CHANGE: 19940329 FORMER COMPANY: FORMER CONFORMED NAME: ENTERGY GSU HOLDINGS INC /DE/ DATE OF NAME CHANGE: 19940329 FORMER COMPANY: FORMER CONFORMED NAME: MIDDLE SOUTH UTILITIES INC DATE OF NAME CHANGE: 19890521 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERGY MISSISSIPPI INC CENTRAL INDEX KEY: 0000066901 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 640205830 STATE OF INCORPORATION: MS FISCAL YEAR END: 0721 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-31508 FILM NUMBER: 10998146 BUSINESS ADDRESS: STREET 1: 308 EAST PEARL STREET CITY: JACKSON STATE: MS ZIP: 39201 BUSINESS PHONE: 601-368-5000 MAIL ADDRESS: STREET 1: 308 EAST PEARL STREET CITY: JACKSON STATE: MS ZIP: 39201 FORMER COMPANY: FORMER CONFORMED NAME: MISSISSIPPI POWER & LIGHT CO DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERGY NEW ORLEANS INC CENTRAL INDEX KEY: 0000071508 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 720273040 STATE OF INCORPORATION: LA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-05807 FILM NUMBER: 10998145 BUSINESS ADDRESS: STREET 1: 1600 PERDIDO ST STREET 2: BLDG 505 CITY: NEW ORLEANS STATE: LA ZIP: 70112 BUSINESS PHONE: 504-670-3674 MAIL ADDRESS: STREET 1: 1600 PERDIDO ST STREET 2: BLDG 505 CITY: NEW ORLEANS STATE: LA ZIP: 70112 FORMER COMPANY: FORMER CONFORMED NAME: NEW ORLEANS PUBLIC SERVICE INC DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYSTEM ENERGY RESOURCES INC CENTRAL INDEX KEY: 0000202584 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 720752777 STATE OF INCORPORATION: AR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09067 FILM NUMBER: 10998143 BUSINESS ADDRESS: STREET 1: ECHELON ONE STREET 2: 1340 ECHELON PKWY CITY: JACKSON STATE: MS ZIP: 39213 BUSINESS PHONE: 601-368-5000 MAIL ADDRESS: STREET 1: ECHELON ONE STREET 2: 1340 ECHELON PKWY CITY: JACKSON STATE: MS ZIP: 39213 FORMER COMPANY: FORMER CONFORMED NAME: MIDDLE SOUTH ENERGY INC DATE OF NAME CHANGE: 19860803 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Entergy Louisiana, LLC CENTRAL INDEX KEY: 0001348952 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 753206126 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-32718 FILM NUMBER: 10998147 BUSINESS ADDRESS: STREET 1: 4809 JEFFERSON HIGHWAY CITY: JEFFERSON STATE: LA ZIP: 70121 BUSINESS PHONE: 504-840-2734 MAIL ADDRESS: STREET 1: 4809 JEFFERSON HIGHWAY CITY: JEFFERSON STATE: LA ZIP: 70121 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Entergy Texas, Inc. CENTRAL INDEX KEY: 0001427437 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 611435798 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-34360 FILM NUMBER: 10998144 BUSINESS ADDRESS: STREET 1: 350 PINE STREET CITY: BEAUMONT STATE: TX ZIP: 77701 BUSINESS PHONE: 409-838-6631 MAIL ADDRESS: STREET 1: 350 PINE STREET CITY: BEAUMONT STATE: TX ZIP: 77701 10-Q 1 a04110.htm 10-Q QUARTERLY PERIOD ENDED JUNE 30, 2010 a04110.htm
__________________________________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
 
X
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
   
 
For the Quarterly Period Ended June 30, 2010
 
OR
 
TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
 
For the transition period from ____________ to ____________

 
Commission
File Number
Registrant, State of Incorporation or Organization,
Address of Principal Executive Offices, Telephone
Number, and IRS Employer Identification No.
 
 
Commission
File Number
Registrant, State of Incorporation or Organization,
Address of Principal Executive Offices, Telephone
Number, and IRS Employer Identification No.
1-11299
ENTERGY CORPORATION
(a Delaware corporation)
639 Loyola Avenue
New Orleans, Louisiana 70113
Telephone (504) 576-4000
72-1229752
 
1-31508
ENTERGY MISSISSIPPI, INC.
(a Mississippi corporation)
308 East Pearl Street
Jackson, Mississippi 39201
Telephone (601) 368-5000
64-0205830
         
         
1-10764
ENTERGY ARKANSAS, INC.
(an Arkansas corporation)
425 West Capitol Avenue
Little Rock, Arkansas 72201
Telephone (501) 377-4000
71-0005900
 
0-05807
ENTERGY NEW ORLEANS, INC.
(a Louisiana corporation)
1600 Perdido Street
New Orleans, Louisiana 70112
Telephone (504) 670-3700
72-0273040
         
         
0-20371
ENTERGY GULF STATES LOUISIANA, L.L.C.
(a Louisiana limited liability company)
446 North Boulevard
Baton Rouge, Louisiana 70802
Telephone (800) 368-3749
74-0662730
 
1-34360
ENTERGY TEXAS, INC.
(a Texas corporation)
350 Pine Street
Beaumont, Texas 77701
Telephone (409) 981-2000
61-1435798
         
         
1-32718
ENTERGY LOUISIANA, LLC
(a Texas limited liability company)
446 North Boulevard
Baton Rouge, Louisiana 70802
Telephone (800) 368-3749
75-3206126
 
1-09067
SYSTEM ENERGY RESOURCES, INC.
(an Arkansas corporation)
Echelon One
1340 Echelon Parkway
Jackson, Mississippi 39213
Telephone (601) 368-5000
72-0752777
         

__________________________________________________________________________________________
 
 
 
Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.  Yes þ No o

Indicate by check mark whether Entergy Corporation has submitted electronically and posted on Entergy's corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes þ No o

Indicate by check mark whether Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy Resources have submitted electronically and posted on Entergy's corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit and post such files).  Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Securities Exchange Act of 1934.

 
Large
accelerated
filer
 
 
Accelerated
filer
 
Non-
accelerated
filer
 
Smaller
reporting
company
Entergy Corporation
Ö
           
Entergy Arkansas, Inc.
       
Ö
   
Entergy Gulf States Louisiana, L.L.C.
       
Ö
   
Entergy Louisiana, LLC
       
Ö
   
Entergy Mississippi, Inc.
       
Ö
   
Entergy New Orleans, Inc.
       
Ö
   
Entergy Texas, Inc.
       
Ö
   
System Energy Resources, Inc.
       
Ö
   

Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act).  Yes o  No þ

Common Stock Outstanding
 
Outstanding at July 30, 2010
Entergy Corporation
($0.01 par value)
186,815,779

Entergy Corporation, Entergy Arkansas, Inc., Entergy Gulf States Louisiana, L.L.C., Entergy Louisiana, LLC, Entergy Mississippi, Inc., Entergy New Orleans, Inc., Entergy Texas, Inc., and System Energy Resources, Inc. separately file this combined Quarterly Report on Form 10-Q.  Information contained herein relating to any individual company is filed by such company on its own behalf.  Each company reports herein only as to itself and makes no other representations whatsoever as to any other company.  This combined Quarterly Report on Form 10-Q supplements and updates the Annual Report on Form 10-K for the calendar year ended December 31, 2009 and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2010, filed by the individual registrants with the SEC, and should be read in conjunction therewith.

ENTERGY CORPORATION AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT ON FORM 10-Q
June 30, 2010

 
Page Number
   
Definitions
1
Entergy Corporation and Subsidiaries
 
Management's Financial Discussion and Analysis
 
Plan to Pursue Separation of Non-Utility Nuclear
3
Results of Operations
4
Liquidity and Capital Resources
11
Rate, Cost-recovery, and Other Regulation
15
Market and Credit Risk Sensitive Instruments
17
Critical Accounting Estimates
18
Consolidated Statements of Income
21
Consolidated Statements of Cash Flows
22
Consolidated Balance Sheets
24
Consolidated Statements of Retained Earnings, Comprehensive Income, and
  Paid-In Capital
 
26
Selected Operating Results
28
Notes to Financial Statements
29
Part 1. Item 4.  Controls and Procedures
72
Entergy Arkansas, Inc.
 
Management's Financial Discussion and Analysis
 
Results of Operations
73
Liquidity and Capital Resources
75
State and Local Rate Regulation
78
Federal Regulation
78
Nuclear Matters
78
Environmental Risks
78
Critical Accounting Estimates
78
Income Statements
80
Statements of Cash Flows
81
Balance Sheets
82
Selected Operating Results
84
Entergy Gulf States Louisiana, L.L.C.
 
Management's Financial Discussion and Analysis
 
Results of Operations
85
Liquidity and Capital Resources
88
State and Local Rate Regulation
91
Federal Regulation
91
Nuclear Matters
92
Environmental Risks
92
Critical Accounting Estimates
92
   
   
ENTERGY CORPORATION AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT ON FORM 10-Q
June 30, 2010

 
Page Number
   
Income Statements
93
Statements of Cash Flows
95
Balance Sheets
96
Statements of Members' Equity and Comprehensive Income
98
Selected Operating Results
99
Entergy Louisiana, LLC
 
Management's Financial Discussion and Analysis
 
Results of Operations
100
Liquidity and Capital Resources
103
State and Local Rate Regulation
106
Federal Regulation
107
Nuclear Matters
107
Environmental Risks
107
Critical Accounting Estimates
107
Income Statements
108
Statements of Cash Flows
109
Balance Sheets
110
Statements of Members' Equity and Comprehensive Income
112
Selected Operating Results
113
Entergy Mississippi, Inc.
 
Management's Financial Discussion and Analysis
 
Results of Operations
114
Liquidity and Capital Resources
117
State and Local Rate Regulation
119
Federal Regulation
119
Critical Accounting Estimates
119
Income Statements
121
Statements of Cash Flows
123
Balance Sheets
124
Selected Operating Results
126
Entergy New Orleans, Inc.
 
Management's Financial Discussion and Analysis
 
Results of Operations
127
Liquidity and Capital Resources
129
State and Local Rate Regulation
131
Federal Regulation
131
Environmental Risks
131
Critical Accounting Estimates
131
Income Statements
132
Statements of Cash Flows
133
Balance Sheets
134
Selected Operating Results
136
ENTERGY CORPORATION AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT ON FORM 10-Q
June 30, 2010

 
Page Number
   
Entergy Texas, Inc.
 
Management's Financial Discussion and Analysis
 
Results of Operations
137
Liquidity and Capital Resources
141
State and Local Rate Regulation
142
Federal Regulation
143
Environmental Risks
143
Critical Accounting Estimates
144
Consolidated Income Statements
145
Consolidated Statements of Cash Flows
147
Consolidated Balance Sheets
148
Selected Operating Results
150
System Energy Resources, Inc.
 
Management's Financial Discussion and Analysis
 
Results of Operations
151
Liquidity and Capital Resources
151
Nuclear Matters
153
Environmental Risks
153
Critical Accounting Estimates
153
Income Statements
154
Statements of Cash Flows
155
Balance Sheets
156
Part II.  Other Information
 
Item 1.    Legal Proceedings
158
Item 1A.  Risk Factors
158
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds
158
Item 5.    Other Information
159
Item 6.    Exhibits
165
Signature
168


FORWARD-LOOKING INFORMATION

In this combined report and from time to time, Entergy Corporation and the Registrant Subsidiaries each makes statements as a registrant concerning its expectations, beliefs, plans, objectives, goals, strategies, and future events or performance.  Such statements are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.  Words such as "may," "will," "could," "project," "believe," "anticipate," "intend," "expect," "estimate," "continue," "potential," "plan," "predict," "forecast," and other similar words or expressions are intended to identify forward-looking statements but are not the only means to identify these statements.  Although each of these registrants believes that these forward-looking statements and the underlying assumptions are reasonable, it cannot provide assurance that they will prove correct.  Any forward-looking statement is based on information current as of the date of this combined report and speaks only as of the date on which such statement is made.  Except to the extent required by the federal securities laws, these registrants undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Forward-looking statements involve a number of risks and uncertainties.  There are factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, including those factors discussed or incorporated by reference in (a) Item 1A. Risk Factors in the Form 10-K, (b) Management's Financial Discussion and Analysis in the Form 10-K and in this report, and (c) the following factors (in addition to others described elsewhere in this combined report and in subsequent securities filings):

·  
resolution of pending and future rate cases and negotiations, including various performance-based rate discussions, and other regulatory proceedings, including those related to Entergy's System Agreement, Entergy's utility supply plan, recovery of storm costs, and recovery of fuel and purchased power costs
·  
changes in utility regulation, including the beginning or end of retail and wholesale competition, the ability to recover net utility assets and other potential stranded costs, the operations of the independent coordinator of transmission for Entergy's utility service territory, and the application of more stringent transmission reliability requirements or market power criteria by the FERC
·  
changes in regulation of nuclear generating facilities and nuclear materials and fuel, including possible shutdown of nuclear generating facilities, particularly those owned or operated by the Non-Utility Nuclear business
·  
resolution of pending or future applications for license renewals or modifications of nuclear generating facilities
·  
the performance of and deliverability of power from Entergy's generation resources, including the capacity factors at its nuclear generating facilities
·  
Entergy's ability to develop and execute on a point of view regarding future prices of electricity, natural gas, and other energy-related commodities
·  
prices for power generated by Entergy's merchant generating facilities, the ability to hedge, sell power forward or otherwise reduce the market price risk associated with those facilities, including the Non-Utility Nuclear plants, and the prices and availability of fuel and power Entergy must purchase for its Utility customers, and Entergy's ability to meet credit support requirements for fuel and power supply contracts
·  
volatility and changes in markets for electricity, natural gas, uranium, and other energy-related commodities
·  
changes in law resulting from federal or state energy legislation or legislation subjecting energy derivatives used in hedging and risk management transactions to governmental regulation
·  
changes in environmental, tax, and other laws, including requirements for reduced emissions of sulfur, nitrogen, carbon, mercury, and other substances, and changes in costs of compliance with environmental and other laws and regulations
·  
uncertainty regarding the establishment of interim or permanent sites for spent nuclear fuel and nuclear waste storage and disposal
·  
variations in weather and the occurrence of hurricanes and other storms and disasters, including uncertainties associated with efforts to remediate the effects of hurricanes and ice storms and the recovery of costs associated with restoration, including accessing funded storm reserves, federal and local cost recovery mechanisms, securitization, and insurance

FORWARD-LOOKING INFORMATION (Concluded)

·  
effects of climate change
·  
Entergy's ability to manage its capital projects and operation and maintenance costs
·  
Entergy's ability to purchase and sell assets at attractive prices and on other attractive terms
·  
the economic climate, and particularly economic conditions in Entergy's Utility service territory and the Northeast United States and events that could influence economic conditions in those areas, such as the recent oil spill in the Gulf of Mexico and related moratorium on drilling of deepwater wells
·  
the effects of Entergy's strategies to reduce tax payments
·  
changes in the financial markets, particularly those affecting the availability of capital and Entergy's ability to refinance existing debt, execute share repurchase programs, and fund investments and acquisitions
·  
actions of rating agencies, including changes in the ratings of debt and preferred stock, changes in general corporate ratings, and changes in the rating agencies' ratings criteria
·  
changes in inflation and interest rates
·  
the effect of litigation and government investigations or proceedings
·  
advances in technology
·  
the potential effects of threatened or actual terrorism and war
·  
Entergy's ability to attract and retain talented management and directors
·  
changes in accounting standards and corporate governance
·  
declines in the market prices of marketable securities and resulting funding requirements for Entergy's defined benefit pension and other postretirement benefit plans
·  
changes in decommissioning trust fund values or earnings or in the timing of or cost to decommission nuclear plant sites
·  
the ability to successfully complete merger, acquisition, or divestiture plans, regulatory or other limitations imposed as a result of merger, acquisition, or divestiture, and the success of the business following a merger, acquisition, or divestiture
·  
risks and uncertainties associated with unwinding the business infrastructure associated with the contemplated Non-Utility Nuclear spin-off, joint venture, and related transactions.

DEFINITIONS

Certain abbreviations or acronyms used in the text and notes are defined below:

Abbreviation or Acronym
Term
AEEC
Arkansas Electric Energy Consumers
AFUDC
Allowance for Funds Used During Construction
ALJ
Administrative Law Judge
ANO 1 and 2
Units 1 and 2 of Arkansas Nuclear One (nuclear), owned by Entergy Arkansas
APSC
Arkansas Public Service Commission
ASC
FASB Accounting Standards Codification
ASU
FASB Accounting Standards Update
Board
Board of Directors of Entergy Corporation
capacity factor
Actual plant output divided by maximum potential plant output for the period
City Council or Council
Council of the City of New Orleans, Louisiana
Entergy
Entergy Corporation and its direct and indirect subsidiaries
Entergy Corporation
Entergy Corporation, a Delaware corporation
Entergy Gulf States, Inc.
Predecessor company for financial reporting purposes to Entergy Gulf States Louisiana that included the assets and business operations of both Entergy Gulf States Louisiana and Entergy Texas
Entergy Gulf States Louisiana
Entergy Gulf States Louisiana, L.L.C., a company created in connection with the jurisdictional separation of Entergy Gulf States, Inc. and the successor company to Entergy Gulf States, Inc. for financial reporting purposes.  The term is also used to refer to the Louisiana jurisdictional business of Entergy Gulf States, Inc., as the context requires.
Entergy Texas
Entergy Texas, Inc., a company created in connection with the jurisdictional separation of Entergy Gulf States, Inc.  The term is also used to refer to the Texas jurisdictional business of Entergy Gulf States, Inc., as the context requires.
EPA
United States Environmental Protection Agency
ERCOT
Electric Reliability Council of Texas
FASB
Financial Accounting Standards Board
FERC
Federal Energy Regulatory Commission
FitzPatrick
James A. FitzPatrick Nuclear Power Plant (nuclear), owned by an Entergy subsidiary in the Non-Nuclear Utility segment
Form 10-K
Annual Report on Form 10-K for the calendar year ended December 31, 2009 filed with the SEC by Entergy Corporation and its Registrant Subsidiaries
Grand Gulf
Unit No. 1 of Grand Gulf Nuclear Station (nuclear), 90% owned or leased by System Energy
GWh
Gigawatt-hour(s), which equals one million kilowatt-hours
Independence
Independence Steam Electric Station (coal), owned 16% by Entergy Arkansas, 25% by Entergy Mississippi, and 7% by Entergy Power
Indian Point 2
Unit 2 of Indian Point Energy Center (nuclear), owned by an Entergy subsidiary in the Non-Nuclear Utility segment
Indian Point 3
Unit 3 of Indian Point Energy Center (nuclear), owned by an Entergy subsidiary in the Non-Nuclear Utility segment
IRS
Internal Revenue Service
ISO
Independent System Operator
kW
Kilowatt, which equals one thousand watts
kWh
Kilowatt-hour(s)
LPSC
Louisiana Public Service Commission
MMBtu
One million British Thermal Units
 
 
1

 
DEFINITIONS (Continued)

Abbreviation or Acronym
Term
MPSC
Mississippi Public Service Commission
MW
Megawatt(s), which equals one thousand kilowatts
MWh
Megawatt-hour(s)
Net MW in operation
Installed capacity owned or operated
Non-Utility Nuclear
Entergy's business segment that owns and operates six nuclear power plants and sells electric power produced by those plants to wholesale customers
NRC
Nuclear Regulatory Commission
NYPA
New York Power Authority
Palisades
Palisades Power Plant (nuclear), owned by an Entergy subsidiary in the Non-Nuclear Utility segment
Pilgrim
Pilgrim Nuclear Power Station (nuclear), owned by an Entergy subsidiary in the Non-Nuclear Utility segment
PPA
Purchased power agreement
PUCT
Public Utility Commission of Texas
PUHCA 1935
Public Utility Holding Company Act of 1935, as amended
PUHCA 2005
Public Utility Holding Company Act of 2005, which repealed PUHCA 1935, among other things
Registrant Subsidiaries
Entergy Arkansas, Inc., Entergy Gulf States Louisiana, L.L.C., Entergy Louisiana, LLC, Entergy Mississippi, Inc., Entergy New Orleans, Inc., Entergy Texas, Inc., and System Energy Resources, Inc.
River Bend
River Bend Station (nuclear), owned by Entergy Gulf States Louisiana
RTO
Regional transmission organization
SEC
Securities and Exchange Commission
System Agreement
Agreement, effective January 1, 1983, as modified, among the Utility operating companies relating to the sharing of generating capacity and other power resources
System Energy
System Energy Resources, Inc.
TWh
Terawatt-hour(s), which equals one billion kilowatt-hours
Unit Power Sales Agreement
Agreement, dated as of June 10, 1982, as amended and approved by FERC, among Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy, relating to the sale of capacity and energy from System Energy's share of Grand Gulf
Utility
Entergy's business segment that generates, transmits, distributes, and sells electric power, with a small amount of natural gas distribution
Utility operating companies
Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas
Vermont Yankee
Vermont Yankee Nuclear Power Station (nuclear), owned by an Entergy subsidiary in the Non-Nuclear Utility segment
Waterford 3
Unit No. 3 (nuclear) of the Waterford Steam Electric Station, 100% owned or leased by Entergy Louisiana
weather-adjusted usage
Electric usage excluding the effects of deviations from normal weather
 
 
2

 

 
ENTERGY CORPORATION AND SUBSIDIARIES

MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS


Entergy operates primarily through its two, reportable, operating segments: Utility and Non-Utility Nuclear.

·  
Utility generates, transmits, distributes, and sells electric power in service territories in four states that include portions of Arkansas, Mississippi, Texas, and Louisiana, including the City of New Orleans; and operates a small natural gas distribution business.
·  
Non-Utility Nuclear owns and operates six nuclear power plants located in the northern United States and sells the electric power produced by those plants primarily to wholesale customers.  This business also provides services to other nuclear power plant owners.

In addition to its two primary, reportable, operating segments, Entergy also operates the non-nuclear wholesale assets business.  The non-nuclear wholesale assets business sells to wholesale customers the electric power produced by power plants that it owns while it focuses on improving performance and exploring sales or restructuring opportunities for its power plants.  Such opportunities are evaluated consistent with Entergy's market-based point-of-view.

In June 2010, Entergy announced that it plans to integrate the Non-Utility Nuclear and non-nuclear wholesale assets businesses into a new organization called Entergy Wholesale Commodities.

Plan to Pursue Separation of Non-Utility Nuclear

See the Form 10-K for a discussion of the Board-approved plan to pursue a tax-free spin-off of the Non-Utility Nuclear business to Entergy shareholders.  On March 2, 2010, Entergy proposed conditions for review by the New York Public Service Commission (NYPSC), including an incremental $500 million reduction in Enexus's long-term debt, restrictions on Enexus's ability to make dividend payments and returns of capital to shareholders until certain conditions are met, and the potential for disbursements to New York's energy efficiency funds if power prices exceed certain levels.  At its hearing held on March 4, 2010, the NYPSC discussed Entergy's petition and proposed conditions and, after that meeting, issued a notice soliciting comments "on a set of conditions that cou ld potentially be developed" regarding Entergy's planned spin-off transaction.  At its hearing held on March 25, 2010, the NYPSC voted 5-0 to reject Entergy's planned spin-off transaction.

On April 5, 2010, Entergy announced that, effective immediately, it planned to unwind the business infrastructure associated with the proposed separate Non-Utility Nuclear generation (Enexus) and nuclear services (EquaGen) companies while it evaluates and works to preserve its legal rights.  Entergy also declared its next quarterly dividend on its common shares of $0.83 per share, an increase from the previous $0.75 per share, and announced that it expected to execute on the $750 million share repurchase program authorized by the Board in the fourth quarter 2009.  The amount of repurchases may vary as a result of material changes in business results or capital spending or new investment opportunities.  As a result of the plan to unwind the business infrastru cture, Entergy recorded expenses for the write-off of certain capitalized costs incurred in connection with the planned spin-off transaction.  These costs are discussed in more detail throughout the "Results of Operations" section below.  Entergy expects that it will incur approximately $40 million, after-tax, in additional expenses in unwinding this business, primarily through the remainder of 2010, including additional write-offs, dis-synergies, and certain other costs.

In July 2010, Entergy withdrew its spin-off transaction petition that was filed with the NYPSC.

In June 2010 the Vermont Public Service Board denied Entergy's spin-off transaction petition.
 
3

Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
 

Results of Operations

Second Quarter 2010 Compared to Second Quarter 2009

Following are income statement variances for Utility, Non-Utility Nuclear, Parent & Other, and Entergy comparing the second quarter 2010 to the second quarter 2009 showing how much the line item increased or (decreased) in comparison to the prior period:

   
 
Utility
 
Non-Utility
Nuclear
 
Parent &
Other (1)
 
 
Entergy
   
(In Thousands)
                 
2nd Qtr 2009 Consolidated Net Income
 
$151,575 
 
$80,211 
 
$25 
 
$231,811 
                 
Net revenue (operating revenue less fuel
  expense, purchased power, and other
  regulatory charges/credits)
 
 
 
128,372 
 
 
 
32,788 
 
 
 
1,036 
 
 
 
162,196 
Other operation and maintenance expenses
 
(12,375)
 
31,151 
 
(14,917)
 
3,859 
Taxes other than income taxes
 
2,897 
 
1,002 
 
668 
 
4,567 
Depreciation and amortization
 
(5,590)
 
315 
 
153 
 
(5,122)
Other income
 
(10,133)
 
64,479 
 
(10,658)
 
43,688 
Interest charges
 
16,040 
 
(14,838)
 
(7,507)
 
(6,305)
Other expenses
 
2,322 
 
4,823 
 
 
7,147 
Income taxes
 
36,347 
 
35,525 
 
41,394 
 
113,266 
                 
2nd Qtr 2010 Consolidated Net Income
 
$230,173 
 
$119,500 
 
($29,390)
 
$320,283 

(1)
Parent & Other includes eliminations, which are primarily intersegment activity.

Refer to "ENTERGY CORPORATION AND SUBSIDIARIES - SELECTED OPERATING RESULTS" for further information with respect to operating statistics.

Net Revenue

Utility

Following is an analysis of the change in net revenue comparing the second quarter 2010 to the second quarter 2009.

  
 
Amount
  
 
(In Millions)
     
2009 net revenue
 
$1,165 
Volume/weather
 
51 
Retail electric price
 
43 
Rough production cost equalization
 
19 
2009 capitalization of Ouachita plant service charges
 
13 
Other
 
2010 net revenue
 
$1,293 
 
4

Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
 

The volume/weather variance is primarily due to an increase of 1,966 GWh, or 9%, in billed electricity usage in all sectors, including the effect of warmer-than-normal weather on the residential sector.

The retail electric price variance is primarily due to increases in the formula rate plan riders at Entergy Gulf States Louisiana effective January 2010 and November 2009, at Entergy Louisiana effective November 2009, and at Entergy Mississippi effective July 2009.  See Note 2 to the financial statements in the Form 10-K for further discussion of the formula rate plan increases.  The retail electric price increase was partially offset by the recovery in 2009 by Entergy Arkansas of 2008 extraordinary storm costs as approved by the APSC and a base rate decrease at Entergy New Orleans effective June 2009.

The rough production cost equalization variance is due to an additional $18.6 million allocation recorded in the second quarter of 2009 of 2007 rough production cost equalization receipts ordered by the PUCT to Texas retail customers over what was originally allocated to Entergy Texas prior to the jurisdictional separation of Entergy Gulf States, Inc. into Entergy Gulf States Louisiana and Entergy Texas, effective December 2007, as discussed in Note 2 to the financial statements.

In 2009, Entergy Arkansas capitalized $12.5 million of Ouachita plant service charges that were previously expensed.  The result of the capitalization in 2009 was a decrease in net revenues with an offsetting decrease in other operation and maintenance expenses.

Non-Utility Nuclear

Following is an analysis of the change in net revenue comparing the second quarter 2010 to the second quarter 2009.

  
 
Amount
  
 
(In Millions)
     
2009 net revenue
 
$492 
Volume
 
60 
Realized price changes
 
(22)
Other
 
(5)
2010 net revenue
 
$525 

As shown in the table above, net revenue for Non-Utility Nuclear increased by $33 million, or 7%, in the second quarter 2010 compared to the second quarter 2009 primarily due to higher volume resulting from more refueling outage days in 2009, partially offset by lower pricing in its contracts to sell power.  Included in net revenue is $12 million and $13 million of amortization of the Palisades purchased power agreement in the second quarters 2010 and 2009, respectively, which is non-cash revenue and is discussed in Note 15 to the financial statements in the Form 10-K.  Following are key performance measures for Non-Utility Nuclear for the second quarter 2010 and 2009:

   
2010
 
2009
         
Net MW in operation at June 30
 
4,998
 
4,998
Average realized price per MWh
 
$57.69
 
$59.22
GWh billed
 
9,868
 
8,980
Capacity factor
 
90%
 
81%
Refueling Outage Days:
       
Indian Point 2
 
11
 
-
Indian Point 3
 
-
 
15
Palisades
 
-
 
32
Pilgrim
 
-
 
31
Vermont Yankee
 
29
 
-

 
5

Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
 
Realized Price per MWh

See the Form 10-K for a discussion of Non-Utility Nuclear's realized price per MWh, including the factors that influence it and the increase in the annual average realized price per MWh from $39.40 for 2003 to $61.07 for 2009.  Non-Utility Nuclear is likely to experience a decrease in realized price per MWh in 2010, however, because the realized price for the first six months of 2010 was $58.22 and, as shown in the contracted sale of energy table in "Market and Credit Risk Sensitive Instruments," Non-Utility Nuclear has sold forward 91% of its planned energy output for the remainder of 2010 for an average contracted energy price of $58 per MWh.

Other Income Statement Items

Utility

Other operation and maintenance expenses decreased from $483 million for the second quarter 2009 to $471 million for the second quarter 2010 primarily due to:

·  
a decrease of $9 million due to higher write-offs of uncollectible customer accounts in 2009;
·  
a decrease of $4 million due to 2008 storm costs at Entergy Arkansas which were deferred per an APSC order and were expensed as they were recovered through revenues in 2009;
·  
a decrease of $4 million in legal expenses in 2010 due to the deferral of certain litigation expenses in accordance with regulatory treatment; and
·  
a decrease of $3 million due to the deferral of 2009 Entergy Arkansas rate case expenses to be amortized effective July 2010.

The decrease was partially offset by an increase of $12.5 million due to the capitalization in 2009 of Ouachita plant service charges previously expensed.

Other income decreased primarily due to a decrease of $11 million in carrying charges on storm restoration costs.

Interest charges increased primarily due to an increase in long-term debt outstanding resulting from debt issuances by certain of the Utility operating companies in late 2009 and early 2010.

Non-Utility Nuclear

           Other operation and maintenance expenses increased from $204 million for the second quarter 2009 to $235 million for the second quarter 2010 primarily due to higher spending on other operation and maintenance expenses resulting from fewer refueling outage days.  Also contributing to the increase were higher pension and benefits expense, an increase in costs related to spin-off dis-synergies, and tritium remediation work at the Vermont Yankee site.

Other income increased in the second quarter 2010 primarily due to $69 million in charges in 2009 resulting from the recognition of impairments that are not considered temporary of certain equity securities held in Non-Utility Nuclear's decommissioning trust funds.

Parent & Other

Interest charges decreased primarily due to lower borrowings, including the redemption of $267 million of notes payable in December 2009, as well as lower interest rates on borrowings under Entergy Corporation's revolving credit facility.
 
6

Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
 

Income Taxes

           The effective income tax rate for the second quarter 2010 was 38.9%.  The difference in the effective income tax rate versus the statutory rate of 35% for the second quarter 2010 is primarily due to state income taxes and certain book and tax differences for Utility plant items.

The effective income tax rate for the second quarter 2009 was 28.1%.  The reduction in the effective income tax rate versus the statutory rate of 35% for the second quarter 2009 was primarily due to:

·  
an adjustment to state income taxes for Non-Utility Nuclear to reflect the effect of a change in the methodology of computing Massachusetts state income taxes as required by that state's taxing authority;
·  
the recognition of state loss carryovers by the parent company, Entergy Corporation, that had been subject to a valuation allowance; and
·  
the recognition of a federal capital loss carryover by Entergy Asset Management, Inc. that had been subject to a valuation allowance.

The reduction was partially offset by state income taxes at the Utility operating companies.

Six Months Ended June 30, 2010 Compared to Six Months Ended June 30, 2009

Following are income statement variances for Utility, Non-Utility Nuclear, Parent & Other, and Entergy comparing the six months ended June 30, 2010 to the six months ended June 30, 2009 showing how much the line item increased or (decreased) in comparison to the prior period:

   
 
Utility
 
Non-Utility
Nuclear
 
Parent &
Other (1)
 
 
Entergy
   
(In Thousands)
                 
2009 Consolidated Net Income
 
$267,544 
 
$261,092 
 
($56,492)
 
$472,144 
                 
Net revenue (operating revenue less fuel
  expense, purchased power, and other
  regulatory charges/credits)
 
 
 
221,068 
 
 
 
(15,339)
 
 
 
4,808 
 
 
 
210,537 
Other operation and maintenance expenses
 
134 
 
77,857 
 
(16,688)
 
61,303 
Taxes other than income taxes
 
6,323 
 
(1,135)
 
394 
 
5,582 
Depreciation and amortization
 
1,596 
 
4,365 
 
269 
 
6,230 
Other income
 
(17,335)
 
97,245 
 
(9,538)
 
70,372 
Interest charges
 
32,009 
 
18,260 
 
(22,824)
 
27,445 
Other expenses
 
5,217 
 
10,272 
 
 
15,490 
Income taxes
 
52,854 
 
19,653 
 
25,399 
 
97,906 
                 
2010 Consolidated Net Income
 
$373,144 
 
$213,726 
 
($47,773)
 
$539,097 

(1)
Parent & Other includes eliminations, which are primarily intersegment activity.

Refer to "ENTERGY CORPORATION AND SUBSIDIARIES - SELECTED OPERATING RESULTS" for further information with respect to operating statistics.
 
 
 
7

Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
 

 
Net Revenue

Utility

Following is an analysis of the change in net revenue comparing the six months ended June 30, 2010 to the six months ended June 30, 2009.

  
 
Amount
  
 
(In Millions)
     
2009 net revenue
 
$2,202 
Volume/weather
 
114 
Retail electric price
 
69 
Rough production cost equalization
 
19 
2009 capitalization of Ouachita plant service charges
 
13 
Net gas revenue
 
13 
Other
 
(7)
2010 net revenue
 
$2,423 

The volume/weather variance is primarily due to an increase of 4,621 GWh, or 10%, in billed electricity usage in all sectors, including the effect on the residential sector of colder-than-normal weather in the first quarter 2010 and warmer-than-normal weather in the second quarter 2010.

The retail electric price variance is primarily due to increases in the formula rate plan riders at Entergy Gulf States Louisiana effective January 2010 and November 2009, at Entergy Louisiana effective November 2009, and at Entergy Mississippi effective July 2009.  See Note 2 to the financial statements in the Form 10-K for further discussion of the formula rate plan increases.  The retail electric price increase was partially offset by the recovery in 2009 by Entergy Arkansas of 2008 extraordinary storm costs as approved by the APSC and a base rate decrease at Entergy New Orleans effective June 2009.

The rough production cost equalization variance is due to an additional $18.6 million allocation recorded in the second quarter of 2009 of 2007 rough production cost equalization receipts ordered by the PUCT to Texas retail customers over what was originally allocated to Entergy Texas prior to the jurisdictional separation of Entergy Gulf States, Inc. into Entergy Gulf States Louisiana and Entergy Texas, effective December 2007, as discussed in Note 2 to the financial statements.

In 2009, Entergy Arkansas capitalized $12.5 million of Ouachita plant service charges that were previously expensed.  The result of the capitalization in 2009 was a decrease in net revenues with an offsetting decrease in other operation and maintenance expenses.

The net gas revenue variance is primarily due to the effect of colder-than-normal weather on residential sales in the first quarter 2010.
 
 
8

Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
 

Non-Utility Nuclear

Following is an analysis of the change in net revenue comparing the six months ended June 30, 2010 to the six months ended June 30, 2009.

  
 
Amount
  
 
(In Millions)
     
2009 net revenue
 
$1,095 
Realized price changes
 
(82)
Volume
 
79 
Other
 
(12)
2010 net revenue
 
$1,080 

As shown in the table above, net revenue for Non-Utility Nuclear decreased by $15 million, or 1%, in the six months ended June 30, 2010 compared to the six months ended June 30, 2009 primarily due to lower pricing in its contracts to sell power, substantially offset by higher volume resulting from more refueling outage days in 2009.  Included in net revenue is $23 million and $26 million of amortization of the Palisades purchased power agreement in the six months ended June 30, 2010 and 2009, respectively, which is non-cash revenue and is discussed in Note 15 to the financial statements in the Form 10-K.  Following are key performance measures for Non-Utility Nuclear for the six months ended June 30, 2010 and 2009:

   
2010
 
2009
         
Net MW in operation at June 30
 
4,998
 
4,998
Average realized price per MWh
 
$58.22
 
$61.66
GWh billed
 
20,123
 
19,054
Capacity factor
 
92%
 
87%
Refueling Outage Days:
       
Indian Point 2
 
33
 
-
Indian Point 3
 
-
 
36
Palisades
 
-
 
41
Pilgrim
 
-
 
31
Vermont Yankee
 
29
 
-

Other Income Statement Items

Utility

Other operation and maintenance expenses were flat for the six months ended June 30, 2010 compared to the six months ended June 30, 2009.   Increases of $15 million in payroll-related and benefits costs and $12.5 million due to the capitalization in 2009 of Ouachita plant service charges previously expensed were offset by decreases of $13 million due to higher write-offs of uncollectible customer accounts in 2009 and $10 million due to 2008 storm costs at Entergy Arkansas which were deferred per an APSC order and were recovered through revenues in 2009.

Other income decreased primarily due to a decrease of $23 million in carrying charges on storm restoration costs, partially offset by an increase of $9 million resulting from higher earnings on decommissioning trust funds.

Interest charges increased primarily due to an increase in long-term debt outstanding resulting from net debt issuances by certain of the Utility operating companies in the second half of 2009 and the first half of 2010.
 
9

 
Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
 

Non-Utility Nuclear

Other operation and maintenance expenses increased from $404 million for the six months ended June 30, 2009 to $481 million for the six months ended June 30, 2010 primarily due to the write-off of $32 million of capital costs, primarily for software that will not be utilized, in connection with Entergy's decision to unwind the infrastructure created for the planned Non-Utility Nuclear spin-off transaction.  Also contributing to the increase were higher spending on other operation and maintenance expenses resulting from fewer refueling outage days, tritium remediation work at the Vermont Yankee site, higher pension and benefits expense, and higher insurance expense.

Other income increased primarily due to $85 million in charges in 2009 resulting from the recognition of impairments that are not considered temporary of certain equity securities held in Non-Utility Nuclear's decommissioning trust funds, increases in realized earnings on the decommissioning trust funds, and interest income from loans to Entergy subsidiaries.

Interest charges increased primarily due to the write-off of $39 million of debt financing costs, primarily incurred for Enexus's $1.2 billion credit facility, in connection with Entergy's decision to unwind the infrastructure created for the planned Non-Utility Nuclear spin-off transaction.  Partially offsetting the increase was a decrease in fees paid to Entergy Corporation for providing collateral in the form of guarantees in connection with some of Non-Utility Nuclear's agreements to sell power.  The guarantee fees paid are intercompany transactions and are eliminated in consolidation.

Parent & Other

Interest charges decreased primarily due to lower borrowings, including the redemption of $267 million of notes payable in December 2009, as well as lower interest rates on borrowings under Entergy Corporation's revolving credit facility.

Income Taxes

The effective income tax rate for the six months ended June 30, 2010 was 39.5%.  The difference in the effective income tax rate versus the statutory rate of 35% for the six months ended June 30, 2010 is primarily due to a charge of $16 million resulting from a change in tax law associated with the recently enacted federal healthcare legislation, as discussed below in "Critical Accounting Estimates".  Also contributing to the increased effective rate were state income taxes and certain book and tax differences for utility plant items.  These factors were partially offset by a $19 million tax benefit recorded in connection with Entergy's decision to unwind the infrastructure c reated for the planned Non-Utility Nuclear spin-off transaction resulting from implementation expenses that previously were not deductible for tax purposes.  Also offsetting the increased effective rate are book and tax differences related to storm cost financing and allowance for equity funds used during construction.

The effective income tax rate for the six months ended June 30, 2009 was 35.0%.  The effective income tax rate is equal to the statutory rate of 35% for the six months ended June 30, 2009 primarily due to the reductions in the effective income tax rate discussed below being offset by increases related to state income taxes at the Utility operating companies and book and tax differences for utility plant items. The effective income tax rate for the six months ended June 30, 2009 reflected reductions related to:

·  
an adjustment to state income taxes for Non-Utility Nuclear to reflect the effect of a change in the methodology of computing Massachusetts state income taxes as required by that state's taxing authority;
·  
the recognition of state loss carryovers by the parent company, Entergy Corporation, that had been subject to a valuation allowance; and
·  
the recognition of a federal capital loss carryover by Entergy Asset Management, Inc. that had been subject to a valuation allowance.
 
 
10

Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
 

 
Liquidity and Capital Resources

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources" in the Form 10-K for a discussion of Entergy's capital structure, capital expenditure plans and other uses of capital, and sources of capital.  Following are updates to that discussion.

Capital Structure

Entergy's capitalization is balanced between equity and debt, as shown in the following table.

   
June 30,
 2010
 
December 31,
2009
         
Net debt to net capital, excluding the Texas securitization
  bonds, which are non-recourse to Entergy Texas
 
 
51.6%
 
 
51.5%
Effect of excluding the Texas securitization bonds
 
2.1%
 
2.1%
Net debt to net capital
 
53.7%
 
53.6%
Effect of subtracting cash from debt
 
2.9%
 
3.8%
Debt to capital
 
56.6%
 
57.4%

Net debt consists of debt less cash and cash equivalents.  Debt consists of notes payable, capital lease obligations, and long-term debt, including the currently maturing portion.  Capital consists of debt, common shareholders' equity, and subsidiaries' preferred stock without sinking fund.  Net capital consists of capital less cash and cash equivalents. Entergy uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy's financial condition.

As discussed in the Form 10-K, Entergy Corporation has in place a revolving credit facility that expires in August 2012.  Entergy Corporation has the ability to issue letters of credit against the total borrowing capacity of the facility.  As of June 30, 2010, the capacity and amounts outstanding under the credit facility are:

 
Capacity
 
 
Borrowings
 
Letters
of Credit
 
Capacity
Available
(In Millions)
             
$3,477 
 
$2,659 
 
$25 
 
$793

Entergy Corporation's credit facility requires it to maintain a consolidated debt ratio of 65% or less of its total capitalization.  The calculation of this debt ratio under Entergy Corporation's credit facility and in the indenture governing the Entergy Corporation senior notes is different than the calculation of the debt to capital ratio above.  Entergy is currently in compliance with this covenant.  If Entergy fails to meet this ratio, or if Entergy Corporation or one of the Utility operating companies (except Entergy New Orleans) defaults on other indebtedness or is in bankruptcy or insolvency proceedings, an acceleration of the facility's maturity date may occur, and there may be an acceleration of amounts due under Entergy Corporation's senior notes.

See Note 4 to the financial statements herein for additional discussion of the Entergy Corporation credit facility and discussion of the Registrant Subsidiaries' credit facilities.

Capital Expenditure Plans and Other Uses of Capital

See the table and discussion in the Form 10-K under "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources - Capital Expenditure Plans and Other Uses of Capital," that sets forth the amounts of planned construction and other capital investments by operating segment for 2010 through 2012.  See Part II, Item 5 in this report for an update regarding Entergy Arkansas’s White Bluff project.  Following are additional updates to the discussion in the Form 10-K.
 
11

Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
 

Acadia Unit 2 Purchase Agreement

As discussed more fully in the Form 10-K, in October 2009, Entergy Louisiana announced that it has signed an agreement to acquire Unit 2 of the Acadia Energy Center, a 580 MW generating unit located near Eunice, La., from Acadia Power Partners, LLC, an independent power producer.  Entergy Louisiana and Acadia Power Partners also have entered into two purchase power agreements that are intended to provide access to the capacity and energy output of the unit during the period before the acquisition closes.  The first agreement is a tolling arrangement pursuant to which Entergy Louisiana will purchase 100 percent of the output of Acadia Unit 2.  This agreement is available to Entergy Louisiana when the federal reviews of the transac tion are complete.  The second purchase power agreement is a call option agreement that commenced on June 1, 2010 and will remain in place either until deliveries commence under the tolling agreement or the acquisition closes.  Entergy Louisiana's purchase is contingent upon, among other things, obtaining necessary approvals, including full cost recovery, from various federal and state regulatory and permitting agencies.  The LPSC has approved both purchase power agreements.  The parties have agreed to a procedural schedule for review of the acquisition that includes a hearing before the ALJ in December 2010.  Currently the closing is expected to occur in early 2011.

Little Gypsy Repowering Project

See the Form 10-K for a discussion of the Little Gypsy repowering project.  In October 2009, Entergy Louisiana made a filing with the LPSC seeking permission to cancel the project and seeking recovery over a five-year period of the project costs.  In June 2010, the LPSC Staff and Intervenors filed testimony.  The LPSC Staff (1) agreed that it was prudent to move the project from long-term suspension to cancellation and that the timing of the decision to suspend on a longer-term basis was not imprudent; (2) indicated that, except for $0.8 million in compensation-related cotst, the costs incurred should be deemed prudent; (3) recommended recovery from customers over ten years but stated that the LPSC may want to consider 15 years; (4) allowed for rec overy of carrying costs and earning a return on project costs, but at a reduced rate approximating the cost of debt, while also acknowledging that the LPSC may consider ordering no return; and (5) indicated that Entergy Louisiana should be directed to securitize project costs, if legally feasible and in the public interest.  The procedural schedule calls for hearings to begin in November 2010.

Dividends and Stock Repurchases

In the fourth quarter 2009 the Board granted authority for a $750 million share repurchase program.  As discussed above, at the same time that it announced its plans to unwind the business infrastructure associated with the proposed spin-off of the Non-Utility Nuclear business, Entergy also announced in April 2010 that it expected to execute on the $750 million share repurchase program and also declared that its next quarterly dividend on its common shares would be $0.83 per share, an increase from the previous $0.75 per share.  The amount of repurchases may vary as a result of material changes in business results or capital spending or new investment opportunities.

Sources of Capital

Entergy Arkansas January 2009 Ice Storm

As discussed in the Form 10-K, in January 2009 a severe ice storm caused significant damage to Entergy Arkansas' transmission and distribution lines, equipment, poles, and other facilities.  A law was enacted in April 2009 in Arkansas that authorizes securitization of storm damage restoration costs.  In June 2010 the APSC issued a financing order authorizing the issuance of approximately $126.3 million in storm cost recovery bonds, which includes carrying costs of $11.5 million and $4.6 million of up-front financing costs.  Entergy Arkansas expects the bonds to be issued in the third quarter 2010.
 
 
12

Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis

Hurricane Gustav and Hurricane Ike

As discussed in the Form 10-K, in September 2008, Hurricane Gustav and Hurricane Ike caused catastrophic damage to Entergy's service territory.  Entergy Gulf States Louisiana and Entergy Louisiana filed their Hurricane Gustav and Hurricane Ike storm cost recovery case with the LPSC in May 2009.  In September 2009, Entergy Gulf States Louisiana and Entergy Louisiana and the Louisiana Utilities Restoration Corporation (LURC), an instrumentality of the State of Louisiana, filed with the LPSC an application requesting that the
 
LPSC grant financing orders authorizing the financing of Entergy Gulf States Louisiana’s and Entergy Louisiana’s storm costs, storm reserves, and issuance costs pursuant to Act 55 of
the Louisiana Regular Session of 2007 (Act 55 financings).  Entergy Gulf States Louisiana’s and Entergy Louisiana’s Hurricane Katrina and Hurricane Rita storm costs were financed primarily by Act 55 financings, as discussed in the Form 10-K.  Entergy Gulf States Louisiana and Entergy Louisiana also filed an application requesting LPSC approval for ancillary issues including the mechanism to flow charges and Act 55 financing savings to customers via a Storm Cost Offset rider.  On December 30, 2009, Entergy Gulf States Louisiana and Entergy Louisiana entered into a stipulation agreement with the LPSC Staff that provides for total recoverable costs of approximately $234 million for Entergy Gulf St ates Louisiana and $394 million for Entergy Louisiana, including carrying costs.  Under this stipulation, Entergy Gulf States Louisiana agrees not to recover $4.4 million and Entergy Louisiana agrees not to recover $7.2 million of their storm restoration spending.  The stipulation also permits replenishing Entergy Gulf States Louisiana's storm reserve in the amount of $90 million and Entergy Louisiana's storm reserve in the amount of $200 million when the Act 55 financings are accomplished.  In March and April 2010, Entergy Gulf States Louisiana, Entergy Louisiana, and other parties to the proceeding filed with the LPSC an uncontested stipulated settlement that includes these terms and also includes Entergy Gulf States Louisiana’s and Entergy Louisiana's proposals under the Act 55 financings, which includes a commitment to pass on to customers a minimum of $15.5 million and $27.75 million of customer benefits, respectively, through prospective annual rate reductions of $3.1 million and $ 5.55 million, respectively, for five years.  A stipulation hearing was held before the ALJ on April 13, 2010.  On April 21, 2010, the LPSC approved the settlement and subsequently issued two financing orders and one ratemaking order intended to facilitate the implementation of the Act 55 financings.  In June 2010 the Louisiana State Bond Commission approved the Act 55 financings.

On July 22, 2010, the Louisiana Local Government Environmental Facilities and Community Development Authority (LCDA) issued $468.9 million in bonds under Act 55.  From the $462.4 million of bond proceeds loaned by the LCDA to the LURC, the LURC deposited $200 million in a restricted escrow account as a storm damage reserve for Entergy Louisiana and transferred $262.4 million directly to Entergy Louisiana. From the bond proceeds received by Entergy Louisiana from the LURC, Entergy Louisiana used $262.4 million to acquire 2,624,297.11 Class B preferred, non-voting, membership interest units of Entergy Holdings Company LLC, a company wholly-owned and consolidated by Entergy, that carry a 9% annual distribution rate. Distributions are payable quarterly commencing on September 15, 2 010, and the membership interests have a liquidation price of $100 per unit.  The preferred membership interests are callable at the option of Entergy Holdings Company LLC after ten years under the terms of the LLC agreement. The terms of the membership interests include certain financial covenants to which Entergy Holdings Company LLC is subject, including the requirement to maintain a net worth of at least $1 billion.

On July 22, 2010, the LCDA issued another $244.1 million in bonds under Act 55. From the $240.3 million of bond proceeds loaned by the LCDA to the LURC, the LURC deposited $90 million in a restricted escrow account as a storm damage reserve for Entergy Gulf States Louisiana and transferred $150.3 million directly to Entergy Gulf States Louisiana. From the bond proceeds received by Entergy Gulf States Louisiana from the LURC, Entergy Gulf States Louisiana used $150.3 million to acquire 1,502,643.04 Class B preferred, non-voting, membership interest units of Entergy Holdings Company LLC, a company wholly-owned and consolidated by Entergy, that carry a 9% annual distribution rate. Distributions are payable quarterly commencing on September 15, 2010, and the membership interests have a liquidation price of $100 per unit.  The pr eferred membership interests are callable at the option of Entergy Holdings Company LLC after ten years under the terms of the LLC agreement. The terms of the membership interests include certain financial covenants to which Entergy Holdings Company LLC is subject, including the requirement to maintain a net worth of at least $1 billion.
 
 
13

Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis

Entergy, Entergy Gulf States Louisiana, and Entergy Louisiana do not report the bonds on their balance sheets because the bonds are the obligation of the LCDA, and there is no recourse against Entergy, Entergy Gulf States Louisiana or Entergy Louisiana in the event of a bond default.  To service the bonds, Entergy Gulf States Louisiana and Entergy Louisiana collect a system restoration charge on behalf of the LURC, and remit the collections to the bond indenture trustee.  Entergy Gulf States Louisiana and Entergy Louisiana will not report the collections as revenue because they are merely acting as the billing and collection agents for the state.
 

Cash Flow Activity
As shown in Entergy's Consolidated Statements of Cash Flows, cash flows for the six months ended June 30, 2010 and 2009 were as follows:

   
2010
 
2009
   
(In Millions)
         
Cash and cash equivalents at beginning of period
 
$1,710 
 
$1,920 
         
Cash flow provided by (used in):
       
Operating activities
 
1,468 
 
1,016 
Investing activities
 
(1,173)
 
(1,120)
Financing activities
 
(670)
 
(536)
Effect of exchange rates on cash and cash equivalents
 
 
Net decrease in cash and cash equivalents
 
(374)
 
(640)
         
Cash and cash equivalents at end of period
 
$1,336 
 
$1,280 

Operating Activities

Entergy's cash flow provided by operating activities increased by $452 million for the six months ended June 30, 2010 compared to the six months ended June 30, 2009, primarily due to the absence of the Hurricane Gustav, Hurricane Ike, and Arkansas ice storm restoration spending that occurred in 2009.  In addition, an increase in Utility net revenue also contributed to the increase.  These increases were partially offset by decreased collection of fuel costs and an $87.8 million fuel cost refund made by Entergy Texas in the first quarter 2010 that is discussed further in Note 2 to the financial statements in the Form 10-K.  Operating cash flow provided by the Non-Utility Nuclear business increased by approximately $80 million, with its slight declin e in net revenue offset by various, individually insignificant, factors.

Investing Activities

Net cash used in investing activities increased by $53 million for the six months ended June 30, 2010 compared to the six months ended June 30, 2009, primarily due to an increase in nuclear fuel purchases, partially offset by an increase in collateral deposits received from Non-Utility Nuclear counterparties.  The variance in construction expenditures was relatively flat, as decreases resulting from Hurricane Gustav, Hurricane Ike, and Arkansas ice storm restoration spending in 2009 were offset by spending on nuclear plant security upgrades, the Waterford 3 steam generator replacement project, and other projects.

Financing Activities

Net cash used in financing activities increased by $134 million for the six months ended June 30, 2010 compared to the six months ended June 30, 2009 primarily because Entergy repurchased $137.7 million of its common stock during the six months ended June 30, 2010.  Entergy made no common stock repurchases during the six months ended June 30, 2009.

For details regarding Entergy's long-term debt activity in 2010 see Note 4 to the financial statements herein.
 
 
14

Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis

Rate, Cost-recovery, and Other Regulation

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Rate, Cost-recovery, and Other Regulation" in the Form 10-K for discussions of rate regulation, federal regulation, and related regulatory proceedings.

State and Local Rate Regulation and Fuel-Cost Recovery

See Note 2 to the financial statements herein for updates to the discussion in the Form 10-K regarding these proceedings.

Federal Regulation

See the Form 10-K for a discussion of federal regulatory proceedings.  Following are updates to that discussion.

System Agreement Proceedings

Rough Production Cost Equalization Rates

2010 Rate Filing Based on Calendar Year 2009 Production Costs

In May 2010, Entergy filed with the FERC the 2010 rates in accordance with the FERC's orders in the System Agreement proceeding.  The filing shows the following payments/receipts among the Utility operating companies for 2010, based on calendar year 2009 production costs, commencing for service in June 2010, are necessary to achieve rough production cost equalization under the FERC's orders:

 
 Payments or
(Receipts)
 
(In Millions)
Entergy Arkansas
$27
Entergy Gulf States Louisiana
$-
Entergy Louisiana
($13)
Entergy Mississippi
($14)
Entergy New Orleans
$-
Entergy Texas
$-

Several parties intervened in the proceeding at the FERC, including the LPSC and the City Council, which have also filed protests.  On July 23, 2010, the FERC accepted Entergy's proposed rates for filing, effective June 1, 2010, subject to refund, and set the proceeding for hearing and settlement procedures.

2009 Rate Filing Based on Calendar Year 2008 Production Costs

Several parties intervened in the 2009 rate proceeding at the FERC, including the LPSC and Ameren, which have also filed protests.  On July 27, 2009, the FERC accepted Entergy's proposed rates for filing, effective June 1, 2009, subject to refund, and set the proceeding for hearing and settlement procedures.  Settlement procedures were terminated and a hearing before the ALJ was held in April 2010.  An initial decision is scheduled for August 2010.

Entergy Arkansas and Entergy Mississippi Notices of Termination of System Agreement Participation and Related APSC Investigation

In February 2010 the APSC issued an order announcing a refocus of its ongoing investigation of Entergy Arkansas' post-System Agreement operation.  The order describes the APSC's "stated purpose in opening this inquiry to conduct an investigation regarding the prudence of [Entergy Arkansas] entering into a successor ESA [Entergy System Agreement] as opposed to becoming a stand-alone utility upon its exit from the ESA, and whether [Entergy Arkansas], as a standalone utility, should join the SPP RTO.  It is the
 
15

Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
 [APSC's] intention to render a decision regarding the prudence of [Entergy Arkansas] entering into a successor ESA as opposed to becoming a stand-alone utility upon its exit from the ESA, as well as [Entergy Arkansas'] RTO participation by the end of calendar year 2010.  In parallel with this Docket, the [APSC] will be actively involved and will be closely watching to see if any meaningful enhancement will be made to a new Enhanced Independent Coordinator of Transmission (“E-ICT") Agreement through the efforts of the [Entergy Transmission System] stakeholders, Entergy, and the newly formed and federally-recognized [Entergy Regional State Committee] in 2010."

Entergy Arkansas filed testimony and participated in a March 2010 evidentiary hearing in the proceeding.  Entergy Arkansas noted in its testimony that it is not reasonable to complete a comprehensive evaluation of strategic options by the end of 2010 and that forcing a decision would place parties in the untenable position of making critical decisions based on insufficient information.  Entergy Arkansas outlined three options for post-System Agreement operation of its electrical system:  1) Entergy Arkansas self providing its generation planning and operating functions as a stand-alone company; 2) Entergy Arkansas plus new coordination agreements with third parties in which Entergy Arkansas self provides some planning and operations functions, but also enter s into one or more coordinating or pooling agreements with third parties; and 3) Successor Arrangements under which Entergy Arkansas plans for its own generation resources but enters into a new generation commitment and dispatch agreement with other Utility operating companies under a successor agreement intended to avoid the litigation previously experienced.  Entergy Arkansas’s plan is expected to lead to a decision in late 2011 regarding which option to implement; however, Entergy Arkansas anticipates pursuing in 2010-2011 several elements that are common to all options.  In an attempt to reach understanding of complex issues, Entergy Arkansas proposes to hold a series of five technical conferences in the coming months targeting specific subjects.  The first two technical conferences were held in May and July 2010.  A second evidentiary hearing in the proceeding is scheduled for August 2010.

In early April 2010, Entergy Corporation and the Utility operating companies determined in connection with their decision-making process that it is appropriate to agree and commit that no Utility operating company will enter voluntarily into successor arrangements with the other Utility operating companies if its retail regulator finds successor arrangements are not in the public interest.  Hugh McDonald, chief executive officer of Entergy Arkansas, notified the APSC of this decision, and explained the decision and commitment, in a letter filed with the APSC on April 26, 2010.

June 2009 LPSC Complaint Proceeding

See the Form 10-K for a discussion of the complaint that the LPSC filed in June 2009 requesting that the FERC determine that certain of Entergy Arkansas' sales of electric energy to third parties: (a) violated the provisions of the System Agreement that allocate the energy generated by Entergy System resources, (b) imprudently denied the Entergy System and its ultimate consumers the benefits of low-cost Entergy System generating capacity, and (c) violated the provision of the System Agreement that prohibits sales to third parties by individual companies absent an offer of a right-of-first-refusal to other Utility operating companies.  Settlement procedures were unsuccessful, and a hearing in the matter is scheduled to commence in August 2010.  On April 16, 2010, the L PSC filed direct testimony in the proceeding alleging, among other things, (1) that Entergy violated the System Agreement by permitting Entergy Arkansas to make non-requirements sales to non-affiliated third parties rather than making such energy available to the other Utility operating companies’ customers; and (2) that over the period 2000 – 2009, these non-requirements sales caused harm to the Utility operating companies’ customers of $144.4 million and these customers should be compensated for this harm by Entergy’s shareholders.  The Utility operating companies believe the LPSC's allegations are without merit.

Independent Coordinator of Transmission (ICT)

See the Form 10-K for a discussion of Entergy's ICT and transmission issues.  As discussed in the Form 10-K, the Entergy Regional State Committee (E-RSC), which is comprised of representatives from all of the Utility operating companies' retail regulators, has been formed to consider several of these issues related to Entergy's transmission system.  Among other things, the E-RSC in concert with the FERC plan to conduct a cost/benefit analysis comparing the ICT arrangement and a proposal under which Entergy would join the Southwest Power Pool RTO.  The scope of the study was expanded in July 2010 to consider Entergy joining the Midwest ISO RTO as another alternative.  The E-RSC is also
 
 
16

Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
considering proposed modifications to the ICT arrangement that could be implemented commencing November 2010, when the initial term of the ICT ends.  Pursuant to a September 1, 2006, order of the LPSC, ELL and EGSL filed an initial report with the LPSC describing, among other things, Entergy’s proposal to modify the current ICT arrangement and to give the E-RSC the authority, upon a unanimous vote, to direct Entergy  (a) to make a filing pursuant to section 205 of the Federal Power Act to change the way transmission upgrade costs are allocated under the Entergy Open Access Transmission Tariff and (b) to add specific projects to Entergy’s construction plan.  As noted in the report, the E-RSC is considering these and other modifications and has not reached a final conclusion.  The Utility operating companies anticipate making the necessary filing with the FERC to extend the ICT, like ly with modifications, in September 2010.

Market and Credit Risk Sensitive Instruments

Commodity Price Risk

Power Generation

As discussed more fully in the Form 10-K, the sale of electricity from the power generation plants owned by Entergy's Non-Utility Nuclear business, unless otherwise contracted, is subject to the fluctuation of market power prices.  Following is an updated summary of the amount of the Non-Utility Nuclear business's output that is currently sold forward under physical or financial contracts (2010 represents the remainder of the year):

   
2010
 
2011
 
2012
 
2013
 
2014
 
Non-Utility Nuclear:
                     
Percent of planned generation sold forward:
                     
Unit-contingent (1)
 
53%
 
73%
 
40%
 
15%
 
14%
 
     Unit-contingent with availability guarantees (2)
 
38%
 
17%
 
14%
 
 6%
 
 3%
 
Firm LD (3)
 
0%
 
2%
 
2%
 
0%
 
0%
 
Offsetting positions (4)
 
0%
 
(2)%
 
(2)%
 
0%
 
0%
 
Total (net)
 
91%
 
90%
 
54%
 
21%
 
17%
 
Planned generation (TWh)
 
20
 
41
 
41
 
40
 
41
 
Average contracted price per MWh (5)
 
$58
 
$54
 
$53
 
$50
 
$50
 

(1)
Unit-contingent is a transaction under which power is supplied from a specific generation asset; if the asset is not operating, seller is generally not liable to buyer for any damages.
(2)
Unit-contingent with availability guarantees is a transaction under which power is supplied from a specific generation asset; if the asset is not operating, seller is generally not liable to buyer for any damages, unless the actual availability over a specified period of time is below an availability threshold specified in the contract.
(3)
Firm LD is a transaction that requires receipt or delivery of energy at a specified delivery point (usually at a market hub not associated with a specific asset) or settles financially on notional quantities; if a party fails to deliver or receive energy, the defaulting party must compensate the other party as specified in the contract.
(4)
Offsetting positions are transactions for the purchase of energy, generally to offset a Firm LD transaction that was used as a placeholder until a unit-contingent transaction could be originated and executed.
(5)
The Vermont Yankee acquisition included a PPA under which the former owners will buy most of the power produced by the plant through the expiration in 2012 of the current operating license for the plant.  The PPA includes an adjustment clause under which the prices specified in the PPA will be adjusted downward monthly if twelve month rolling average power market prices drop below prices specified in the PPA, which has not happened thus far.
 
 
17

Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
Some of the agreements to sell the power produced by Entergy's Non-Utility Nuclear power plants contain provisions that require an Entergy subsidiary to provide collateral to secure its obligations under the agreements.  The Entergy subsidiary is required to provide collateral based upon the difference between the current market and contracted power prices in the regions where Non-Utility Nuclear sells power.  The primary form of collateral to satisfy these requirements is an Entergy Corporation guaranty.  Cash and letters of credit are also acceptable forms of collateral.  At June 30, 2010, based on power prices at that time, Entergy had credit exposure of $13 million under the guarantees in place supporting Entergy Nuclear Power Marketing (a Non-Utility Nu clear subsidiary) transactions, $20 million of guarantees that support letters of credit, and $3 million of posted cash collateral.  As of June 30, 2010, the credit exposure associated with Non-Utility Nuclear assurance requirements would increase by $64 million for a $1 per MMBtu increase in gas prices in both the short-and long-term markets.   In the event of a decrease in Entergy Corporation's credit rating to below investment grade, based on power prices as of June 30, 2010, Entergy would have been required to provide approximately $77 million of additional cash or letters of credit under some of the agreements.

As of June 30, 2010, the counterparties or their guarantors for 99.5% of the planned energy output under contract for Non-Utility Nuclear through 2014 have public investment grade credit ratings and 0.5% is with load-serving entities without public credit ratings.

In addition to selling the power produced by its plants, Non-Utility Nuclear sells unforced capacity that is used to meet requirements placed on load-serving distribution companies by the ISO in their area.  Following is a summary of the amount of Non-Utility Nuclear's unforced capacity that is currently sold forward, and the blended amount of Non-Utility Nuclear's planned generation output and unforced capacity that is currently sold forward (2010 represents the remainder of the year):

   
2010
 
2011
 
2012
 
2013
 
2014
Non-Utility Nuclear:
                   
Percent of capacity sold forward (net):
                   
Bundled capacity and energy contracts
 
26%
 
25%
 
18%
 
16%
 
16%
Capacity contracts
 
46%
 
26%
 
30%
 
13%
 
 0%
Total
 
72%
 
51%
 
48%
 
29%
 
16%
Planned net MW in operation
 
4,998
 
4,998
 
4,998
 
4,998
 
4,998
Average capacity contract price per kW per month
 
$3.2
 
$3.5
 
$2.9
 
$2.6
 
$-
Blended Capacity and Energy (based on revenues)
                   
% of planned generation and capacity sold forward
 
92%
 
90%
 
57%
 
21%
 
15%
Average contract revenue per MWh
 
$60
 
$55
 
$55
 
$53
 
$50

Critical Accounting Estimates

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates" in the Form 10-K for a discussion of the estimates and judgments necessary in Entergy's accounting for nuclear decommissioning costs, unbilled revenue, impairment of long-lived assets and trust fund investments, qualified pension and other postretirement benefits, and other contingencies.  Following is an update to that discussion.

Federal Healthcare Legislation

The Patient Protection and Affordable Care Act (PPACA) became federal law on March 23, 2010, and, on March 30, 2010, the Health Care and Education Reconciliation Act of 2010 became federal law and amended certain provisions of the PPACA.  These new federal laws change the law governing employer-sponsored group health plans, like Entergy's plans.  All of the effects of these changes are not yet determinable because technical guidance regarding application must still be issued, and Entergy will monitor these developments.
 
 
18

Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
One provision of the new law that is effective in 2013 eliminates the federal income tax deduction for prescription drug expenses of Medicare beneficiaries for which the plan sponsor also receives the retiree drug subsidy under Part D.  Entergy receives subsidy payments under the Medicare Part D plan and therefore in the first quarter 2010 recorded a reduction to the deferred tax asset related to the unfunded other postretirement benefit obligation.  The offset was recorded as a $16 million charge to income tax expense or, for the Utility, including each Registrant Subsidiary, as a regulatory asset, as detailed in Note 2 to the financial statements herein.

 
19

 

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20

 


ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the Three and Six Months Ended June 30, 2010 and 2009
(Unaudited)
                         
   
Three Months Ended
   
Six Months Ended
 
   
2010
   
2009
   
2010
   
2009
 
      (In Thousands, Except Share Data)  
                         
OPERATING REVENUES
                       
Electric
  $ 2,214,108     $ 1,918,446     $ 4,221,038     $ 3,945,363  
Natural gas
    31,136       28,834       127,163       102,884  
Competitive businesses
    617,706       573,509       1,274,095       1,261,654  
TOTAL
    2,862,950       2,520,789       5,622,296       5,309,901  
                                 
OPERATING EXPENSES
                               
Operating and Maintenance:
                               
   Fuel, fuel-related expenses, and
                               
     gas purchased for resale
    631,546       521,071       1,190,214       1,367,060  
   Purchased power
    416,458       322,919       891,361       646,174  
   Nuclear refueling outage expenses
    64,221       60,234       126,510       117,013  
   Other operation and maintenance
    700,204       696,345       1,402,692       1,341,389  
Decommissioning
    52,467       49,307       104,043       98,050  
Taxes other than income taxes
    126,968       122,401       262,380       256,798  
Depreciation and amortization
    255,567       260,689       524,771       518,541  
Other regulatory charges (credits) - net
    (10,722 )     13,327       17,370       (16,147 )
TOTAL
    2,236,709       2,046,293       4,519,341       4,328,878  
                                 
OPERATING INCOME
    626,241       474,496       1,102,955       981,023  
                                 
OTHER INCOME (DEDUCTIONS)
                               
Allowance for equity funds used during construction
    17,630       15,782       30,926       32,730  
Interest and dividend income
    35,792       58,892       84,213       105,278  
Other than temporary impairment losses
    (837 )     (69,203 )     (1,049 )     (84,939 )
Miscellaneous - net
    (16,780 )     (13,354 )     (17,302 )     (26,653 )
TOTAL
    35,805       (7,883 )     96,788       26,416  
                                 
INTEREST AND OTHER CHARGES
                               
Interest on long-term debt
    127,302       125,157       294,237       253,123  
Other interest - net
    20,877       27,487       33,142       46,780  
Allowance for borrowed funds used during construction
    (10,323 )     (8,483 )     (18,325 )     (18,294 )
TOTAL
    137,856       144,161       309,054       281,609  
                                 
INCOME BEFORE INCOME TAXES
    524,190       322,452       890,689       725,830  
                                 
Income taxes
    203,907       90,641       351,592       253,686  
                                 
CONSOLIDATED NET INCOME
    320,283       231,811       539,097       472,144  
                                 
Preferred dividend requirements of subsidiaries
    5,017       4,998       10,033       9,996  
                                 
NET INCOME ATTRIBUTABLE TO ENTERGY CORPORATION
  $ 315,266     $ 226,813     $ 529,064     $ 462,148  
                                 
                                 
Earnings per average common share:
                               
    Basic
  $ 1.67     $ 1.16     $ 2.80     $ 2.38  
    Diluted
  $ 1.65     $ 1.14     $ 2.77     $ 2.35  
Dividends declared per common share
  $ 0.83     $ 0.75     $ 1.58     $ 1.50  
                                 
Basic average number of common shares outstanding
    188,776,240       196,105,002       188,988,284       194,359,001  
Diluted average number of common shares outstanding
    190,717,958       198,243,169       190,999,699       198,150,768  
                                 
See Notes to Financial Statements.
                               
 
 
21

 



ENTERGY CORPORATION AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2010 and 2009
(Unaudited)
   
2010
   
2009
 
   
(In Thousands)
 
             
OPERATING ACTIVITIES
           
Consolidated net income
  $ 539,097     $ 472,144  
Adjustments to reconcile consolidated net income to net cash flow
               
 provided by operating activities:
               
  Reserve for regulatory adjustments
    (515 )     (1,630 )
  Other regulatory charges (credits) - net
    17,370       (16,147 )
  Depreciation, amortization, and decommissioning, including nuclear fuel amortization
    831,785       697,205  
  Deferred income taxes, investment tax credits, and non-current taxes accrued
    342,641       249,448  
  Changes in working capital:
               
     Receivables
    (177,445 )     1,888  
     Fuel inventory
    5,002       (3,963 )
     Accounts payable
    23,094       (58,177 )
     Taxes accrued
    -       5,193  
     Interest accrued
    (28,815 )     (37,043 )
     Deferred fuel
    (2,070 )     266,062  
     Other working capital accounts
    (116,720 )     (157,092 )
  Provision for estimated losses and reserves
    (30,218 )     (18,642 )
  Changes in other regulatory assets
    (22,703 )     (455,577 )
  Changes in pensions and other postretirement liabilities
    (74,187 )     (44,961 )
  Other
    161,518       117,641  
Net cash flow provided by operating activities
    1,467,834       1,016,349  
                 
  INVESTING ACTIVITIES
               
Construction/capital expenditures
    (918,582 )     (932,056 )
Allowance for equity funds used during construction
    30,926       32,730  
Nuclear fuel purchases
    (218,829 )     (149,568 )
Proceeds from sale/leaseback of nuclear fuel
    -       21,210  
Proceeds from sale of assets and businesses
    9,675       8,654  
Changes in transition charge account
    (22,528 )     2,962  
NYPA value sharing payment
    (72,000 )     (72,000 )
Decrease in other investments
    62,325       17,111  
Proceeds from nuclear decommissioning trust fund sales
    1,487,387       1,282,206  
Investment in nuclear decommissioning trust funds
    (1,531,275 )     (1,330,730 )
Net cash flow used in investing activities
    (1,172,901 )     (1,119,481 )
                 
See Notes to Financial Statements.
               
 
 
22

 
 
 
 
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2010 and 2009
(Unaudited)
      2010       2009  
   
(In Thousands)
 
                 
FINANCING ACTIVITIES
               
Proceeds from the issuance of:
               
  Long-term debt
    525,789       783,304  
  Common stock and treasury stock
    8,716       2,691  
Retirement of long-term debt
    (774,772 )     (1,022,790 )
Repurchase of common stock
    (137,749 )     -  
Changes in credit line borrowings - net
    17,123       -  
Dividends paid:
               
  Common stock
    (298,796 )     (289,159 )
  Preferred stock
    (10,033 )     (9,995 )
Net cash flow used in financing activities
    (669,722 )     (535,949 )
                 
Effect of exchange rates on cash and cash equivalents
    762       (503 )
                 
Net decrease in cash and cash equivalents
    (374,027 )     (639,584 )
                 
Cash and cash equivalents at beginning of period
    1,709,551       1,920,491  
                 
Cash and cash equivalents at end of period
  $ 1,335,524     $ 1,280,907  
                 
                 
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
               
  Cash paid/(received) during the period for:
               
    Interest - net of amount capitalized
  $ 309,311     $ 321,186  
    Income taxes
  $ 26,054     $ (3,139 )
                 
   Noncash financing activities:
               
     Long-term debt retired (equity unit notes)
    -     $ (500,000 )
     Common stock issued in settlement of equity unit purchase contracts
    -     $ 500,000  
     Proceeds from long-term debt issued for the purpose of refunding prior long-term debt
  $ 150,000       -  
     Long-term debt refunded with proceeds from long-term debt issued in prior period
  $ (150,000 )     -  
                 
See Notes to Financial Statements.
               
 
 
23

 



ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30, 2010 and December 31, 2009
(Unaudited)
             
   
2010
   
2009
 
   
(In Thousands)
 
             
CURRENT ASSETS
           
Cash and cash equivalents:
           
  Cash
  $ 77,155     $ 85,861  
  Temporary cash investments
    1,258,369       1,623,690  
     Total cash and cash equivalents
    1,335,524       1,709,551  
Securitization recovery trust account
    35,626       13,098  
Accounts receivable:
               
  Customer
    646,714       553,692  
  Allowance for doubtful accounts
    (31,269 )     (27,631 )
  Other
    177,162       152,303  
  Accrued unbilled revenues
    373,548       302,463  
     Total accounts receivable
    1,166,155       980,827  
Deferred fuel costs
    19,155       126,798  
Accumulated deferred income taxes
    25,403       -  
Fuel inventory - at average cost
    191,852       196,855  
Materials and supplies - at average cost
    846,344       825,702  
Deferred nuclear refueling outage costs
    251,237       225,290  
System agreement cost equalization
    23,424       70,000  
Prepayments and other
    467,802       386,040  
TOTAL
    4,362,522       4,534,161  
                 
OTHER PROPERTY AND INVESTMENTS
               
Investment in affiliates - at equity
    38,239       39,580  
Decommissioning trust funds
    3,206,900       3,211,183  
Non-utility property - at cost (less accumulated depreciation)
    254,222       247,664  
Other
    112,313       120,273  
TOTAL
    3,611,674       3,618,700  
                 
PROPERTY, PLANT AND EQUIPMENT
               
Electric
    36,644,117       36,343,772  
Property under capital lease
    782,343       783,096  
Natural gas
    319,034       314,256  
Construction work in progress
    1,679,226       1,547,319  
Nuclear fuel under capital lease
    -       527,521  
Nuclear fuel
    1,262,635       739,827  
TOTAL PROPERTY, PLANT AND EQUIPMENT
    40,687,355       40,255,791  
Less - accumulated depreciation and amortization
    17,195,687       16,866,389  
PROPERTY, PLANT AND EQUIPMENT - NET
    23,491,668       23,389,402  
                 
DEFERRED DEBITS AND OTHER ASSETS
               
Regulatory assets:
               
  Regulatory asset for income taxes - net
    606,779       619,500  
  Other regulatory assets (includes Texas securitization transition
       property of $793,286 as of June 30, 2010)
    4,015,339       3,647,154  
  Deferred fuel costs
    172,202       172,202  
Goodwill
    377,172       377,172  
Accumulated deferred income taxes
    74,754       -  
Other
    1,039,964       1,006,306  
TOTAL
    6,286,210       5,822,334  
                 
TOTAL ASSETS
  $ 37,752,074     $ 37,364,597  
                 
See Notes to Financial Statements.
               
 
 
24

 
 
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND EQUITY
June 30, 2010 and December 31, 2009
(Unaudited)
                 
      2010       2009  
   
(In Thousands)
 
                 
CURRENT LIABILITIES
               
Currently maturing long-term debt
  $ 590,454     $ 711,957  
Notes payable
    203,974       30,031  
Accounts payable
    976,740       998,228  
Customer deposits
    327,805       323,342  
Accumulated deferred income taxes
    5,330       48,584  
Interest accrued
    171,219       192,283  
Deferred fuel costs
    109,926       219,639  
Obligations under capital leases
    2,432       212,496  
Pension and other postretirement liabilities
    41,288       55,031  
System agreement cost equalization
    79,018       187,204  
Other
    298,318       215,202  
TOTAL
    2,806,504       3,193,997  
                 
NON-CURRENT LIABILITIES
               
Accumulated deferred income taxes and taxes accrued
    8,003,988       7,422,319  
Accumulated deferred investment tax credits
    299,892       308,395  
Obligations under capital leases
    35,998       354,233  
Other regulatory liabilities
    524,962       421,985  
Decommissioning and asset retirement cost liabilities
    3,042,067       2,939,539  
Accumulated provisions
    98,956       141,315  
Pension and other postretirement liabilities
    2,180,595       2,241,039  
Long-term debt (includes Texas securitization bonds
       of $828,816 as of June 30, 2010)
    11,020,326       10,705,738  
Other
    657,324       711,334  
TOTAL
    25,864,108       25,245,897  
                 
Commitments and Contingencies
               
                 
Subsidiaries' preferred stock without sinking fund
    216,724       217,343  
                 
EQUITY
               
Common Shareholders' Equity:
               
Common stock, $.01 par value, authorized 500,000,000 shares;
               
  issued 254,752,788 shares in 2010 and in 2009
    2,548       2,548  
Paid-in capital
    5,377,119       5,370,042  
Retained earnings
    8,273,153       8,043,122  
Accumulated other comprehensive income (loss)
    (31,065 )     (75,185 )
Less - treasury stock, at cost (67,257,674 shares in 2010 and
               
  65,634,580 shares in 2009)
    4,851,017       4,727,167  
Total common shareholders' equity
    8,770,738       8,613,360  
Subsidiaries' preferred stock without sinking fund
    94,000       94,000  
TOTAL
    8,864,738       8,707,360  
                 
TOTAL LIABILITIES AND EQUITY
  $ 37,752,074     $ 37,364,597  
                 
See Notes to Financial Statements.
               

 
25

 



ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS, COMPREHENSIVE INCOME, AND PAID-IN CAPITAL
For the Three Months Ended June 30, 2010 and 2009
(Unaudited)
                         
   
2010
   
2009
 
   
(In Thousands)
 
                         
RETAINED EARNINGS
                       
Retained Earnings - Beginning of period
  $ 8,115,010           $ 7,482,329        
                             
     Add:
                           
        Net income attributable to Entergy Corporation
    315,266     $ 315,266       226,813     $ 226,813  
                                 
     Deduct:
                               
        Dividends declared on common stock
    157,123               146,555          
                                 
Retained Earnings - End of period
  $ 8,273,153             $ 7,562,587          
                                 
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
                               
Balance at beginning of period:
                               
  Accumulated derivative instrument fair value changes
  $ 260,481             $ 208,544          
                                 
  Pension and other postretirement liabilities
    (266,134 )             (233,089 )        
                                 
  Net unrealized investment gains (losses)
    89,003               (36,184 )        
                                 
  Foreign currency translation
    2,042               2,263          
     Total
    85,392               (58,466 )        
                                 
Net derivative instrument fair value changes
                               
  arising during the period (net of tax benefit of $(50,672) and ($14,567))
    (83,467 )     (83,467 )     (23,728 )     (23,728 )
                                 
Pension and other postretirement liabilities (net of tax expense (benefit) of $1,650 and ($493))
    3,205       3,205       (41 )     (41 )
                                 
Net unrealized investment gains (losses) (net of tax expense (benefit) of ($33,891) and $74,927)
    (36,043 )     (36,043 )     70,275       70,275  
                                 
Foreign currency translation (net of tax expense (benefit) of ($82) and $725)
    (152 )     (152 )     1,346       1,346  
                                 
Balance at end of period:
                               
  Accumulated derivative instrument fair value changes
    177,014               184,816          
                                 
  Pension and other postretirement liabilities
    (262,929 )             (233,130 )        
                                 
  Net unrealized investment gains (losses)
    52,960               34,091          
                                 
  Foreign currency translation
    1,890               3,609          
     Total
  $ (31,065 )           $ (10,614 )        
                                 
Add: preferred dividend requirements of subsidiaries
            5,017               4,998  
                                 
Comprehensive Income
          $ 203,826             $ 279,663  
                                 
                                 
PAID-IN CAPITAL
                               
Paid-in Capital - Beginning of period
  $ 5,373,424             $ 5,370,446          
                                 
     Add:
                               
        Common stock issuances related to stock plans
    3,695               4,819          
                                 
Paid-in Capital - End of period
  $ 5,377,119             $ 5,375,265          
                                 
                                 
See Notes to Financial Statements.
                               

 
26

 



ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS, COMPREHENSIVE INCOME, AND PAID-IN CAPITAL
For the Six Months Ended June 30, 2010 and 2009
(Unaudited)
                         
   
2010
   
2009
 
   
(In Thousands)
 
                         
RETAINED EARNINGS
                       
Retained Earnings - Beginning of period
  $ 8,043,122           $ 7,382,719        
                             
     Add:
                           
        Net income attributable to Entergy Corporation
    529,064     $ 529,064       462,148     $ 462,148  
        Adjustment related to implementation of new accounting pronouncement
    -               6,365          
              Total
    529,064               468,513          
                                 
     Deduct:
                               
        Dividends declared on common stock
    299,033               288,645          
                                 
Retained Earnings - End of period
  $ 8,273,153             $ 7,562,587          
                                 
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
                               
Balance at beginning of period:
                               
  Accumulated derivative instrument fair value changes
  $ 117,943             $ 120,830          
                                 
  Pension and other postretirement liabilities
    (267,939 )             (232,232 )        
                                 
  Net unrealized investment gains (losses)
    72,162               (4,402 )        
                                 
  Foreign currency translation
    2,649               3,106          
     Total
    (75,185 )             (112,698 )        
                                 
Net derivative instrument fair value changes
                               
  arising during the period (net of tax expense of $36,587 and $42,619)
    59,071       59,071       63,986       63,986  
                                 
Pension and other postretirement liabilities (net of tax expense (benefit) of $2,541 and ($628))
    5,010       5,010       (898 )     (898 )
                                 
Net unrealized investment gains (losses) (net of tax expense (benefit) of ($16,078) and $38,950)
    (19,202 )     (19,202 )     44,858       44,858  
                                 
Adjustment related to implementation of new accounting pronouncement (net of tax benefit of ($4,921))
    -       -       (6,365 )     -  
                                 
Foreign currency translation (net of tax expense (benefit) of ($409) and $271)
    (759 )     (759 )     503       503  
                                 
Balance at end of period:
                               
  Accumulated derivative instrument fair value changes
    177,014               184,816          
                                 
  Pension and other postretirement liabilities
    (262,929 )             (233,130 )        
                                 
  Net unrealized investment gains (losses)
    52,960               34,091          
                                 
  Foreign currency translation
    1,890               3,609          
     Total
  $ (31,065 )           $ (10,614 )        
                                 
Add: preferred dividend requirements of subsidiaries
            10,033               9,996  
                                 
Comprehensive Income
          $ 583,217             $ 580,593  
                                 
                                 
PAID-IN CAPITAL
                               
Paid-in Capital - Beginning of period
  $ 5,370,042             $ 4,869,303          
                                 
     Add:
                               
        Common stock issuances in settlement of equity unit purchase contracts
    -               499,934          
        Common stock issuances related to stock plans
    7,077               6,028          
              Total
    7,077               505,962          
                                 
Paid-in Capital - End of period
  $ 5,377,119             $ 5,375,265          
                                 
                                 
See Notes to Financial Statements.
                               

 
27

 

ENTERGY CORPORATION AND SUBSIDIARIES
SELECTED OPERATING RESULTS
For the Three and Six Months Ended June 30, 2010 and 2009
(Unaudited)
                         
                         
   
Three Months Ended
   
Increase/
       
Description
 
2010
   
2009
   
(Decrease)
   
%
 
     (Dollars in Millions)        
Utility Electric Operating Revenues:
                   
  Residential
  $ 724     $ 642     $ 82       13  
  Commercial
    562       520       42       8  
  Industrial
    570       492       78       16  
  Governmental
    52       48       4       8  
    Total retail
    1,908       1,702       206       12  
  Sales for resale
    62       65       (3 )     (5 )
  Other
    244       153       91       59  
    Total
  $ 2,214     $ 1,920     $ 294       15  
                                 
Utility Billed Electric Energy
                               
 Sales (GWh):
                               
  Residential
    7,705       7,100       605       9  
  Commercial
    6,803       6,518       285       4  
  Industrial
    9,862       8,790       1,072       12  
  Governmental
    581       577       4       1  
    Total retail
    24,951       22,985       1,966       9  
  Sales for resale
    971       1,313       (342 )     (26 )
    Total
    25,922       24,298       1,624       7  
                                 
                                 
Non-Utility Nuclear:
                               
Operating Revenues
  $ 581     $ 545     $ 36       7  
Billed Electric Energy Sales (GWh)
    9,868       8,980       888       10  
                                 
                                 
   
Six Months Ended
   
Increase/
         
Description
    2010       2009    
(Decrease)
   
%
 
     
(Dollars in Millions)
       
Utility Electric Operating Revenues:
                         
  Residential
  $ 1,542     $ 1,398     $ 144       10  
  Commercial
    1,088       1,080       8       1  
  Industrial
    1,091       1,040       51       5  
  Governmental
    102       101       1       1  
    Total retail
    3,823       3,619       204       6  
  Sales for resale
    145       139       6       4  
  Other
    253       187       66       35  
    Total
  $ 4,221     $ 3,945     $ 276       7  
                                 
Utility Billed Electric Energy
                               
 Sales (GWh):
                               
  Residential
    17,350       14,993       2,357       16  
  Commercial
    13,275       12,712       563       4  
  Industrial
    18,596       16,929       1,667       10  
  Governmental
    1,173       1,139       34       3  
    Total retail
    50,394       45,773       4,621       10  
  Sales for resale
    2,287       2,700       (413 )     (15 )
    Total
    52,681       48,473       4,208       9  
                                 
                                 
Non-Utility Nuclear:
                               
Operating Revenues
  $ 1,195     $ 1,201     $ (6 )     -  
Billed Electric Energy Sales (GWh)
    20,123       19,054       1,069       6  

 
28

 


ENTERGY CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

NOTE 1.  COMMITMENTS AND CONTINGENCIES  (Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Entergy and the Registrant Subsidiaries are involved in a number of legal, regulatory, and tax proceedings before various courts, regulatory commissions, and governmental agencies in the ordinary course of business.  While management is unable to predict the outcome of such proceedings, management does not believe that the ultimate resolution of these matters will have a material adverse effect on Entergy's results of operations, cash flows, or financial condition.  Entergy discusses regulatory proceedings in Note 2 to the financial statements in the Form 10-K and herein and discusses tax proceedings in Note 3 to the financial statements in the Form 10-K.

Nuclear Insurance

See Note 8 to the financial statements in the Form 10-K for information on nuclear liability and property insurance associated with Entergy's nuclear power plants.

Conventional Property Insurance

See Note 8 to the financial statements in the Form 10-K for information on Entergy's non-nuclear property insurance program.

Employment Litigation

The Registrant Subsidiaries and other Entergy subsidiaries are responding to various lawsuits in both state and federal courts and to other labor-related proceedings filed by current and former employees and third parties not selected for open positions.  These actions include, but are not limited to, allegations of wrongful employment actions; wage disputes and other claims under the Fair Labor Standards Act or its state counterparts; claims of race, gender and disability discrimination; disputes arising under collective bargaining agreements; unfair labor practice proceedings and other administrative proceedings before the National Labor Relations Board; claims of retaliation; and claims for or regarding benefits under various Entergy Corporation sponsored plans.  E ntergy and the Registrant Subsidiaries are responding to these lawsuits and proceedings and deny liability to the claimants.

Asbestos Litigation  (Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas)

See Note 8 to the financial statements in the Form 10-K for information regarding asbestos litigation at Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas.


NOTE 2.  RATE AND REGULATORY MATTERS (Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Regulatory Assets

See Note 2 to the financial statements in the Form 10-K for information regarding regulatory assets in the Utility business presented on the balance sheets of Entergy and the Registrant Subsidiaries.  Following are updates to that information.
 
29

Entergy Corporation and Subsidiaries
Notes to Financial Statements
 
 
Fuel and Purchased Power Cost Recovery

See Entergy Corporation and Subsidiaries' "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - System Agreement Proceedings" for updates to the discussion in the Form 10-K regarding the System Agreement proceedings.

Entergy Gulf States Louisiana

           In January 2003, the LPSC authorized its staff to initiate a proceeding to audit the fuel adjustment clause filings of Entergy Gulf States Louisiana and its affiliates pursuant to a November 1997 LPSC general order.  The audit includes a review of the reasonableness of charges flowed by Entergy Gulf States Louisiana through its fuel adjustment clause for the period January 1, 1995 through December 31, 2002.  In June 2005 the LPSC expanded the audit period to include the years through 2004.  Discovery has largely concluded, and the LPSC Staff is expected to issue its report in the third quarter 2010.  A procedural schedule will be set to establish a hearing process to address any issues noted in the LPSC Staff report that are contested by Entergy Gulf State s Louisiana.  Entergy Gulf States Louisiana has recorded provisions for the estimated effect of this proceeding.

Entergy Mississippi

In August 2009 the MPSC retained an independent audit firm to audit Entergy Mississippi's fuel adjustment clause submittals for the period October 2007 through September 2009.  The independent audit firm submitted its report to the MPSC in December 2009.  The report does not recommend that any costs be disallowed for recovery.  The report did suggest that some costs, less than one percent of the fuel and purchased power costs recovered during the period, may have been more reasonably charged to customers through base rates rather than through fuel charges, but the report did not suggest that customers should not have paid for those costs.  In November 2009 the MPSC also retained another firm to review processes and practices related to fuel and pur chased energy.  The results of that review were filed with the MPSC in March 2010.  In that report, the independent consulting firm found that the practices and procedures in activities that directly affect the costs recovered through Entergy Mississippi's fuel adjustment clause appear reasonable.  Both audit reports were certified by the MPSC to the Mississippi Legislature, as required by Mississippi law.

Entergy Texas

As discussed in the Form 10-K, in January 2008, Entergy Texas made a compliance filing with the PUCT describing how its 2007 rough production cost equalization receipts under the System Agreement were allocated between Entergy Gulf States, Inc.'s Texas and Louisiana jurisdictions.  In December 2008 the PUCT adopted an ALJ proposal for decision recommending an additional $18.6 million allocation to Texas retail customers.  Because the PUCT allocation to Texas retail customers is inconsistent with the LPSC allocation to Louisiana retail customers, the PUCT's decision results in trapped costs between the Texas and Louisiana jurisdictions with no mechanism for recovery.  The PUCT denied Entergy Texas' motion for rehearing and Entergy Texas commenced proceedings in both state and federal district courts seeking to reverse the PUCT's decision.  The federal proceeding had been abated pending action by the FERC in the proceeding discussed below.  

Entergy Texas filed with the FERC a proposed amendment to the System Agreement bandwidth formula to specifically calculate the payments to Entergy Gulf States Louisiana and Entergy Texas of Entergy Gulf States, Inc.'s rough production cost equalization receipts for 2007.  In May 2009 the FERC issued an order rejecting the proposed amendment.  Because of the FERC's order, Entergy Texas recorded the effects of the PUCT's allocation of the additional $18.6 million to Texas retail customers in the second quarter 2009.  On an after-tax basis, the charge to earnings was approximately $13.0 million (including interest).  In May 2010 the FERC rejected Entergy's request for rehearing of the FERC's order.  On July 14, 2010, Entergy appealed the FER C's decision to the U.S. Court of Appeals for the District of Columbia. 
 
30

Entergy Corporation and Subsidiaries
Notes to Financial Statements
 
 
                In the settlement of Entergy Texas's December 2009 rate case proceeding that is discussed further below, Entergy Texas agreed to credit to fuel factor customers $18.6 million, with the parties agreeing that this amount represents the remaining portion of the 2007 rough production cost equalization payments received by Entergy Texas.  Entergy Texas also agreed to dismiss the state and federal district court proceedings and its appeal of the FERC's decision, all of which were seeking to change the result of the December 2008 PUCT decision.

In June 2010, Entergy Texas filed with the PUCT a request to refund approximately $66 million, including interest, of fuel cost recovery over-collections through May 2010.  Entergy Texas requested that the proposed refund be made over a six-month period beginning no later than September 2010.  The request is pending consideration by the PUCT.

Storm Cost Recovery

Entergy Arkansas Storm Reserve Accounting

The APSC's June 2007 order in Entergy Arkansas' base rate proceeding eliminated storm reserve accounting for Entergy Arkansas.  In March 2009 a law was enacted in Arkansas that requires the APSC to permit storm reserve accounting for utilities that request it.  Entergy Arkansas filed its request with the APSC, and reinstated storm reserve accounting effective January 1, 2009.  A hearing on Entergy Arkansas' request was held in March 2010, and in April 2010 the ALJ approved Entergy Arkansas’s establishment of a storm cost reserve account.

Entergy Arkansas January 2009 Ice Storm

As discussed in the Form 10-K, in January 2009 a severe ice storm caused significant damage to Entergy Arkansas' transmission and distribution lines, equipment, poles, and other facilities.  A law was enacted in April 2009 in Arkansas that authorizes securitization of storm damage restoration costs.  In June 2010 the APSC issued a financing order authorizing the issuance of approximately $126.3 million in storm cost recovery bonds, which includes carrying costs of $11.5 million and $4.6 million of up-front financing costs.  Entergy Arkansas expects the bonds to be issued in the third quarter 2010.

Entergy Gulf States Louisiana and Entergy Louisiana Hurricane Gustav and Hurricane Ike Filing

As discussed in the Form 10-K, in September 2008, Hurricane Gustav and Hurricane Ike caused catastrophic damage to Entergy's service territory.  Entergy Gulf States Louisiana and Entergy Louisiana filed their Hurricane Gustav and Hurricane Ike storm cost recovery case with the LPSC in May 2009.  In September 2009, Entergy Gulf States Louisiana and Entergy Louisiana and the Louisiana Utilities Restoration Corporation (LURC), an instrumentality of the State of Louisiana, filed with the LPSC an application requesting that the LPSC grant financing orders authorizing the financing of Entergy Gulf States Louisiana’s and Entergy Louisiana’s storm costs, storm reserves, and issuance costs pursuant to Act 55 of the Louisiana Regular Session of 2007 (Act 55 financings).  Entergy Gulf States Louisiana’s and Entergy Louisiana’s Hurricane Katrina and Hurricane Rita storm costs were financed primarily by Act 55 financings, as discussed in the Form 10-K.  Entergy Gulf States Louisiana and Entergy Louisiana also filed an application requesting LPSC approval for ancillary issues including the mechanism to flow charges and Act 55 financing savings to customers via a Storm Cost Offset rider.  On December 30, 2009, Entergy Gulf States Louisiana and Entergy Louisiana entered into a stipulation agreement with the LPSC Staff that provides for total recoverable costs of approximately $234 million for Entergy Gulf States Louisiana and $394 million for Entergy Louisiana, including carrying costs.  Under this stipulation, Entergy Gulf States Louisiana agrees not to recover $4.4 million and Entergy Louisiana agrees not to recover $7.2 million of thei r storm restoration spending.  The stipulation also permits replenishing Entergy Gulf States Louisiana's storm reserve in the amount of $90 million and Entergy Louisiana's storm reserve in the amount of $200 million when the Act 55 financings are accomplished.  In March and April 2010, Entergy Gulf States Louisiana, Entergy Louisiana, and other parties to the proceeding filed with the LPSC an uncontested stipulated settlement that includes these terms and also includes Entergy Gulf States Louisiana’s and Entergy Louisiana's proposals under the Act 55 financings, which includes a commitment to pass on to customers a
 
31

Entergy Corporation and Subsidiaries
Notes to Financial Statements
 
minimum of $15.5 million and $27.75 million of customer benefits, respectively, through prospective annual rate reductions of $3.1 million and $5.55 million for five years.  A stipulation hearing was held before the ALJ on April 13, 2010.  On April 21, 2010, the LPSC approved the settlement and subsequently issued two financing orders and one ratemaking order intended to facilitate the implementation of the Act 55 financings.  In June 2010 the Louisiana State Bond Commission approved the Act 55 financings.

On July 22, 2010, the Louisiana Local Government Environmental Facilities and Community Development Authority (LCDA) issued $468.9 million in bonds under Act 55.  From the $462.4 million of bond proceeds loaned by the LCDA to the LURC, the LURC deposited $200 million in a restricted escrow account as a storm damage reserve for Entergy Louisiana and transferred $262.4 million directly to Entergy Louisiana. From the bond proceeds received by Entergy Louisiana from the LURC, Entergy Louisiana used $262.4 million to acquire 2,624,297.11 Class B preferred, non-voting, membership interest units of Entergy Holdings Company LLC, a company wholly-owned and consolidated by Entergy, that carry a 9% annual distribution rate. Distributions are payable quarterly commencing on September 15, 2 010, and the membership interests have a liquidation price of $100 per unit. The preferred membership interests are callable at the option of Entergy Holdings Company LLC after ten years under the terms of the LLC agreement. The terms of the membership interests include certain financial covenants to which Entergy Holdings Company LLC is subject, including the requirement to maintain a net worth of at least $1 billion.

On July 22, 2010, the LCDA issued another $244.1 million in bonds under Act 55. From the $240.3 million of bond proceeds loaned by the LCDA to the LURC, the LURC deposited $90 million in a restricted escrow account as a storm damage reserve for Entergy Gulf States Louisiana and transferred $150.3 million directly to Entergy Gulf States Louisiana. From the bond proceeds received by Entergy Gulf States Louisiana from the LURC, Entergy Gulf States Louisiana used $150.3 million to acquire 1,502,643.04 Class B preferred, non-voting, membership interest units of Entergy Holdings Company LLC, a company wholly-owned and consolidated by Entergy, that carry a 9% annual distribution rate. Distributions are payable quarterly commencing on September 15, 2010, and the membership interests have a liquidation price of $100 per unit. The preferred mem bership interests are callable at the option of Entergy Holdings Company LLC after ten years under the terms of the LLC agreement. The terms of the membership interests include certain financial covenants to which Entergy Holdings Company LLC is subject, including the requirement to maintain a net worth of at least $1 billion.

Entergy, Entergy Gulf States Louisiana, and Entergy Louisiana do not report the bonds on their balance sheets because the bonds are the obligation of the LCDA, and there is no recourse against Entergy, Entergy Gulf States Louisiana or Entergy Louisiana in the event of a bond default.  To service the bonds, Entergy Gulf States Louisiana and Entergy Louisiana collect a system restoration charge on behalf of the LURC, and remit the collections to the bond indenture trustee.  Entergy Gulf States Louisiana and Entergy Louisiana will not report the collections as revenue because they are merely acting as the billing and collection agents for the state.

Entergy New Orleans

In December 2005, the U.S. Congress passed the Katrina Relief Bill, a hurricane aid package that included CDBG funding (for the states affected by Hurricanes Katrina, Rita, and Wilma) that allowed state and local leaders to fund individual recovery priorities.  In March 2007, the City Council certified that Entergy New Orleans incurred $205 million in storm-related costs through December 2006 that are eligible for CDBG funding under the state action plan, and certified Entergy New Orleans' estimated costs of $465 million for its gas system rebuild.  Entergy New Orleans received $180.8 million of CDBG funds in 2007 and $19.2 million in 2010.

Federal Healthcare Legislation

The Patient Protection and Affordable Care Act (PPACA) became federal law on March 23, 2010, and, on March 30, 2010, the Health Care and Education Reconciliation Act of 2010 became federal law and amended certain provisions of the PPACA.  These new federal laws change the law governing employer-sponsored group health plans, like Entergy's plans.  All of the effects of these changes are not yet determinable because technical guidance regarding application must still be issued, and Entergy will monitor these developments.
 
32

Entergy Corporation and Subsidiaries
Notes to Financial Statements
 
One provision of the new law that is effective in 2013 eliminates the federal income tax deduction for prescription drug expenses of Medicare beneficiaries for which the plan sponsor also receives the retiree drug subsidy under Part D.  Entergy receives subsidy payments under the Medicare Part D plan and therefore in the first quarter 2010 recorded a reduction to the deferred tax asset related to the unfunded other postretirement benefit obligation.  The offset was recorded as a charge to income tax expense or, for the Utility, including each Registrant Subsidiary, as a regulatory asset.  The Utility has a regulatory asset of $99 million recorded for this, including $31 million at Entergy Arkansas, $16 million at Entergy Gulf States Louisiana, $19 million at Entergy Louisiana, $10 million at Entergy Mississippi, $7 million at Entergy New Orleans, $11 million at Entergy Texas, and $5 million at System Energy.

Retail Rate Proceedings

See Note 2 to the financial statements in the Form 10-K for information regarding retail rate proceedings involving the Utility operating companies.  The following are updates to the Form 10-K.

Filings with the APSC

As discussed in the Form 10-K, on September 4, 2009, Entergy Arkansas filed with the APSC for a general change in rates, charges, and tariffs.  In June 2010 the APSC approved a settlement and subsequent compliance tariffs that provide for a $63.7 million rate increase, effective for bills rendered for the first billing cycle of July 2010.  The settlement provides for a 10.2% return on common equity.  Entergy Arkansas's proposed formula rate plan mechanism, including a recovery mechanism for APSC-approved costs for additional capacity purchases or construction/acquisition of new transmission or generating facilities, was not adopted under the settlement.

Filings with the LPSC

(Entergy Gulf States Louisiana)

See the Form 10-K for a discussion of Entergy Gulf States Louisiana’s formula rate plan that the LPSC approved for the 2008, 2009, and 2010 test years.  Entergy Gulf States Louisiana, effective with the November 2009 billing cycle, reset its rates to achieve a 10.65% return on equity for the 2008 test year.  The rate reset, a $44.3 million increase that includes a $36.9 million cost of service adjustment, plus $7.4 million net for increased capacity costs and a base rate reclassification, was implemented for the November 2009 billing cycle, and the rate reset was subject to refund pending review of the 2008 test year filing that was made in October 2009.  In January 2010, Entergy Gulf States Louisiana implemented an additional $23.9 million rate increa se pursuant to a special rate implementation filing made in December 2009, primarily for incremental capacity costs approved by the LPSC.  In May 2010, Entergy Gulf States Louisiana and the LPSC staff submitted a joint report on the 2008 test year filing and requested that the LPSC accept the report, which will result in a $0.8 million reduction in current rates effective in the June 2010 billing cycle and a $0.5 million refund.  At its May 19, 2010 meeting, the LPSC accepted the joint report.

In May 2010, Entergy Gulf States Louisiana made its formula rate plan filing with the LPSC for the 2009 test year.  The filing reflects a 10.25% return on common equity, which is within the allowed earnings bandwidth, indicating no cost of service rate change is necessary under the formula rate plan.  The filing does reflect, however, consistent with a December 2009 filing, a $9.7 million revenue requirement to provide supplemental funding for the decommissioning trust maintained for the LPSC-regulated 70% share of River Bend, in response to a NRC notification of a projected shortfall of decommissioning funding assurance.  Currently, Entergy Gulf States Louisiana's retail rates contain no amount for decommissioning funding.  The filing also re flects a $20.8 million rate increase for incremental capacity costs.  In July 2010 the LPSC approved a $7.8 million increase in the revenue requirement for decommissioning, effective September 2010.  Other issues in the formula rate plan proceeding remain pending.
 
33

Entergy Corporation and Subsidiaries
Notes to Financial Statements
 

In January 2010, Entergy Gulf States Louisiana filed with the LPSC its gas rate stabilization plan for the test year ended September 30, 2009.  The filing showed an earned return on common equity of 10.87%, which is within the earnings bandwidth of 10.5% plus or minus fifty basis points, resulting in no rate change.  In April 2010, Entergy Gulf States Louisiana filed a revised evaluation report reflecting changes agreed upon with the LPSC Staff.  The revised evaluation report also results in no rate change.

(Entergy Louisiana)

See the Form 10-K for a discussion of Entergy Louisiana’s formula rate plan that the LPSC approved for the 2008, 2009, and 2010 test years.  Entergy Louisiana, effective with the November 2009 billing cycle, reset its rates to achieve a 10.25% return on equity for the 2008 test year.  The rate reset, a $2.5 million increase that includes a $16.3 million cost of service adjustment less a $13.8 million net reduction for decreased capacity costs and a base rate reclassification, was implemented for the November 2009 billing cycle, and the rate reset was subject to refund pending review of the 2008 test year filing that was made in October 2009.  In April 2010, Entergy Louisiana and the LPSC staff submitted a joint report on the 2008 test year filing and r equested that the LPSC accept the report, which will result in a $0.1 million reduction in current rates effective in the May 2010 billing cycle and a $0.1 million refund.  In addition, Entergy Louisiana will move the recovery of approximately $12.5 million of capacity costs from fuel adjustment clause recovery to base rate recovery.  At its April 21, 2010 meeting, the LPSC accepted the joint report.

In May 2010, Entergy Louisiana made its formula rate plan filing with the LPSC for the 2009 test year.  The filing reflects a 10.82% return on common equity, which is within the allowed earnings bandwidth, indicating no cost of service rate change is necessary under the formula rate plan.  The filing does reflect, however, consistent with a December 2009 filing, a $7.9 million revenue requirement increase to provide supplemental funding for the decommissioning trust maintained for Waterford 3, in response to a NRC notification of a projected shortfall of decommissioning funding assurance.  Currently, Entergy Louisiana has $2.2 million in retail rates for decommissioning funding.  The filing also reflects a $7.4 million rate decrease for increm ental capacity costs.  In July 2010 the LPSC approved a $3.5 million increase in the retail revenue requirement for decommissioning, effective September 2010.  Other issues in the formula rate plan proceeding remain pending.

Filings with the MPSC

In September 2009, Entergy Mississippi filed with the MPSC proposed modifications to its formula rate plan rider.  In March 2010 the MPSC issued an order: (1) providing the opportunity for a reset of Entergy Mississippi's return on common equity to a point within the formula rate plan bandwidth and eliminating the 50/50 sharing that had been in the plan, (2) modifying the performance measurement process, and (3) replacing the revenue change limit of two percent of revenues, which was subject to a $14.5 million revenue adjustment cap, with a limit of four percent of revenues, although any adjustment above two percent requires a hearing before the MPSC.  The MPSC did not approve Entergy Mississippi's request to use a projected test year for its annua l scheduled formula rate plan filing and, therefore, Entergy Mississippi will continue to use a historical test year for its annual evaluation reports under the plan.

As discussed in the Form 10-K, in March 2010, Entergy Mississippi submitted its 2009 test year filing, its first annual filing under the new formula rate plan rider.  In June 2010 the MPSC approved a joint stipulation between Entergy Mississippi and the Mississippi Public Utilities Staff that provides for no change in rates, but does provide for the deferral as a regulatory asset of $3.9 million of legal expenses associated with certain litigation involving the Mississippi Attorney General, as well as ongoing legal expenses in that litigation until the litigation is resolved.

Filings with the City Council

In May 2010, Entergy New Orleans filed its electric and gas formula rate plan evaluation reports.  The filings request a $12.8 million electric base revenue decrease and a $2.4 million gas base revenue increase.  The new rates would be effective with the first billing cycle in October 2010.  The City Council and its Advisors' review and consideration of these filings is pending.
 
34

 
Entergy Corporation and Subsidiaries
Notes to Financial Statements

Filings with the PUCT and Texas Cities

As discussed in the Form 10-K, in December 2009, Entergy Texas filed a rate case requesting a $198.7 million increase reflecting an 11.5% return on common equity based on an adjusted June 2009 test year.  The filing includes a proposed cost of service adjustment rider with a three-year term beginning with the 2010 calendar year as the initial evaluation period.  Key provisions include a plus or minus 15 basis point bandwidth, with earnings outside the bandwidth reset to the bottom or top of the band and rates changing prospectively depending upon whether Entergy Texas is under or over-earning.  The annual change in revenue requirement is limited to a percentage change in the Consumer Price Index for urban areas, and the filing includes a provision for extrao rdinary events greater than $10 million per year that would be considered separately.  The filing also proposes a purchased power recovery rider and a competitive generation service tariff and will establish test year baseline values to be used in the transmission cost recovery factor rider authorized for use by Entergy Texas in the 2009 legislative session.  The rate case also includes a $2.8 million revenue requirement to provide supplemental funding for the decommissioning trust maintained for the 70% share of River Bend for which Entergy Texas retail customers are responsible, in response to an NRC notification of a projected shortfall of decommissioning funding assurance.  Beginning in May 2010, Entergy Texas implemented a $17.5 million interim rate increase, subject to refund.  Intervenors and PUCT Staff filed testimony opposing the riders discussed above and recommended disallowances that would result in a maximum rate increase of, based on the PUCT Staff’ s testimony, $58 million.  Hearings regarding the merits of the competitive generation service tariff, which was a proposal required by law that would allow certain larger customers to obtain alternative generation supply, were held in July 2010, and this issue is pending a PUCT decision.  
 
The parties filed a settlement in August 2010 intended to resolve the other issues in the rate case proceeding.  The settlement provides for a $59 million base rate increase for electricity usage beginning August 15, 2010, with an additional increase of $9 million for bills rendered beginning May 2, 2011.  The settlement stipulates an authorized return on equity of 10.125%.  The settlement provides that Entergy Texas's proposed cost of service adjustment rider, purchased power recovery rider, and transmission cost recovery factors will not be approved in the rate case proceeding, although baseline values were established to be used in Entergy Texas's request for a transmission recovery factor that will be made in a separate procee ding.  The settlement states that Entergy Texas's fuel costs for the period April 2007 through June 2009 are reconciled, with $3.25 million of disallowed costs.  The settlement also sets River Bend decommissioning costs at $2.0 million annually.  The current jurisdictional deadline by which the PUCT is required to issue a final order in this proceeding is November 1, 2010.


NOTE 3.  EQUITY  (Entergy Corporation)

Common Stock

Earnings per Share

The following tables present Entergy's basic and diluted earnings per share calculations included on the consolidated income statement:

   
For the Three Months Ended June 30,
   
2010
 
2009
   
(In Millions, Except Per Share Data)
                         
Basic earnings per share
 
Income
 
Shares
 
$/share
 
Income
 
Shares
 
$/share
                         
Net income attributable to
Entergy Corporation
 
 
$315.3
 
 
188.8
 
 
$1.67 
 
 
$226.8
 
 
196.1
 
 
$1.16 
Average dilutive effect of:
                       
Stock options
 
 -
 
1.9
 
(0.02)
 
 -
 
2.1
 
(0.02)
                         
Diluted earnings per share
 
$315.3
 
190.7
 
$1.65 
 
$226.8
 
198.2
 
$1.14 

 
35

Entergy Corporation and Subsidiaries
Notes to Financial Statements
 


   
For the Six Months Ended June 30,
   
2010
 
2009
   
(In Millions, Except Per Share Data)
                         
Basic earnings per share
 
Income
 
Shares
 
$/share
 
Income
 
Shares
 
$/share
                         
Net income attributable to
Entergy Corporation
 
 
$529.1
 
 
189.0
 
 
$2.80 
 
 
$462.1
 
 
194.4
 
 
$2.38 
Average dilutive effect of:
                       
Stock options
 
 -
 
2.0
 
(0.03)
 
 -
 
2.1
 
(0.02)
Equity units
 
 -
 
 -
 
 - 
 
$ 3.2
 
1.7
 
(0.01)
                         
Diluted earnings per share
 
$529.1
 
191.0
 
$2.77 
 
$465.3
 
198.2
 
$2.35 

Entergy's stock option and other equity compensation plans are discussed in Note 12 to the financial statements in the Form 10-K.

Treasury Stock

During the six months ended June 30, 2010, Entergy Corporation issued 192,906 shares of its previously repurchased common stock to satisfy stock option exercises and other stock-based awards.  Also during the six months ended June 30, 2010, Entergy Corporation purchased 1,816,000 shares of common stock for a total purchase price of $137.7 million.

Retained Earnings

On July 30, 2010, Entergy Corporation's Board of Directors declared a common stock dividend of $0.83 per share, payable on September 1, 2010 to holders of record as of August 12, 2010.


NOTE 4.  REVOLVING CREDIT FACILITIES, LINES OF CREDIT, SHORT-TERM BORROWINGS, AND LONG-TERM DEBT (Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Entergy Corporation has in place a credit facility that expires in August 2012 and has a borrowing capacity of approximately $3.5 billion.  Entergy Corporation also has the ability to issue letters of credit against the total borrowing capacity of the credit facility.  The facility fee is currently 0.09% of the commitment amount.  Facility fees and interest rates on loans under the credit facility can fluctuate depending on the senior unsecured debt ratings of Entergy Corporation.  The weighted average interest rate for the six months ended June 30, 2010 was 0.713% on the drawn portion of the facility.  Following is a summary of the borrowings outstanding and capacity available under the facility as of June 30, 2010.

 
Capacity
 
 
Borrowings
 
Letters
of Credit
 
Capacity
Available
(In Millions)
             
$3,477 
 
$2,659
 
$25 
 
$793

Entergy Corporation's facility requires it to maintain a consolidated debt ratio of 65% or less of its total capitalization.  Entergy is in compliance with this covenant.  If Entergy fails to meet this ratio, or if Entergy Corporation or one of the Utility operating companies (except Entergy New Orleans) defaults on other indebtedness or is in bankruptcy or insolvency proceedings, an acceleration of the facility maturity date may occur.
 
36

 
Entergy Corporation and Subsidiaries
Notes to Financial Statements

Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, and Entergy Texas each had credit facilities available as of June 30, 2010 as follows:

 
 
Company
 
Expiration Date
 
 
Amount of
Facility
 
 
 
Interest Rate (a)
 
Amount Drawn
as of
June 30, 2010
                 
Entergy Arkansas
 
April 2011
 
$75.125 million (b)
 
2.75%
 
-
Entergy Gulf States Louisiana
 
August 2012
 
$100 million (c)
 
0.76%
 
-
Entergy Louisiana
 
August 2012
 
$200 million (d)
 
0.76%
 
-
Entergy Mississippi
 
May 2011
 
$35 million (e)
 
2.10%
 
-
Entergy Mississippi
 
May 2011
 
$25 million (e)
 
2.10%
 
-
Entergy Mississippi
 
May 2011
 
$10 million (e)
 
2.10%
 
-
Entergy Texas
 
August 2012
 
$100 million (f)
 
0.82%
 
-

(a)
The interest rate is the rate as of June 30, 2010 that would be applied to the outstanding borrowings under the facility.
(b)
The credit facility requires Entergy Arkansas to maintain a debt ratio of 65% or less of its total capitalization.  Borrowings under the Entergy Arkansas credit facility may be secured by a security interest in its accounts receivable.
(c)
The credit facility allows Entergy Gulf States Louisiana to issue letters of credit against the borrowing capacity of the facility.  As of June 30, 2010, no letters of credit were outstanding.  The credit facility requires Entergy Gulf States Louisiana to maintain a consolidated debt ratio of 65% or less of its total capitalization.  Pursuant to the terms of the credit agreement, the amount of debt assumed by Entergy Texas ($0 as of June 30, 2010 and $168 million as of December 31, 2009) is excluded from debt and capitalization in calculating the debt ratio.
(d)
The credit facility allows Entergy Louisiana to issue letters of credit against the borrowing capacity of the facility.  As of June 30, 2010, no letters of credit were outstanding.  The credit facility requires Entergy Louisiana to maintain a consolidated debt ratio of 65% or less of its total capitalization.
(e)
Borrowings under the Entergy Mississippi credit facilities may be secured by a security interest in its accounts receivable.  Entergy Mississippi is required to maintain a consolidated debt ratio of 65% or less of its total capitalization.
(f)
The credit facility allows Entergy Texas to issue letters of credit against the borrowing capacity of the facility.  As of June 30, 2010, no letters of credit were outstanding.  The credit facility requires Entergy Texas to maintain a consolidated debt ratio of 65% or less of its total capitalization.  Pursuant to the terms of the credit agreement securitization bonds are excluded from debt and capitalization in calculating the debt ratio.

The facility fees on the credit facilities range from 0.09% to 0.15% of the commitment amount.

The short-term borrowings of the Registrant Subsidiaries are limited to amounts authorized by the FERC.  The current FERC-authorized limits are effective through October 31, 2011 under a FERC order dated October 14, 2009. In addition to borrowings from commercial banks, these companies are authorized under a FERC order to borrow from the Entergy System money pool.  The money pool is an inter-company borrowing arrangement designed to reduce the Utility subsidiaries' dependence on external short-term borrowings.  Borrowings from the money pool and external borrowings combined may not exceed the FERC-authorized limits.  The following are the FERC-authorized limits for short-term borrowings and the outstanding short-term borrowings as of June 30, 2010 (aggregating both money pool and external short- term borrowings) for the Registrant Subsidiaries:
 
37

Entergy Corporation and Subsidiaries
Notes to Financial Statements
 

   
Authorized
 
Borrowings
   
(In Millions)
         
Entergy Arkansas
 
$250
 
-
Entergy Gulf States Louisiana
 
$200
 
-
Entergy Louisiana
 
$250
 
-
Entergy Mississippi
 
$175
 
-
Entergy New Orleans
 
$100
 
-
Entergy Texas
 
$200
 
-
System Energy
 
$200
 
-

Variable Interest Entities (Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, and System Energy)

See Note 12 to the financial statements for a discussion of the consolidation of the nuclear fuel company variable interest entities (VIE) effective in the first quarter 2010.  The variable interest entities have short-term credit facilities and also issue commercial paper to finance the acquisition and ownership of nuclear fuel as follows as of June 30, 2010:

 
 
 
 
Company
 
 
 
 
Expiration
Date
 
 
 
Amount
of
Facility
 
 
Weighted Average Interest
Rate on
Borrowings (a)
 
Amount
Outstanding
as of
June 30,
2010
 
                   
                   
Entergy Arkansas VIE
 
August 2010
 
$80
 
0.975%
 
$31.3
 
Entergy Gulf States Louisiana VIE
 
August 2010
 
$75
 
0.775%
 
26.3
 
Entergy Louisiana VIE
 
August 2010
 
$80
 
0.975%
 
55.2
 
System Energy VIE
 
August 2010
 
$85
 
0.985%
 
62.7
 

(a) Includes letter of credit fees and bank fronting fees on commercial paper issuances by the VIEs for Entergy Arkansas, Entergy Louisiana, and System Energy.  The VIE for Entergy Gulf States Louisiana does not issue commercial paper, but borrows directly on its bank credit facility.

The amount outstanding on these credit facilities and commercial paper issuances are presented as Notes payable on the balance sheets.  The commitment fees on the credit facilities are 0.10% of the commitment amount.  Each credit facility requires the respective lessee (Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, or System Energy) to maintain a consolidated debt ratio of 70% or less of its total capitalization.  In July 2010, each of these credit facilities were refinanced with new credit facilities, each in the same amount and with expiration dates of July 2013.
 
38

 
Entergy Corporation and Subsidiaries
Notes to Financial Statements

The variable interest entities had long-term notes payable that are included in long-term debt on the respective balance sheets as of June 30, 2010 as follows:

Company
 
Description
 
Amount
         
Entergy Arkansas VIE
 
5.60% Series G due September 2011
 
$35 million
Entergy Arkansas VIE
 
9% Series H due June 2013
 
$30 million
Entergy Arkansas VIE
 
5.69% Series I due July 2014
 
$70 million
Entergy Gulf States Louisiana VIE
 
5.56% Series N due May 2013
 
$75 million
Entergy Gulf States Louisiana VIE
 
5.41% Series O due July 2012
 
$60 million
Entergy Louisiana VIE
 
5.69% Series E due July 2014
 
$50 million
System Energy VIE
 
6.29% Series F due September 2013
 
$70 million
System Energy VIE
 
5.33% Series G due April 2015
 
$60 million

In accordance with regulatory treatment, interest on the nuclear fuel company variable interest entities' credit facilities, commercial paper, and long-term notes payable is included as fuel expense.

Debt Issuances and Redemptions

(Entergy Arkansas)

On June 1, 2010, Entergy Arkansas paid, at maturity, its $100 million of 4.50% Series first mortgage bonds.

(Entergy Louisiana)

In March 2010, Entergy Louisiana issued $150 million of 6.0% Series first mortgage bonds due March 2040.  Entergy Louisiana used the proceeds in April 2010, together with other available funds, to redeem, prior to maturity, all of its $150 million 7.60% Series first mortgage bonds, due April 2032.  Because the proceeds were deposited directly with a trustee and not held by Entergy Louisiana, the bond issuance and redemption are reported as non-cash financing activity on the cash flow statement.

On June 1, 2010, Entergy Louisiana paid, at maturity, its $55 million of 4.670% Series first mortgage bonds.

(Entergy Mississippi)

In April 2010, Entergy Mississippi issued $80 million of 6.20% Series first mortgage bonds due April 2040.  Entergy Mississippi used the proceeds, together with other available funds, to redeem, prior to maturity, all of its $100 million 7.25% Series first mortgage bonds, due December 2032.

(Entergy New Orleans)

Pursuant to its plan of reorganization, in May 2007, Entergy New Orleans issued notes due in three years in satisfaction of its affiliate prepetition accounts payable (approximately $74 million, including interest), including its indebtedness to the Entergy System money pool.  In May 2010, Entergy New Orleans repaid, at maturity, the notes payable.

On July 1, 2010, Entergy New Orleans paid, at maturity, its $30 million of 4.98% Series first mortgage bonds.
 
39

Entergy Corporation and Subsidiaries
Notes to Financial Statements
 

(Entergy Texas)

In May 2010, Entergy Texas issued $200 million of 3.60% Series mortgage bonds due June 2015.  Entergy Texas used a portion of the proceeds to pay prior to maturity Entergy Texas' remaining obligations (with interest rates ranging from 4.875% to 6.18% per annum and maturities ranging from November 1, 2011 to March 1, 2035) pursuant to the debt assumption agreement with Entergy Gulf States Louisiana.

(Entergy Corporation)

In May 2010, Entergy Corporation repaid, at maturity, its $75 million 6.58% notes payable.

In June 2010, Entergy Corporation repaid, at maturity, its $60 million bank term loan.

Fair Value

The book value and the fair value of long-term debt for Entergy Corporation and the Registrant Subsidiaries as of June 30, 2010 are as follows:

   
Book Value
of Long-Term
Debt (a)
 
Fair Value
of Long-Term
Debt (a) (b)
   
(In Thousands)
         
Entergy
 
$10,801,738
 
$11,162,285
Entergy Arkansas
 
$1,472,960
 
$1,510,130
Entergy Gulf States Louisiana
 
$1,592,307
 
$1,667,817
Entergy Louisiana
 
$1,533,490
 
$1,619,053
Entergy Mississippi
 
$825,341
 
$803,312
Entergy New Orleans
 
$197,264
 
$204,626
Entergy Texas
 
$1,680,776
 
$1,852,939
System Energy
 
$608,151
 
$619,411

(a)
The values exclude lease obligations of $224 million at Entergy Louisiana and $225 million at System Energy, long-term DOE obligations of $181 million at Entergy Arkansas, and the note payable to NYPA of $179 million at Entergy, and include debt due within one year.
(b)
The fair value is determined by nationally recognized investment banking firms.
 
40

 
Entergy Corporation and Subsidiaries
Notes to Financial Statements


NOTE 5.  STOCK-BASED COMPENSATION (Entergy Corporation)

Entergy grants stock options, which are described more fully in Note 12 to the financial statements in the Form 10-K.  Awards under Entergy's plans generally vest over three years.

The following table includes financial information for stock options for the second quarter and six months ended June 30 for each of the years presented:

 
2010
 
2009
 
(In Millions)
       
Compensation expense included in Entergy's Net Income for the second quarter
$3.7
 
$4.2
Tax benefit recognized in Entergy's Net Income for the second quarter
$1.4
 
$1.6
       
Compensation expense included in Entergy's Net Income for the six months ended June 30,
$7.6
 
$8.5
Tax benefit recognized in Entergy's Net Income for the six months ended June 30,
$2.9
 
$3.3
Compensation cost capitalized as part of fixed assets and inventory as of June 30,
$1.4
 
$1.6

Entergy granted 1,407,900 stock options during the first quarter 2010 with a weighted-average fair value of $13.18.  At June 30, 2010, there were 12,404,064 stock options outstanding with a weighted-average exercise price of $70.73.  The aggregate intrinsic value of the stock options outstanding at June 30, 2010 was $11.1 million.


NOTE 6.  RETIREMENT AND OTHER POSTRETIREMENT BENEFITS (Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Components of Net Pension Cost

Entergy's qualified pension cost, including amounts capitalized, for the second quarters of 2010 and 2009, included the following components:

   
2010
 
2009
   
(In Thousands)
         
Service cost - benefits earned during the period
 
$26,239 
 
$22,412 
Interest cost on projected benefit obligation
 
57,802 
 
54,543 
Expected return on assets
 
(64,902)
 
(62,305)
Amortization of prior service cost
 
1,164 
 
1,249 
Amortization of loss
 
16,475 
 
5,600 
Net pension costs
 
$36,778 
 
$21,499 

Entergy's qualified pension cost, including amounts capitalized, for the six months ended June 30, 2010 and 2009, included the following components:

   
2010
 
2009
   
(In Thousands)
         
Service cost - benefits earned during the period
 
$52,478 
 
$44,824 
Interest cost on projected benefit obligation
 
115,604 
 
109,086 
Expected return on assets
 
(129,804)
 
(124,610)
Amortization of prior service cost
 
2,328 
 
2,498 
Amortization of loss
 
32,950 
 
11,200 
Net pension costs
 
$73,556 
 
$42,998 

 
41

Entergy Corporation and Subsidiaries
Notes to Financial Statements
 
The Registrant Subsidiaries' qualified pension cost, including amounts capitalized, for the second quarters of 2010 and 2009, included the following components:

 
 
2010
 
 
Entergy
Arkansas
 
Entergy
Gulf States
Louisiana
 
 
Entergy
Louisiana
 
 
Entergy
 Mississippi
 
 
Entergy
New Orleans
 
 
Entergy
Texas
 
 
System
Energy
   
(In Thousands)
Service cost - benefits earned
                           
  during the period
 
$3,944 
 
$2,116 
 
$2,443 
 
$1,163 
 
$516 
 
$1,067 
 
$1,033 
Interest cost on projected
                           
  benefit obligation
 
12,319 
 
6,094 
 
7,135 
 
3,807 
 
1,510
 
3,967 
 
2,252 
Expected return on assets
 
(12,659)
 
(7,688)
 
(8,194)
 
(4,313)
 
(1,809)
 
(5,137)
 
(2,952)
Amortization of prior service
                           
  cost
 
196 
 
75 
 
119 
 
79 
 
44 
 
59 
 
Amortization of loss
 
4,126 
 
1,906 
 
2,151 
 
1,091 
 
636 
 
802 
 
132 
Net pension cost
 
$7,926 
 
$2,503 
 
$3,654 
 
$1,827 
 
$897 
 
$758 
 
$473 


 
 
2009
 
 
Entergy
Arkansas
 
Entergy
Gulf States
Louisiana
 
 
Entergy
Louisiana
 
 
Entergy
Mississippi
 
 
Entergy
New Orleans
 
 
Entergy
Texas
 
 
System
Energy
   
(In Thousands)
Service cost - benefits earned
                           
  during the period
 
$3,400 
 
$1,748 
 
$1,974 
 
$995 
 
$425 
 
$917 
 
$880 
Interest cost on projected
                           
  benefit obligation
 
11,761 
 
5,279 
 
6,940 
 
3,676 
 
1,470
 
3,935 
 
2,139 
Expected return on assets
 
(12,187)
 
(7,516)
 
(8,197)
 
(4,236)
 
(1,815)
 
(5,185)
 
(2,766)
Amortization of prior service
                           
  cost
 
212 
 
110 
 
119 
 
85 
 
52 
 
80 
 
Amortization of loss
 
1,764 
 
79 
 
703 
 
324 
 
305 
 
43 
 
109 
Net pension cost/(income)
 
$4,950 
 
($300)
 
$1,539 
 
$844 
 
$437 
 
($210)
 
$371 

The Registrant Subsidiaries' qualified pension cost, including amounts capitalized, for the six months ended June 30, 2010 and 2009, included the following components:

 
 
2010
 
 
Entergy
Arkansas
 
Entergy
Gulf States
Louisiana
 
 
Entergy
Louisiana
 
 
Entergy
 Mississippi
 
 
Entergy
New Orleans
 
 
Entergy
Texas
 
 
System
Energy
   
(In Thousands)
Service cost - benefits earned
                           
  during the period
 
$7,888 
 
$4,232 
 
$4,886 
 
$2,326 
 
$1,032 
 
$2,134 
 
$2,066 
Interest cost on projected
                           
  benefit obligation
 
24,638 
 
12,188 
 
14,270 
 
7,614 
 
3,020
 
7,934 
 
4,504 
Expected return on assets
 
(25,318)
 
(15,376)
 
(16,388)
 
(8,626)
 
(3,618)
 
(10,274)
 
(5,904)
Amortization of prior service
                           
  cost
 
392 
 
150 
 
238 
 
158 
 
88 
 
118 
 
16 
Amortization of loss
 
8,252 
 
3,812 
 
4,302 
 
2,182 
 
1,272 
 
1,604 
 
264 
Net pension cost
 
$15,852 
 
$5,006 
 
$7,308 
 
$3,654 
 
$1,794 
 
$1,516 
 
$946 
 
42

 
Entergy Corporation and Subsidiaries
Notes to Financial Statements

 
 
2009
 
 
Entergy
Arkansas
 
Entergy
Gulf States
Louisiana
 
 
Entergy
Louisiana
 
 
Entergy
Mississippi
 
 
Entergy
New Orleans
 
 
Entergy
Texas
 
 
System
Energy
   
(In Thousands)
Service cost - benefits earned
                           
  during the period
 
$6,800 
 
$3,496 
 
$3,948 
 
$1,990 
 
$850 
 
$1,834 
 
$1,760 
Interest cost on projected
                           
  benefit obligation
 
23,522 
 
10,558 
 
13,880 
 
7,352 
 
2,940
 
7,870 
 
4,278 
Expected return on assets
 
(24,374)
 
(15,032)
 
(16,394)
 
(8,472)
 
(3,630)
 
(10,370)
 
(5,532)
Amortization of prior service
                           
  cost
 
424 
 
220 
 
238 
 
170 
 
104 
 
160 
 
18 
Amortization of loss
 
3,528 
 
158 
 
1,406 
 
648 
 
610 
 
86 
 
218 
Net pension cost/(income)
 
$9,900 
 
($600)
 
$3,078 
 
$1,688 
 
$874 
 
($420)
 
$742 
 
Entergy recognized $11.5 million and $4.4 million in pension cost for its non-qualified pension plans in the second quarters of 2010 and 2009, respectively.  In the second quarter 2010, Entergy recognized a $6.9 million settlement charge related to the payment of lump sum benefits out of the plan that is included in the non-qualified pension plan cost above.  Entergy recognized $16.1 million and $8.8 million in pension cost for its non-qualified pension plans for the six months ended June 30, 2010 and 2009, respectively, including the $6.9 million settlement charge recognized in the second quarter 2010.
 
The Registrant Subsidiaries recognized the following pension cost for their non-qualified pension plans in the second quarters of 2010 and 2009:

   
 
Entergy
Arkansas
 
Entergy
Gulf States
Louisiana
 
 
Entergy
Louisiana
 
 
Entergy
Mississippi
 
 
Entergy
New Orleans
 
 
Entergy
Texas
   
(In Thousands)
Non-qualified pension cost
  second quarter 2010
 
$189
 
 
$41 
 
  $6   
$51 
 
 
$6 
 
 
$175
 
Settlement charge recognized
  in the second quarter 2010
  included in cost above
 
 
 
$86 
 
 
 
$  - 
 
 
 
$  - 
 
 
 
$  - 
 
 
 
$  - 
 
 
 
$5 
Non-qualified pension cost
  second quarter 2009
 
 
$99 
 
 
$97 
 
 
$6 
 
 
$43 
 
 
$20 
 
 
$185 

The Registrant Subsidiaries recognized the following pension cost for their non-qualified pension plans for the six months ended June 30, 2010 and 2009:
 
   
 
Entergy
Arkansas
 
Entergy
Gulf States
Louisiana
 
 
Entergy
Louisiana
 
 
Entergy
Mississippi
 
 
Entergy
New Orleans
 
 
Entergy
Texas
   
(In Thousands)
Non-qualified pension cost six
  months ended June 30, 2010
 
$290 
 
 
$82 
 
  $6   
$101 
 
 
$6 
 
 
$345 
 
Settlement charge recognized
  in the six months ended
  June 30, 2010 included in cost
  above
 
 
 
$86 
 
 
 
$  - 
 
 
 
$  - 
 
 
 
$  - 
 
 
 
$  - 
 
 
 
$5 
Non-qualified pension cost six
  months ended June 30, 2009
 
 
$198 
 
 
$194 
 
 
$12 
 
 
$86 
 
 
$40 
 
 
$370 
 
43

Entergy Corporation and Subsidiaries
Notes to Financial Statements
 



Components of Net Other Postretirement Benefit Cost

Entergy's other postretirement benefit cost, including amounts capitalized, for the second quarters of 2010 and 2009, included the following components:

   
2010
 
2009
   
(In Thousands)
         
Service cost - benefits earned during the period
 
$13,078 
 
$11,691 
Interest cost on APBO
 
19,020 
 
18,816 
Expected return on assets
 
(6,553)
 
(5,871)
Amortization of transition obligation
 
932 
 
933 
Amortization of prior service cost
 
(3,015)
 
(4,024)
Amortization of loss
 
4,317 
 
4,743 
Net other postretirement benefit cost
 
$27,779 
 
$26,288 
 
Entergy's other postretirement benefit cost, including amounts capitalized, for the six months ended June 30, 2010 and 2009, included the following components:

   
2010
 
2009
   
(In Thousands)
         
Service cost - benefits earned during the period
 
$26,156 
 
$23,382 
Interest cost on APBO
 
38,040 
 
37,632 
Expected return on assets
 
(13,106)
 
(11,742)
Amortization of transition obligation
 
1,864 
 
1,866 
Amortization of prior service cost
 
(6,030)
 
(8,048)
Amortization of loss
 
8,634 
 
9,486 
Net other postretirement benefit cost
 
$55,558 
 
$52,576 

The Registrant Subsidiaries' other postretirement benefit cost, including amounts capitalized, for the second quarters of 2010 and 2009, included the following components:

 
 
2010
 
 
Entergy
Arkansas
 
Entergy
Gulf States
Louisiana
 
 
Entergy
Louisiana
 
 
Entergy
Mississippi
 
 
Entergy
New Orleans
 
 
Entergy
Texas
 
 
System
Energy
   
(In Thousands)
Service cost - benefits earned
                           
  during the period
 
$1,843 
 
$1,370 
 
$1,371 
 
$550 
 
$347 
 
$697 
 
$563 
Interest cost on APBO
 
3,629 
 
2,144 
 
2,269 
 
1,093 
 
900 
 
1,582 
 
641 
Expected return on assets
 
(2,445)
 
 
 
(888)
 
(725)
 
(1,718)
 
(468)
Amortization of transition
                           
  obligation
 
205 
 
60 
 
96 
 
88 
 
415 
 
66 
 
Amortization of prior service
                           
  cost
 
(197)
 
(77)
 
117 
 
(62)
 
90 
 
19 
 
(191)
Amortization of loss
 
1,690 
 
663 
 
609 
 
476 
 
274 
 
752 
 
325 
Net other postretirement
                           
  benefit cost
 
$4,725 
 
$4,160 
 
$4,462 
 
$1,257 
 
$1,301 
 
$1,398 
 
$872 
                             
 
44

 
Entergy Corporation and Subsidiaries
Notes to Financial Statements
 
 
2009
 
 
Entergy
Arkansas
 
Entergy
Gulf States
Louisiana
 
 
Entergy
Louisiana
 
 
Entergy
Mississippi
 
 
Entergy
New Orleans
 
 
Entergy
Texas
 
 
System
Energy
   
(In Thousands)
Service cost - benefits earned
                           
  during the period
 
$1,765 
 
$1,196 
 
$1,147 
 
$530 
 
$311 
 
$619 
 
$513 
Interest cost on APBO
 
3,759 
 
2,005 
 
2,297 
 
1,173 
 
967 
 
1,490 
 
605 
Expected return on assets
 
(2,143)
 
 
 
(757)
 
(684)
 
(1,556)
 
(414)
Amortization of transition
                           
  obligation
 
205 
 
60 
 
96 
 
88 
 
416 
 
66 
 
Amortization of prior service
                           
  cost
 
(197)
 
(77)
 
117 
 
(62)
 
90 
 
19 
 
(245)
Amortization of loss
 
2,087 
 
494 
 
553 
 
657 
 
381 
 
799 
 
320 
Net other postretirement
                           
  benefit cost
 
$5,476 
 
$3,678 
 
$4,210 
 
$1,629 
 
$1,481 
 
$1,437 
 
$781 

The Registrant Subsidiaries' other postretirement benefit cost, including amounts capitalized, for the six months ended June 30, 2010 and 2009, included the following components:

 
 
2010
 
 
Entergy
Arkansas
 
Entergy
Gulf States
Louisiana
 
 
Entergy
Louisiana
 
 
Entergy
Mississippi
 
 
Entergy
New Orleans
 
 
Entergy
Texas
 
 
System
Energy
   
(In Thousands)
Service cost - benefits earned
                           
  during the period
 
$3,686 
 
$2,740 
 
$2,742 
 
$1,100 
 
$694 
 
$1,394 
 
$1,126 
Interest cost on APBO
 
7,258 
 
4,288 
 
4,538 
 
2,186 
 
1,800 
 
3,164 
 
1,282 
Expected return on assets
 
(4,890)
 
 
 
(1,776)
 
(1,450)
 
(3,436)
 
(936)
Amortization of transition
                           
  obligation
 
410 
 
120 
 
192 
 
176 
 
830 
 
132 
 
Amortization of prior service
                           
  cost
 
(394)
 
(154)
 
234 
 
(124)
 
180 
 
38 
 
(382)
Amortization of loss
 
3,380 
 
1,326 
 
1,218 
 
952 
 
548 
 
1,504 
 
650 
Net other postretirement
                           
  benefit cost
 
$9,450 
 
$8,320 
 
$8,924 
 
$2,514 
 
$2,602 
 
$2,796 
 
$1,744 
                             
 
45

Entergy Corporation and Subsidiaries
Notes to Financial Statements
 

 
 
2009
 
 
Entergy
Arkansas
 
Entergy
Gulf States
Louisiana
 
 
Entergy
Louisiana
 
 
Entergy
Mississippi
 
 
Entergy
New Orleans
 
 
Entergy
Texas
 
 
System
Energy
   
(In Thousands)
Service cost - benefits earned
                           
  during the period
 
$3,530 
 
$2,392 
 
$2,294 
 
$1,060 
 
$622 
 
$1,238 
 
$1,026 
Interest cost on APBO
 
7,518 
 
4,010 
 
4,594 
 
2,346 
 
1,934 
 
2,980 
 
1,210 
Expected return on assets
 
(4,286)
 
 
 
(1,514)
 
(1,368)
 
(3,112)
 
(828)
Amortization of transition
                           
  obligation
 
410 
 
120 
 
192 
 
176 
 
832 
 
132 
 
Amortization of prior service
                           
  cost
 
(394)
 
(154)
 
234 
 
(124)
 
180 
 
38 
 
(490)
Amortization of loss
 
4,174 
 
988 
 
1,106 
 
1,314 
 
762 
 
1,598 
 
640 
Net other postretirement
                           
  benefit cost
 
$10,952 
 
$7,356 
 
$8,420 
 
$3,258 
 
$2,962 
 
$2,874 
 
$1,562 

Employer Contributions

Based on current assumptions, Entergy expects to contribute $254 million to its qualified pension plans in 2010.  Guidance pursuant to the Pension Protection Act of 2006 rules, effective for the 2009 plan year and beyond, may affect the level of Entergy’s pension contributions in the future.  As of the end of July 2010, Entergy had contributed $159 million to its pension plans.  Therefore, Entergy presently anticipates contributing an additional $95 million to fund its qualified pension plans in 2010.
 
Based on current assumptions, the Registrant Subsidiaries expect to contribute the following to qualified pension plans in 2010:

   
 
Entergy
Arkansas
 
Entergy
Gulf States
Louisiana
 
 
Entergy
Louisiana
 
 
Entergy
Mississippi
 
 
Entergy
New Orleans
 
 
Entergy
Texas
 
 
System
Energy
   
(In Thousands)
Expected 2010 pension
  contributions
 
 
$71,177
 
 
$18,858
 
 
$35,909
 
 
$17,792
 
 
$6,961
 
 
$10,635
 
 
$16,094
Pension contributions made
  through July 2010
 
 
$46,689
 
 
$9,919
 
 
$19,423
 
 
$11,055
 
 
$3,810
 
 
$5,351
 
 
$9,916
Remaining estimated pension
  contributions to be made in 2010
 
 
$24,488
 
 
$8,939
 
 
$16,486
 
 
$6,737
 
 
$3,151
 
 
$5,284
 
 
$6,178

Medicare Prescription Drug, Improvement and Modernization Act of 2003 (Medicare Act)

Based on actuarial analysis, the estimated effect of future Medicare subsidies reduced the December 31, 2009 Accumulated Postretirement Benefit Obligation (APBO) by $215 million, and reduced the second quarter 2010 and 2009 other postretirement benefit cost by $6.6 million and $6.0 million, respectively.  It reduced the six months ended June 30, 2010 and 2009 other postretirement benefit cost by $13.3 million and $12.0 million, respectively.  In the second quarter 2010, Entergy received $0.6 million in Medicare subsidies for prescription drug claims.  In the six months ended June 30, 2010, Entergy received $1.8 million in Medicare subsidies for prescription drug claims.

Based on actuarial analysis, the estimated effect of future Medicare subsidies reduced the December 31, 2009 APBO and the second quarters 2010 and 2009 other postretirement benefit cost and the six months ended June 30, 2010 and 2009 other postretirement benefit cost for the Registrant Subsidiaries as follows:
 
46

 
Entergy Corporation and Subsidiaries
Notes to Financial Statements

   
 
Entergy
Arkansas
 
Entergy
Gulf States
Louisiana
 
 
Entergy
Louisiana
 
 
Entergy
Mississippi
 
Entergy
New
Orleans
 
 
Entergy
Texas
 
 
System
Energy
   
(In Thousands)
Reduction in 12/31/2009 APBO
 
($45,809)
 
($22,227)
 
($25,443)
 
($14,824)
 
($9,798)
 
($16,652)
 
($7,965)
Reduction in second quarter 2010
                           
  other postretirement benefit cost
 
($1,314)
 
($850)
 
($786)
 
($412)
 
($268)
 
($277)
 
($267)
Reduction in second quarter 2009
                           
  other postretirement benefit cost
 
($1,235)
 
($814)
 
($695)
 
($391)
 
($261)
 
($240)
 
($231)
Reduction in six months ended
                           
  June 30, 2010 other
                           
  postretirement benefit cost
 
($2,628)
 
($1,700)
 
($1,572)
 
($824)
 
($536)
 
($554)
 
($534)
Reduction in six months ended
                           
  June 30, 2009 other
                           
  postretirement benefit cost
 
($2,470)
 
($1,628)
 
($1,390)
 
($782)
 
($522)
 
($480)
 
($462)
Medicare subsidies received in the
                           
  second quarter 2010
 
$136 
 
$75 
 
$87 
 
$45 
 
$45 
 
$67 
 
$14 
Medicare subsidies received in the
                           
  six months ended June 30, 2010
 
$405 
 
$232 
 
$261 
 
$139 
 
$137 
 
$202 
 
$44 

For further information on the Medicare Act refer to Note 11 to the financial statements in the Form 10-K.


NOTE 7.  BUSINESS SEGMENT INFORMATION (Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Entergy Corporation

Entergy's reportable segments as of June 30, 2010 are Utility and Non-Utility Nuclear.  Utility generates, transmits, distributes, and sells electric power in portions of Arkansas, Louisiana, Mississippi, and Texas, and provides natural gas utility service in portions of Louisiana.  Non-Utility Nuclear owns and operates six nuclear power plants and is primarily focused on selling electric power produced by those plants to wholesale customers.  "All Other" includes the parent company, Entergy Corporation, and other business activity, including the non-nuclear wholesale assets business, and earnings on the proceeds of sales of previously-owned businesses.

Entergy's segment financial information for the second quarters of 2010 and 2009 is as follows:
 
 
 
 
Utility
 
 
Non-Utility
Nuclear*
 
 
 
All Other*
 
 
 
Eliminations
 
 
 
Consolidated
 
(In Thousands)
2010
                 
Operating revenues
$2,246,108 
 
$580,852
 
$43,283 
 
($7,293)
 
$2,862,950 
Income taxes (benefit)
$141,047 
 
$71,484
 
($8,624)
 
$- 
 
$203,907 
Consolidated net income (loss)
$230,173 
 
$119,500
 
($11,031)
 
($18,359)
 
$320,283 
                   
2009
                 
Operating revenues
$1,947,831 
 
$544,929
 
$34,589 
 
($6,560)
 
$2,520,789 
Income taxes (benefit)
$104,700 
 
$35,959
 
($50,018)
 
$- 
 
$90,641 
Consolidated net income
$151,575 
 
$80,211
 
$18,384 
 
($18,359)
 
$231,811 
 
47

Entergy Corporation and Subsidiaries
Notes to Financial Statements
 

Entergy's segment financial information for the six months ended June 30, 2010 and 2009 is as follows:

 
 
 
Utility
 
 
Non-Utility
Nuclear*
 
 
 
All Other*
 
 
 
Eliminations
 
 
 
Consolidated
 
(In Thousands)
2010
                 
Operating revenues
$4,349,937 
 
$1,194,627
 
$91,864 
 
($14,132)
 
$5,622,296 
Income taxes (benefit)
$231,017 
 
$157,689
 
($37,114)
 
$- 
 
$351,592 
Consolidated net income (loss)
$373,144 
 
$213,726
 
($11,054)
 
($36,719)
 
$539,097 
Total assets
$28,613,090 
 
$8,716,935
 
$2,619,175 
 
($2,197,126)
 
$37,752,074 
                   
2009
                 
Operating revenues
$4,050,037 
 
$1,201,116
 
$72,331 
 
($13,583)
 
$5,309,901 
Income taxes (benefit)
$178,163 
 
$138,036
 
($62,513)
 
$- 
 
$253,686 
Consolidated net income (loss)
$267,544 
 
$261,092
 
($19,774)
 
($36,718)
 
$472,144 
Total assets
$29,010,123 
 
$8,316,584
 
$1,162,840 
 
($2,004,327)
 
$36,485,220 

Businesses marked with * are sometimes referred to as the "competitive businesses," with the exception of the parent company, Entergy Corporation.  Eliminations are primarily intersegment activity.  Almost all of Entergy's goodwill is related to the Utility segment.

On April 5, 2010, Entergy announced that, effective immediately, it plans to unwind the business infrastructure associated with its proposed plan to spin-off its Non-Utility Nuclear business.  As a result of the plan to unwind the business infrastructure, Entergy has recorded expenses in the Non-Utility Nuclear segment, almost entirely in the first quarter 2010, for the write-off of certain capitalized costs incurred in connection with the planned spin-off transaction.  Other operation and maintenance expenses include the write-off of $32 million of capital costs, primarily for software that will not be utilized.  Interest charges include the write-off of $39 million of debt financing costs, primarily incurred for Enexus's $1.2 billion credit facility.   Entergy expects that it will incur approximately $40 million, after-tax, in additional expenses in unwinding this business, primarily through the remainder of 2010, including additional write-offs, dis-synergies, and certain other costs.

Registrant Subsidiaries

The Registrant Subsidiaries have one reportable segment, which is an integrated utility business, except for System Energy, which is an electricity generation business.  The Registrant Subsidiaries' operations are managed on an integrated basis because of the substantial effect of cost-based rates and regulatory oversight on the business process, cost structures, and operating results.

 
48

 
Entergy Corporation and Subsidiaries
Notes to Financial Statements

NOTE 8.  RISK MANAGEMENT AND FAIR VALUES (Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Market and Commodity Risks

In the normal course of business, Entergy is exposed to a number of market and commodity risks.  Market risk is the potential loss that Entergy may incur as a result of changes in the market or fair value of a particular instrument or commodity.  All financial and commodity-related instruments, including derivatives, are subject to market risk.  Entergy is subject to a number of commodity and market risks, including:

Type of Risk
 
Affected Businesses
     
Power price risk
 
Utility, Non-Utility Nuclear, Non-nuclear wholesale assets
Fuel price risk
 
Utility, Non-Utility Nuclear, Non-nuclear wholesale assets
Foreign currency exchange rate risk
 
Utility, Non-Utility Nuclear, Non-nuclear wholesale assets
Equity price and interest rate risk - investments
 
Utility, Non-Utility Nuclear

Entergy manages a portion of these risks using derivative instruments, some of which are classified as cash flow hedges due to their financial settlement provisions while others are classified as normal purchase/normal sales transactions due to their physical settlement provisions.  Normal purchase/normal sale risk management tools include power purchase and sales agreements and fuel purchase agreements, capacity contracts, and tolling agreements.  Financially-settled cash flow hedges can include natural gas and electricity futures, forwards, swaps, and options; foreign currency forwards; and interest rate swaps.  Entergy enters into derivatives only to manage natural risks inherent in its physical or financial assets or liabilities.

Entergy manages fuel price volatility for its Louisiana jurisdictions (Entergy Gulf States Louisiana, Entergy Louisiana, and Entergy New Orleans) and Entergy Mississippi primarily through the purchase of short-term natural gas swaps.  These swaps are marked-to-market with offsetting regulatory assets or liabilities.  The notional volumes of these swaps are based on a portion of projected annual exposure to gas for electric generation and projected winter purchases for gas distribution at Entergy Gulf States Louisiana and Entergy New Orleans.
 
Entergy's exposure to market risk is determined by a number of factors, including the size, term, composition, and diversification of positions held, as well as market volatility and liquidity.  For instruments such as options, the time period during which the option may be exercised and the relationship between the current market price of the underlying instrument and the option's contractual strike or exercise price also affects the level of market risk.  A significant factor influencing the overall level of market risk to which Entergy is exposed is its use of hedging techniques to mitigate such risk.  Entergy manages market risk by actively monitoring compliance with stated risk management policies as well as monitoring the effectiveness of its hedging policies and strategies.  Entergy's ris k management policies limit the amount of total net exposure and rolling net exposure during the stated periods.  These policies, including related risk limits, are regularly assessed to ensure their appropriateness given Entergy's objectives.
 
49

Entergy Corporation and Subsidiaries
Notes to Financial Statements
 

Derivatives

The fair values of Entergy's derivative instruments in the consolidated balance sheet as of June 30, 2010 are as follows:

Instrument
 
Balance Sheet Location
 
Fair Value
 
Business
             
Derivatives designated as hedging instruments
           
             
Assets:
           
Electricity futures, forwards, and swaps
 
Prepayments and other
(current portion)
 
 
$181 million
 
 
Non-Utility Nuclear
             
Electricity futures, forwards, and swaps
 
Other deferred debits and other assets
(non-current portion)
 
 
$127 million
 
 
Non-Utility Nuclear
             
Liabilities:
           
Electricity futures, forwards, and swaps
 
Other current liabilities
(current portion)
 
 
$3 million
 
 
Non-Utility Nuclear
             
Electricity futures, forwards, and swaps
 
Other non-current liabilities
(non-current portion)
 
 
$8 million
 
 
Non-Utility Nuclear
             
Derivatives not designated as hedging instruments
           
             
Liabilities:
           
Natural gas swaps
 
Other current liabilities
 
$22 million
 
Utility

The fair values of Entergy's derivative instruments in the consolidated balance sheet as of December 31, 2009 are as follows:

Instrument
 
Balance Sheet Location
 
Fair Value
 
Business
             
Derivatives designated as hedging instruments
           
             
Assets:
           
Electricity futures, forwards, and swaps
 
Prepayments and other
(current portion)
 
 
$109 million
 
 
Non-Utility Nuclear
             
Electricity futures, forwards, and swaps
 
Other deferred debits and other assets
(non-current portion)
 
 
$91 million
 
 
Non-Utility Nuclear
             
Derivatives not designated as hedging instruments
           
             
Assets:
           
Natural gas swaps
 
Prepayments and other
 
$8 million
 
Utility
 
50

 
Entergy Corporation and Subsidiaries
Notes to Financial Statements

The effect of Entergy's derivative instruments designated as cash flow hedges on the consolidated statements of income for the three months ended June 30, 2010 and 2009 is as follows:

 
 
 
Instrument
 
 
Amount of gain (loss) recognized in OCI (effective portion)
 
 
 
 
Statement of Income location
 
Amount of gain (loss) reclassified from accumulated OCI into income (effective portion)
             
2010
           
             
Electricity futures, forwards,
and swaps
 
 
($71) million
 
Competitive businesses operating revenues
 
 
$67 million
             
2009
           
             
Electricity futures, forwards,
and swaps
 
 
$36 million
 
Competitive businesses operating revenues
 
 
$76 million
             

The effect of Entergy's derivative instruments designated as cash flow hedges on the consolidated statements of income for the six months ended June 30, 2010 and 2009 is as follows:

 
 
 
Instrument
 
 
Amount of gain (loss) recognized in OCI (effective portion)
 
 
 
 
Statement of Income location
 
Amount of gain (loss) reclassified from accumulated OCI into income (effective portion)
             
2010
           
             
Electricity futures, forwards,
and swaps
 
 
$197 million
 
Competitive businesses operating revenues
 
 
$103 million
             
2009
           
             
Electricity futures, forwards,
and swaps
 
 
$237 million
 
Competitive businesses operating revenues
 
 
$133 million
             

Electricity over-the-counter swaps that financially settle against day-ahead power pool prices are used to manage price exposure for Non-Utility Nuclear generation.  Based on market prices as of June 30, 2010, cash flow hedges relating to power sales totaled $297 million of net gains, of which approximately $178 million are expected to be reclassified from accumulated other comprehensive income (OCI) to operating revenues in the next twelve months.  The actual amount reclassified from accumulated OCI, however, could vary due to future changes in market prices.  Gains totaling approximately $67 million and $103 million were realized on the maturity of cash flow hedges for the three months ended June 30, 2010 and for the six months ended June 30, 2010, respectively . Unrealized gains or losses recorded in OCI result from hedging power output at the Non-Utility Nuclear power plants.  The related gains or losses from hedging power are included in operating revenues when realized.  The maximum length of time over which Entergy is currently hedging the variability in future cash flows for forecasted power transactions at June 30, 2010 is approximately four years.  Planned generation currently sold forward from Non-Utility Nuclear power plants is 91% for the remaining two quarters of 2010 of which approximately 40% is sold under financial hedges and the remainder under normal purchase/sale contracts.  The ineffective portion of the change in the value of Entergy's cash flow hedges during the three and six months ended June 30, 2010 and 2009 was insignificant.  Certain of the agreements to sell the power produced by Entergy's Non-Utility Nuclear power plants contain provisions that require an Entergy subsidiary to provide col lateral to secure its obligations when the current market prices exceed the contracted power prices.   The primary form of collateral to satisfy these requirements is an Entergy Corporation guaranty.  As of June 30, 2010, hedge contracts with
 
 
51

Entergy Corporation and Subsidiaries
Notes to Financial Statements
 
three counterparties were in a liability position (approximately $11 million total), but were significantly below the amounts of guarantees provided under their contracts and no cash collateral was required.  If the Entergy Corporation credit rating falls below investment grade, the impact of the corporate guarantee is ignored and Entergy would have to post collateral equal to the estimated outstanding liability under the contract at the applicable date.  From time to time, Entergy may effectively liquidate a cash flow hedge instrument by entering into a contract offsetting the original hedge, and then de-designating the original hedge.  Gains or losses accumulated in OCI prior to de-designation continue to be deferred in OCI until they are included in income as the original hedged transaction occurs.  From the point of de-designation, the gains or losses on the original hedge and the offsetti ng contract are recorded to assets or liabilities on the balance sheet and offset as they flow through to earnings.

           Natural gas over-the-counter swaps that financially settle against NYMEX futures are used to manage fuel price volatility for the Utility's Louisiana and Mississippi customers.  All benefits or costs of the program are recorded in fuel costs.  The total volume of natural gas swaps outstanding as of June 30, 2010 is 32,940,000 MMBtu for Entergy, 8,380,000 MMBtu for Entergy Gulf States Louisiana, 14,390,000 MMBtu for Entergy Louisiana, and 9,660,000 MMBtu for Entergy Mississippi, and 510,000 MMBtu for Entergy New Orleans.  Credit support for these natural gas swaps is covered by master agreements that do not require collateralization based on mark-to-market value, but do carry adequate assurance language that may lead to collateralization requ ests.
 
The effect of Entergy's derivative instruments not designated as hedging instruments on the consolidated statements of income for the three months ended June 30, 2010 and 2009 is as follows:

 
 
Instrument
 
Amount of gain (loss)
recognized in OCI
(de-designated hedges)
 
 
Statement of Income
Location
 
 
Amount of gain
recorded in income
             
2010
           
             
Natural gas swaps
 
 
$ -
 
Fuel, fuel-related expenses, and gas purchased for resale
 
 
$22 million
             
Electricity futures, forwards, and swaps de-designated as hedged items
 
 
$3 million
 
Competitive business operating revenues
 
 
$ -
             
2009
           
             
Natural gas swaps
 
 
$ -
 
Fuel, fuel-related expenses, and gas purchased for resale
 
 
$38 million
             
 
52

 
Entergy Corporation and Subsidiaries
Notes to Financial Statements

The effect of Entergy's derivative instruments not designated as hedging instruments on the consolidated statements of income for the six months ended June 30, 2010 and 2009 is as follows:

 
 
Instrument
 
Amount of gain (loss)
recognized in OCI
(de-designated hedges)
 
 
Statement of Income
Location
 
 
Amount of gain (loss)
recorded in income
             
2010
           
             
Natural gas swaps
 
 
$ -
 
Fuel, fuel-related expenses, and gas purchased for resale
 
 
($63) million
             
Electricity futures, forwards, and swaps de-designated as hedged items
 
 
$3 million
 
Competitive business operating revenues
 
 
$ -
             
2009
           
             
Natural gas swaps
 
 
$ -
 
Fuel, fuel-related expenses, and gas purchased for resale
 
 
$14 million
             

Due to regulatory treatment, the natural gas swaps are marked to market through fuel, fuel-related expenses, and gas purchased for resale and then such amounts are simultaneously reversed and recorded as offsetting regulatory assets or liabilities.  The gains or losses recorded as fuel expenses when the swaps are settled are recovered through fuel cost recovery mechanisms.

The fair values of the Registrant Subsidiaries' derivative instruments on their balance sheets as of June 30, 2010 are as follows:

Instrument
 
Balance Sheet Location
 
Fair Value
 
Registrant
Derivatives not designated as hedging instruments
Liabilities:
           
Natural gas swaps
 
Gas hedge contracts
 
$5.2 million
 
Entergy Gulf States Louisiana
Natural gas swaps
 
Gas hedge contracts
 
$9.7 million
 
Entergy Louisiana
Natural gas swaps
 
Gas hedge contracts
 
$7.0 million
 
Entergy Mississippi

The fair values of the Registrant Subsidiaries' derivative instruments on their balance sheets as of December 31, 2009 are as follows:

Instrument
 
Balance Sheet Location
 
Fair Value
 
Registrant
Derivatives not designated as hedging instruments
Assets:
           
Natural gas swaps
 
Prepayments and other
 
$2.1 million
 
Entergy Gulf States Louisiana
Natural gas swaps
 
Gas hedge contracts
 
$3.4 million
 
Entergy Louisiana
Natural gas swaps
 
Prepayments and other
 
$2.9 million
 
Entergy Mississippi
 
53

Entergy Corporation and Subsidiaries
Notes to Financial Statements
 

The effects of the Registrant Subsidiaries' derivative instruments not designated as hedging instruments on their statements of income for the three months ended June 30, 2010 and 2009 are as follows:

 
Instrument
 
 
Statement of Income Location
 
Amount of gain (loss) recorded in income
 
 
Registrant
             
2010
           
             
 
Natural gas swaps
 
Fuel, fuel-related expenses, and gas purchased for resale
 
 
$4.9 million
 
 
Entergy Gulf States Louisiana
             
 
Natural gas swaps
 
Fuel, fuel-related expenses, and gas purchased for resale
 
 
$9.2 million
 
 
Entergy Louisiana
             
 
Natural gas swaps
 
Fuel, fuel-related expenses, and gas purchased for resale
 
 
$8.2 million
 
 
Entergy Mississippi
             
2009
           
             
 
Natural gas swaps
 
Fuel, fuel-related expenses, and gas purchased for resale
 
 
$10.7 million
 
 
Entergy Gulf States Louisiana
             
 
Natural gas swaps
 
Fuel, fuel-related expenses, and gas purchased for resale
 
 
$16.4 million
 
 
Entergy Louisiana
             
 
Natural gas swaps
 
Fuel, fuel-related expenses, and gas purchased for resale
 
 
$11.6 million
 
 
Entergy Mississippi
             
 
Natural gas swaps
 
Fuel, fuel-related expenses, and gas purchased for resale
 
 
($0.3) million
 
 
Entergy New Orleans
             
The effects of the Registrant Subsidiaries' derivative instruments not designated as hedging instruments on their statements of income for the six months ended June 30, 2010 and 2009 are as follows:

 
Instrument
 
 
Statement of Income Location
 
Amount of gain (loss) recorded in income
 
 
Registrant
             
2010
           
             
Natural gas swaps
 
Fuel, fuel-related expenses, and gas purchased for resale
 
($16.3) million
 
Entergy Gulf States Louisiana
             
Natural gas swaps
 
Fuel, fuel-related expenses, and gas purchased for resale
 
($27.0) million
 
Entergy Louisiana
             
Natural gas swaps
 
Fuel, fuel-related expenses, and gas purchased for resale
 
($19.6) million
 
Entergy Mississippi
             
 
54

 
Entergy Corporation and Subsidiaries
Notes to Financial Statements
2009
           
             
Natural gas swaps
 
Fuel, fuel-related expenses, and gas purchased for resale
 
$8.0 million
 
Entergy Gulf States Louisiana
             
Natural gas swaps
 
Fuel, fuel-related expenses, and gas purchased for resale
 
$3.2 million
 
Entergy Louisiana
             
Natural gas swaps
 
Fuel, fuel-related expenses, and gas purchased for resale
 
$0.2 million
 
Entergy Mississippi
             
Natural gas swaps
 
Fuel, fuel-related expenses, and gas purchased for resale
 
$2.7 million
 
Entergy New Orleans
             

Fair Values

The estimated fair values of Entergy's financial instruments and derivatives are determined using bid prices and market quotes.  Considerable judgment is required in developing the estimates of fair value.  Therefore, estimates are not necessarily indicative of the amounts that Entergy could realize in a current market exchange.  Gains or losses realized on financial instruments other than natural gas swaps held by regulated businesses are reflected in future rates and therefore do not accrue to the benefit or detriment of shareholders.  Entergy considers the carrying amounts of most financial instruments classified as current assets and liabilities to be a reasonable estimate of their fair value because of the short maturity of these instruments.< /font>

Accounting standards define fair value as an exit price, or the price that would be received to sell an asset or the amount that would be paid to transfer a liability in an orderly transaction between knowledgeable market participants at date of measurement.  Entergy and the Registrant Subsidiaries use assumptions or market input data that market participants would use in pricing assets or liabilities at fair value.  The inputs can be readily observable, corroborated by market data, or generally unobservable.  Entergy and the Registrant Subsidiaries endeavor to use the best available information to determine fair value.

Accounting standards establish a fair value hierarchy that prioritizes the inputs used to measure fair value.  The hierarchy establishes the highest priority for unadjusted market quotes in an active market for the identical asset or liability and the lowest priority for unobservable inputs.  The three levels of the fair value hierarchy are:

·  
Level 1 - Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.  Level 1 primarily consists of individually owned common stocks, cash equivalents, debt instruments, and gas hedge contracts.

·  
Level 2 - Level 2 inputs are inputs other than quoted prices included in Level 1 that are, either directly or indirectly, observable for the asset or liability at the measurement date.  Assets are valued based on prices derived by independent third parties that use inputs such as benchmark yields, reported trades, broker/dealer quotes, and issuer spreads.  Prices are reviewed and can be challenged with the independent parties and/or overridden by Entergy if it is believed such would be more reflective of fair value.  Level 2 inputs include the following:

-  
quoted prices for similar assets or liabilities in active markets;
-  
quoted prices for identical assets or liabilities in inactive markets;
-  
inputs other than quoted prices that are observable for the asset or liability; or
-  
inputs that are derived principally from or corroborated by observable market data by correlation or other means.
 
55

Entergy Corporation and Subsidiaries
Notes to Financial Statements
 

Level 2 consists primarily of individually owned debt instruments or shares in common trusts.  Common trust funds are stated at estimated fair value based on the fair market value of the underlying investments.

·  
Level 3 - Level 3 inputs are pricing inputs that are generally less observable or unobservable from objective sources.  These inputs are used with internally developed methodologies to produce management's best estimate of fair value for the asset or liability.  Level 3 consists primarily of derivative power contracts used as cash flow hedges of power sales at merchant power plants.

The values for the cash flow hedges that are recorded as derivative contract assets or liabilities are based on both observable inputs including public market prices and unobservable inputs such as model-generated prices for longer-term markets and are classified as Level 3 assets and liabilities.  The amounts reflected as the fair value of derivative assets or liabilities are based on the estimated amount that the contracts are in-the-money at the balance sheet date (treated as an asset) or out-of-the-money at the balance sheet date (treated as a liability) and would equal the estimated amount receivable or payable by Entergy if the contracts were settled at that date.  These derivative contracts include cash flow hedges that swap fixed for floating cash flows for sales of the output from Entergy's Non-Utility Nuc lear business.  The fair values are based on the mark-to-market comparison between the fixed contract prices and the floating prices determined each period from a combination of quoted forward power market prices for the period for which such curves are available, and model-generated prices using quoted forward gas market curves and estimates regarding heat rates to convert gas to power and the costs associated with the transportation of the power from the plants' bus bar to the contract's point of delivery, generally a power market hub, for the period thereafter.  The differences between the fixed price in the swap contract and these market-related prices multiplied by the volume specified in the contract and discounted at the counterparties' credit adjusted risk free rate are recorded as derivative contract assets or liabilities. $308 million of cash flow hedges as of June 30, 2010 are in-the-money contracts with counterparties who are all currently investment grade.  $11 mill ion of the cash flow hedges as of June 30, 2010 are out-of-the-money contracts supported by corporate guarantees, which would require additional cash or letters of credit in the event of a decrease in Entergy Corporation’s credit rating to below investment grade.

The following table sets forth, by level within the fair value hierarchy, Entergy's assets and liabilities that are accounted for at fair value on a recurring basis as of June 30, 2010 and December 31, 2009.  The assessment of the significance of a particular input to a fair value measurement requires judgment and may affect their placement within the fair value hierarchy levels.

2010
 
Level 1
 
Level 2
 
Level 3
 
Total
   
(In Millions)
Assets:
               
Temporary cash investments
 
$1,258
 
$-
 
$-
 
$1,258
Decommissioning trust funds
               
Equity securities
 
313
 
1,375
 
-
 
1,688
Debt securities
 
537
 
982
 
-
 
1,519
Power contracts
 
-
 
-
 
308
 
308
Securitization recovery trust account
 
36
 
-
 
-
 
36
Other investments
 
35
 
-
 
-
 
35
   
$2,179
 
$2,357
 
$308
 
$4,844
                 
Liabilities:
               
Power contracts
 
$-
 
$-
 
$11
 
$11
Gas hedge contracts
 
22
 
-
 
-
 
22
   
$22
 
$-
 
$11
 
$33
 
56

 
Entergy Corporation and Subsidiaries
Notes to Financial Statements

2009
 
Level 1
 
Level 2
 
Level 3
 
Total
   
(In Millions)
Assets:
               
Temporary cash investments
 
$1,624
 
$-
 
$-
 
$1,624
Decommissioning trust funds:
               
Equity securities
 
528
 
1,260
 
-
 
1,788
Debt securities
 
443
 
980
 
-
 
1,423
Power contracts
 
-
 
-
 
200
 
200
Securitization recovery trust account
 
13
 
-
 
-
 
13
Gas hedge contracts
 
8
 
-
 
-
 
8
Other investments
 
42
 
-
 
-
 
42
   
$2,658
 
$2,240
 
$200
 
$5,098

The following table sets forth a reconciliation of changes in the net assets for the fair value of derivatives classified as Level 3 in the fair value hierarchy for the three months ended June 30, 2010 and 2009:

   
2010
 
2009
   
(In Millions)
         
Balance as of beginning of period
 
$432 
 
$351 
         
Price changes (unrealized gains/losses)
 
(68)
 
36 
Settlements
 
(67)
 
(74)
         
Balance as of June 30,
 
$297 
 
$313 



The following table sets forth a reconciliation of changes in the net assets for the fair value of derivatives classified as Level 3 in the fair value hierarchy for the six months ended June 30, 2010 and 2009:

   
2010
 
2009
   
(In Millions)
         
Balance as of January 1,
 
$200 
 
$207 
         
Price changes (unrealized gains/losses)
 
200 
 
237 
Settlements
 
(103)
 
(131)
         
Balance as of June 30,
 
$297 
 
$313 

The following table sets forth, by level within the fair value hierarchy, the Registrant Subsidiaries' assets that are accounted for at fair value on a recurring basis as of June 30, 2010 and December 31, 2009.  The assessment of the significance of a particular input to a fair value measurement requires judgment and may affect its placement within the fair value hierarchy levels.
 
57

Entergy Corporation and Subsidiaries
Notes to Financial Statements
 

Entergy Arkansas

2010
 
Level 1
 
Level 2
 
Level 3
 
Total
   
(In Millions)
Assets:
               
Temporary cash investments
 
$92.0
 
$-
 
$-
 
$92.0
Decommissioning trust funds:
               
Equity securities
 
10.5
 
232.6
 
-
 
243.1
Debt securities
 
18.4
 
174.1
 
-
 
192.5
   
$120.9
 
$406.7
 
$-
 
$527.6

2009
 
Level 1
 
Level 2
 
Level 3
 
Total
   
(In Millions)
Assets:
               
Temporary cash investments
 
$82.9
 
$-
 
$-
 
$82.9
Decommissioning trust funds:
               
Equity securities
 
15.4
 
205.3
 
-
 
220.7
Debt securities
 
17.6
 
201.9
 
-
 
219.5
   
$115.9
 
$407.2
 
$-
 
$523.1

Entergy Gulf States Louisiana

2010
 
Level 1
 
Level 2
 
Level 3
 
Total
   
(In Millions)
Assets:
               
Temporary cash investments
 
$145.5
 
$-
 
$-
 
$145.5
Decommissioning trust funds:
               
Equity securities
 
2.1
 
184.6
 
-
 
186.7
Debt securities
 
31.4
 
126.1
 
-
 
157.5
Other investments
 
0.1
 
-
 
-
 
0.1
   
$179.1
 
$310.7
 
$-
 
$489.8
                 
Liabilities:
               
Gas hedge contracts
 
$5.2
 
$-
 
$-
 
$5.2

2009
 
Level 1
 
Level 2
 
Level 3
 
Total
   
(In Millions)
Assets:
               
Temporary cash investments
 
$144.3
 
$-
 
$-
 
$144.3
Decommissioning trust funds:
               
Equity securities
 
6.7
 
175.5
 
-
 
182.2
Debt securities
 
25.3
 
142.0
 
-
 
167.3
Gas hedge contracts
 
2.1
 
-
 
-
 
2.1
   
$178.4
 
$317.5
 
$-
 
$495.9
 
58

 
Entergy Corporation and Subsidiaries
Notes to Financial Statements

Entergy Louisiana

2010
 
Level 1
 
Level 2
 
Level 3
 
Total
   
(In Millions)
Assets:
               
Temporary cash investments
 
$98.8
 
$-
 
$-
 
$98.8
Decommissioning trust funds:
               
Equity securities
 
2.9
 
112.7
 
-
 
115.6
Debt securities
 
46.9
 
46.6
 
-
 
93.5
Other investments
 
0.8
 
-
 
-
 
0.8
   
$149.4
 
$159.3
 
$-
 
$308.7
                 
Liabilities:
               
Gas hedge contracts
 
$9.7
 
$-
 
$-
 
$9.7

2009
 
Level 1
 
Level 2
 
Level 3
 
Total
   
(In Millions)
Assets:
               
Temporary cash investments
 
$151.7
 
$-
 
$-
 
$151.7
Decommissioning trust funds:
               
Equity securities
 
7.0
 
110.9
 
-
 
117.9
Debt securities
 
44.3
 
46.9
 
-
 
91.2
Gas hedge contracts
 
3.4
 
-
 
-
 
3.4
Other investments
 
0.8
 
-
 
-
 
0.8
   
$207.2
 
$157.8
 
$-
 
$365.0


Entergy Mississippi

2010
 
Level 1
 
Level 2
 
Level 3
 
Total
   
(In Millions)
Assets:
               
Other investments
 
$31.9
 
$-
 
$-
 
$31.9
                 
Liabilities:
               
Gas hedge contracts
 
$7.0
 
$-
 
$-
 
$7.0

2009
 
Level 1
 
Level 2
 
Level 3
 
Total
   
(In Millions)
Assets:
               
Temporary cash investments
 
$90.3
 
$-
 
$-
 
$90.3
Gas hedge contracts
 
2.9
 
-
 
-
 
2.9
Other investments
 
31.9
 
-
 
-
 
31.9
   
$125.1
 
$-
 
$-
 
$125.1

Entergy New Orleans

2010
 
Level 1
 
Level 2
 
Level 3
 
Total
   
(In Millions)
Assets:
               
Temporary cash investments
 
$139.1
 
$-
 
$-
 
$139.1
Other investments
 
2.6
 
-
 
-
 
2.6
   
$141.7
 
$-
 
$-
 
$141.7
 
59

Entergy Corporation and Subsidiaries
Notes to Financial Statements
 

2009
 
Level 1
 
Level 2
 
Level 3
 
Total
   
(In Millions)
Assets:
               
Temporary cash investments
 
$190.0
 
$-
 
$-
 
$190.0
Other investments
 
9.5
 
-
 
-
 
9.5
   
$199.5
 
$-
 
$-
 
$199.5

Entergy Texas

2010
 
Level 1
 
Level 2
 
Level 3
 
Total
   
(In Millions)
Assets:
               
Temporary cash investments
 
$99.9
 
$-
 
$-
 
$99.9
Securitization recovery trust account
 
35.6
 
-
 
-
 
35.6
   
$135.5
 
$-
 
$-
 
$135.5
 
2009
 
Level 1
 
Level 2
 
Level 3
 
Total
   
(In Millions)
Assets:
               
Temporary cash investments
 
$199.2
 
$-
 
$-
 
$199.2
Securitization recovery trust account
 
13.1
 
-
 
-
 
13.1
   
$212.3
 
$-
 
$-
 
$212.3

System Energy

2010
 
Level 1
 
Level 2
 
Level 3
 
Total
   
(In Millions)
Assets:
               
Temporary cash investments
 
$317.2
 
$-
 
$-
 
$317.2
Decommissioning trust funds:
               
Equity securities
 
1.9
 
174.9
 
-
 
176.8
Debt securities
 
97.3
 
60.6
 
-
 
157.9
   
$416.4
 
$235.5
 
$-
 
$651.9

2009
 
Level 1
 
Level 2
 
Level 3
 
Total
   
(In Millions)
Assets:
               
Temporary cash investments
 
$263.6
 
$-
 
$-
 
$263.6
Decommissioning trust funds:
               
Equity securities
 
2.1
 
180.2
 
-
 
182.3
Debt securities
 
78.4
 
66.3
 
-
 
144.7
   
$344.1
 
$246.5
 
$-
 
$590.6


NOTE 9.  DECOMMISSIONING TRUST FUNDS (Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, and System Energy)

Entergy holds debt and equity securities, classified as available-for-sale, in nuclear decommissioning trust accounts.  The NRC requires Entergy to maintain trusts to fund the costs of decommissioning ANO 1, ANO 2, River Bend, Waterford 3, Grand Gulf, Pilgrim, Indian Point 1 and 2, Vermont Yankee, and Palisades (NYPA currently retains the decommissioning trusts and liabilities for Indian Point 3 and FitzPatrick).  The funds are invested primarily in equity securities; fixed-rate, fixed-income securities; and cash and cash equivalents.
 
60

 
Entergy Corporation and Subsidiaries
Notes to Financial Statements

Entergy records decommissioning trust funds on the balance sheet at their fair value.  Because of the ability of the Registrant Subsidiaries to recover decommissioning costs in rates and in accordance with the regulatory treatment for decommissioning trust funds, the Registrant Subsidiaries have recorded an offsetting amount of unrealized gains/(losses) on investment securities in other regulatory liabilities/assets.  For the nonregulated portion of River Bend, Entergy Gulf States Louisiana has recorded an offsetting amount of unrealized gains/(losses) in other deferred credits.  Decommissioning trust funds for Pilgrim, Indian Point 2, Vermont Yankee, and Palisades do not meet the criteria for regulatory accounting treatment.  Accordingly, unrealiz ed gains recorded on the assets in these trust funds are recognized in the accumulated other comprehensive income component of shareholders' equity because these assets are classified as available for sale.  Unrealized losses (where cost exceeds fair market value) on the assets in these trust funds are also recorded in the accumulated other comprehensive income component of shareholders' equity unless the unrealized loss is other than temporary and therefore recorded in earnings.  Generally, Entergy records realized gains and losses on its debt and equity securities using the specific identification method to determine the cost basis of its securities.

The securities held as of June 30, 2010 and December 31, 2009 are summarized as follows:

   
Fair
Value
 
Total
Unrealized
Gains
 
Total
Unrealized
Losses
   
(In Millions)
2010
           
Equity Securities
 
$1,688
 
$195
 
$66
Debt Securities
 
1,519
 
    87
 
   1
  Total
 
$3,207
 
$282
 
$67
             
             
2009
           
Equity Securities
 
$1,788
 
$311
 
$30
Debt Securities
 
1,423
 
    63
 
   8
  Total
 
$3,211
 
$374
 
$38

The amortized cost of debt securities was $1,434 million as of June 30, 2010 and $1,368 million as of December 31, 2009.  As of June 30, 2010, the debt securities have an average coupon rate of approximately 4.42%, an average duration of approximately 5.14 years, and an average maturity of approximately 8.2 years.  The equity securities are generally held in funds that are designed to approximate or somewhat exceed the return of the Standard & Poor's 500 Index.  A relatively small percentage of the securities are held in funds intended to replicate the return of the Wilshire 4500 Index or the Russell 3000 Index.

The fair value and gross unrealized losses of available-for-sale equity and debt securities, summarized by investment type and length of time that the securities have been in a continuous loss position, are as follows as of June 30, 2010:

   
Equity Securities
 
Debt Securities
   
Fair
Value
 
Gross
Unrealized
Losses
 
Fair
Value
 
Gross
Unrealized
Losses
   
(In Millions)
                 
Less than 12 months
 
$460
 
$29
 
$65
 
$1
More than 12 months
 
135
 
37
 
15
 
-
  Total
 
$595
 
$66
 
$80
 
$1
 
61

Entergy Corporation and Subsidiaries
Notes to Financial Statements
 

The fair value and gross unrealized losses of available-for-sale equity and debt securities, summarized by investment type and length of time that the securities have been in a continuous loss position, are as follows as of December 31, 2009:

   
Equity Securities
 
Debt Securities
   
Fair
Value
 
Gross
Unrealized
Losses
 
Fair
Value
 
Gross
Unrealized
Losses
   
(In Millions)
                 
Less than 12 months
 
$57
 
$1
 
$311
 
$6
More than 12 months
 
205
 
29
 
18
 
2
  Total
 
$262
 
$30
 
$329
 
$8

The unrealized losses in excess of twelve months on equity securities above relate to Entergy's Utility operating companies and System Energy.

The fair value of debt securities, summarized by contractual maturities, as of June 30, 2010 and December 31, 2009 are as follows:

   
2010
 
2009
   
(In Millions)
less than 1 year
 
$55
 
$31
1 year - 5 years
 
549
 
676
5 years - 10 years
 
503
 
388
10 years - 15 years
 
143
 
131
15 years - 20 years
 
69
 
34
20 years+
 
200
 
163
  Total
 
$1,519
 
$1,423

During the three months ended June 30, 2010 and 2009, proceeds from the dispositions of securities amounted to $716 million and $699 million, respectively.  During the three months ended June 30, 2010 and 2009, gross gains of $9 million and $16 million, respectively, and gross losses of $2 million and $10 million, respectively, were reclassified out of accumulated other comprehensive income into earnings or recorded in earnings.

During the six months ended June 30, 2010 and 2009, proceeds from the dispositions of securities amounted to $1,487 million and $1,282 million, respectively.  During the six months ended June 30, 2010 and 2009, gross gains of $24 million and $30 million, respectively, and gross losses of $4 million and $26 million, respectively, were reclassified out of accumulated other comprehensive income into earnings or recorded in earnings.
 
62

 
Entergy Corporation and Subsidiaries
Notes to Financial Statements

Entergy Arkansas

Entergy Arkansas holds debt and equity securities, classified as available-for-sale, in nuclear decommissioning trust accounts.  The securities held as of June 30, 2010 and December 31, 2009 are summarized as follows:
 
   
Fair
Value
 
Total
Unrealized
Gains
 
Total
Unrealized
Losses
   
(In Millions)
2010
           
Equity Securities
 
$243.1
 
$48.3
 
$6.8
Debt Securities
 
  192.5
 
  13.7
 
 0.1
Total
 
$435.6
 
$62.0
 
$6.9
             
2009
           
Equity Securities
 
$220.7
 
$60.1
 
$3.4
Debt Securities
 
  219.5
 
  10.7
 
  1.7
Total
 
$440.2
 
$70.8
 
$5.1

The amortized cost of debt securities was $178.9 million as of June 30, 2010 and $210.5 million as of December 31, 2009.  As of June 30, 2010, the debt securities have an average coupon rate of approximately 4.36%, an average duration of approximately 4.25 years, and an average maturity of approximately 5.0 years.  The equity securities are generally held in funds that are designed to approximate the return of the Standard & Poor's 500 Index.  A relatively small percentage of the securities are held in funds intended to replicate the return of the Wilshire 4500 Index.

The fair value and gross unrealized losses of available-for-sale equity and debt securities, summarized by investment type and length of time that the securities have been in a continuous loss position, are as follows as of June 30, 2010:

   
Equity Securities
 
Debt Securities
   
Fair
Value
 
Gross
Unrealized
Losses
 
Fair
Value
 
Gross
Unrealized
Losses
   
(In Millions)
                 
Less than 12 months
 
$62.2
 
$2.6
 
$7.0
 
$0.1
More than 12 months
 
16.9
 
4.2
 
4.1
 
-
Total
 
$79.1
 
$6.8
 
$11.1
 
$0.1

The fair value and gross unrealized losses of available-for-sale equity and debt securities, summarized by investment type and length of time that the securities have been in a continuous loss position, are as follows as of December 31, 2009:

   
Equity Securities
 
Debt Securities
   
Fair
Value
 
Gross
Unrealized
Losses
 
Fair
Value
 
Gross
Unrealized
Losses
   
(In Millions)
                 
Less than 12 months
 
$-
 
$-
 
$31.9
 
$1.2
More than 12 months
 
26.8
 
3.4
 
3.9
 
0.5
Total
 
$26.8
 
$3.4
 
$35.8
 
$1.7
 
63

Entergy Corporation and Subsidiaries
Notes to Financial Statements
 

The fair value of debt securities, summarized by contractual maturities, as of June 30, 2010 and December 31, 2009 are as follows:

   
2010
 
2009
   
(In Millions)
         
less than 1 year
 
$5.7
 
$6.7
1 year - 5 years
 
79.2
 
133.2
5 years - 10 years
 
101.3
 
68.2
10 years - 15 years
 
3.0
 
5.1
15 years - 20 years
 
-
 
-
20 years+
 
3.3
 
6.3
Total
 
$192.5
 
$219.5

During the three months ended June 30, 2010 and 2009, proceeds from the dispositions of securities amounted to $33.3 million and $21.9 million, respectively.  During the three months ended June 30, 2010 and 2009, gross gains of $0.6 million and $0.1 million, respectively, and gross losses of $0.3 million and $0.4 million, respectively, were recorded in earnings.

During the six months ended June 30, 2010 and 2009, proceeds from the dispositions of securities amounted to $132.3 million and $51.7 million, respectively.  During the six months ended June 30, 2010 and 2009, gross gains of $2.6 million and $0.2 million, respectively, and gross losses of $0.6 million and $1.2 million, respectively, were recorded in earnings.

Entergy Gulf States Louisiana

Entergy Gulf States Louisiana holds debt and equity securities, classified as available-for-sale, in nuclear decommissioning trust accounts.  The securities held as of June 30, 2010 and December 31, 2009 are summarized as follows:

   
Fair
Value
 
Total
Unrealized
Gains
 
Total
Unrealized
Losses
   
(In Millions)
2010
           
Equity Securities
 
$186.7
 
$10.3
 
$12.3
Debt Securities
 
 157.5
 
11.4
 
0.3
  Total
 
$344.2
 
$21.7
 
$12.6
             
2009
           
Equity Securities
 
$182.2
 
$17.0
 
$5.3
Debt Securities
 
167.3
 
10.0
 
0.9
  Total
 
$349.5
 
$27.0
 
$6.2

The amortized cost of debt securities was $146.4 million as of June 30, 2010 and $158.5 million as of December 31, 2009.  As of June 30, 2010, the debt securities have an average coupon rate of approximately 4.56%, an average duration of approximately 6.39 years, and an average maturity of approximately 9.2 years.  The equity securities are generally held in funds that are designed to approximate the return of the Standard & Poor's 500 Index.  A relatively small percentage of the securities are held in funds intended to replicate the return of the Wilshire 4500 Index.
 
64

 
Entergy Corporation and Subsidiaries
Notes to Financial Statements

The fair value and gross unrealized losses of available-for-sale equity and debt securities, summarized by investment type and length of time that the securities have been in a continuous loss position, are as follows as of June 30, 2010:

   
Equity Securities
 
Debt Securities
   
Fair
Value
 
Gross
Unrealized
Losses
 
Fair
Value
 
Gross
Unrealized
Losses
   
(In Millions)
                 
Less than 12 months
 
$92.7
 
$5.5
 
$5.5
 
$0.1
More than 12 months
 
26.2
 
6.8
 
4.5
 
0.2
  Total
 
$118.9
 
$12.3
 
$10.0
 
$0.3

The fair value and gross unrealized losses of available-for-sale equity and debt securities, summarized by investment type and length of time that the securities have been in a continuous loss position, are as follows as of December 31, 2009:

   
Equity Securities
 
Debt Securities
   
Fair
Value
 
Gross
Unrealized
Losses
 
Fair
Value
 
Gross
Unrealized
Losses
   
(In Millions)
                 
Less than 12 months
 
$-
 
$-
 
$24.7
 
$0.6
More than 12 months
 
48.9
 
5.3
 
4.3
 
0.3
  Total
 
$48.9
 
$5.3
 
$29.0
 
$0.9

The fair value of debt securities, summarized by contractual maturities, as of June 30, 2010 and December 31, 2009 are as follows:

   
2010
 
2009
   
(In Millions)
         
less than 1 year
 
$6.7
 
$3.3
1 year - 5 years
 
32.2
 
46.1
5 years - 10 years
 
55.7
 
53.9
10 years - 15 years
 
43.6
 
52.0
15 years - 20 years
 
9.3
 
3.5
20 years+
 
10.0
 
8.5
  Total
 
$157.5
 
$167.3

During the three months ended June 30, 2010 and 2009, proceeds from the dispositions of securities amounted to $36.5 million and $9.9 million, respectively.  During the three months ended June 30, 2010 and 2009, gross gains of $0.6 million and $0.1 million, respectively, and gross losses of $0.1 million and $0.4 million, respectively, were recorded in earnings.

During the six months ended June 30, 2010 and 2009, proceeds from the dispositions of securities amounted to $78.8 million and $33.7 million, respectively.  During the six months ended June 30, 2010 and 2009, gross gains of $1.5 million and $0.9 million, respectively, and gross losses of $0.2 million and $0.5 million, respectively, were recorded in earnings.
 
65

Entergy Corporation and Subsidiaries
Notes to Financial Statements
 

Entergy Louisiana

Entergy Louisiana holds debt and equity securities, classified as available-for-sale, in nuclear decommissioning trust accounts.  The securities held as of June 30, 2010 and December 31, 2009 are summarized as follows:

   
Fair
Value
 
Total
Unrealized
Gains
 
Total
Unrealized
Losses
   
(In Millions)
2010
           
Equity Securities
 
$115.6
 
$11.5
 
$9.0
Debt Securities
 
    93.5
 
    6.3
 
  0.1
  Total
 
$209.1
 
$17.8
 
$9.1
             
2009
           
Equity Securities
 
$117.9
 
$15.3
 
$5.3
Debt Securities
 
91.2
 
    3.9
 
  0.9
  Total
 
$209.1
 
$19.2
 
$6.2

The amortized cost of debt securities was $87.4 million as of June 30, 2010 and $88.2 million as of December 31, 2009.  As of June 30, 2010, the debt securities have an average coupon rate of approximately 4.03%, an average duration of approximately 4.88 years, and an average maturity of approximately 9.9 years.  The equity securities are generally held in funds that are designed to approximate the return of the Standard & Poor's 500 Index.  A relatively small percentage of the securities are held in funds intended to replicate the return of the Wilshire 4500 Index.

The fair value and gross unrealized losses of available-for-sale equity and debt securities, summarized by investment type and length of time that the securities have been in a continuous loss position, are as follows as of June 30, 2010:

   
Equity Securities
 
Debt Securities
   
Fair
Value
 
Gross
Unrealized
Losses
 
Fair
Value
 
Gross
Unrealized
Losses
   
(In Millions)
                 
Less than 12 months
 
$33.8
 
$2.3
 
$2.3
 
$0.1
More than 12 months
 
23.8
 
6.7
 
0.2
 
-
  Total
 
$57.6
 
$9.0
 
$2.5
 
$0.1

The fair value and gross unrealized losses of available-for-sale equity and debt securities, summarized by investment type and length of time that the securities have been in a continuous loss position, are as follows as of December 31, 2009:

   
Equity Securities
 
Debt Securities
   
Fair
Value
 
Gross
Unrealized
Losses
 
Fair
Value
 
Gross
Unrealized
Losses
   
(In Millions)
                 
Less than 12 months
 
$-
 
$-
 
$29.7
 
$0.8
More than 12 months
 
37.5
 
5.3
 
0.9
 
0.1
  Total
 
$37.5
 
$5.3
 
$30.6
 
$0.9
 
66

 
Entergy Corporation and Subsidiaries
Notes to Financial Statements

The fair value of debt securities, summarized by contractual maturities, as of June 30, 2010 and December 31, 2009 are as follows:

   
2010
 
2009
   
(In Millions)
         
less than 1 year
 
$5.1
 
$2.2
1 year - 5 years
 
27.8
 
31.9
5 years - 10 years
 
25.0
 
23.7
10 years - 15 years
 
12.1
 
12.1
15 years - 20 years
 
7.0
 
5.5
20 years+
 
16.5
 
15.8
  Total
 
$93.5
 
$91.2

During the three months ended June 30, 2010 and 2009, proceeds from the dispositions of securities amounted to $6.2 million and $23.3 million, respectively.  During the three months ended June 30, 2010 and 2009, gross gains of $0.02 million and $1.1 million, respectively, and gross losses of $0.1 million and $0.3 million, respectively, were recorded in earnings.

During the six months ended June 30, 2010 and 2009, proceeds from the dispositions of securities amounted to $26.7 million and $33.5 million, respectively.  During the six months ended June 30, 2010 and 2009, gross gains of $0.6 million and $1.5 million, respectively, and gross losses of $0.1 million and $0.4 million, respectively, were recorded in earnings.

System Energy

System Energy holds debt and equity securities, classified as available-for-sale, in nuclear decommissioning trust accounts.  The securities held as of June 30, 2010 and December 31, 2009 are summarized as follows:

   
Fair
Value
 
Total
Unrealized
Gains
 
Total
Unrealized
Losses
   
(In Millions)
2010
           
Equity Securities
 
  $176.8    
 
$13.0
 
$22.3
Debt Securities
 
  157.9    
 
6.5
 
0.1
  Total
 
$334.7
 
$19.5
 
$22.4
             
2009
           
Equity Securities
 
$182.3
 
$17.8
 
$14.7
Debt Securities
 
144.7
 
2.8
 
0.8
  Total
 
$327.0
 
$20.6
 
$15.5

The amortized cost of debt securities was $151.5 million as of June 30, 2010 and $142.8 million as of December 31, 2009.  As of June 30, 2010, the debt securities have an average coupon rate of approximately 3.90%, an average duration of approximately 4.78 years, and an average maturity of approximately 7.1 years.  The equity securities are generally held in funds that are designed to approximate the return of the Standard & Poor's 500 Index.  A relatively small percentage of the securities are held in funds intended to replicate the return of the Wilshire 4500 Index.
 
67

Entergy Corporation and Subsidiaries
Notes to Financial Statements
 

The fair value and gross unrealized losses of available-for-sale equity and debt securities, summarized by investment type and length of time that the securities have been in a continuous loss position, are as follows as of June 30, 2010:

   
Equity Securities
 
Debt Securities
   
Fair
Value
 
Gross
Unrealized
Losses
 
Fair
Value
 
Gross
Unrealized
Losses
   
(In Millions)
                 
Less than 12 months
 
$36.7
 
$2.8
 
$3.4
 
$-
More than 12 months
 
67.4
 
19.5
 
0.6
 
0.1
  Total
 
$104.1
 
$22.3
 
$4.0
 
$0.1

The fair value and gross unrealized losses of available-for-sale equity and debt securities, summarized by investment type and length of time that the securities have been in a continuous loss position, are as follows as of December 31, 2009:

   
Equity Securities
 
Debt Securities
   
Fair
Value
 
Gross
Unrealized
Losses
 
Fair
Value
 
Gross
Unrealized
Losses
   
(In Millions)
                 
Less than 12 months
 
$-
 
$-
 
$56.4
 
$0.6
More than 12 months
 
89.3
 
14.7
 
3.2
 
0.2
  Total
 
$89.3
 
$14.7
 
$59.6
 
$0.8

The fair value of debt securities, summarized by contractual maturities, as of June 30, 2010 and December 31, 2009 are as follows:

   
2010
 
2009
   
(In Millions)
         
less than 1 year
 
$3.4
 
$1.0
1 year - 5 years
 
88.9
 
84.0
5 years - 10 years
 
41.1
 
36.2
10 years - 15 years
 
6.4
 
4.2
15 years - 20 years
 
1.9
 
2.3
20 years+
 
16.2
 
17.0
  Total
 
$157.9
 
$144.7

During the three months ended June 30, 2010 and 2009, proceeds from the dispositions of securities amounted to $56.8 million and $170.1 million, respectively.  During the three months ended June 30, 2010 and 2009, gross gains of $0.4 million and $0.7 million, respectively, and gross losses of $0.1 million and $3.9 million, respectively, were recorded in earnings.

During the six months ended June 30, 2010 and 2009, proceeds from the dispositions of securities amounted to $138.2 million and $322.0 million, respectively.  During the six months ended June 30, 2010 and 2009, gross gains of $1.4 million and $3.7 million, respectively, and gross losses of $0.2 million and $6.3 million, respectively, were recorded in earnings.
 
68

 
Entergy Corporation and Subsidiaries
Notes to Financial Statements

Other-than-temporary impairments and unrealized gains and losses

Entergy, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, and System Energy evaluate unrealized losses at the end of each period to determine whether an other-than-temporary impairment has occurred.  Effective January 1, 2009, Entergy adopted an accounting pronouncement providing guidance regarding recognition and presentation of other-than-temporary impairments related to investments in debt securities.  The assessment of whether an investment in a debt security has suffered an other-than-temporary impairment is based on whether Entergy has the intent to sell or more likely than not will be required to sell the debt security before recovery of its amortized costs.  Further, if Entergy does not expect to recover the entire amortized cost basis of the debt security, an other-than-temporary impairm ent is considered to have occurred and it is measured by the present value of cash flows expected to be collected less the amortized cost basis (credit loss).  For debt securities held as of January 1, 2009 for which an other-than-temporary impairment had previously been recognized but for which assessment under the new guidance indicates this impairment is temporary, Entergy recorded an adjustment to its opening balance of retained earnings of $11.3 million ($6.4 million net-of-tax).  Entergy did not have any material other-than-temporary impairments relating to credit losses on debt securities for the six months ended June 30, 2010.  The assessment of whether an investment in an equity security has suffered an other-than-temporary impairment continues to be based on a number of factors including, first, whether Entergy has the ability and intent to hold the investment to recover its value, the duration and severity of any losses, and, then, whether it is expected that the investment wil l recover its value within a reasonable period of time.  Entergy's trusts are managed by third parties who operate in accordance with agreements that define investment guidelines and place restrictions on the purchases and sales of investments.  Non-Utility Nuclear recorded charges to other income of $1 million and $69 million for the three months ended June 30, 2010 and 2009, respectively, and $1 million and $85 million in the six months ended June 30, 2010 and 2009, respectively, resulting from the recognition of the other-than-temporary impairment of certain equity securities held in its decommissioning trust funds.


NOTE 10.  INCOME TAXES (Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Income Tax Audits and Litigation

See Note 3 to the financial statements in the Form 10-K for a discussion of tax proceedings.


NOTE 11.  PROPERTY, PLANT, AND EQUIPMENT (Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Construction Expenditures in Accounts Payable

Construction expenditures included in accounts payable at June 30, 2010 is $125.5 million for Entergy, $7 million for Entergy Arkansas, $14 million for Entergy Gulf States Louisiana, $7.7 million for Entergy Louisiana, $1.3 million for Entergy Mississippi, $1.4 million for Entergy New Orleans, $3 million for Entergy Texas, and $30.2 million for System Energy.

Vermont Yankee

Four nuclear power plants in Entergy's Non-Utility Nuclear business have applications pending for NRC license renewals.  This includes the Vermont Yankee plant, which currently has an operating license that expires March 21, 2012.  In addition to its NRC license, the Vermont Public Service Board (VPSB) requires Vermont Yankee to obtain a state Certificate of Public Good (CPG) in order to operate the plant and store spent nuclear fuel beyond March 21, 2012, when the current CPG expires.  On March 3, 2008, Non-Utility Nuclear filed an application with the VPSB to renew its CPG.  Under Vermont law the VPSB cannot act on the CPG application until the Vermont General Assembly first votes affirmatively to permit the VPSB to do so.  On February 24, 2010, a bill to approve the continued operation of Vermont Yankee was advanced to a vote in the Vermont Senate and defeated by a margin of 26 to 4.  This vote does not preclude either house of the Vermont General Assembly from voting on a similar bill in the future.
 
69

Entergy Corporation and Subsidiaries
Notes to Financial Statements
 

Entergy evaluates its investments in long-lived assets, including Vermont Yankee, under the accounting rules for impairment whenever there are indications that impairments may exist.  This evaluation involves a significant degree of estimation and uncertainty.  In the Non-Utility Nuclear business, Entergy's investments are subject to impairment if adverse market conditions arise, if a unit ceases operation, or for certain units if their operating licenses will not be renewed.  Specifically regarding Vermont Yankee, if Entergy concludes that Vermont Yankee is unlikely to operate significantly beyond its current license expiration date in 2012, it could result in an impairment of part or all of the carrying value of the plant, including any capitalized asset r etirement cost associated with the recording of the decommissioning liability.  Decommissioning liabilities are further described in Note 9 to the financial statements in the Form 10-K.


NOTE 12.  VARIABLE INTEREST ENTITIES (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, System Energy)

Under applicable authoritative accounting guidance, a variable interest entity (VIE) is an entity that conducts a business or holds property that possesses any of the following characteristics: an insufficient amount of equity at risk to finance its activities, equity owners who do not have the power to direct the significant activities of the entity (or have voting rights that are disproportionate to their ownership interest), or where equity holders do not receive expected losses or returns.  An entity may have an interest in a VIE through ownership or other contractual rights or obligations, and is required to consolidate a VIE if it is the VIE's primary beneficiary.

The FASB issued authoritative accounting guidance that became effective in the first quarter 2010 that revises the manner in which entities evaluate whether consolidation is required for VIEs.  Under the revised guidance, the primary beneficiary of a VIE is the entity that has the power to direct the activities of the VIE that most significantly affect the VIE's economic performance, and has the obligation to absorb losses or has the right to residual returns that would potentially be significant to the entity.  In conjunction with the adoption of the new guidance, Entergy updated reviews of its contracts and arrangements to determine whether Entergy is the primary beneficiary of a VIE based on the revisions to the previous consolidation model and other provisions of this standard.  Based on this review Entergy determined that Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, and System Energy should consolidate the respective companies from which they lease nuclear fuel, usually in a sale and leaseback transaction.  This determination is because Entergy directs the nuclear fuel companies with respect to nuclear fuel purchases, assists the nuclear fuel companies in obtaining financing, and, if financing cannot be arranged, the lessee (Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, or System Energy) is responsible to repurchase nuclear fuel to allow the nuclear fuel company (the VIE) to meet its obligations.  Under the previous guidance, the determination of the primary beneficiary of a VIE was based on ownership interests and the risks and rewards in the entity attributable to the variable interest holders.  Therefore, the Entergy companies did not previously consolidate the nuclear fuel compa nies.  Because Entergy has historically accounted for the leases with the nuclear fuel companies as capital lease obligations, the effect of consolidating the nuclear fuel companies did not materially affect Entergy's financial statements.  During the term of the arrangements, none of the Entergy operating companies have been required to provide financial support apart from their scheduled lease payments.  These nuclear fuel leases are further described in Note 10 to the financial statements in the Form 10-K.  See Note 4 to the financial statements herein for details of the nuclear fuel companies' credit facility and commercial paper borrowings and long-term debt that are reported by Entergy, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, and System Energy.  These amounts also represent Entergy's and the respective Registrant Subsidiary's maximum exposure to losses associated with their respective interests in the nuclear fuel companies.< /font>
 
70

 
Entergy Corporation and Subsidiaries
Notes to Financial Statements

    Entergy Texas determined that Entergy Gulf States Reconstruction Funding I, LLC, and Entergy Texas Restoration Funding, LLC, companies wholly-owned and consolidated by Entergy Texas, are variable interest entities and that Entergy Texas is the primary beneficiary.  In June 2007, Entergy Gulf States Reconstruction Funding issued senior secured transition bonds (securitization bonds) to finance Entergy Texas's Hurricane Rita reconstruction costs.  In November 2009, Entergy Texas Restoration Funding issued senior secured transition bonds (securitization bonds) to finance Entergy Texas's Hurricane Ike and Hurricane Gustav restoration costs.  With the proceeds, the variable interest entities purchased from Entergy Texas the transition pr operty, which is the right to recover from customers through a transition charge amounts sufficient to service the securitization bonds.  The transition property is reflected as a regulatory asset on the consolidated Entergy Texas balance sheet.  The creditors of Entergy Texas do not have recourse to the assets or revenues of the variable interest entities, including the transition property, and the creditors of the variable interest entities do not have recourse to the assets or revenues of Entergy Texas.  Entergy Texas has no payment obligations to the variable interest entities except to remit transition charge collections.  See Note 5 to the financial statements in the Form 10-K for additional details regarding the securitization bonds.

Entergy Louisiana and System Energy are also considered to each hold a variable interest in the lessors from which they lease undivided interests representing approximately 9.3% of the Waterford 3 and 11.5% of the Grand Gulf nuclear plants, respectively.  Entergy Louisiana and System Energy are the lessees under these arrangements, which are described in more detail in Note 10 to the consolidated financial statements in the Form 10-K.  Entergy Louisiana made payments on its lease, including interest, of $25.3 million and $22.0 million in the six months ended June 30, 2010 and 2009, respectively.  System Energy made payments on its lease, including interest, of $45.7 million and $43.8 million in the six months ended June 30, 2010 and 2009, respectively.   The lessors are banks acting in the capacity of owner trustee for the benefit of equity investors in the transactions pursuant to trust agreements entered solely for the purpose of facilitating the lease transactions.  It is possible that Entergy Louisiana and System Energy may be considered as the primary beneficiary of the lessors, but Entergy is unable to apply the revised authoritative accounting guidance with respect to these VIEs because the lessors are not required to, and could not, provide the necessary financial information to consolidate the lessors.  Because Entergy accounts for these leasing arrangements as capital financings, however, Entergy believes that consolidating the lessors would not materially affect the financial statements.  In the unlikely event of default under a lease, remedies available to the lessor include payment by the lessee of the fair value of the undivided interest in the plant, payment of the present value of the basic rent payments, o r payment of a predetermined casualty value.  Entergy believes, however, that the obligations recorded on the balance sheets materially represent each company’s potential exposure to loss.

Entergy has also reviewed various lease arrangements, power purchase agreements, and other agreements in which it holds a variable interest.  In these cases, Entergy has determined that it is not the primary beneficiary of the related VIE because it does not have the power to direct the activities of the VIE that most significantly affect the VIE's economic performance, or it does not have the obligation to absorb losses or the right to residual returns that would potentially be significant to the entity, or both.
__________________________________

In the opinion of the management of Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas and System Energy, the accompanying unaudited financial statements contain all adjustments (consisting primarily of normal recurring accruals and reclassification of previously reported amounts to conform to current classifications) necessary for a fair statement of the results for the interim periods presented.  The business of the Registrant Subsidiaries is subject to seasonal fluctuations, however, with the peak periods occurring during the third quarter.  The results for the interim periods presented should not be used as a basis for estimating results of operations for a full year.
 
71

 
 
Part I, Item 4. Controls and Procedures

Disclosure Controls and Procedures

As of June 30, 2010, evaluations were performed under the supervision and with the participation of Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy (individually "Registrant" and collectively the "Registrants") management, including their respective Principal Executive Officers (PEO) and Principal Financial Officers (PFO).  The evaluations assessed the effectiveness of the Registrants' disclosure controls and procedures.  Based on the evaluations, each PEO and PFO has concluded that, as to the Registrant or Registrants for which they serve as PEO or PFO, the Registrant's or Registrants' disclosure controls and procedures are effective to ensure that info rmation required to be disclosed by each Registrant in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms; and that the Registrant's or Registrants' disclosure controls and procedures are also effective in reasonably assuring that such information is accumulated and communicated to the Registrant's or Registrants' management, including their respective PEOs and PFOs, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Controls over Financial Reporting

Under the supervision and with the participation of the Registrants' management, including their respective PEOs and PFOs, the Registrants evaluated changes in internal control over financial reporting that occurred during the quarter ended June 30, 2010 and found no change that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting.
 
72

 
Entergy Arkansas, Inc.
Management's Financial Discussion and Analysis

ENTERGY ARKANSAS, INC.

MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS

Results of Operations

Net Income

Second Quarter 2010 Compared to Second Quarter 2009

Net income increased by $39.0 million primarily due to higher net revenue, lower other operation and maintenance expenses, and a lower effective income tax rate.

Six Months Ended June 30, 2010 Compared to Six Months Ended June 30, 2009

Net income increased by $38.2 million primarily due to higher net revenue, higher other income, lower other operation and maintenance expenses, and a lower effective income tax rate.

Net Revenue

Second Quarter 2010 Compared to Second Quarter 2009

Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory charges (credits).  Following is an analysis of the change in net revenue comparing the second quarter 2010 to the second quarter 2009.

  
 
Amount
   
(In Millions)
     
2009 net revenue
 
$282.6 
Volume/weather
 
20.0 
2009 capitalization of Ouachita plant service charges
 
12.5 
Other
 
7.6 
2010 net revenue
 
$322.7 

The volume/weather variance is primarily due to an increase of 460 GWh, or 10%, in billed electricity usage primarily in the industrial sector and also including the effect of more favorable weather on residential and commercial sales.

In 2009, Entergy Arkansas capitalized $12.5 million of Ouachita plant service charges that were previously expensed.  The result of the capitalization in 2009 was a decrease in net revenues with an offsetting decrease in other operation and maintenance expenses.
 
 
Gross operating revenues and fuel and purchased power expenses

Gross operating revenues increased primarily due to an increase of $39.5 million in rider revenues and an increase of $20 million related to volume/weather, as discussed above.  The increase was partially offset by a decrease of $25.5 million in fuel cost recovery revenues due to a change in the energy cost recovery rider effective April 2010 and a decrease of $19.1 million in gross wholesale revenue due to the expiration of a wholesale customer contract in 2009.

Fuel and purchased power expenses decreased primarily due to a decrease in the average market price of purchased power, partially offset by an increase in the recovery from customers of deferred fuel costs.
 
73

Entergy Arkansas, Inc.
Management's Financial Discussion and Analysis
 
Six Months Ended June 30, 2010 Compared to Six Months Ended June 30, 2009

Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory credits.  Following is an analysis of the change in net revenue comparing the six months ended June 30, 2010 to the six months ended June 30, 2009.

  
 
Amount
   
(In Millions)
     
2009 net revenue
 
$542.5 
Volume/weather
 
28.8 
2009 capitalization of Ouachita plant service charges
 
12.5 
Other
 
(0.7)
2010 net revenue
 
$583.1 

The volume/weather variance is primarily due to an increase of 868 GWh, or 9%, in billed electricity usage primarily in the industrial sector and also including the effect of more favorable weather on residential and commercial sales.

In 2009, Entergy Arkansas capitalized $12.5 million of Ouachita plant service charges that were previously expensed.  The result of the capitalization in 2009 was a decrease in net revenues with an offsetting decrease in other operation and maintenance expenses.

Gross operating revenues and fuel and purchased power expenses

Gross operating revenues increased primarily due to an increase of $81.5 million in rider revenues and an increase of $28.8 million related to volume/weather, as discussed above.  The increase was partially offset by a decrease of $83.2 million in fuel cost recovery revenues due to a change in the energy cost recovery rider effective April 2010 and a decrease of $21 million in gross wholesale revenue due to the expiration of a wholesale customer contract in 2009.

Fuel and purchased power expenses decreased primarily due to a decrease in the average market price of purchased power, partially offset by an increase in the recovery from customers of deferred fuel costs.

Other Income Statement Variances

Second Quarter 2010 Compared to Second Quarter 2009

Other operation and maintenance expenses decreased primarily due to:

·  
a decrease of $10.5 million in fossil expenses due to plant outages costs in 2009;
·  
a decrease of $4.3 million due to 2008 storm costs which were deferred per an APSC order and were recovered through revenues in 2009;
·  
a decrease of $3.2 million due to the deferral of 2009 rate case expenses to be amortized effective July 2010; and
·  
a decrease of $2.7 million in customer service costs primarily as a result of higher write-offs of uncollectible customer accounts in 2009.

The decrease was partially offset by an increase of $12.5 million due to the capitalization in 2009 of Ouachita plant service charges previously expensed.
 
74

 
Entergy Arkansas, Inc.
Management's Financial Discussion and Analysis

Six Months Ended June 30, 2010 Compared to Six Months Ended June 30, 2009

Other operation and maintenance expenses decreased primarily due to:

·  
a decrease of $15.3 million in fossil expenses due to plant outages costs in 2009;
·  
a decrease of $10 million due to 2008 storm costs which were deferred per an APSC order and were recovered through revenues in 2009;
·  
a decrease of $3.3 million in customer service costs primarily as a result of higher write-offs of uncollectible customer accounts in 2009; and
·  
a decrease of $3.2 million due to the deferral of 2009 rate case expenses to be amortized effective July 2010.

The decrease was partially offset by:

·  
an increase of $12.5 million due to the capitalization in 2009 of Ouachita plant service charges previously expensed;
·  
an increase of $5.6 million in payroll-related and benefits costs; and
·  
nuclear insurance premium refunds of $3.4 million received in 2009.

Other income increased primarily due to an increase of $6.2 million in earnings on decommissioning trust funds.

Income Taxes

The effective income tax rates for the second quarter of 2010 and the six months ended June 30, 2010 were 40.8% and 42.7%, respectively.  The differences in the effective income tax rates for the second quarter 2010 and the six months ended June 30, 2010 versus the federal statutory rate of 35.0% are primarily due to certain book and tax differences related to utility plant items.

The effective income tax rates for the second quarter of 2009 and the six months ended June 30, 2009 were 57.3% and 54.8%, respectively.  The differences in the effective income tax rates for the second quarter 2009 and the six months ended June 30, 2009 versus the federal statutory rate of 35.0% are primarily due to certain book and tax differences related to utility plant items, state income taxes, and payroll and benefits related items, partially offset by the amortization of investment tax credits.

Liquidity and Capital Resources

Cash Flow

Cash flows for the six months ended June 30, 2010 and 2009 were as follows:

   
2010
 
2009
   
(In Thousands)
         
Cash and cash equivalents at beginning of period
 
$86,233 
 
$39,568 
         
Cash flow provided by (used in):
       
 
Operating activities
 
351,346
 
257,810 
 
Investing activities
 
(155,857)
 
(204,966)
 
Financing activities
 
(183,430)
 
(12,287)
Net increase in cash and cash equivalents
 
12,059 
 
40,557 
         
Cash and cash equivalents at end of period
 
$98,292 
 
$80,125 
 
75

Entergy Arkansas, Inc.
Management's Financial Discussion and Analysis
 

Operating Activities

Cash flow from operations increased $93.5 million for the six months ended June 30, 2010 compared to the six months ended June 30, 2009 primarily due to ice storm spending in 2009, offset by an increase of $22.3 million in pension contributions and income tax payments of $10 million in 2010 compared to income tax refunds of $24.9 million received in 2009.

Investing Activities

Net cash flow used in investing activities decreased $49.1 million for the six months ended June 30, 2010 compared to the six months ended June 30, 2009 primarily due to a decrease in distribution construction expenditures as a result of an ice storm hitting Entergy Arkansas's service territory in the first quarter 2009, decreases in fossil construction expenditures resulting from various fossil projects that occurred in 2009, and money pool activity.   The decrease was partially offset by an increase in nuclear construction expenditures primarily due to the reactor coolant pump upgrade project and security upgrades.

Increases in Entergy Arkansas' receivable from the money pool are a use of cash flow, and Entergy Arkansas' receivable from the money pool increased by $2.9 million in 2010 compared to increasing by $35.2 million in 2009.  The money pool is an inter-company borrowing arrangement designed to reduce Entergy's subsidiaries' need for external short-term borrowings.

Financing Activities

Net cash flow used in financing activities increased $171.1 million for the six months ended June 30, 2010 compared to the six months ended June 30, 2009 primarily due to the retirement of $100 million of 4.50% Series first mortgage bonds in June 2010, an increase of $44.7 million in common stock dividends paid in 2010, and payment on credit borrowings of $25.8 million.

Capital Structure

Entergy Arkansas's capitalization is balanced between equity and debt, as shown in the following table.

   
June 30,
2010
 
December 31,
2009
         
Net debt to net capital
 
50.7%
 
52.8%
Effect of subtracting cash from debt
 
1.5%
 
1.2%
Debt to capital
 
52.2%
 
54.0%

Net debt consists of debt less cash and cash equivalents.  Debt consists of notes payable, capital lease obligations, and long-term debt, including the currently maturing portion.  Capital consists of debt, preferred stock without sinking fund, and shareholders' equity.  Net capital consists of capital less cash and cash equivalents.  Entergy Arkansas uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Arkansas's financial condition.

Uses and Sources of Capital

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources" in the Form 10-K for a discussion of Entergy Arkansas's uses and sources of capital.  Following are updates to the information provided in the Form 10-K.
 
76

 
Entergy Arkansas, Inc.
Management's Financial Discussion and Analysis

Entergy Arkansas's receivables from the money pool were as follows:

June 30,
2010
 
December 31,
2009
 
June 30,
2009
 
December 31,
2008
(In Thousands)
             
$31,782
 
$28,859
 
$51,217
 
$15,991

See Note 4 to the financial statements in the Form 10-K for a description of the money pool.

In April 2010, Entergy Arkansas renewed its credit facility through April 2011 in the amount of $75.125 million.  There were no outstanding borrowings under the Entergy Arkansas credit facility as of June 30, 2010.

On June 1, 2010, Entergy Arkansas paid, at maturity, its $100 million of 4.50% Series first mortgage bonds.

Entergy's Utility supply plan initiative will continue to seek to transform its generation portfolio with new or repowered generation resources.  Opportunities resulting from the supply plan initiative, including new projects or the exploration of alternative financing sources, could result in increases or decreases in the capital expenditure estimates given in the Form 10-K.  The estimated capital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints, market volatility, economic trends, environmental compliance, and the ability to access capital.

Entergy Arkansas January 2009 Ice Storm

As discussed in the Form 10-K, in January 2009 a severe ice storm caused significant damage to Entergy Arkansas' transmission and distribution lines, equipment, poles, and other facilities.  A law was enacted in April 2009 in Arkansas that authorizes securitization of storm damage restoration costs.  In June 2010 the APSC issued a financing order authorizing the issuance of approximately $126.3 million in storm cost recovery bonds, which includes carrying costs of $11.5 million and $4.6 million of up-front financing costs.  Entergy Arkansas expects the bonds to be issued in the third quarter 2010.

White Bluff Coal Plant Project

In June 2005 the EPA issued final Best Available Retrofit Control Technology (BART) regulations that could potentially result in a requirement to install SO2 and NOx pollution control technology on certain of Entergy's coal and oil generation units.  The rule leaves certain BART determinations to the states.  The Arkansas Department of Environmental Quality (ADEQ) prepared a State Implementation Plan (SIP) for Arkansas facilities to implement its obligations under the Clean Air Visibility Rule.  The ADEQ determined that Entergy Arkansas's White Bluff power plant affects a Class I Area's visibility and will be subject to the EPA's presumptive BART requirements to install scrubbers and l ow NOx burners.  Under then current regulations, the scrubbers would have had to be operational by October 2013.  Entergy filed a petition in December 2009 with the Arkansas Pollution Control and Ecology (APC&E) Commission requesting a variance from this deadline, however, because the EPA has not approved Arkansas's Regional Haze SIP and the EPA has recently expressed concerns about Arkansas's Regional Haze SIP and questioned the appropriateness of issuing an air permit prior to that approval.  Entergy Arkansas's petition requested that, consistent with federal law, the compliance deadline be changed as expeditiously as practicable, but in no event later than five years after EPA approval of the Arkansas Regional Haze SIP.  The APC&E Commission approved the variance at its March 26, 2010 meeting.  No party appealed the variance, and the ruling is final.  The timeline for EPA action on t he Arkansas Regional Haze SIP is uncertain at this time.

In March 2009, Entergy Arkansas made a filing with the APSC seeking a declaratory order that the White Bluff project is in the public interest.  In May 2009 the APSC Staff filed a motion requesting that the APSC require Entergy Arkansas to file testimony on several issues.  In December 2009, in response to the EPA concerns regarding Arkansas's Regional Haze SIP, the APSC suspended the procedural schedule in the proceeding and directed Entergy Arkansas to file monthly status reports regarding developments between the
 
77

Entergy Arkansas, Inc.
Management's Financial Discussion and Analysis
 
EPA and the ADEQ concerning the EPA's approval of the Arkansas Regional Haze SIP.  In May 2010, Entergy Arkansas withdrew its petition for a declaratory order and the APSC closed the proceeding.

Currently, the White Bluff project is suspended, but the latest conceptual cost estimate indicated that Entergy Arkansas's share of the project could cost approximately $465 million.  The plant would continue to operate during construction, although an outage would be necessary to complete the tie-in of the scrubbers.  Entergy continues to review potential environmental spending needs and financing alternatives for any such spending, and future spending estimates are likely to change based on the results of this continuing analysis.

State and Local Rate Regulation

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS – State and Local Rate Regulation" in the Form 10-K for a discussion of state and local rate regulation.  Following is an update to the discussion in the Form 10-K.

As discussed in the Form 10-K, on September 4, 2009, Entergy Arkansas filed with the APSC for a general change in rates, charges, and tariffs.  In June 2010 the APSC approved a settlement and subsequent compliance tariffs that provide for a $63.7 million rate increase, effective for bills rendered for the first billing cycle of July 2010.  The settlement provides for a 10.2% return on common equity.  Entergy Arkansas's proposed formula rate plan mechanism, including a recovery mechanism for APSC-approved costs for additional capacity purchases or construction/acquisition of new transmission or generating facilities, was not adopted under the settlement.

Entergy Arkansas Storm Reserve Accounting

The APSC's June 2007 order in Entergy Arkansas' base rate proceeding eliminated storm reserve accounting for Entergy Arkansas.  In March 2009 a law was enacted in Arkansas that requires the APSC to permit storm reserve accounting for utilities that request it.  Entergy Arkansas filed its request with the APSC, and reinstated storm reserve accounting effective January 1, 2009.  A hearing on Entergy Arkansas' request was held in March 2010, and in April 2010 the ALJ approved Entergy Arkansas’s establishment of a storm cost reserve account.

Federal Regulation

See "System Agreement Proceedings" and "Independent Coordinator of Transmission" in the "Rate, Cost-recovery, and Other Regulation" section of Entergy Corporation and Subsidiaries Management's Financial Discussion and Analysis for updates to the discussion in the Form 10-K.

Nuclear Matters

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Nuclear Matters" in the Form 10-K for a discussion of nuclear matters.

Environmental Risks

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Environmental Risks" in the Form 10-K for a discussion of environmental risks.

Critical Accounting Estimates

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates" in the Form 10-K for a discussion of the estimates and judgments necessary in Entergy Arkansas's accounting for nuclear decommissioning costs, unbilled revenue, and qualified pension and other postretirement benefits.
 
78

Entergy Arkansas, Inc.
Management's Financial Discussion and Analysis
 

Federal Healthcare Legislation

See the "Critical Accounting Estimates - Federal Healthcare Legislation" section of Entergy Corporation and Subsidiaries Management's Financial Discussion and Analysis for an update to the Form 10-K discussion on critical accounting estimates.


 
79

 


ENTERGY ARKANSAS, INC.
INCOME STATEMENTS
 
For the Three and Six Months Ended June 30, 2010 and 2009
(Unaudited)
                         
   
Three Months Ended
   
Six Months Ended
 
   
2010
   
2009
   
2010
   
2009
 
   
(In Thousands)
   
(In Thousands)
 
                         
OPERATING REVENUES
                       
Electric
  $ 540,535     $ 518,009     $ 1,072,429     $ 1,054,003  
                                 
OPERATING EXPENSES
                               
Operation and Maintenance:
                               
   Fuel, fuel-related expenses, and
                               
     gas purchased for resale
    116,739       82,334       282,469       267,490  
   Purchased power
    108,830       151,947       216,980       246,274  
   Nuclear refueling outage expenses
    10,748       10,467       21,859       19,961  
   Other operation and maintenance
    113,518       124,605       225,658       232,031  
Decommissioning
    8,877       8,347       17,619       17,490  
Taxes other than income taxes
    20,033       18,604       42,557       39,971  
Depreciation and amortization
    60,705       63,268       124,703       125,629  
Other regulatory charges (credits) - net
    (7,708 )     1,091       (10,126 )     (2,244 )
TOTAL
    431,742       460,663       921,719       946,602  
                                 
OPERATING INCOME
    108,793       57,346       150,710       107,401  
                                 
OTHER INCOME
                               
Allowance for equity funds used during construction
    1,304       850       2,758       2,625  
Interest and dividend income
    6,034       3,795       13,722       7,019  
Miscellaneous - net
    (323 )     (1,142 )     (85 )     (2,070 )
TOTAL
    7,015       3,503       16,395       7,574  
                                 
INTEREST AND OTHER CHARGES
                               
Interest on long-term debt
    21,109       21,686       42,469       42,898  
Other interest - net
    1,914       1,210       2,890       1,884  
Allowance for borrowed funds used during construction
    (762 )     (544 )     (1,611 )     (1,647 )
TOTAL
    22,261       22,352       43,748       43,135  
                                 
INCOME BEFORE INCOME TAXES
    93,547       38,497       123,357       71,840  
                                 
Income taxes
    38,146       22,074       52,703       39,347  
                                 
NET INCOME
    55,401       16,423       70,654       32,493  
                                 
Preferred dividend requirements and other
    1,718       1,718       3,437       3,437  
                                 
EARNINGS APPLICABLE TO
                               
COMMON STOCK
  $ 53,683     $ 14,705     $ 67,217     $ 29,056  
                                 
See Notes to Financial Statements.
                               

 
80

 





ENTERGY ARKANSAS, INC.
STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2010 and 2009
(Unaudited)
             
   
2010
   
2009
 
   
(In Thousands)
 
             
OPERATING ACTIVITIES
           
Net income
  $ 70,654     $ 32,493  
Adjustments to reconcile net income to net cash flow provided by operating activities:
         
  Reserve for regulatory adjustments
    (3,948 )     (1,645 )
  Other regulatory credits - net
    (10,126 )     (2,244 )
  Depreciation, amortization, and decommissioning, including nuclear fuel amortization
    179,316       143,119  
  Deferred income taxes and investment tax credits, and non-current taxes accrued
    (156,174 )     58,433  
  Changes in working capital:
               
    Receivables
    (21,628 )     (57,181 )
    Fuel inventory
    (4,815 )     (1,589 )
    Accounts payable
    (51,095 )     (40,878 )
    Taxes accrued
    172,506       -  
    Interest accrued
    (836 )     (1,888 )
    Deferred fuel costs
    137,385       122,270  
    Other working capital accounts
    70,417       66,220  
  Provision for estimated losses and reserves
    (8,125 )     (2,617 )
  Changes in other regulatory assets
    (38,326 )     (32,875 )
  Changes in pension and other postretirement liabilities
    (28,336 )     (9,033 )
  Other
    44,477       (14,775 )
Net cash flow provided by operating activities
    351,346       257,810  
                 
INVESTING ACTIVITIES
               
Construction expenditures
    (144,478 )     (167,408 )
Allowance for equity funds used during construction
    2,758       2,625  
Nuclear fuel purchases
    (12,129 )     (771 )
Proceeds from sale/leaseback of nuclear fuel
    -       594  
Changes in other investments
    2,415       -  
Proceeds from nuclear decommissioning trust fund sales
    132,340       51,651  
Investment in nuclear decommissioning trust funds
    (136,329 )     (56,431 )
Proceeds from sale of equipment
    2,489       -  
Change in money pool receivable - net
    (2,923 )     (35,226 )
Net cash flow used in investing activities
    (155,857 )     (204,966 )
                 
FINANCING ACTIVITIES
               
Retirement of long-term debt
    (100,000 )     -  
Changes in credit borrowings - net
    (25,777 )     -  
Dividends paid:
               
  Common stock
    (53,400 )     (8,700 )
  Preferred stock
    (3,437 )     (3,437 )
Other
    (816 )     (150 )
Net cash flow used in financing activities
    (183,430 )     (12,287 )
                 
Net increase in cash and cash equivalents
    12,059       40,557  
                 
Cash and cash equivalents at beginning of period
    86,233       39,568  
                 
Cash and cash equivalents at end of period
  $ 98,292     $ 80,125  
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
               
Cash paid/(received) during the period for:
               
  Interest - net of amount capitalized
  $ 43,570     $ 43,992  
  Income taxes
  $ 10,000     $ (24,911 )
                 
See Notes to Financial Statements.
               

 
81

 



ENTERGY ARKANSAS, INC.
BALANCE SHEETS
ASSETS
June 30, 2010 and December 31, 2009
(Unaudited)
             
   
2010
   
2009
 
   
(In Thousands)
 
             
CURRENT ASSETS
           
Cash and cash equivalents
           
  Cash
  $ 6,320     $ 3,336  
  Temporary cash investments
    91,972       82,897  
    Total cash and cash equivalents
    98,292       86,233  
Accounts receivable:
               
  Customer
    109,923       93,754  
  Allowance for doubtful accounts
    (22,023 )     (21,853 )
  Associated companies
    76,192       91,650  
  Other
    53,251       55,381  
  Accrued unbilled revenues
    102,284       76,126  
    Total accounts receivable
    319,627       295,058  
Deferred fuel costs
    -       122,802  
Accumulated deferred income taxes
    14,358       -  
Fuel inventory - at average cost
    19,875       15,060  
Materials and supplies - at average cost
    135,467       132,182  
Deferred nuclear refueling outage costs
    40,906       34,492  
System agreement cost equalization
    23,424       70,000  
Prepayments and other
    8,533       32,668  
TOTAL
    660,482       788,495  
                 
OTHER PROPERTY AND INVESTMENTS
               
Investment in affiliates - at equity
    11,201       11,201  
Decommissioning trust funds
    435,638       440,220  
Non-utility property - at cost (less accumulated depreciation)
    1,687       1,435  
Other
    2,976       2,976  
TOTAL
    451,502       455,832  
                 
UTILITY PLANT
               
Electric
    7,677,677       7,602,975  
Property under capital lease
    1,335       1,364  
Construction work in progress
    94,274       114,998  
Nuclear fuel under capital lease
    -       173,076  
Nuclear fuel
    158,186       11,543  
TOTAL UTILITY PLANT
    7,931,472       7,903,956  
Less - accumulated depreciation and amortization
    3,605,224       3,534,056  
UTILITY PLANT - NET
    4,326,248       4,369,900  
                 
DEFERRED DEBITS AND OTHER ASSETS
               
Regulatory assets:
               
  Regulatory asset for income taxes - net
    46,570       51,340  
  Other regulatory assets
    829,848       746,955  
Other
    25,496       23,118  
TOTAL
    901,914       821,413  
                 
TOTAL ASSETS
  $ 6,340,146     $ 6,435,640  
                 
See Notes to Financial Statements.
               
 
 
 
82

 
 
 
ENTERGY ARKANSAS, INC.
BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
June 30, 2010 and December 31, 2009
(Unaudited)
                 
      2010       2009  
   
(In Thousands)
 
                 
CURRENT LIABILITIES
               
Currently maturing long-term debt
  $ -     $ 100,000  
Notes payable
    31,289       -  
Accounts payable:
               
  Associated companies
    64,298       107,584  
  Other
    97,503       111,523  
Customer deposits
    69,532       67,480  
Taxes accrued
    172,506       -  
Accumulated deferred income taxes
    -       74,794  
Interest accrued
    25,758       24,104  
Deferred fuel costs
    14,583       -  
Obligations under capital leases
    65       72,838  
Other
    24,510       14,742  
TOTAL
    500,044       573,065  
                 
NON-CURRENT LIABILITIES
               
Accumulated deferred income taxes and taxes accrued
    1,456,005       1,493,580  
Accumulated deferred investment tax credits
    45,925       47,909  
Obligations under capital leases
    1,270       101,601  
Other regulatory liabilities
    106,031       101,370  
Decommissioning
    583,993       566,374  
Accumulated provisions
    5,092       13,217  
Pension and other postretirement liabilities
    420,085       448,421  
Long-term debt
    1,653,746       1,518,569  
Other
    26,227       43,623  
TOTAL
    4,298,374       4,334,664  
                 
Commitments and Contingencies
               
                 
Preferred stock without sinking fund
    116,350       116,350  
                 
SHAREHOLDERS' EQUITY
               
Common stock, $0.01 par value, authorized 325,000,000
               
  shares; issued and outstanding 46,980,196 shares in 2010
               
  and 2009
    470       470  
Paid-in capital
    588,444       588,444  
Retained earnings
    836,464       822,647  
TOTAL
    1,425,378       1,411,561  
                 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
  $ 6,340,146     $ 6,435,640  
                 
See Notes to Financial Statements.
               
 
 
83

 



ENTERGY ARKANSAS, INC.
SELECTED OPERATING RESULTS
For the Three and Six Months Ended June 30, 2010 and 2009
(Unaudited)
                         
                         
   
Three Months Ended
   
Increase/
       
Description
 
2010
   
2009
   
(Decrease)
   
%
 
   
(Dollars In Millions)
       
Electric Operating Revenues:
                       
  Residential
  $ 164     $ 150     $ 14       9  
  Commercial
    111       105       6       6  
  Industrial
    109       93       16       17  
  Governmental
    4       6       (2 )     (33 )
    Total retail
    388       354       34       10  
  Sales for resale
                               
     Associated companies
    76       86       (10 )     (12 )
     Non-associated companies
    16       25       (9 )     (36 )
  Other
    61       53       8       15  
    Total
  $ 541     $ 518     $ 23       4  
                                 
Billed Electric Energy
                               
 Sales (GWh):
                               
  Residential
    1,624       1,481       143       10  
  Commercial
    1,429       1,359       70       5  
  Industrial
    1,739       1,490       249       17  
  Governmental
    62       64       (2 )     (3 )
    Total retail
    4,854       4,394       460       10  
  Sales for resale
                               
     Associated companies
    2,070       2,530       (460 )     (18 )
     Non-associated companies
    139       464       (325 )     (70 )
    Total
    7,063       7,388       (325 )     (4 )
                                 
                                 
   
Six Months Ended
   
Increase/
         
Description
    2010       2009    
(Decrease)
   
%
 
   
(Dollars In Millions)
       
Electric Operating Revenues:
                               
  Residential
  $ 383     $ 361     $ 22       6  
  Commercial
    220       219       1       -  
  Industrial
    210       197       13       7  
  Governmental
    9       10       (1 )     (10 )
    Total retail
    822       787       35       4  
  Sales for resale
                               
     Associated companies
    155       159       (4 )     (3 )
     Non-associated companies
    40       57       (17 )     (30 )
  Other
    55       51       4       8  
    Total
  $ 1,072     $ 1,054     $ 18       2  
                                 
Billed Electric Energy
                               
 Sales (GWh):
                               
  Residential
    4,025       3,590       435       12  
  Commercial
    2,809       2,711       98       4  
  Industrial
    3,325       2,989       336       11  
  Governmental
    126       127       (1 )     (1 )
    Total retail
    10,285       9,417       868       9  
  Sales for resale
                               
     Associated companies
    4,057       4,400       (343 )     (8 )
     Non-associated companies
    387       1,027       (640 )     (62 )
    Total
    14,729       14,844       (115 )     (1 )

 
84

 


ENTERGY GULF STATES LOUISIANA, L.L.C.

MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS


Results of Operations

Net Income

Second Quarter 2010 Compared to Second Quarter 2009

Net income increased by $3.4 million primarily due to higher net revenue, partially offset by lower other income, a higher effective income tax rate, and higher other operation and maintenance expenses.

Six Months Ended June 30, 2010 Compared to Six Months Ended June 30, 2009

Net income increased by $14.3 million primarily due to higher net revenue, partially offset by lower other income, higher other operation and maintenance expenses, and a higher effective income tax rate.

Net Revenue

Second Quarter 2010 Compared to Second Quarter 2009

Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses and 3) other regulatory charges (credits).  Following is an analysis of the change in net revenue comparing the second quarter 2010 to the second quarter 2009.

   
Amount
   
(In Millions)
     
2009 net revenue
 
$201.4 
Retail electric price
 
18.9 
Fuel recovery
 
6.1 
Volume/weather
 
3.6 
Other
 
(0.7)
2010 net revenue
 
$229.3 

The retail electric price variance is primarily due to formula rate plan increases effective January 2010 and November 2009. See Note 2 to the financial statements in the Form 10-K for further discussion of the formula rate plan increases.

           The fuel recovery variance is primarily due to inclusion of certain nuclear fuel costs now included as recoverable after a revision to the fuel adjustment clause methodology, partially offset by fuel true-ups.

The volume/weather variance is primarily due to an increase of 599 GWh, or 14%, in billed electricity usage in all sectors, including the effect of more favorable weather on the residential sector.
 
85

Entergy Gulf States Louisiana, L.L.C.
Management's Financial Discussion and Analysis
 

Gross operating revenues and  purchased power expenses

Gross operating revenues increased primarily due to:

·  
an increase of $25.9 million in fuel cost recovery revenues due to higher fuel rates and increased usage;
·  
an increase of $12.7 million in rider revenues due to lower System Agreement credits in 2010;
·  
an increase of $3.6 million related to volume/weather, as discussed above; and
·  
formula rate plan increases effective January 2010 and November 2009, as discussed above.

Purchased power expenses increased primarily due to an increase in net area demand and the average market price of purchased power.

Six Months Ended June 30, 2010 Compared to Six Months Ended June 30, 2009

Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory charges (credits).  Following is an analysis of the change in net revenue comparing the six months ended June 30, 2010 to the six months ended June 30, 2009.

   
Amount
   
(In Millions)
     
2009 net revenue
 
$397.5 
Retail electric price
 
28.1 
Volume/weather
 
20.6 
Fuel recovery
 
5.8 
Net wholesale revenue
 
(5.8)
Other
 
1.1 
2010 net revenue
 
$447.3 

The retail electric price variance is primarily due to formula rate plan increases effective January 2010 and November 2009. See Note 2 to the financial statements in the Form 10-K for further discussion of the formula rate plan increases.

The volume/weather variance is primarily due to an increase of 1,297 GWh, or 16%, in billed electricity usage in all sectors, including the effect of more favorable weather on the residential sector.

The fuel recovery variance is primarily due to inclusion of certain nuclear fuel costs now included as recoverable after a revision to the fuel adjustment clause methodology, partially offset by fuel true-ups.

The net wholesale revenue variance is primarily due to the transfer of several wholesale customers to Entergy Texas in the first quarter 2010.

Gross operating revenues and fuel and purchased power expenses

Gross operating revenues increased primarily due to:

·  
an increase of $20.6 million related to volume/weather, as discussed above;
·  
an increase of $13 million in rider revenues due to lower System Agreement credits in 2010;
·  
an increase of $12.8 million in gross gas revenues primarily due to increased usage; and
·  
formula rate plan increases effective January 2010 and November 2009, as discussed above.

Fuel and purchased power expenses increased primarily due to an increase in net area demand and the average market price of purchased power, partially offset by a decrease in deferred fuel expense due to fuel and purchased power expense increases in excess of fuel cost recovery revenues.
 
86

 
Entergy Gulf States Louisiana, L.L.C.
Management's Financial Discussion and Analysis
 

Other Income Statement Variances

Second Quarter 2010 Compared to Second Quarter 2009

Other operation and maintenance expenses increased primarily due to:

·  
an increase of $6 million in fossil expenses primarily due to higher plant maintenance costs and plant outages;
·  
an increase of $2.5 million due to the settlement of Hurricane Gustav and Hurricane Ike storm costs; and
·  
an increase of $1.1 million in payroll-related and benefits costs.

The increase was partially offset by a decrease of $2.2 million in customer service costs primarily as a result of higher write-offs of uncollectible customer accounts in 2009 and a decrease of $1.1 million in nuclear expenses due to lower nuclear contract costs.

Other income decreased primarily due to a decrease of $6.6 million in interest and dividend income related to the debt assumption agreement with Entergy Texas.  In June 2010, Entergy Texas repaid the outstanding assumed debt and the debt assumption agreement was terminated.

Six Months Ended June 30, 2010 Compared to Six Months Ended June 30, 2009

Other operation and maintenance expenses increased primarily due to:

·  
an increase of $6 million in fossil expenses primarily due to higher plant maintenance costs and plant outages;
·  
an increase of $2.5 million due to the settlement of Hurricane Gustav and Hurricane Ike storm costs; and
·  
an increase of $2.2 million in payroll-related and benefits costs.

The increase was partially offset by a decrease of $3.4 million in customer service costs primarily as a result of higher write-offs of uncollectible customer accounts in 2009 and a decrease of $1.7 million in nuclear expenses due to lower nuclear contract costs.

Other income decreased primarily due to a decrease of $14.3 million in interest and dividend income related to the debt assumption agreement with Entergy Texas.  In June 2010, Entergy Texas repaid the outstanding assumed debt and the debt assumption agreement was terminated.

Income Taxes

The effective income tax rate was 47.9% for the second quarter 2010 and 43.0% for the six months ended June 30, 2010.  The differences in the effective income tax rates for the second quarter 2010 and for the six months ended June 30, 2010 versus the federal statutory rate of 35% were primarily due to book and tax differences related to utility plant items and state income taxes, partially offset by book and tax differences related to storm cost financing and the amortization of investment tax credits.

The effective income tax rate was 38.4% for the second quarter 2009 and 39.7% for the six months ended June 30, 2009.  The difference in the effective income tax rate for the second quarter 2009 versus the federal statutory rate of 35% is primarily due to book and tax differences related to utility plant items and state income taxes, partially offset by book and tax differences related to storm cost financing.  The difference in the effective income tax rate for the six months ended June 30, 2009 versus the federal statutory rate of 35% is primarily due to book and tax differences related to utility plant items and state income taxes, partially offset by book and tax differences related to storm cost financing, book and tax differences related to allowance for equity funds used during construction, and the amortization of investment tax credits.
 
87

Entergy Gulf States Louisiana, L.L.C.
Management's Financial Discussion and Analysis
 

Liquidity and Capital Resources

Cash Flow

Cash flows for the six months ended June 30, 2010 and 2009 were as follows:

   
2010
 
2009
   
(In Thousands)
         
Cash and cash equivalents at beginning of period
 
$144,460 
 
$49,303 
         
Cash flow provided by (used in):
       
 
Operating activities
 
208,179 
 
120,994 
 
Investing activities
 
(128,780)
 
(96,493)
 
Financing activities
 
(75,311)
 
(6,607)
Net increase in cash and cash equivalents
 
4,088 
 
17,894 
         
Cash and cash equivalents at end of period
 
$148,548 
 
$67,197 

Operating Activities

Net cash flow provided by operating activities increased $87.2 million for the six months ended June 30, 2010 compared to the six months ended June 30, 2009 primarily due to a decrease of $28.9 million in income tax payments, a decrease of $6.9 million in interest payments, and storm restoration spending in 2009, partially offset by decreased recovery of deferred fuel costs and the timing of collections of receivables from customers.

Investing Activities

Net cash flow used in investing activities increased $32.3 million for the six months ended June 30, 2010 compared to the six months ended June 30, 2009 primarily due to:

·  
an increase in construction expenditures resulting from $24.9 million in costs associated with the development of new nuclear generation at River Bend, as discussed below;
·  
proceeds from the sale/leaseback of nuclear fuel of $20.6 million in 2009.  See Note 12 to the financial statements for discussion of the consolidation of nuclear fuel company variable interest entities effective January 1, 2010; and
·  
an increase of $11.9 million in nuclear fuel purchases.

The increase was partially offset by a decrease in distribution construction expenditures related to Hurricane Gustav and Hurricane Ike work in 2009 and money pool activity.

Decreases in Entergy Gulf States Louisiana's receivable from the money pool are a source of cash flow, and Entergy Gulf States Louisiana's receivable from the money pool decreased by $0.1 million for the six months ended June 30, 2010 compared to increasing by $31 million for the six months ended June 30, 2009.  The money pool is an inter-company borrowing arrangement designed to reduce the Utility subsidiaries' need for external short-term borrowings.

Financing Activities

Net cash flow used in financing activities increased $68.7 million for the six months ended June 30, 2010 compared to the six months ended June 30, 2009 primarily due to an increase of $58.3 million in common equity distributions.
 
88

 
Entergy Gulf States Louisiana, L.L.C.
Management's Financial Discussion and Analysis
 

Capital Structure

Entergy Gulf States Louisiana's capitalization is balanced between equity and debt, as shown in the following table. The calculation below does not reduce the debt by the debt assumed by Entergy Texas ($0 as of June 30, 2010, and $168 million as of December 31, 2009) because Entergy Gulf States Louisiana was still primarily liable on the debt.

   
June 30,
 2010
 
December 31,
2009
         
Net debt to net capital
 
50.3%
 
53.2%
Effect of subtracting cash from debt
 
2.5%
 
2.1%
Debt to capital
 
52.8%
 
55.3%

Net debt consists of debt less cash and cash equivalents.  Debt consists of notes payable, capital lease obligations and long-term debt, including the currently maturing portion.  Capital consists of debt and members' equity.  Net capital consists of capital less cash and cash equivalents.  Entergy Gulf States Louisiana uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Gulf States Louisiana's financial condition.

Uses and Sources of Capital

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources" in the Form 10-K for a discussion of Entergy Gulf States Louisiana's uses and sources of capital. Following are additional updates to the information provided in the Form 10-K.

Entergy Gulf States Louisiana's receivables from the money pool were as follows:

June 30,
2010
 
December 31,
2009
 
June 30,
2009
 
December 31,
2008
(In Thousands)
             
$50,032
 
$50,131
 
$42,597
 
$11,589

See Note 4 to the financial statements in the Form 10-K for a description of the money pool.

As discussed in the Form 10-K, Entergy Gulf States Louisiana has a credit facility in the amount of $100 million scheduled to expire in August 2012.  No borrowings were outstanding under the facility as of June 30, 2010.

New Nuclear Development

As discussed in the Form 10-K, Entergy Gulf States Louisiana and Entergy Louisiana provided public notice to the LPSC of their intention to make a filing pursuant to the LPSC's general order that governs the development of new nuclear generation in Louisiana.  The project option being developed by the companies is for new nuclear generation at River Bend.  Entergy Gulf States Louisiana and Entergy Louisiana, together with Entergy Mississippi, have been engaged in the development of options to construct new nuclear generation at the River Bend and Grand Gulf sites.  Entergy Gulf States Louisiana and Entergy Louisiana are leading the development at River Bend, and Entergy Mississippi is leading the development at Grand Gulf.  This project is in the e arly stages, and several issues remain to be addressed over time before significant additional capital would be committed to this project.  In the first quarter 2010, Entergy Gulf States Louisiana and Entergy Louisiana each paid for and recognized on its books $24.9 million in costs associated with the development of new nuclear generation at the River Bend site; these costs previously had been recorded on the books of Entergy New Nuclear Utility Development, LLC, a System Energy subsidiary. Entergy Gulf States Louisiana and Entergy Louisiana will share costs going forward on a 50/50 basis, which reflects each company's current participation level in the project.  In March 2010, Entergy Gulf States Louisiana and Entergy Louisiana filed with the LPSC seeking approval to continue the development activities.  The parties have agreed to a procedural schedule that includes a hearing in May 2011.
 
89

Entergy Gulf States Louisiana, L.L.C.
Management's Financial Discussion and Analysis
 

Hurricane Gustav and Hurricane Ike

As discussed in the Form 10-K, in September 2008, Hurricane Gustav and Hurricane Ike caused catastrophic damage to Entergy's service territory.  Entergy Gulf States Louisiana and Entergy Louisiana filed their Hurricane Gustav and Hurricane Ike storm cost recovery case with the LPSC in May 2009.  In September 2009, Entergy Gulf States Louisiana and Entergy Louisiana and the Louisiana Utilities Restoration Corporation (LURC), an instrumentality of the State of Louisiana, filed with the LPSC an application requesting that the LPSC grant financing orders authorizing the financing of Entergy Gulf States Louisiana’s and Entergy Louisiana’s storm costs, storm reserves, and issuance costs pursuant to Act 55 of the Louisiana Regular Session of 2007 (Act 55 financings).  Entergy Gulf States Louisiana’s and Entergy Louisiana’s Hurricane Katrina and Hurricane Rita storm costs were financed primarily by Act 55 financings, as discussed in the Form 10-K.  Entergy Gulf States Louisiana and Entergy Louisiana also filed an application requesting LPSC approval for ancillary issues including the mechanism to flow charges and Act 55 financing savings to customers via a Storm Cost Offset rider.  On December 30, 2009, Entergy Gulf States Louisiana and Entergy Louisiana entered into a stipulation agreement with the LPSC Staff that provides for total recoverable costs of approximately $234 million for Entergy Gulf States Louisiana and $394 million for Entergy Louisiana, including carrying costs.  Under this stipulation, Entergy Gulf States Louisiana agrees not to recover $4.4 million and Entergy Louisiana agrees not to recover $7.2 million of thei r storm restoration spending.  The stipulation also permits replenishing Entergy Gulf States Louisiana's storm reserve in the amount of $90 million and Entergy Louisiana's storm reserve in the amount of $200 million when the Act 55 financings are accomplished.  In March and April 2010, Entergy Gulf States Louisiana, Entergy Louisiana, and other parties to the proceeding filed with the LPSC an uncontested stipulated settlement that includes these terms and also includes Entergy Gulf States Louisiana’s and Entergy Louisiana's proposals under the Act 55 financings, which includes a commitment to pass on to customers a minimum of $15.5 million and $27.75 million of customer benefits, respectively, through prospective annual rate reductions of $3.1 million and $5.55 million for five years.  A stipulation hearing was held before the ALJ on April 13, 2010.  On April 21, 2010, the LPSC approved the settlement and subsequently issued two financing orders and one ratemaking order intende d to facilitate the implementation of the Act 55 financings.  In June 2010 the Louisiana State Bond Commission approved the Act 55 financings.

On July 22, 2010, the Louisiana Local Government Environmental Facilities and Community Development Authority (LCDA) issued $244.1 million in bonds under Act 55.  From the $240.3 million of bond proceeds loaned by the LCDA to the LURC, the LURC deposited $90 million in a restricted escrow account as a storm damage reserve for Entergy Gulf States Louisiana and transferred $150.3 million directly to Entergy Gulf States Louisiana.  From the bond proceeds received by Entergy Gulf States Louisiana from the LURC, Entergy Gulf States Louisiana used $150.3 million to acquire 1,502,643.04 Class B preferred, non-voting, membership interest units of Entergy Holdings Company LLC, a company wholly-owned and consolidated by Entergy, that carry a 9% annual distribution rate. Distributions are payable quarterly commencing on Septe mber 15, 2010, and the membership interests have a liquidation price of $100 per unit. The preferred membership interests are callable at the option of Entergy Holdings Company LLC after ten years under the terms of the LLC agreement. The terms of the membership interests include certain financial covenants to which Entergy Holdings Company LLC is subject, including the requirement to maintain a net worth of at least $1 billion.

Entergy Gulf States Louisiana does not report the bonds on its balance sheet because the bonds are the obligation of the LCDA and there is no recourse against Entergy or Entergy Gulf States Louisiana in the event of a bond default.  To service the bonds, Entergy Gulf States Louisiana collects a system restoration charge on behalf of the LURC, and remits the collections to the bond indenture trustee.  Entergy Gulf States Louisiana will not report the collections as revenue because it is merely acting as the billing and collection agent for the state.
 
90

Entergy Gulf States Louisiana, L.L.C.
Management's Financial Discussion and Analysis
 

State and Local Rate Regulation

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS – State and Local Rate Regulation" in the Form 10-K for a discussion of state and local rate regulation.  Following are updates to that discussion.

See the Form 10-K for a discussion of Entergy Gulf States Louisiana’s formula rate plan that the LPSC approved for the 2008, 2009, and 2010 test years.  Entergy Gulf States Louisiana, effective with the November 2009 billing cycle, reset its rates to achieve a 10.65% return on equity for the 2008 test year.  The rate reset, a $44.3 million increase that includes a $36.9 million cost of service adjustment, plus $7.4 million net for increased capacity costs and a base rate reclassification, was implemented for the November 2009 billing cycle, and the rate reset was subject to refund pending review of the 2008 test year filing that was made in October 2009.  In January 2010, Entergy Gulf States Louisiana implemented an additional $23.9 million rate increa se pursuant to a special rate implementation filing made in December 2009, primarily for incremental capacity costs approved by the LPSC.  In May 2010, Entergy Gulf States Louisiana and the LPSC staff submitted a joint report on the 2008 test year filing and requested that the LPSC accept the report, which will result in a $0.8 million reduction in current rates effective in the June 2010 billing cycle and a $0.5 million refund.  At its May 19, 2010 meeting, the LPSC accepted the joint report.

In May 2010, Entergy Gulf States Louisiana made its formula rate plan filing with the LPSC for the 2009 test year.  The filing reflects a 10.25% return on common equity, which is within the allowed earnings bandwidth, indicating no cost of service rate change is necessary under the formula rate plan.  The filing does reflect, however, consistent with a December 2009 filing, a $9.7 million revenue requirement to provide supplemental funding for the decommissioning trust maintained for the LPSC-regulated 70% share of River Bend, in response to a NRC notification of a projected shortfall of decommissioning funding assurance.  Currently, Entergy Gulf States Louisiana's retail rates contain no amount for decommissioning funding.  The filing also re flects a $20.8 million rate increase for incremental capacity costs.  In July 2010 the LPSC approved a $7.8 million increase in the revenue requirement for decommissioning, effective September 2010.  Other issues in the formula rate plan proceeding remain pending.

In January 2010, Entergy Gulf States Louisiana filed with the LPSC its gas rate stabilization plan for the test year ended September 30, 2009.  The filing showed an earned return on common equity of 10.87%, which is within the earnings bandwidth of 10.5% plus or minus fifty basis points, resulting in no rate change.  In April 2010, Entergy Gulf States Louisiana filed a revised evaluation report reflecting changes agreed upon with the LPSC Staff.  The revised evaluation report also results in no rate change.

           In January 2003, the LPSC authorized its staff to initiate a proceeding to audit the fuel adjustment clause filings of Entergy Gulf States Louisiana and its affiliates pursuant to a November 1997 LPSC general order.  The audit includes a review of the reasonableness of charges flowed by Entergy Gulf States Louisiana through its fuel adjustment clause for the period January 1, 1995 through December 31, 2002.  In June 2005 the LPSC expanded the audit period to include the years through 2004.  Discovery has largely concluded, and the LPSC Staff is expected to issue its report in the third quarter 2010.  A procedural schedule will be set to establish a hearing process to address any issues noted in the LPSC Staff report that are contested by Entergy Gulf State s Louisiana.  Entergy Gulf States Louisiana has recorded provisions for the estimated effect of this proceeding.

Federal Regulation

See "System Agreement Proceedings" and "Independent Coordinator of Transmission" in the "Rate, Cost-recovery, and Other Regulation" section of Entergy Corporation and Subsidiaries Management's Financial Discussion and Analysis for updates to the discussion in the Form 10-K.
 
91

Entergy Gulf States Louisiana, L.L.C.
Management's Financial Discussion and Analysis
 

Nuclear Matters

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Nuclear Matters" in the Form 10-K for a discussion of nuclear matters.

Environmental Risks

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Environmental Risks" in the Form 10-K for a discussion of environmental risks.

Critical Accounting Estimates

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates" in the Form 10-K for a discussion of the estimates and judgments necessary in Entergy Gulf States Louisiana's accounting for nuclear decommissioning costs, unbilled revenue, and qualified pension and other postretirement benefits.

Federal Healthcare Legislation

See the "Critical Accounting Estimates - Federal Healthcare Legislation" section of Entergy Corporation and Subsidiaries Management's Financial Discussion and Analysis for an update to the Form 10-K discussion on critical accounting estimates.

 
92

 


ENTERGY GULF STATES LOUISIANA, L.L.C.
INCOME STATEMENTS
For the Three and Six Months Ended June 30, 2010 and 2009
(Unaudited)
                         
   
Three Months Ended
   
Six Months Ended
 
   
2010
   
2009
   
2010
   
2009
 
   
(In Thousands)
   
(In Thousands)
 
                         
OPERATING REVENUES
                       
Electric
  $ 497,004     $ 430,866     $ 954,785     $ 889,871  
Natural gas
    12,221       10,397       53,115       40,297  
TOTAL
    509,225       441,263       1,007,900       930,168  
                                 
OPERATING EXPENSES
                               
Operation and Maintenance:
                               
   Fuel, fuel-related expenses, and
                               
     gas purchased for resale
    68,853       65,697       132,989       173,687  
   Purchased power
    213,417       171,522       432,027       351,464  
   Nuclear refueling outage expenses
    5,605       5,293       11,323       10,528  
   Other operation and maintenance
    87,240       82,349       166,879       162,100  
Decommissioning
    3,325       3,363       6,604       6,658  
Taxes other than income taxes
    17,954       17,445       36,410       35,169  
Depreciation and amortization
    32,613       34,472       67,802       67,731  
Other regulatory charges (credits) - net
    (2,376 )     2,685       (4,430 )     7,567  
TOTAL
    426,631       382,826       849,604       814,904  
                                 
OPERATING INCOME
    82,594       58,437       158,296       115,264  
                                 
OTHER INCOME
                               
Allowance for equity funds used during construction
    1,525       1,012       2,811       3,284  
Interest and dividend income
    8,780       16,866       19,378       35,104  
Miscellaneous - net
    (1,773 )     (1,830 )     (3,352 )     (3,221 )
TOTAL
    8,532       16,048       18,837       35,167  
                                 
INTEREST AND OTHER CHARGES
                               
Interest on long-term debt
    23,949       26,072       48,198       55,098  
Other interest - net
    6,474       2,331       7,407       4,565  
Allowance for borrowed funds used during construction
    (982 )     (700 )     (1,799 )     (2,033 )
TOTAL
    29,441       27,703       53,806       57,630  
                                 
INCOME BEFORE INCOME TAXES
    61,685       46,782       123,327       92,801  
                                 
Income taxes
    29,531       17,980       53,090       36,878  
                                 
NET INCOME
    32,154       28,802       70,237       55,923  
                                 
Preferred distribution requirements and other
    208       206       414       412  
                                 
                                 
EARNINGS APPLICABLE TO COMMON EQUITY
  $ 31,946     $ 28,596     $ 69,823     $ 55,511  
                                 
See Notes to Financial Statements.
                               

 
93

 


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94

 

ENTERGY GULF STATES LOUISIANA, L.L.C.
STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2010 and 2009
(Unaudited)
             
   
2010
   
2009
 
   
(In Thousands)
 
             
OPERATING ACTIVITIES
           
Net income
  $ 70,237     $ 55,923  
Adjustments to reconcile net income to net cash flow provided by operating activities:
         
  Reserve for regulatory adjustments
    823       -  
  Other regulatory charges (credits) - net
    (4,430 )     7,567  
  Depreciation, amortization, and decommissioning, including nuclear fuel amortization
    98,435       74,389  
  Deferred income taxes, investment tax credits, and non-current taxes accrued
    (301,383 )     59,199  
  Changes in working capital:
               
    Receivables
    (66,006 )     61,127  
    Fuel inventory
    1,973       (2,819 )
    Accounts payable
    62,841       (85,115 )
    Taxes accrued
    325,175       48,058  
    Interest accrued
    229       (2,615 )
    Deferred fuel costs
    (29,431 )     14,908  
    Other working capital accounts
    39,676       22,253  
  Provision for estimated losses and reserves
    (7,322 )     91  
  Changes in other regulatory assets
    (2,998 )     (29,696 )
  Other
    20,360       (102,276 )
Net cash flow provided by operating activities
    208,179       120,994  
                 
INVESTING ACTIVITIES
               
Construction expenditures
    (118,261 )     (84,132 )
Allowance for equity funds used during construction
    2,811       3,284  
Nuclear fuel purchases
    (12,023 )     (116 )
Proceeds from sale/leaseback of nuclear fuel
    -       20,621  
Investment in affiliates
    -       160  
Proceeds from nuclear decommissioning trust fund sales
    78,849       33,706  
Investment in nuclear decommissioning trust funds
    (83,391 )     (39,008 )
Change in money pool receivable - net
    99       (31,008 )
Changes in other investments
    3,136       -  
Net cash flow used in investing activities
    (128,780 )     (96,493 )
                 
FINANCING ACTIVITIES
               
Changes in credit borrowings - net
    (9,500 )     -  
Dividends/distributions paid:
               
  Common equity
    (64,300 )     (6,000 )
  Preferred membership interests
    (414 )     (412 )
Other
    (1,097 )     (195 )
Net cash flow used in financing activities
    (75,311 )     (6,607 )
                 
Net increase in cash and cash equivalents
    4,088       17,894  
                 
Cash and cash equivalents at beginning of period
    144,460       49,303  
                 
Cash and cash equivalents at end of period
  $ 148,548     $ 67,197  
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
               
Cash paid during the period for:
               
  Interest - net of amount capitalized
  $ 53,905     $ 60,795  
  Income taxes
  $ 394     $ 29,337  
                 
Noncash financing activities:
               
  Repayment by Entergy Texas of assumed long-term debt
  $ 167,742     $ 70,825  
                 
See Notes to Financial Statements.
               

 
95

 



ENTERGY GULF STATES LOUISIANA, L.L.C.
BALANCE SHEETS
ASSETS
June 30, 2010 and December 31, 2009
(Unaudited)
             
   
2010
   
2009
 
   
(In Thousands)
 
             
CURRENT ASSETS
           
Cash and cash equivalents:
           
  Cash
  $ 3,090     $ 139  
  Temporary cash investments
    145,458       144,321  
        Total cash and cash equivalents
    148,548       144,460  
Accounts receivable:
               
  Customer
    66,051       38,633  
  Allowance for doubtful accounts
    (1,968 )     (1,235 )
  Associated companies
    134,979       102,807  
  Other
    29,738       22,425  
  Accrued unbilled revenues
    58,408       56,425  
    Total accounts receivable
    287,208       219,055  
Fuel inventory - at average cost
    27,325       29,298  
Materials and supplies - at average cost
    111,611       107,531  
Deferred nuclear refueling outage costs
    15,943       26,722  
Debt assumption by Entergy Texas
    -       167,742  
Prepayments and other
    5,889       42,146  
TOTAL
    596,524       736,954  
                 
OTHER PROPERTY AND INVESTMENTS
               
Investment in affiliate preferred membership interests
    189,400       189,400  
Decommissioning trust funds
    344,190       349,527  
Non-utility property - at cost (less accumulated depreciation)
    149,951       146,190  
Other
    11,865       11,342  
TOTAL
    695,406       696,459  
                 
UTILITY PLANT
               
Electric
    6,828,055       6,855,075  
Natural gas
    116,688       113,970  
Construction work in progress
    104,927       84,161  
Nuclear fuel under capital lease
    -       156,996  
Nuclear fuel
    148,687       6,005  
TOTAL UTILITY PLANT
    7,198,357       7,216,207  
Less - accumulated depreciation and amortization
    3,766,139       3,714,199  
UTILITY PLANT - NET
    3,432,218       3,502,008  
                 
DEFERRED DEBITS AND OTHER ASSETS
               
Regulatory assets:
               
  Regulatory asset for income taxes - net
    268,443       288,313  
  Other regulatory assets
    425,302       299,793  
  Deferred fuel costs
    100,124       100,124  
Long-term receivables
    980       967  
Other
    17,038       11,564  
TOTAL
    811,887       700,761  
                 
TOTAL ASSETS
  $ 5,536,035     $ 5,636,182  
                 
See Notes to Financial Statements.
               
 
 
96

 
 
ENTERGY GULF STATES LOUISIANA, L.L.C.
BALANCE SHEETS
LIABILITIES AND MEMBERS' EQUITY
June 30, 2010 and December 31, 2009
(Unaudited)
                 
      2010       2009  
   
(In Thousands)
 
                 
CURRENT LIABILITIES
               
Currently maturing long-term debt
  $ 11,975     $ 11,975  
Notes payable
    24,800       -  
Accounts payable:
               
  Associated companies
    112,075       52,622  
  Other
    95,673       91,604  
Customer deposits
    45,777       45,645  
Taxes accrued
    325,175       -  
Accumulated deferred income taxes
    6,813       12,219  
Interest accrued
    26,953       24,709  
Deferred fuel costs
    12,920       42,351  
Obligations under capital leases
    -       30,387  
Pension and other postretirement liabilities
    8,196       8,021  
Gas hedge contracts
    5,244       263  
System agreement cost equalization
    -       10,000  
Other
    13,358       8,790  
TOTAL
    688,959       338,586  
                 
NON-CURRENT LIABILITIES
               
Accumulated deferred income taxes and taxes accrued
    1,047,387       1,345,984  
Accumulated deferred investment tax credits
    86,552       88,246  
Obligations under capital leases
    -       126,226  
Other regulatory liabilities
    63,361       47,423  
Decommissioning and asset retirement cost liabilities
    330,408       321,158  
Accumulated provisions
    7,347       14,669  
Pension and other postretirement liabilities
    231,045       234,473  
Long-term debt
    1,580,332       1,614,366  
Long-term payables - associated companies
    33,535       34,340  
Other
    18,739       28,952  
TOTAL
    3,398,706       3,855,837  
                 
Commitments and Contingencies
               
                 
MEMBERS' EQUITY
               
Preferred membership interests without sinking fund
    10,000       10,000  
Members' equity
    1,479,443       1,473,930  
Accumulated other comprehensive loss
    (41,073 )     (42,171 )
TOTAL
    1,448,370       1,441,759  
                 
TOTAL LIABILITIES AND MEMBERS' EQUITY
  $ 5,536,035     $ 5,636,182  
                 
See Notes to Financial Statements.
               

 
97

 

ENTERGY GULF STATES LOUISIANA, L.L.C.
STATEMENTS OF MEMBERS' EQUITY AND COMPREHENSIVE INCOME
For the Three and Six Months Ended June 30, 2010 and 2009
(Unaudited)
                         
   
Three Months Ended
 
   
2010
   
2009
 
   
(In Thousands)
 
MEMBERS' EQUITY
                       
Members' Equity - Beginning of period
  $ 1,470,802           $ 1,379,318        
                             
    Add: Net Income
    32,154     $ 32,154       28,802     $ 28,802  
                                 
    Deduct:
                               
      Dividends/distributions declared on common equity
    23,300               6,000          
      Preferred membership interests
    208       208       206       206  
      Other
    5               5          
      23,513               6,211          
                                 
Members' Equity - End of period
  $ 1,479,443             $ 1,401,909          
                                 
ACCUMULATED OTHER COMPREHENSIVE
                               
LOSS (Net of Taxes):
                               
Balance at beginning of period:
                               
  Pension and other postretirement liabilities
  $ (41,592 )           $ (29,863 )        
                                 
Pension and other postretirement liabilities (net of tax expense
                               
  of $505 and $309)
    519       519       199       199  
                                 
Balance at end of period:
                               
  Pension and other postretirement liabilities
  $ (41,073 )           $ (29,664 )        
Comprehensive Income
          $ 32,465             $ 28,795  
                                 
                                 
   
Six Months Ended
 
      2010       2009  
   
(In Thousands)
 
MEMBERS' EQUITY
                               
Members' Equity - Beginning of period
  $ 1,473,930             $ 1,352,408          
                                 
    Add:  Net Income
    70,237     $ 70,237       55,923     $ 55,923  
                                 
    Deduct:
                               
      Dividends/distributions declared on common equity
    64,300               6,000          
      Preferred membership interests
    414       414       412       412  
      Other
    10               10          
      64,724               6,422          
                                 
Members' Equity - End of period
  $ 1,479,443             $ 1,401,909          
                                 
ACCUMULATED OTHER COMPREHENSIVE
                               
LOSS (Net of Taxes):
                               
Balance at beginning of period:
                               
  Pension and other postretirement liabilities
  $ (42,171 )           $ (30,265 )        
                                 
Pension and other postretirement liabilities (net of tax expense
                               
  of $1,048 and $745)
    1,098       1,098       601       601  
                                 
Balance at end of period:
                               
  Pension and other postretirement liabilities
  $ (41,073 )           $ (29,664 )        
Comprehensive Income
          $ 70,921             $ 56,112  
                                 
                                 
See Notes to Financial Statements.
                               

 
98

 



ENTERGY GULF STATES LOUISIANA, L.L.C.
SELECTED OPERATING RESULTS
For the Three and Six Months Ended June 30, 2010 and 2009
(Unaudited)
                         
                         
   
Three Months Ended
   
Increase/
       
Description
 
2010
   
2009
   
(Decrease)
   
%
 
   
(Dollars In Millions)
       
Electric Operating Revenues:
                       
  Residential
  $ 107     $ 88     $ 19       22  
  Commercial
    101       86       15       17  
  Industrial
    128       95       33       35  
  Governmental
    5       4       1       25  
    Total retail
    341       273       68       25  
  Sales for resale
                               
     Associated companies
    116       105       11       10  
     Non-associated companies
    22       31       (9 )     (29 )
  Other
    18       22       (4 )     (18 )
    Total
  $ 497     $ 431     $ 66       15  
                                 
Billed Electric Energy
                               
 Sales (GWh):
                               
  Residential
    1,195       1,126       69       6  
  Commercial
    1,244       1,211       33       3  
  Industrial
    2,319       1,818       501       28  
  Governmental
    51       55       (4 )     (7 )
    Total retail
    4,809       4,210       599       14  
  Sales for resale
                               
     Associated companies
    2,216       1,930       286       15  
     Non-associated companies
    480       743       (263 )     (35 )
    Total
    7,505       6,883       622       9  
                                 
                                 
   
Six Months Ended
   
Increase/
         
Description
    2010       2009    
(Decrease)
   
%
 
   
(Dollars In Millions)
         
Electric Operating Revenues:
                               
  Residential
  $ 226     $ 189     $ 37       20  
  Commercial
    199       185       14       8  
  Industrial
    241       207       34       16  
  Governmental
    10       9       1       11  
    Total retail
    676       590       86       15  
  Sales for resale
                               
     Associated companies
    209       201       8       4  
     Non-associated companies
    46       63       (17 )     (27 )
  Other
    24       36       (12 )     (33 )
    Total
  $ 955     $ 890     $ 65       7  
                                 
Billed Electric Energy
                               
 Sales (GWh):
                               
  Residential
    2,520       2,182       338       15  
  Commercial
    2,443       2,336       107       5  
  Industrial
    4,329       3,478       851       24  
  Governmental
    107       106       1       1  
    Total retail
    9,399       8,102       1,297       16  
  Sales for resale
                               
     Associated companies
    3,906       3,713       193       5  
     Non-associated companies
    957       1,404       (447 )     (32 )
    Total
    14,262       13,219       1,043       8  

 
99

 
ENTERGY LOUISIANA, LLC

MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS

Results of Operations

Net Income

Second Quarter 2010 Compared to Second Quarter 2009

Net income increased $21.3 million primarily due to higher net revenue partially offset by higher interest expense.

Six Months Ended June 30, 2010 Compared to Six Months Ended June 30, 2009

Net income increased $21.6 million primarily due to higher net revenue, partially offset by higher interest expense, higher other operation and maintenance expenses, lower other income, and a higher effective income tax rate.

Net Revenue

Second Quarter 2010 Compared to Second Quarter 2009

Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory charges (credits).  Following is an analysis of the change in net revenue comparing the second quarter 2010 to the second quarter 2009.

   
Amount
   
(In Millions)
     
2009 net revenue
 
$241.6 
Retail electric price
 
12.9 
Volume/weather
 
11.0 
Other
 
3.6 
2010 net revenue
 
$269.1 

The retail electric price variance is primarily due to a net increase in the formula rate plan effective November 2009 which allowed Entergy Louisiana to reset its rates to achieve a 10.25% return on equity for the 2008 test year, in addition to fewer credits passed on to customers in 2010 compared to 2009 related to the Act 55 storm cost financing as a result of a reduction in rates effective with the May 2010 billing cycle.  See Note 2 to the financial statements in the Form 10-K and herein for more discussion of the formula rate plan rate reset.  See Note 2 to the financial statements in the Form 10-K for further discussion of the Act 55 storm cost financing. 

The volume/weather variance is primarily due to an increase of 446 GWh, or 7%, in billed electricity usage in all sectors, including the effect of more favorable weather on the residential and commercial sectors.
 
100

Entergy Louisiana, LLC
Management's Financial Discussion and Analysis
 
Gross operating revenues and fuel and purchased power expenses

Gross operating revenues increased primarily due to:

·  
an increase of $41.8 million in fuel cost recovery revenues due to higher fuel rates and increased usage;
·  
an increase of $15.6 million in rider revenues due to lower System Agreement credits in 2010;
·  
an increase of $12.9 million in gross wholesale revenue due to an increase in sales to affiliated customers; and
·  
an increase of $11.0 million related to volume/weather, as discussed above.

Fuel and purchased power expenses increased primarily due to an increase in the average market price of purchased power and an increase in demand, partially offset by a decrease in the average market price of natural gas.

Six Months Ended June 30, 2010 Compared to Six Months Ended June 30, 2009

Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory charges (credits).  Following is an analysis of the change in net revenue comparing the six months ended June 30, 2010 to the six months ended June 30, 2009.

   
Amount
   
(In Millions)
     
2009 net revenue
 
$453.5 
Volume/weather
 
33.7 
Retail electric price
 
22.2 
Other
 
(2.0)
2010 net revenue
 
$507.4 

The volume/weather variance is primarily due to an increase of 1,169 GWh, or 9%, in billed electricity usage in all sectors, including the effect of more favorable weather on the residential and commercial sectors.

The retail electric price variance is primarily due to a net increase in the formula rate plan effective November 2009 which allowed Entergy Louisiana to reset its rates to achieve a 10.25% return on equity for the 2008 test year, in addition to fewer credits passed on to customers in 2010 compared to 2009 related to the Act 55 storm cost financing as a result of a reduction in rates effective with the May 2010 billing cycle.  See Note 2 to the financial statements in the Form 10-K and herein for more discussion of the formula rate plan rate reset.  See Note 2 to the financial statements in the Form 10-K for further discussion of the Act 55 storm cost financing. 

Gross operating revenues and fuel and purchased power expenses

Gross operating revenues increased primarily due to:

·  
an increase of $106.4 million in fuel cost recovery revenues due to higher fuel rates and increased usage;
·  
an increase of $33.7 million related to volume/weather, as discussed above;
·  
an increase of $17.7 million in gross wholesale revenue due to an increase in sales to affiliated customers; and
·  
an increase of $16.3 million in rider revenues due to lower System Agreement credits in 2010.

Fuel and purchased power expenses increased primarily due to an increase in the average market price of purchased power, an increase in demand, and an increase in the recovery from customers of deferred fuel costs, partially offset by a decrease in the average market price of natural gas.
 
101

 
Entergy Louisiana, LLC
Management's Financial Discussion and Analysis

Other Income Statement Variances

Second Quarter 2010 Compared to Second Quarter 2009

Interest expense increased primarily due to an increase in long-term debt outstanding as a result of the issuance of $400 million of 5.40% Series first mortgage bonds in November 2009 and the issuance of $150 million of 6.0% Series first mortgage bonds in March 2010.  In April 2010, Entergy Louisiana used the proceeds from the March 2010 issuance, together with other available funds, to redeem, prior to maturity, all of its $150 million 7.60% Series first mortgage bonds, due April 2032.

Six Months Ended June 30, 2010 Compared to Six Months Ended June 30, 2009

Other operation and maintenance expenses increased primarily due to:

·  
an increase of $3.7 million in nuclear expenses due to higher nuclear labor and contract costs;
·  
an increase of $2.8 million in payroll-related and benefits costs; and
·  
an increase of $2.3 million due to the settlement of Hurricane Gustav and Hurricane Ike storm costs.

The increase was partially offset by a decrease of $3.8 million in customer service costs primarily as a result of higher write-offs of uncollectible customer accounts in 2009.

Other income decreased primarily due to a decrease in carrying charges on storm restoration costs and a decrease in the allowance for equity funds used during construction due to more construction work in progress in 2009.

Interest expense increased primarily due to an increase in long-term debt outstanding as a result of the issuance of $400 million of 5.40% Series first mortgage bonds in November 2009 and the issuance of $150 million of 6.0% Series first mortgage bonds in March 2010.  In April 2010, Entergy Louisiana used the proceeds from the March 2010 issuance, together with other available funds, to redeem, prior to maturity, all of its $150 million 7.60% Series first mortgage bonds, due April 2032.

Income Taxes

The effective income tax rates for the second quarters of 2010 and 2009 were 31.1% and 29.9%, respectively.  The effective income tax rates for the six months ended June 30, 2010 and 2009 were 30.3% and 27.7%, respectively.    The differences in the effective income tax rates for the second quarters of 2010 and 2009 and the six months ended June 30, 2010 and 2009 versus the federal statutory rate of 35.0% are primarily due to book and tax differences related to storm cost financing and allowance for equity funds used during construction, partially offset by certain book and tax differences related to utility plant items and state income taxes.
 
102

Entergy Louisiana, LLC
Management's Financial Discussion and Analysis
 

Liquidity and Capital Resources

Cash Flow

Cash flows for the six months ended June 30, 2010 and 2009 were as follows:

   
2010
 
2009
   
(In Thousands)
         
Cash and cash equivalents at beginning of period
 
$151,849 
 
$138,918 
         
Cash flow provided by (used in):
       
 
Operating activities
 
226,060 
 
166,826 
 
Investing activities
 
(175,517)
 
(212,944)
 
Financing activities
 
(103,357)
 
(19,972)
Net decrease in cash and cash equivalents
 
(52,814)
 
(66,090)
         
Cash and cash equivalents at end of period
 
$99,035 
 
$72,828 

Operating Activities

Cash flow provided by operating activities increased $59.2 million for the six months ended June 30, 2010 compared to the six months ended June 30, 2009 primarily due to storm restoration spending in 2009 as a result of Hurricane Gustav and increased recovery of fuel costs, offset by an increase of $9.2 million in pension contributions and income tax payments of $4.5 million in 2010 compared to income tax refunds of $31.0 million in 2009.

Investing Activities

Net cash flow used in investing activities decreased $37.4 million for the six months ended June 30, 2010 compared to the six months ended June 30, 2009 primarily due to a decrease in construction expenditures as a result of higher distribution construction expenditures in 2009 due to Hurricane Gustav and decreased fossil construction expenditures due to the suspension of the Little Gypsy repowering project in 2009.  See MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - "Little Gypsy Repowering Project" in the Form 10-K for a discussion of the suspension.  The decrease was partially offset by an increase in construction expenditures resulting from $2 4.9 million in costs associated with the development of new nuclear generation at River Bend, as discussed below, and increased nuclear construction expenditures primarily due to the Waterford 3 steam generator replacement project, the dry fuel storage project, and security upgrades.

Financing Activities

Net cash flow used in financing activities increased $83.4 million for the six months ended June 30, 2010 compared to the six months ended June 30, 2009 primarily due to:

·  
the retirement in June 2010 of $55 million of 4.67% Series first mortgage bonds;
·  
a principal payment of $17.3 million in 2010 for the Waterford 3 sale-leaseback obligation compared to a principal payment of $6.6 million in 2009; and
·  
the retirement of the $30 million Series D note by the nuclear fuel company variable interest entity.

Also, in March 2010, Entergy Louisiana issued $150 million of 6.0% Series first mortgage bonds due March 2040.  Because the proceeds were deposited directly with a trustee and not held by Entergy Louisiana, the bond issuance is reported as a non-cash financing activity on the cash flow statement.  In April 2010 the proceeds were used, together with other available funds, to redeem, prior to maturity, all of its $150 million 7.60% Series first mortgage bonds, due April 2032.
 
103

 
Entergy Louisiana, LLC
Management's Financial Discussion and Analysis

Capital Structure

Entergy Louisiana's capitalization is balanced between equity and debt, as shown in the following table.

   
June 30,
2010
 
December 31,
2009
         
Net debt to net capital
 
46.1%
 
47.8%
Effect of subtracting cash from debt
 
1.3%
 
2.1%
Debt to capital
 
47.4%
 
49.9%

Net debt consists of debt less cash and cash equivalents.  Debt consists of notes payable, capital lease obligations, and long-term debt, including the currently maturing portion.  Capital consists of debt and members' equity.  Net capital consists of capital less cash and cash equivalents.  Entergy Louisiana uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Louisiana's financial condition.

Uses and Sources of Capital

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources" in the Form 10-K for a discussion of Entergy Louisiana's uses and sources of capital.  Following are updates to the discussion in the Form 10-K.

Entergy Louisiana's receivables from the money pool were as follows:

June 30,
2010
 
December 31,
2009
 
June 30,
2009
 
December 31,
2008
(In Thousands)
             
$34,131
 
$52,807
 
$46,559
 
$61,236

See Note 4 to the financial statements in the Form 10-K for a description of the money pool.

As discussed in the Form 10-K, Entergy Louisiana has a credit facility in the amount of $200 million scheduled to expire in August 2012.  No borrowings were outstanding under the facility as of June 30, 2010.

In March 2010, Entergy Louisiana issued $150 million of 6.0% Series first mortgage bonds due March 2040.  Entergy Louisiana used the proceeds in April 2010, together with other available funds, to redeem, prior to maturity, all of its $150 million 7.60% Series first mortgage bonds, due April 2032.

On June 1, 2010, Entergy Louisiana paid, at maturity, its $55 million of 4.670% Series first mortgage bonds.

Acadia Unit 2 Purchase Agreement

As discussed more fully in the Form 10-K, in October 2009, Entergy Louisiana announced that it has signed an agreement to acquire Unit 2 of the Acadia Energy Center, a 580 MW generating unit located near Eunice, La., from Acadia Power Partners, LLC, an independent power producer.  Entergy Louisiana and Acadia Power Partners also have entered into two purchase power agreements that are intended to provide access to the capacity and energy output of the unit during the period before the acquisition closes.  The first agreement is a tolling arrangement pursuant to which Entergy Louisiana will purchase 100 percent of the output of Acadia Unit 2.  This agreement is available to Entergy Louisiana when the federal reviews of the transac tion are complete.  The second purchase power agreement is a call option agreement that commenced on June 1, 2010 and will remain in place either until deliveries commence under the tolling agreement or the acquisition closes.  Entergy Louisiana's purchase is contingent upon, among other things, obtaining necessary approvals, including full cost recovery, from various federal and state regulatory and permitting agencies.  The LPSC has approved both purchase power agreements.  The parties have agreed to a procedural schedule for review of the acquisition that includes a hearing before the ALJ in December 2010.  Currently the closing is expected to occur in early 2011.
 
104

Entergy Louisiana, LLC
Management's Financial Discussion and Analysis
 

Little Gypsy Repowering Project

See the Form 10-K for a discussion of the Little Gypsy repowering project.  In October 2009, Entergy Louisiana made a filing with the LPSC seeking permission to cancel the project and seeking recovery over a five-year period of the project costs.  In June 2010, the LPSC Staff and Intervenors filed testimony.  The LPSC Staff (1) agreed that it was prudent to move the project from long-term suspension to cancellation and that the timing of the decision to suspend on a longer-term basis was not imprudent; (2) indicated that, except for $0.8 million in compensation-related costs, the costs incurred should be deemed prudent; (3) recommended recovery from customers over ten years but stated that the LPSC may want to consider 15 years; (4) allowed for rec overy of carrying costs and earning a return on project costs, but at a reduced rate approximating the cost of debt, while also acknowledging that the LPSC may consider ordering no return; and (5) indicated that Entergy Louisiana should be directed to securitize project costs, if legally feasible and in the public interest.  The procedural schedule calls for hearings to begin in November 2010.

New Nuclear Development

As discussed in the Form 10-K, Entergy Gulf States Louisiana and Entergy Louisiana provided public notice to the LPSC of their intention to make a filing pursuant to the LPSC's general order that governs the development of new nuclear generation in Louisiana.  The project option being developed by the companies is for new nuclear generation at River Bend.  Entergy Gulf States Louisiana and Entergy Louisiana, together with Entergy Mississippi, have been engaged in the development of options to construct new nuclear generation at the River Bend and Grand Gulf sites.  Entergy Gulf States Louisiana and Entergy Louisiana are leading the development at River Bend, and Entergy Mississippi is leading the development at Grand Gulf.  This project is in the early stages, and several issues remain to be add ressed over time before significant additional capital would be committed to this project.  In the first quarter 2010, Entergy Gulf States Louisiana and Entergy Louisiana each paid for and recognized on its books $24.9 million in costs associated with the development of new nuclear generation at the River Bend site; these costs previously had been recorded on the books of Entergy New Nuclear Utility Development, LLC, a System Energy subsidiary. Entergy Gulf States Louisiana and Entergy Louisiana will share costs going forward on a 50/50 basis, which reflects each company's current participation level in the project.  In March 2010, Entergy Gulf States Louisiana and Entergy Louisiana filed with the LPSC seeking approval to continue the development activities.  The parties have agreed to a procedural schedule that includes a hearing in May 2011.

Hurricane Gustav and Hurricane Ike

As discussed in the Form 10-K, in September 2008, Hurricane Gustav and Hurricane Ike caused catastrophic damage to Entergy's service territory.  Entergy Gulf States Louisiana and Entergy Louisiana filed their Hurricane Gustav and Hurricane Ike storm cost recovery case with the LPSC in May 2009.  In September 2009, Entergy Gulf States Louisiana and Entergy Louisiana and the Louisiana Utilities Restoration Corporation (LURC), an instrumentality of the State of Louisiana, filed with the LPSC an application requesting that the LPSC grant financing orders authorizing the financing of Entergy Gulf States Louisiana’s and Entergy Louisiana’s storm costs, storm reserves, and issuance costs pursuant to Act 55 of the Louisiana Regular Session of 2007 (Act 55 financings).  Entergy Gulf States Louisiana’s and Entergy Louisiana’s Hurricane Katrina and Hurricane Rita storm costs were financed primarily by Act 55 financings, as discussed in the Form 10-K.  Entergy Gulf States Louisiana and Entergy Louisiana also filed an application requesting LPSC approval for ancillary issues including the mechanism to flow charges and Act 55 financing savings to customers via a Storm Cost Offset rider.  On December 30, 2009, Entergy Gulf States Louisiana and Entergy Louisiana entered into a stipulation agreement with the LPSC Staff that provides for total recoverable costs of approximately $234 million for Entergy Gulf States Louisiana and $394 million for Entergy Louisiana, including carrying costs.  Under this stipulation, Entergy Gulf States Louisiana agrees not to recover $4.4 million and Entergy Louisiana agrees not to recover $7.2 million of thei r storm restoration spending.  The stipulation also permits replenishing Entergy Gulf States Louisiana's storm reserve in the amount of $90 million and Entergy
 
105

Entergy Louisiana, LLC
Management's Financial Discussion and Analysis
 
Louisiana's storm reserve in the amount of $200 million when the Act 55 financings are accomplished.  In March and April 2010, Entergy Gulf States Louisiana, Entergy Louisiana, and
other parties to the proceeding filed with the LPSC an uncontested stipulated settlement that includes these terms and also includes Entergy Gulf States Louisiana’s and Entergy Louisiana's proposals under the Act 55 financings, which includes a commitment to pass on to customers a minimum of $15.5 million and $27.75 million of customer benefits, respectively, through prospective annual rate reductions of $3.1 million and $5.55 million for five years.  A stipulation hearing was held before the ALJ on April 13, 2010.  On April 21, 2010, the LPSC approved the settlement and subsequently issued two financing orders and one ratemaking order intended to facilitate the implementation of the Act 55 financings.  In June 2010 the Louisiana State Bond Commission approved the Act 55 financings.

On July 22, 2010, the Louisiana Local Government Environmental Facilities and Community Development Authority (LCDA) issued $468.9 million in bonds under Act 55.  From the $462.4 million of bond proceeds loaned by the LCDA to the LURC, the LURC deposited $200 million in a restricted escrow account as a storm damage reserve for Entergy Louisiana and transferred $262.4 million directly to Entergy Louisiana. From the bond proceeds received by Entergy Louisiana from the LURC, Entergy Louisiana used $262.4 million to acquire 2,624,297.11 Class B preferred, non-voting, membership interest units of Entergy Holdings Company LLC, a company wholly-owned and consolidated by Entergy, that carry a 9% annual distribution rate. Distributions are payable quarterly commencing on September 15, 2 010, and the membership interests have a liquidation price of $100 per unit. The preferred membership interests are callable at the option of Entergy Holdings Company LLC after ten years under the terms of the LLC agreement. The terms of the membership interests include certain financial covenants to which Entergy Holdings Company LLC is subject, including the requirement to maintain a net worth of at least $1 billion.

Entergy Louisiana does not report the bonds on its balance sheet because the bonds are the obligation of the LCDA and there is no recourse against Entergy or Entergy Louisiana in the event of a bond default.  To service the bonds, Entergy Louisiana collects a system restoration charge on behalf of the LURC, and remits the collections to the bond indenture trustee.  Entergy Louisiana will not report the collections as revenue because it is merely acting as the billing and collection agent for the state.

State and Local Rate Regulation

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS – State and Local Rate Regulation" in the Form 10-K for a discussion of state and local rate regulation.

See the Form 10-K for a discussion of Entergy Louisiana’s formula rate plan that the LPSC approved for the 2008, 2009, and 2010 test years.  Entergy Louisiana, effective with the November 2009 billing cycle, reset its rates to achieve a 10.25% return on equity for the 2008 test year.  The rate reset, a $2.5 million increase that includes a $16.3 million cost of service adjustment less a $13.8 million net reduction for decreased capacity costs and a base rate reclassification, was implemented for the November 2009 billing cycle, and the rate reset was subject to refund pending review of the 2008 test year filing that was made in October 2009.  In April 2010, Entergy Louisiana and the LPSC staff submitted a joint report on the 2008 test year filing and r equested that the LPSC accept the report, which
will result in a $0.1 million reduction in current rates effective in the May 2010 billing cycle and a $0.1 million refund.  In addition, Entergy Louisiana will move the recovery of approximately $12.5 million of capacity costs from fuel adjustment clause recovery to base rate recovery.  At its April 21, 2010 meeting, the LPSC accepted the joint report.

In May 2010, Entergy Louisiana made its formula rate plan filing with the LPSC for the 2009 test year.  The filing reflects a 10.82% return on common equity, which is within the allowed earnings bandwidth, indicating no cost of service rate change is necessary under the formula rate plan.  The filing does reflect, however, consistent with a December 2009 filing, a $7.9 million revenue requirement increase to provide supplemental funding for the decommissioning trust maintained for Waterford 3, in response to a NRC notification of a projected shortfall of decommissioning funding assurance.  Currently, Entergy Louisiana has $2.2 million in retail rates for decommissioning funding.  The filing also reflects a $7.4 million rate decrease for increm ental capacity costs.  In July 2010 the LPSC approved a $3.5 million increase in the retail revenue requirement for decommissioning, effective September 2010.  Other issues in the formula rate plan proceeding remain pending.
 
106

Entergy Louisiana, LLC
Management's Financial Discussion and Analysis
 

Federal Regulation

See "System Agreement Proceedings" and "Independent Coordinator of Transmission" in the "Rate, Cost-recovery, and Other Regulation" section of Entergy Corporation and Subsidiaries Management's Financial Discussion and Analysis for updates to the discussion in the Form 10-K.

Nuclear Matters

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Nuclear Matters" in the Form 10-K for a discussion of nuclear matters.

Environmental Risks

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Environmental Risks" in the Form 10-K for a discussion of environmental risks.

Critical Accounting Estimates

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates" in the Form 10-K for a discussion of the estimates and judgments necessary in Entergy Louisiana's accounting for nuclear decommissioning costs, unbilled revenue, and qualified pension and other postretirement benefits.

Federal Healthcare Legislation

See the "Critical Accounting Estimates - Federal Healthcare Legislation" section of Entergy Corporation and Subsidiaries Management's Financial Discussion and Analysis for an update to the Form 10-K discussion on critical accounting estimates.
 
107

 

 
ENTERGY LOUISIANA, LLC
INCOME STATEMENTS
For the Three and Six Months Ended June 30, 2010 and 2009
(Unaudited)
                         
   
Three Months Ended
   
Six Months Ended
 
   
2010
   
2009
   
2010
   
2009
 
   
(In Thousands)
   
(In Thousands)
 
                         
OPERATING REVENUES
                       
Electric
  $ 619,473     $ 527,156     $ 1,230,997     $ 1,056,413  
                                 
OPERATING EXPENSES
                               
Operation and Maintenance:
                               
   Fuel, fuel-related expenses, and
                               
     gas purchased for resale
    143,426       84,993       302,675       219,567  
   Purchased power
    212,402       194,614       432,475       371,136  
   Nuclear refueling outage expenses
    6,172       5,475       12,270       11,069  
   Other operation and maintenance
    104,706       108,169       206,686       201,811  
Decommissioning
    5,688       5,295       11,275       10,497  
Taxes other than income taxes
    15,158       17,071       33,158       33,715  
Depreciation and amortization
    47,291       50,569       97,518       100,016  
Other regulatory charges (credits) - net
    (5,485 )     5,959       (11,503 )     12,214  
TOTAL
    529,358       472,145       1,084,554       960,025  
                                 
OPERATING INCOME
    90,115       55,011       146,443       96,388  
                                 
OTHER INCOME
                               
Allowance for equity funds used during construction
    6,990       7,414       13,527       14,860  
Interest and dividend income
    18,566       16,820       34,908       38,332  
Miscellaneous - net
    (1,250 )     (1,425 )     (2,072 )     (2,198 )
TOTAL
    24,306       22,809       46,363       50,994  
                                 
INTEREST AND OTHER CHARGES
                               
Interest on long-term debt
    28,329       23,501       57,192       46,908  
Other interest - net
    1,823       2,045       3,997       4,205  
Allowance for borrowed funds used during construction
    (4,668 )     (4,782 )     (9,036 )     (9,592 )
TOTAL
    25,484       20,764       52,153       41,521  
                                 
INCOME BEFORE INCOME TAXES
    88,937       57,056       140,653       105,861  
                                 
Income taxes
    27,678       17,066       42,562       29,334  
                                 
NET INCOME
    61,259       39,990       98,091       76,527  
                                 
Preferred distribution requirements and other
    1,738       1,738       3,475       3,475  
                                 
EARNINGS APPLICABLE TO
                               
COMMON EQUITY
  $ 59,521     $ 38,252     $ 94,616     $ 73,052  
                                 
See Notes to Financial Statements.
                               

 
108

 




ENTERGY LOUISIANA, LLC
STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2010 and 2009
(Unaudited)
             
   
2010
   
2009
 
   
(In Thousands)
 
             
OPERATING ACTIVITIES
           
Net income
  $ 98,091     $ 76,527  
Adjustments to reconcile net income to net cash flow provided by operating activities:
         
  Other regulatory charges (credits) - net
    (11,503 )     12,214  
  Depreciation, amortization, and decommissioning, including nuclear fuel amortization
    140,665       110,513  
  Deferred income taxes, investment tax credits, and non-current taxes accrued
    86,180       80,720  
  Changes in working capital:
               
     Receivables
    (56,595 )     102,838  
     Accounts payable
    25,101       (44,070 )
     Taxes accrued
    (25,993 )     283  
     Interest accrued
    (1,646 )     (7,460 )
     Deferred fuel costs
    16,177       (28,644 )
     Other working capital accounts
    (27,190 )     (32,904 )
  Provision for estimated losses and reserves
    3,120       95  
  Changes in other regulatory assets
    (26,468 )     (116,055 )
  Other
    6,121       12,769  
Net cash flow provided by operating activities
    226,060       166,826  
                 
INVESTING ACTIVITIES
               
Construction expenditures
    (213,121 )     (240,172 )
Allowance for equity funds used during construction
    13,527       14,860  
Changes in other investments - net
    9,353       996  
Proceeds from nuclear decommissioning trust fund sales
    26,668       33,463  
Investment in nuclear decommissioning trust funds
    (30,176 )     (36,966 )
Change in money pool receivable - net
    18,676       14,677  
Other
    (444 )     198  
Net cash flow used in investing activities
    (175,517 )     (212,944 )
                 
FINANCING ACTIVITIES
               
Retirement of long-term debt
    (102,326 )     (6,597 )
Changes in short-term borrowings - net
    7,990       -  
Distributions paid:
               
   Common equity
    -       (9,700 )
   Preferred membership interests
    (3,475 )     (3,475 )
Other
    (5,546 )     (200 )
Net cash flow used in financing activities
    (103,357 )     (19,972 )
                 
Net decrease in cash and cash equivalents
    (52,814 )     (66,090 )
                 
Cash and cash equivalents at beginning of period
    151,849       138,918  
                 
Cash and cash equivalents at end of period
  $ 99,035     $ 72,828  
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
               
Cash paid/(received) during the period for:
               
  Interest - net of amount capitalized
  $ 60,992     $ 56,837  
  Income taxes
  $ 4,527     $ (31,044 )
                 
Noncash investing and financing activities:
               
Proceeds from long-term debt issued for the purpose
               
  of refunding prior long-term debt
  $ 150,000     $ -  
Long-term debt refunded with proceeds from long-term
               
  debt issued in prior period
  $ (150,000 )   $ -  
                 
See Notes to Financial Statements.
               

 
109

 

ENTERGY LOUISIANA, LLC
BALANCE SHEETS
ASSETS
June 30, 2010 and December 31, 2009
(Unaudited)
             
   
2010
   
2009
 
   
(In Thousands)
 
             
CURRENT ASSETS
           
Cash and cash equivalents:
           
  Cash
  $ 263     $ 160  
  Temporary cash investments
    98,772       151,689  
    Total cash and cash equivalents
    99,035       151,849  
Accounts receivable:
               
  Customer
    109,665       56,978  
  Allowance for doubtful accounts
    (2,527 )     (1,312 )
  Associated companies
    77,182       110,425  
  Other
    11,570       9,174  
  Accrued unbilled revenues
    90,032       72,550  
    Total accounts receivable
    285,922       247,815  
Note receivable - Entergy New Orleans
    -       9,353  
Materials and supplies - at average cost
    135,898       127,812  
Deferred nuclear refueling outage costs
    23,287       36,783  
Gas hedge contracts
    -       3,409  
Prepayments and other
    21,360       10,633  
TOTAL
    565,502       587,654  
                 
OTHER PROPERTY AND INVESTMENTS
               
Investment in affiliate preferred membership interests
    544,994       544,994  
Decommissioning trust funds
    209,109       209,070  
Non-utility property - at cost (less accumulated depreciation)
    1,033       1,124  
Other
    810       810  
TOTAL
    755,946       755,998  
                 
UTILITY PLANT
               
Electric
    7,150,658       7,190,609  
Property under capital lease
    262,111       262,111  
Construction work in progress
    586,013       509,667  
Nuclear fuel under capital lease
    -       122,011  
Nuclear fuel
    90,585       -  
TOTAL UTILITY PLANT
    8,089,367       8,084,398  
Less - accumulated depreciation and amortization
    3,398,641       3,370,225  
UTILITY PLANT - NET
    4,690,726       4,714,173  
                 
DEFERRED DEBITS AND OTHER ASSETS
               
Regulatory assets:
               
  Regulatory asset for income taxes - net
    137,084       132,086  
  Other regulatory assets
    631,843       477,020  
  Deferred fuel costs
    67,998       67,998  
Long-term receivables
    1,500       1,500  
Other
    23,057       18,762  
TOTAL
    861,482       697,366  
                 
TOTAL ASSETS
  $ 6,873,656     $ 6,755,191  
                 
See Notes to Financial Statements.
               
 
 
110

 
 
 
ENTERGY LOUISIANA, LLC
BALANCE SHEETS
LIABILITIES AND MEMBERS' EQUITY
June 30, 2010 and December 31, 2009
(Unaudited)
                 
      2010       2009  
   
(In Thousands)
 
                 
CURRENT LIABILITIES
               
Currently maturing long-term debt
  $ 180,287     $ 222,326  
Notes payable
    55,181       -  
Accounts payable:
               
  Associated companies
    65,221       56,057  
  Other
    138,926       141,311  
Customer deposits
    83,874       82,864  
Taxes accrued
    -       25,993  
Accumulated deferred income taxes
    18,727       13,349  
Interest accrued
    33,234       32,955  
Deferred fuel costs
    17,810       1,633  
Obligations under capital leases
    -       56,528  
Pension and other postretirement liabilities
    9,311       9,153  
System agreement cost equalization
    11,055       54,000  
Gas hedge contracts
    9,716       -  
Other
    16,610       9,831  
TOTAL
    639,952       706,000  
                 
NON-CURRENT LIABILITIES
               
Accumulated deferred income taxes and taxes accrued
    1,809,773       1,703,272  
Accumulated deferred investment tax credits
    78,052       79,650  
Obligations under capital leases
    -       65,483  
Other regulatory liabilities
    61,526       45,711  
Decommissioning
    309,491       298,216  
Accumulated provisions
    23,421       20,301  
Pension and other postretirement liabilities
    290,488       296,347  
Long-term debt
    1,577,005       1,557,226  
Other
    76,632       71,176  
TOTAL
    4,226,388       4,137,382  
                 
Commitments and Contingencies
               
                 
MEMBERS' EQUITY
               
Preferred membership interests without sinking fund
    100,000       100,000  
Members' equity
    1,931,964       1,837,348  
Accumulated other comprehensive loss
    (24,648 )     (25,539 )
TOTAL
    2,007,316       1,911,809  
                 
TOTAL LIABILITIES AND MEMBERS' EQUITY
  $ 6,873,656     $ 6,755,191  
                 
See Notes to Financial Statements.
               

 
111

 

ENTERGY LOUISIANA, LLC
STATEMENTS OF MEMBERS' EQUITY AND COMPREHENSIVE INCOME
For the Three and Six Months Ended June 30, 2010 and 2009
(Unaudited)
                         
   
Three Months Ended
 
   
2010
   
2009
 
   
(In Thousands)
 
MEMBERS' EQUITY
                       
Members' Equity - Beginning of period
  $ 1,872,443           $ 1,662,253        
                             
    Add:
                           
    Net income
    61,259     $ 61,259       39,990     $ 39,990  
      61,259               39,990          
                                 
    Deduct:
                               
      Distributions declared:
                               
          Preferred membership interests
    1,738       1,738       1,738       1,738  
          Common stock dividend to parent
    -               5,100          
      1,738               6,838          
                                 
Members' Equity - End of period
  $ 1,931,964             $ 1,695,405          
                                 
                                 
                                 
                                 
ACCUMULATED OTHER COMPREHENSIVE
                               
INCOME  (Net of Taxes):
                               
Balance at beginning of period:
                               
  Pension and other postretirement liabilities
  $ (25,093 )           $ (23,797 )        
                                 
Pension and other postretirement liabilities (net of tax expense of $377 and $348)
    445       445       418       418  
                                 
Balance at end of period:
                               
  Pension and other postretirement liabilities
  $ (24,648 )           $ (23,379 )        
Comprehensive Income
          $ 59,966             $ 38,670  
                                 
                                 
                                 
   
Six Months Ended
 
      2010       2009  
   
(In Thousands)
 
MEMBERS' EQUITY
                               
Members' Equity - Beginning of period
  $ 1,837,348             $ 1,632,053          
                                 
    Add:
                               
    Net income
    98,091     $ 98,091       76,527     $ 76,527  
      98,091               76,527          
                                 
    Deduct:
                               
      Distributions declared:
                               
          Preferred membership interests
    3,475       3,475       3,475       3,475  
          Common stock dividend to parent
    -               9,700          
      3,475               13,175          
                                 
Members' Equity - End of period
  $ 1,931,964             $ 1,695,405          
                                 
                                 
                                 
                                 
ACCUMULATED OTHER COMPREHENSIVE
                               
INCOME  (Net of Taxes):
                               
Balance at beginning of period:
                               
  Pension and other postretirement liabilities
  $ (25,539 )           $ (24,215 )        
                                 
Pension and other postretirement liabilities (net of tax expense of $754 and $697)
    891       891       836       836  
                                 
Balance at end of period:
                               
  Pension and other postretirement liabilities
  $ (24,648 )           $ (23,379 )        
Comprehensive Income
          $ 95,507             $ 73,888  
                                 
                                 
                                 
                                 
See Notes to Financial Statements.
                               

 
112

 

ENTERGY LOUISIANA, LLC
SELECTEED OPERATING RESULSTS
For the Three and Six Months Ended June 30, 2010 and 2009
(Unaudited)
                         
                         
   
Three Months Ended
   
Increase/
       
Description
 
2010
   
2009
   
(Decrease)
   
%
 
   
(Dollars In Millions)
       
Electric Operating Revenues:
                       
  Residential
  $ 177     $ 151     $ 26       17  
  Commercial
    127       112       15       13  
  Industrial
    205       174       31       18  
  Governmental
    10       9       1       11  
    Total retail
    519       446       73       16  
  Sales for resale
                               
     Associated companies
    58       46       12       26  
     Non-associated companies
    1       1       -       -  
  Other
    41       34       7       21  
    Total
  $ 619     $ 527     $ 92       17  
                                 
Billed Electric Energy
                               
 Sales (GWh):
                               
  Residential
    2,022       1,902       120       6  
  Commercial
    1,455       1,399       56       4  
  Industrial
    3,703       3,435       268       8  
  Governmental
    112       110       2       2  
    Total retail
    7,292       6,846       446       7  
  Sales for resale
                               
     Associated companies
    959       390       569       146  
     Non-associated companies
    8       11       (3 )     (27 )
    Total
    8,259       7,247       1,012       14  
                                 
                                 
   
Six Months Ended
   
Increase/
         
Description
    2010       2009    
(Decrease)
   
%
 
   
(Dollars In Millions)
         
Electric Operating Revenues:
                               
  Residential
  $ 392     $ 315     $ 77       24  
  Commercial
    259       230       29       13  
  Industrial
    409       358       51       14  
  Governmental
    22       19       3       16  
    Total retail
    1,082       922       160       17  
  Sales for resale
                               
     Associated companies
    95       78       17       22  
     Non-associated companies
    3       3       -       -  
  Other
    51       53       (2 )     (4 )
    Total
  $ 1,231     $ 1,056     $ 175       17  
                                 
Billed Electric Energy
                               
 Sales (GWh):
                               
  Residential
    4,411       3,834       577       15  
  Commercial
    2,839       2,711       128       5  
  Industrial
    6,927       6,478       449       7  
  Governmental
    240       225       15       7  
    Total retail
    14,417       13,248       1,169       9  
  Sales for resale
                               
     Associated companies
    1,193       739       454       61  
     Non-associated companies
    59       66       (7 )     (11 )
    Total
    15,669       14,053       1,616       11  
 
 
113

 
ENTERGY MISSISSIPPI, INC.

MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS


Results of Operations

Net Income

Second Quarter 2010 Compared to Second Quarter 2009

Net income increased $10.3 million primarily due to lower other operation and maintenance expenses, higher net revenue, and a lower effective income tax rate, partially offset by higher interest expense.

Six Months Ended June 30, 2010 Compared to Six Months Ended June 30, 2009

Net income increased $15.3 million primarily due to higher net revenue, lower other operation and maintenance expenses, and a lower effective income tax rate, partially offset by higher interest expense.

Net Revenue

Second Quarter 2010 Compared to Second Quarter 2009

Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory credits.  Following is an analysis of the change in net revenue comparing the second quarter 2010 to the second quarter 2009.

   
Amount
   
(In Millions)
     
2009 net revenue
 
$147.0 
Volume/weather
 
6.3 
Other
 
0.7 
2010 net revenue
 
$154.0 

The volume/weather variance is primarily due to an increase of 249 GWh, or 9%, in billed electricity usage in all sectors, including the effect of more favorable weather compared to the same period in 2009.

Gross operating revenues, fuel and purchased power expenses, and other regulatory credits

Gross operating revenues increased primarily due to the volume/weather variance discussed above and an increase of $4.6 million in gross wholesale revenues primarily due to an increase in volume as a result of more energy available for resale sales.

Other regulatory credits decreased primarily due to increased recovery of costs associated with the power management recovery rider and increased recovery through the Grand Gulf rider of Grand Gulf capacity costs due to higher rates and increased usage. There is no material effect on net income due to quarterly adjustments to the power management recovery rider and annual adjustments to the Grand Gulf rider. See Note 2 to the financial statements in the Form 10-K for a discussion of the power management recovery rider.
 
114

Entergy Mississippi, Inc.
Management's Financial Discussion and Analysis
 

Six Months Ended June 30, 2010 Compared to Six Months Ended June 30, 2009

Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory charges (credits).  Following is an analysis of the change in net revenue comparing the six months ended June 30, 2010 to the six months ended June 30, 2009.

   
Amount
   
(In Millions)
     
2009 net revenue
 
$253.8  
Volume/weather
 
 6.7  
Retail electric price
 
4.2  
Other
 
1.8  
2010 net revenue
 
$266.5 

The volume/weather variance is primarily due to an increase of 534 GWh, or 9%, in billed electricity usage in all sectors, including the effect of more favorable weather on the residential sector.

The retail electric price variance is primarily due to a formula rate plan increase effective July 2009. The formula rate plan filing is discussed further in Note 2 to the financial statements in the Form 10-K.

Gross operating revenues, fuel and purchased power expenses, and other regulatory charges (credits)

Gross operating revenues decreased slightly primarily due to a decrease of $78.8 million in fuel cost recovery revenues due to lower fuel rates. The decrease was significantly offset by an increase of $44.4 million in power management rider revenue, the volume/weather variance discussed above, and an increase in Grand Gulf rider revenue as a result of higher rates and increased usage.

Fuel and purchased power expenses decreased primarily due to a decrease in the recovery from customers of deferred fuel costs, offset by increased net area demand.

Other regulatory charges increased primarily due to increased recovery of costs associated with the power management recovery rider and increased recovery through the Grand Gulf rider of Grand Gulf capacity costs due to higher rates and increased usage. There is no material effect on net income due to quarterly adjustments to the power management recovery rider and annual adjustments to the Grand Gulf rider. See Note 2 to the financial statements in the Form 10-K for a discussion of the power management recovery rider.

Other Income Statement Variances

Second Quarter 2010 Compared to Second Quarter 2009

Other operation and maintenance expenses decreased primarily due to:

·  
a decrease of $3.9 million in legal expenses due to the deferral of certain litigation expenses in accordance with regulatory treatment; and
·  
a decrease of $1.6 million in distribution expenses primarily due to the timing of contract work.

The decrease was partially offset by an increase of $1.2 million in payroll-related and benefit costs.

Taxes other than income taxes increased primarily due to an increase in ad valorem taxes as a result of a higher 2010 assessment and a higher millage rate.
 
115

 
Entergy Mississippi, Inc.
Management's Financial Discussion and Analysis
  

Other income increased primarily due to an increase in the allowance for equity funds used during construction due to more construction work in progress in 2010.

Interest expense increased primarily due to the issuance of $150 million of 6.64% Series first mortgage bonds in June 2009.

Six Months Ended June 30, 2010 Compared to Six Months Ended June 30, 2009

Other operation and maintenance expenses decreased primarily due to:

·  
a decrease of $3.9 million in legal expenses due to the deferral of certain litigation expenses in accordance with regulatory treatment;
·  
a decrease of $2.2 million in distribution expenses related to decreased materials and supplies costs and the timing of contract work; and
·  
a decrease of $1.7 million in customer services costs as a result of decreased write-offs of uncollectible customer accounts.

The decrease was partially offset by an increase of $2.0 million in payroll-related and benefit costs.

Other income increased primarily due to an increase in the allowance for equity funds used during construction due to more construction work in progress in 2010 and an increase in contribution in aid of construction on prepaid transmission projects in 2010.

Interest expense increased primarily due to the issuance of $150 million of 6.64% Series first mortgage bonds in June 2009.

Income Taxes

The effective income tax rate was 33.0% for the second quarter 2010 and 31.9% for the six months ended June 30, 2010.  The difference in the effective income tax rate for the second quarter of 2010 versus the federal statutory rate of 35% is primarily due to state income taxes, book and tax differences related to the allowance for equity funds used during construction, book and tax differences related to utility plant items, and the amortization of investment tax credits, offset by an adjustment to the provision for uncertain tax positions. The difference in the effective income tax rate for the six months ended June 30, 2010 versus the federal statutory rate of 35% is primarily due to book and tax differences related to the allowance for equity funds used during construction, state income taxes, the amortization of investment tax credits, and book and tax differences related to utility plant items, partially offset by an adjustment to the provision for uncertain tax positions.

The effective income tax rate was 40.2% for the second quarter 2009 and 37.6% for the six months ended June 30, 2009.  The difference in the effective income tax rate for the second quarter of 2009 versus the federal statutory rate of 35% is primarily due to state income taxes. The difference in the effective income tax rate for the six months ended June 30, 2009 versus the federal statutory rate of 35% is primarily due to an adjustment to the provision for uncertain tax positions, book and tax differences related to utility plant items, and payroll and benefits related items, partially offset by book and tax differences related to the allowance for equity funds used during construction and the amortization of investment tax credits.
 
116

Entergy Mississippi, Inc.
Management's Financial Discussion and Analysis
 

Liquidity and Capital Resources

Cash Flow

Cash flows for the six months ended June 30, 2010 and 2009 were as follows:

   
2010
 
2009
   
(In Thousands)
         
Cash and cash equivalents at beginning of period
 
$91,451 
 
$1,082 
         
Cash flow provided by (used in):
       
 
Operating activities
 
4,482 
 
53,951 
 
Investing activities
 
(70,940)
 
(84,773)
 
Financing activities
 
(23,775)
 
71,865 
Net increase (decrease) in cash and cash equivalents
 
(90,233)
 
41,043 
         
Cash and cash equivalents at end of period
 
$1,218 
 
$42,125 

Operating Activities

Cash flow provided by operating activities decreased $49.5 million for the six months ended June 30, 2010 compared to the six months ended June 30, 2009 primarily due to decreased recovery of deferred fuel costs.

Investing Activities

Cash flow used in investing activities decreased $13.8 million for the six months ended June 30, 2010 compared to the six months ended June 30, 2009 primarily due to money pool activity, partially offset by increased construction expenditures resulting from a $49 million payment to a System Energy subsidiary for costs associated with the development of new nuclear generation at Grand Gulf, as discussed below.

Decreases in Entergy Mississippi's receivable from the money pool are a source of cash flow, and Entergy Mississippi's receivable from the money pool decreased $31.4 million for the six months ended June 30, 2010 compared to increasing $27.0 million for the six months ended June 30, 2009.  The money pool is an inter-company borrowing arrangement designed to reduce the Utility subsidiaries' need for external short-term borrowings.

Financing Activities

Entergy Mississippi's financing activities used $23.8 million in cash flow for the six months ended June 30, 2010 compared to providing $71.9 million in cash flow for the six months ended June 30, 2009 primarily due to:

·  
the redemption, prior to maturity, of $100 million of 7.25% Series first mortgage bonds in April 2010;
·  
the issuance of $150 million of 6.64% Series first mortgage bonds in June 2009; and
·  
the issuance of $80 million of 6.20% Series first mortgage bonds in April 2010; offset by
·  
money pool activity.

Increases in Entergy Mississippi's payable to the money pool are a source of cash flow, and Entergy Mississippi's payable to the money pool increased by $20.6 million for the six months ended June 30, 2010 compared to decreasing $66.0 million for the six months ended June 30, 2009.

 
117

 
Entergy Mississippi, Inc.
Management's Financial Discussion and Analysis
  
 

Capital Structure

Entergy Mississippi's capitalization is balanced between equity and debt, as shown in the following table.

   
June 30,
2010
 
December 31,
2009
         
Net debt to net capital
 
52.1%
 
50.7%
Effect of subtracting cash from debt
 
0.0%
 
2.8%
Debt to capital
 
52.1%
 
53.5%

Net debt consists of debt less cash and cash equivalents.  Debt consists of notes payable, capital lease obligations, and long-term debt, including the currently maturing portion.  Capital consists of debt, preferred stock without sinking fund, and shareholders' equity.  Net capital consists of capital less cash and cash equivalents.  Entergy Mississippi uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Mississippi's financial condition.

Uses and Sources of Capital

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources" in the Form 10-K for a discussion of Entergy Mississippi's uses and sources of capital.  Following are updates to the information presented in the Form 10-K.

Entergy Mississippi's receivables from or (payables to) the money pool were as follows:

June 30,
2010
 
December 31,
2009
 
June 30,
2009
 
December 31,
2008
(In Thousands)
             
($20,591)
 
$31,435
 
$26,958
 
($66,044)

See Note 4 to the financial statements in the Form 10-K for a description of the money pool.

In May 2010, Entergy Mississippi renewed its three separate credit facilities through May 2011 in the aggregate amount of $70 million. No borrowings were outstanding under the credit facilities as of June 30, 2010.

In April 2010, Entergy Mississippi issued $80 million of 6.20% Series first mortgage bonds due April 2040. Entergy Mississippi used the proceeds, together with other available funds, to redeem, prior to maturity, all of its $100 million 7.25% Series first mortgage bonds, due December 2032.

New Nuclear Development

Pursuant to the Mississippi Baseload Act and the Mississippi Public Utilities Act, Entergy Mississippi is developing a project option for new nuclear generation at Grand Gulf Nuclear Station.  Entergy Mississippi, together with Entergy Gulf States Louisiana and Entergy Louisiana, has been engaged in the development of options to construct new nuclear generation at the Grand Gulf and River Bend Station sites.  Entergy Mississippi is leading the development at Grand Gulf, and Entergy Gulf States Louisiana and Entergy Louisiana are leading the development at River Bend.  This project is in the early stages, and several issues remain to be addressed over time before significant additional capital would be committed to this project.  In 2010, Entergy Mi ssissippi paid for and has recognized on its books $49 million in costs associated with the development of new nuclear generation at Grand Gulf; these costs previously had been recorded on the books of Entergy New Nuclear Utility Development, LLC, a System Energy subsidiary.
 
118

Entergy Mississippi, Inc.
Management's Financial Discussion and Analysis
 

State and Local Rate Regulation

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - State and Local Rate Regulation" in the Form 10-K for a discussion of the formula rate plan and fuel and purchased power cost recovery. Following are updates to that discussion.

Formula Rate Plan

In September 2009, Entergy Mississippi filed with the MPSC proposed modifications to its formula rate plan rider.  In March 2010 the MPSC issued an order: (1) providing the opportunity for a reset of Entergy Mississippi's return on common equity to a point within the formula rate plan bandwidth and eliminating the 50/50 sharing that had been in the plan, (2) modifying the performance measurement process, and (3) replacing the revenue change limit of two percent of revenues, which was subject to a $14.5 million revenue adjustment cap, with a limit of four percent of revenues, although any adjustment above two percent requires a hearing before the MPSC.  The MPSC did not approve Entergy Mississippi's request to use a projected test year for its annua l scheduled formula rate plan filing and, therefore, Entergy Mississippi will continue to use a historical test year for its annual evaluation reports under the plan.

As discussed in the Form 10-K, in March 2010, Entergy Mississippi submitted its 2009 test year filing, its first annual filing under the new formula rate plan rider.  In June 2010 the MPSC approved a joint stipulation between Entergy Mississippi and the Mississippi Public Utilities Staff that provides for no change in rates, but does provide for the deferral as a regulatory asset of $3.9 million of legal expenses associated with certain litigation involving the Mississippi Attorney General, as well as ongoing legal expenses in that litigation until the litigation is resolved.

Fuel and Purchased Power Cost Recovery

In August 2009 the MPSC retained an independent audit firm to audit Entergy Mississippi's fuel adjustment clause submittals for the period October 2007 through September 2009.  The independent audit firm submitted its report to the MPSC in December 2009.  The report does not recommend that any costs be disallowed for recovery.  The report did suggest that some costs, less than one percent of the fuel and purchased power costs recovered during the period, may have been more reasonably charged to customers through base rates rather than through fuel charges, but the report did not suggest that customers should not have paid for those costs.  In November 2009 the MPSC also retained another firm to review processes and practices related to fuel and pur chased energy.  The results of that review were filed with the MPSC in March 2010.  In that report, the independent consulting firm found that the practices and procedures in activities that directly affect the costs recovered through Entergy Mississippi's fuel adjustment clause appear reasonable.  Both audit reports were certified by the MPSC to the Mississippi Legislature, as required by Mississippi law.

Federal Regulation

See "System Agreement Proceedings" and "Independent Coordinator of Transmission" in the "Rate, Cost-recovery, and Other Regulation" section of Entergy Corporation and Subsidiaries Management's Financial Discussion and Analysis for updates to the discussion in the Form 10-K.

Critical Accounting Estimates

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates" in the Form 10-K for a discussion of the estimates and judgments necessary in Entergy Mississippi's accounting for unbilled revenue and qualified pension and other postretirement benefits.
 
119

Entergy Mississippi, Inc.
Management's Financial Discussion and Analysis
 

Federal Healthcare Legislation

See the "Critical Accounting Estimates - Federal Healthcare Legislation" section of Entergy Corporation and Subsidiaries Management's Financial Discussion and Analysis for an update to the Form 10-K discussion on critical accounting estimates.
 
120

 


ENTERGY MISSISSIPPI, INC.
INCOME STATEMENTS
For the Three and Six Months Ended June 30, 2010 and 2009
(Unaudited)
                         
   
Three Months Ended
   
Six Months Ended
 
   
2010
   
2009
   
2010
   
2009
 
   
(In Thousands)
   
(In Thousands)
 
                         
OPERATING REVENUES
                       
Electric
  $ 308,492     $ 290,615     $ 552,050     $ 552,320  
                                 
OPERATING EXPENSES
                               
Operation and Maintenance:
                               
   Fuel, fuel-related expenses, and
                               
     gas purchased for resale
    75,236       79,748       83,289       180,561  
   Purchased power
    83,758       79,850       184,094       175,119  
   Other operation and maintenance
    51,379       58,796       98,780       109,025  
Taxes other than income taxes
    16,561       15,203       32,609       31,812  
Depreciation and amortization
    22,275       21,730       44,380       43,013  
Other regulatory charges (credits) - net
    (4,521 )     (16,021 )     18,173       (57,168 )
TOTAL
    244,688       239,306       461,325       482,362  
                                 
OPERATING INCOME
    63,804       51,309       90,725       69,958  
                                 
OTHER INCOME
                               
Allowance for equity funds used during construction
    1,708       754       3,099       1,718  
Interest and dividend income
    133       223       321       449  
Miscellaneous - net
    25       (674 )     55       (1,180 )
TOTAL
    1,866       303       3,475       987  
                                 
INTEREST AND OTHER CHARGES
                               
Interest on long-term debt
    13,182       10,993       26,227       21,460  
Other interest - net
    2,311       1,066       2,916       2,220  
Allowance for borrowed funds used during construction
    (953 )     (429 )     (1,729 )     (1,046 )
TOTAL
    14,540       11,630       27,414       22,634  
                                 
INCOME BEFORE INCOME TAXES
    51,130       39,982       66,786       48,311  
                                 
Income taxes
    16,861       16,055       21,324       18,146  
                                 
NET INCOME
    34,269       23,927       45,462       30,165  
                                 
Preferred dividend requirements and other
    707       707       1,414       1,414  
                                 
EARNINGS APPLICABLE TO
                               
COMMON STOCK
  $ 33,562     $ 23,220     $ 44,048     $ 28,751  
                                 
See Notes to Financial Statements.
                               

 
121

 

 

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122

 

ENTERGY MISSISSIPPI, INC.
STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2010 and 2009
(Unaudited)
             
   
2010
   
2009
 
   
(In Thousands)
 
             
OPERATING ACTIVITIES
           
Net income
  $ 45,462     $ 30,165  
Adjustments to reconcile net income to net cash flow provided by operating activities:
         
  Other regulatory charges (credits) - net
    18,173       (57,168 )
  Depreciation and amortization
    44,380       43,013  
  Deferred income taxes, investment tax credits, and non-current taxes accrued
    (14,794 )     5,007  
  Changes in working capital:
               
    Receivables
    (33,931 )     11,333  
    Fuel inventory
    (1,512 )     (892 )
    Accounts payable
    10,020       (625 )
    Taxes accrued
    15,305       (8,590 )
    Interest accrued
    904       (3,942 )
    Deferred fuel costs
    (83,156 )     55,830  
    Other working capital accounts
    35,061       (3,608 )
  Provision for estimated losses and reserves
    (2,870 )     2,950  
  Changes in other regulatory assets
    (14,171 )     (51,609 )
  Other
    (14,389 )     32,087  
Net cash flow provided by operating activities
    4,482       53,951  
                 
INVESTING ACTIVITIES
               
Construction expenditures
    (117,021 )     (59,434 )
Allowance for equity funds used during construction
    3,099       1,718  
Changes in other investments - net
    7,610       -  
Change in money pool receivable - net
    31,435       (26,958 )
Proceeds from the sale of assets
    3,951       (180 )
Other
    (14 )     81  
Net cash flow used in investing activities
    (70,940 )     (84,773 )
                 
FINANCING ACTIVITIES
               
Proceeds from the issuance of long-term debt
    77,248       148,723  
Retirement of long-term debt
    (100,000 )     -  
Change in money pool payable - net
    20,591       (66,044 )
Dividends paid:
               
  Common stock
    (20,200 )     (9,400 )
  Preferred stock
    (1,414 )     (1,414 )
Net cash flow provided by (used in) financing activities
    (23,775 )     71,865  
                 
Net increase (decrease) in cash and cash equivalents
    (90,233 )     41,043  
                 
Cash and cash equivalents at beginning of period
    91,451       1,082  
                 
Cash and cash equivalents at end of period
  $ 1,218     $ 42,125  
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
         
Cash paid during the period for:
               
  Interest - net of amount capitalized
  $ 26,957     $ 26,538  
  Income taxes
  $ 1,500     $ -  
                 
                 
See Notes to Financial Statements.
               

 
123

 

ENTERGY MISSISSIPPI, INC.
BALANCE SHEETS
ASSETS
June 30, 2010 and December 31, 2009
(Unaudited)
             
   
2010
   
2009
 
   
(In Thousands)
 
             
CURRENT ASSETS
           
Cash and cash equivalents:
           
  Cash
  $ 1,209     $ 1,147  
  Temporary cash investments
    9       90,304  
    Total cash and cash equivalents
    1,218       91,451  
Accounts receivable:
               
  Customer
    62,595       50,092  
  Allowance for doubtful accounts
    (978 )     (1,018 )
  Associated companies
    18,576       36,565  
  Other
    10,792       12,842  
  Accrued unbilled revenues
    51,164       41,137  
    Total accounts receivable
    142,149       139,618  
Note receivable - Entergy New Orleans
    -       7,610  
Deferred fuel costs
    10,249       -  
Accumulated deferred income taxes
    8,028       294  
Fuel inventory - at average cost
    7,387       5,875  
Materials and supplies - at average cost
    33,961       37,979  
Prepayments and other
    -       2,820  
TOTAL
    202,992       285,647  
                 
OTHER PROPERTY AND INVESTMENTS
               
Investment in affiliates - at equity
    5,535       5,535  
Non-utility property - at cost (less accumulated depreciation)
    4,795       4,864  
Storm reserve escrow account
    31,881       31,867  
TOTAL
    42,211       42,266  
                 
UTILITY PLANT
               
Electric
    3,097,354       3,070,109  
Property under capital lease
    5,694       6,418  
Construction work in progress
    127,685       62,866  
TOTAL UTILITY PLANT
    3,230,733       3,139,393  
Less - accumulated depreciation and amortization
    1,137,502       1,115,756  
UTILITY PLANT - NET
    2,093,231       2,023,637  
                 
DEFERRED DEBITS AND OTHER ASSETS
               
Regulatory assets:
               
  Regulatory asset for income taxes - net
    43,647       34,114  
  Other regulatory assets
    257,668       251,407  
Other
    19,051       19,564  
TOTAL
    320,366       305,085  
                 
TOTAL ASSETS
  $ 2,658,800     $ 2,656,635  
                 
See Notes to Financial Statements.
               
 
 
 
124

 
 
ENTERGY MISSISSIPPI, INC.
BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
June 30, 2010 and December 31, 2009
(Unaudited)
                 
      2010       2009  
   
(In Thousands)
 
                 
CURRENT LIABILITIES
               
Currently maturing long-term debt
  $ 80,000     $ -  
Accounts payable:
               
  Associated companies
    61,898       58,421  
  Other
    56,588       31,176  
Customer deposits
    64,495       62,316  
Taxes accrued
    56,908       41,603  
Interest accrued
    20,083       19,179  
Deferred fuel costs
    -       72,907  
System agreement cost equalization
    12,369       -  
Gas hedge contracts
    7,007       -  
Other
    12,067       5,399  
TOTAL
    371,415       291,001  
                 
NON-CURRENT LIABILITIES
               
Accumulated deferred income taxes and taxes accrued
    587,887       578,759  
Accumulated deferred investment tax credits
    7,028       7,514  
Obligations under capital lease
    4,182       4,949  
Other regulatory liabilities
    -       2,905  
Asset retirement cost liabilities
    5,220       5,071  
Accumulated provisions
    38,533       41,403  
Pension and other postretirement liabilities
    104,367       111,437  
Long-term debt
    745,341       845,304  
Other
    31,833       29,146  
TOTAL
    1,524,391       1,626,488  
                 
Commitments and Contingencies
               
                 
Preferred stock without sinking fund
    50,381       50,381  
                 
SHAREHOLDERS' EQUITY
               
Common stock, no par value, authorized 12,000,000
               
 shares; issued and outstanding 8,666,357 shares in 2010 and 2009
    199,326       199,326  
Capital stock expense and other
    (690 )     (690 )
Retained earnings
    513,977       490,129  
TOTAL
    712,613       688,765  
                 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
  $ 2,658,800     $ 2,656,635  
                 
See Notes to Financial Statements.
               

 
125

 

ENTERGY MISSISSIPPI, INC.
SELECTED OPERATING RESULTS
For the Three and Six Months Ended June 30, 2010 and 2009
(Unaudited)
                         
                         
   
Three Months Ended
   
Increase/
       
Description
 
2010
   
2009
   
(Decrease)
   
%
 
   
(Dollars In Millions)
       
Electric Operating Revenues:
                       
  Residential
  $ 110     $ 101     $ 9       9  
  Commercial
    97       95       2       2  
  Industrial
    37       36       1       3  
  Governmental
    9       9       -       -  
    Total retail
    253       241       12       5  
  Sales for resale
                               
     Associated companies
    12       10       2       20  
     Non-associated companies
    10       7       3       43  
  Other
    33       33       -       -  
    Total
  $ 308     $ 291     $ 17       6  
                                 
Billed Electric Energy
                               
 Sales (GWh):
                               
  Residential
    1,235       1,094       141       13  
  Commercial
    1,173       1,115       58       5  
  Industrial
    566       519       47       9  
  Governmental
    99       96       3       3  
    Total retail
    3,073       2,824       249       9  
  Sales for resale
                               
     Associated companies
    87       66       21       32  
     Non-associated companies
    107       81       26       32  
    Total
    3,267       2,971       296       10  
                                 
                                 
   
Six Months Ended
   
Increase/
         
Description
    2010       2009    
(Decrease)
   
%
 
   
(Dollars In Millions)
       
Electric Operating Revenues:
                               
  Residential
  $ 216     $ 208     $ 8       4  
  Commercial
    181       188       (7 )     (4 )
  Industrial
    66       72       (6 )     (8 )
  Governmental
    18       18       -       -  
    Total retail
    481       486       (5 )     (1 )
  Sales for resale
                               
     Associated companies
    20       15       5       33  
     Non-associated companies
    18       14       4       29  
  Other
    33       37       (4 )     (11 )
    Total
  $ 552     $ 552     $ -       -  
                                 
Billed Electric Energy
                               
 Sales (GWh):
                               
  Residential
    2,780       2,378       402       17  
  Commercial
    2,269       2,186       83       4  
  Industrial
    1,068       1,026       42       4  
  Governmental
    196       189       7       4  
    Total retail
    6,313       5,779       534       9  
  Sales for resale
                               
     Associated companies
    154       86       68       79  
     Non-associated companies
    182       152       30       20  
    Total
    6,649       6,017       632       11  

 
126

 
 

ENTERGY NEW ORLEANS, INC.

MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS


Results of Operations

Net Income

Second Quarter 2010 Compared to Second Quarter 2009

Net income decreased $3.5 million primarily due to higher operation and maintenance expenses and higher taxes other than income taxes, partially offset by a lower effective income tax rate.

Six Months Ended June 30, 2010 Compared to Six Months Ended June 30, 2009

Net income increased $2.6 million primarily due to higher net revenue and a lower effective income tax rate, partially offset by higher other operation and maintenance expenses, higher taxes other than income taxes, and lower other income.

Net Revenue

Second Quarter 2010 Compared to Second Quarter 2009

Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory charges.  Following is an analysis of the changes in net revenue comparing the second quarter 2010 to the second quarter 2009.

   
Amount
   
(In Millions)
     
2009 net revenue
 
$63.9 
Miscellaneous insignificant items
 
2.0 
2010 net revenue
 
$65.9 


Gross operating revenues

Gross operating revenues increased primarily due to an increase of $10.8 million primarily due to the effect of the rate case settlement as discussed in Note 2 to the financial statements in the Form 10-K and increased retail gas and electricity usage due to the effect of more favorable volume/weather in the residential sector.  The increase was offset by a decrease of $17.4 million in affiliated wholesale revenue due to a decrease in volume resulting in less energy available for resale sales.

 
127

Entergy New Orleans, Inc.
Management's Financial Discussion and Analysis
 

Six Months Ended June 30, 2010 Compared to Six Months Ended June 30, 2009

Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory charges.  Following is an analysis of the changes in net revenue comparing the six months ended June 30, 2010 to the six months ended June 30, 2009.

   
Amount
   
(In Millions)
     
2009 net revenue
 
$120.0 
Net gas revenue
 
9.0 
Volume/weather
 
7.4 
Effect of rate case settlement
 
(5.0)
Other
 
4.9 
2010 net revenue
 
$136.3 

The net gas variance is primarily due to more favorable weather compared to the same period in 2009.

The volume/weather variance is primarily due to an increase of 232 GWh, or 11%, in billed retail electricity usage primarily due to more favorable weather compared to the same period in 2009, and a 5.4% increase in the number of residential electric customers.

The effect of rate case settlement variance results from the April 2009 settlement of Entergy New Orleans's rate case, and includes the effects of realigning non-fuel costs associated with the operation of Grand Gulf from the fuel adjustment clause to electric base rates effective June 2009.  See Note 2 to the financial statements in the Form 10-K for further discussion of the rate case settlement.

Gross operating revenues and fuel and purchased power expenses

Gross operating revenues increased primarily due to:

·  
an increase of $28.2 million due to the effect of the rate case settlement, as discussed above;
·  
increased gas and electricity usage due to the effect of more favorable volume/weather, as discussed above; and
·  
an increase of $2.8 million in gas fuel cost recovery revenues due to higher usage.

The increase was offset by:

·  
a decrease of $15.6 million in electric fuel cost recovery revenues primarily due to the effect of the rate case settlement offset by higher fuel rates; and
·  
a decrease of $28.1 million in affiliated wholesale revenue due to a decrease in volume resulting in less energy available for resale sales.

Fuel and purchased power expenses decreased primarily due to decreased generation as a result of planned outages.  The decrease was offset by an increase in the volume of system purchases as a result of the displacement of gas generation coupled with an increase in the average price of associated purchased power.

Other Income Statement Variances

Second Quarter 2010 Compared to Second Quarter 2009

Other operation and maintenance expenses increased primarily due to an increase of $10.7 million in fossil expenses due to the timing of outages and the increased scope of work done during this year’s outage.
 
128

Entergy New Orleans, Inc.
Management's Financial Discussion and Analysis

Taxes other than income taxes increased primarily due to an increase in local franchise taxes resulting from higher electric and gas retail revenues as compared with the same period in 2009.

Six Months Ended June 30, 2010 Compared to Six Months Ended June 30, 2009

Other operation and maintenance expenses increased primarily due to an increase of $12.6 million in fossil expenses due to the timing of outages and the increased scope of work done during this year’s outages.

Taxes other than income taxes increased primarily due to higher millage rates and an increase in local franchise taxes resulting from higher electric and gas retail revenues as compared with the same period in 2009.

Other income decreased primarily due to carrying costs on Hurricane Gustav and Hurricane Ike storm restoration costs recorded in 2009.  See Note 2 to the financial statements in the Form 10-K for further discussion of the storm reserve established in the April 2009 rate case settlement.

Income Taxes

The effective income tax rate was 16.5% for the second quarter 2010 and 29.8% for the six months ended June 30, 2010.  The differences in the effective income tax rates for the second quarter 2010 and the six months ended June 30, 2010 versus the federal statutory rate of 35% are primarily due to flow-through book and tax timing differences, partially offset by certain book and tax differences related to utility plant items and state income taxes.
 
The effective income tax rate was 39.8% for the second quarter 2009 and 39.6% for the six months ended June 30, 2009.  The differences in the effective income tax rates for the second quarter of 2009 and the six months ended June 30, 2009 versus the federal statutory rate of 35% are primarily due to state income taxes and book and tax differences related to utility plant items.

Liquidity and Capital Resources

Cash Flow

Cash flows for the six months ended June 30, 2010 and 2009 were as follows:

   
2010
 
2009
   
(In Thousands)
         
Cash and cash equivalents at beginning of period
 
$191,191 
 
$137,444 
         
Cash flow provided by (used in):
       
 
Operating activities
 
49,828 
 
44,787 
 
Investing activities
 
(10,226)
 
(51,267)
 
Financing activities
 
(90,398)
 
(9,238)
Net decrease in cash and cash equivalents
 
(50,796)
 
(15,718)
         
Cash and cash equivalents at end of period
 
$140,395 
 
$121,726 
 
129

 
Entergy New Orleans, Inc.
Management's Financial Discussion and Analysis
 
 

Operating Activities

Net cash flow provided by operating activities increased $5.0 million for the six months ended June 30, 2010 compared to the six months ended June 30, 2009 primarily due to the receipt of $19.2 million in CDBG funds.

The increase was partially offset by:

·  
an increase of $3.2 million in interest payments;
·  
$3.2 million in income tax refunds received in 2009; and
·  
an increase in pension contributions of $2.2 million.

Investing Activities

Net cash flow used in investing activities decreased $41.0 million for the six months ended June 30, 2010 compared to the six months ended June 30, 2009 primarily due to money pool activity and a storm reserve drawdown.

Decreases in Entergy New Orleans's receivable from the money pool are a source of cash flow, and Entergy New Orleans's receivable from the money pool decreased by $18.1 million in the six months ended June 30, 2010 compared to increasing by $18 million in the six months ended June 30, 2009.  The money pool is an inter-company borrowing arrangement designed to reduce the Utility subsidiaries' need for external short-term borrowings.

Financing Activities

Net cash flow used in financing activities increased $81.2 million for the six months ended June 30, 2010 compared to the six months ended June 30, 2009 primarily due to the repayment of $74.3 million of affiliate notes payable.

See Note 4 to the financial statements for the details on long-term debt.

Capital Structure

Entergy New Orleans's capitalization is balanced between equity and debt, as shown in the following table. The decrease in the debt to capital ratio is due to the repayment of affiliate notes payable in May 2010, as discussed below.

   
June 30,
 2010
 
December 31,
2009
         
Net debt to net capital
 
19.8%
 
26.2%
Effect of subtracting cash from debt
 
26.4%
 
28.2%
Debt to capital
 
46.2%
 
54.4%

Net debt consists of debt less cash and cash equivalents.  Debt consists of notes payable and long-term debt, including the currently maturing portion.  Capital consists of debt, preferred stock without sinking fund, and shareholders' equity.  Net capital consists of capital less cash and cash equivalents.  Entergy New Orleans uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy New Orleans's financial condition.

Uses and Sources of Capital

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources" in the Form 10-K for a discussion of Entergy New Orleans's uses and sources of capital.  The following are updates to the Form 10-K.
 
130

 
Entergy New Orleans, Inc.
Management's Financial Discussion and Analysis
Entergy New Orleans's receivables from the money pool were as follows:

June 30,
2010
 
December 31,
2009
 
June 30,
2009
 
December 31,
2008
(In Thousands)
             
$48,078
 
$66,149
 
$78,079
 
$60,093

See Note 4 to the financial statements in the Form 10-K for a description of the money pool.

Pursuant to its plan of reorganization, in May 2007, Entergy New Orleans issued notes due in three years in satisfaction of its affiliate prepetition accounts payable (approximately $74 million, including interest), including its indebtedness to the Entergy System money pool.  In May 2010, Entergy New Orleans repaid, at maturity, the notes payable.

On July 1, 2010, Entergy New Orleans paid, at maturity, its $30 million of 4.98% Series first mortgage bonds.

State and Local Rate Regulation

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS – State and Local Rate Regulation" in the Form 10-K for a discussion of state and local rate regulation.  Following is an update to that discussion.

In May 2010, Entergy New Orleans filed its electric and gas formula rate plan evaluation reports.  The filings request a $12.8 million electric base revenue decrease and a $2.4 million gas base revenue increase.  The new rates would be effective with the first billing cycle in October 2010.  The City Council and its Advisors’ review and consideration of these filings is pending.

Federal Regulation

See "System Agreement Proceedings" and "Independent Coordinator of Transmission" in the "Rate, Cost-recovery, and Other Regulation" section of Entergy Corporation and Subsidiaries Management's Financial Discussion and Analysis for updates to the discussion in the Form 10-K.

Environmental Risks

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Environmental Risks" in the Form 10-K for a discussion of environmental risks.

Critical Accounting Estimates

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates" in the Form 10-K for a discussion of the estimates and judgments necessary in Entergy New Orleans's accounting for unbilled revenue and qualified pension and other postretirement benefits.

Federal Healthcare Legislation

See the "Critical Accounting Estimates - Federal Healthcare Legislation" section of Entergy Corporation and Subsidiaries Management's Financial Discussion and Analysis for an update to the Form 10-K discussion on critical accounting estimates.

 
131

 


ENTERGY NEW ORLEANS, INC.
INCOME STATEMENTS
For the Three and Six Months Ended June 30, 2010 and 2009
(Unaudited)
                         
   
Three Months Ended
   
Six Months Ended
 
   
2010
   
2009
   
2010
   
2009
 
   
(In Thousands)
   
(In Thousands)
 
                         
OPERATING REVENUES
                       
Electric
  $ 119,666     $ 118,700     $ 244,632     $ 245,644  
Natural gas
    18,915       18,437       74,048       62,587  
TOTAL
    138,581       137,137       318,680       308,231  
                                 
OPERATING EXPENSES
                               
Operation and Maintenance:
                               
   Fuel, fuel-related expenses, and
                               
     gas purchased for resale
    11,867       25,946       71,958       93,733  
   Purchased power
    60,229       47,087       109,138       94,364  
   Other operation and maintenance
    37,053       28,085       65,181       54,535  
Taxes other than income taxes
    10,125       8,761       22,071       19,216  
Depreciation and amortization
    8,816       8,455       17,525       16,770  
Other regulatory charges - net
    568       224       1,332       178  
TOTAL
    128,658       118,558       287,205       278,796  
                                 
OPERATING INCOME
    9,923       18,579       31,475       29,435  
                                 
OTHER INCOME
                               
Allowance for equity funds used during construction
    192       (109 )     361       109  
Interest and dividend income
    162       1,236       296       3,017  
Miscellaneous - net
    (287 )     (266 )     (471 )     (521 )
TOTAL
    67       861       186       2,605  
                                 
INTEREST AND OTHER CHARGES
                               
Interest on long-term debt
    2,903       2,908       5,809       5,819  
Other interest - net
    633       1,513       1,784       2,414  
Allowance for borrowed funds used during construction
    (92 )     82       (174 )     (39 )
TOTAL
    3,444       4,503       7,419       8,194  
                                 
INCOME BEFORE INCOME TAXES
    6,546       14,937       24,242       23,846  
                                 
Income taxes
    1,079       5,942       7,214       9,452  
                                 
NET INCOME
    5,467       8,995       17,028       14,394  
                                 
Preferred dividend requirements and other
    241       241       482       482  
                                 
EARNINGS APPLICABLE TO
                               
COMMON STOCK
  $ 5,226     $ 8,754     $ 16,546     $ 13,912  
                                 
See Notes to Financial Statements.
                               

 
132

 

ENTERGY NEW ORLEANS, INC.
STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2010 and 2009
(Unaudited)
   
2010
   
2009
 
   
(In Thousands)
 
OPERATING ACTIVITIES
           
Net income
  $ 17,028     $ 14,394  
Adjustments to reconcile net income to net cash flow provided by operating activities:
         
  Reserve for regulatory adjustment
    196       -  
  Other regulatory charges - net
    1,332       178  
  Depreciation and amortization
    17,525       16,770  
  Deferred income taxes, investment tax credits, and non-current taxes accrued
    29,868       (3,596 )
  Changes in working capital:
               
    Receivables
    4,508       28,382  
    Fuel inventory
    (919 )     4,886  
    Accounts payable
    1,960       (11,896 )
    Prepaid taxes and taxes accrued
    (24,619 )     15,094  
    Interest accrued
    (672 )     (437 )
    Deferred fuel costs
    (4,910 )     (6,989 )
    Other working capital accounts
    (13,168 )     (9,504 )
  Provision for estimated losses and reserves
    (7,875 )     3,048  
  Changes in other regulatory assets
    7,627       (6,493 )
  Changes in pension and other postretirement liabilities
    (3,823 )     (1,780 )
  Other
    25,770       2,730  
Net cash flow provided by operating activities
    49,828       44,787  
                 
INVESTING ACTIVITIES
               
Construction expenditures
    (35,568 )     (30,063 )
Allowance for equity funds used during construction
    361       109  
Change in money pool receivable - net
    18,071       (17,986 )
Changes in other investments - net
    6,910       (3,327 )
Net cash flow used in investing activities
    (10,226 )     (51,267 )
                 
FINANCING ACTIVITIES
               
Retirement of long-term debt
    (74,993 )     -  
Dividends paid:
               
  Common stock
    (14,900 )     (8,000 )
  Preferred stock
    (482 )     (482 )
Other
    (23 )     (756 )
Net cash flow used in financing activities
    (90,398 )     (9,238 )
                 
Net decrease in cash and cash equivalents
    (50,796 )     (15,718 )
                 
Cash and cash equivalents at beginning of period
    191,191       137,444  
                 
Cash and cash equivalents at end of period
  $ 140,395     $ 121,726  
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
               
Cash paid/(received) during the period for:
               
  Interest - net of amount capitalized
  $ 7,936     $ 4,698  
  Income taxes
    -     $ (3,212 )
                 
See Notes to Financial Statements.
               

 
133

 

ENTERGY NEW ORLEANS, INC.
BALANCE SHEETS
ASSETS
June 30, 2010 and December 31, 2009
(Unaudited)
             
   
2010
   
2009
 
   
(In Thousands)
 
             
CURRENT ASSETS
           
Cash and cash equivalents
           
  Cash
  $ 1,261     $ 1,179  
  Temporary cash investments
    139,134       190,012  
        Total cash and cash equivalents
    140,395       191,191  
Accounts receivable:
               
  Customer
    45,964       41,284  
  Allowance for doubtful accounts
    (1,277 )     (1,166 )
  Associated companies
    49,709       78,670  
  Other
    4,241       2,299  
  Accrued unbilled revenues
    20,299       20,328  
    Total accounts receivable
    118,936       141,415  
Deferred fuel costs
    8,906       3,996  
Accumulated deferred income taxes
    -       2,584  
Fuel inventory - at average cost
    3,452       2,533  
Materials and supplies - at average cost
    9,548       9,674  
Prepaid taxes
    22,942       -  
Prepayments and other
    9,462       4,311  
TOTAL
    313,641       355,704  
                 
OTHER PROPERTY AND INVESTMENTS
               
Investment in affiliates - at equity
    3,259       3,259  
Non-utility property at cost (less accumulated depreciation)
    1,016       1,016  
Storm reserve escrow account
    2,589       9,499  
TOTAL
    6,864       13,774  
                 
UTILITY PLANT
               
Electric
    801,073       789,367  
Natural gas
    201,907       199,847  
Construction work in progress
    13,772       21,148  
TOTAL UTILITY PLANT
    1,016,752       1,010,362  
Less - accumulated depreciation and amortization
    524,013       514,609  
UTILITY PLANT - NET
    492,739       495,753  
                 
DEFERRED DEBITS AND OTHER ASSETS
               
Regulatory assets:
               
  Deferred fuel costs
    4,080       4,080  
  Other regulatory assets
    117,173       125,686  
Other
    6,856       6,079  
TOTAL
    128,109       135,845  
                 
TOTAL ASSETS
  $ 941,353     $ 1,001,076  
                 
See Notes to Financial Statements.
               
 
 
 
134

 
 
ENTERGY NEW ORLEANS, INC.
BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
June 30, 2010 and December 31, 2009
(Unaudited)
                 
                 
      2010       2009  
   
(In Thousands)
 
                 
CURRENT LIABILITIES
               
Currently maturing long-term debt
  $ 30,000     $ 30,000  
Notes payable - associated companies
    -       74,230  
Accounts payable:
               
  Associated companies
    29,366       28,138  
  Other
    25,741       23,653  
Customer deposits
    20,740       20,505  
Taxes accrued
    -       1,677  
Accumulated deferred income taxes
    2,895       -  
Interest accrued
    3,277       3,949  
System agreement cost equalization
    -       6,000  
Other
    3,425       5,803  
TOTAL CURRENT LIABILITIES
    115,444       193,955  
                 
NON-CURRENT LIABILITIES
               
Accumulated deferred income taxes and taxes accrued
    181,516       147,496  
Accumulated deferred investment tax credits
    1,994       2,153  
Regulatory liability for income taxes - net
    58,617       58,970  
Other regulatory liabilities
    40,857       43,148  
Retirement cost liability
    3,283       3,174  
Accumulated provisions
    8,116       15,991  
Pension and other postretirement liabilities
    39,950       43,773  
Long-term debt
    167,264       168,023  
Gas system rebuild insurance proceeds
    86,575       90,116  
Other
    7,725       5,911  
TOTAL NON-CURRENT LIABILITIES
    595,897       578,755  
                 
                 
Commitments and Contingencies
               
                 
Preferred stock without sinking fund
    19,780       19,780  
                 
SHAREHOLDERS' EQUITY
               
Common stock, $4 par value, authorized 10,000,000
               
  shares; issued and outstanding 8,435,900 shares in 2010
               
  and 2009
    33,744       33,744  
Paid-in capital
    36,294       36,294  
Retained earnings
    140,194       138,548  
TOTAL
    210,232       208,586  
                 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
  $ 941,353     $ 1,001,076  
                 
See Notes to Financial Statements.
               

 
135

 
 

 
ENTERGY NEW ORLEANS, INC.
SELECTED OPERATING RESULTS
For the Three and Six Months Ended June 30, 2010 and 2009
(Unaudited)
                         
                         
   
Three Months Ended
   
Increase/
       
Description
 
2010
   
2009
   
(Decrease)
   
%
 
   
(Dollars In Millions)
       
Electric Operating Revenues:
                       
  Residential
  $ 41     $ 32     $ 9       28  
  Commercial
    41       36       5       14  
  Industrial
    9       8       1       13  
  Governmental
    17       14       3       21  
    Total retail
    108       90       18       20  
  Sales for resale
                               
     Associated companies
    2       20       (18 )     (90 )
  Other
    10       9       1       11  
    Total
  $ 120     $ 119     $ 1       1  
                                 
Billed Electric Energy
                               
 Sales (GWh):
                               
  Residential
    379       336       43       13  
  Commercial
    458       439       19       4  
  Industrial
    134       134       -       -  
  Governmental
    191       192       (1 )     (1 )
    Total retail
    1,162       1,101       61       6  
  Sales for resale
                               
     Associated companies
    24       378       (354 )     (94 )
     Non-associated companies
    1       2       (1 )     (50 )
    Total
    1,187       1,481       (294 )     (20 )
                                 
                                 
   
Six Months Ended
   
Increase/
         
Description
    2010       2009  
(Decrease)
   
%
 
   
(Dollars In Millions)
         
Electric Operating Revenues:
                               
  Residential
  $ 87     $ 67     $ 20       30  
  Commercial
    78       75       3       4  
  Industrial
    16       17       (1 )     (6 )
  Governmental
    32       30       2       7  
    Total retail
    213       189       24       13  
  Sales for resale
                               
     Associated companies
    22       51       (29 )     (57 )
  Other
    10       6       4       67  
    Total
  $ 245     $ 246     $ (1 )     -  
                                 
Billed Electric Energy
                               
 Sales (GWh):
                               
  Residential
    865       669       196       29  
  Commercial
    886       844       42       5  
  Industrial
    241       247       (6 )     (2 )
  Governmental
    374       374       -       -  
    Total retail
    2,366       2,134       232       11  
  Sales for resale
                               
     Associated companies
    304       866       (562 )     (65 )
     Non-associated companies
    9       10       (1 )     (10 )
    Total
    2,679       3,010       (331 )     (11 )

 
136

 
 

ENTERGY TEXAS, INC.

MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS


Results of Operations

Net Income

Second Quarter 2010 Compared to Second Quarter 2009

Net income increased by $17.2 million primarily due to higher net revenue, lower other operation and maintenance expenses, a lower effective income tax rate, and lower interest and other charges, partially offset by lower other income.

Six Months Ended June 30, 2010 Compared to Six Months Ended June 30, 2009

Net income increased by $23.3 million primarily due to higher net revenue, lower other operation and maintenance expenses, and a lower effective income tax rate, partially offset by lower other income and higher taxes other than income taxes.

Net Revenue

Second Quarter 2010 Compared to Second Quarter 2009

Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory charges.  Following is an analysis of the change in net revenue comparing the second quarter 2010 to the second quarter 2009.

   
Amount
   
(In Millions)
     
2009 net revenue
 
$109.1 
Rough production cost equalization
 
18.6 
Net wholesale revenue
 
9.6 
Volume/weather
 
6.0 
Securitization transition charge
 
4.6 
Purchased power capacity
 
(13.7)
Other
 
5.5 
2010 net revenue
 
$139.7 

The rough production cost equalization variance is due to an additional $18.6 million allocation recorded in the second quarter of 2009 of 2007 rough production cost equalization receipts ordered by the PUCT to Texas retail customers over what was originally allocated to Entergy Texas prior to the jurisdictional separation of Entergy Gulf States, Inc. into Entergy Gulf States Louisiana and Entergy Texas, effective December 2007, as discussed in Note 2 to the financial statements.

The net wholesale revenue variance is primarily due to increased sales to municipal and co-op customers due to the addition of new contracts and higher revenue as a result of sales to Entergy Gulf States Louisiana.

The volume/weather variance is primarily due to increased electricity usage primarily in the residential and commercial sectors coupled with the effect of more favorable weather on residential sales.  Billed electricity usage increased a total of 151 GWh, or 4%.
 
137

Entergy Texas, Inc.
Management's Financial Discussion and Analysis
 

The securitization transition charge variance is due to the issuance of securitization bonds.  In November 2009, Entergy Texas Restoration Funding, LLC, a company wholly-owned and consolidated by Entergy Texas, issued securitization bonds and with the proceeds purchased from Entergy Texas the transition property, which is the right to recover from customers through a transition charge amounts sufficient to service the securitization bonds.  The securitization transition charge is offset with a corresponding increase in interest on long-term debt with no impact on net income.  See Note 5 to the financial statements in the Form 10-K for further discussion of the securitization bond issuance.

The purchased power capacity variance is primarily due to ongoing purchased power capacity expense.

Gross operating revenues and  fuel and purchased power expenses

Gross operating revenues increased primarily due to an increase of $89.6 million in gross wholesale revenues as a result of increased customer contracts, as discussed above, and an increase of $45 million in fuel cost recovery revenues primarily attributable to higher fuel rates and increased usage.  The increase was partially offset by a decrease of $48.7 million in rider revenues.

Fuel and purchased power expenses increased primarily due to increases in net area demand and the average market prices of natural gas and purchased power, coupled with an increase in deferred fuel expense as the result of higher fuel revenues, as discussed above.

Six Months Ended June 30, 2010 Compared to Six Months Ended June 30, 2009

Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory charges.  Following is an analysis of the change in net revenue comparing the six months ended June 30, 2010 to the six months ended June 30, 2009.

   
Amount
   
(In Millions)
     
2009 net revenue
 
$207.8 
Net wholesale revenue
 
22.0 
Rough production cost equalization
 
18.6 
Volume/weather
 
16.5 
Securitization transition charge
 
9.3 
Purchased power capacity
 
(17.2)
Other
 
3.8 
2010 net revenue
 
$260.8 

The net wholesale revenue variance is primarily due to increased sales to municipal and co-op customers due to the addition of new contracts and higher revenue as a result of sales to Entergy Gulf States Louisiana.

The rough production cost equalization variance is due to an additional $18.6 million allocation recorded in the second quarter of 2009 of 2007 rough production cost equalization receipts ordered by the PUCT to Texas retail customers over what was originally allocated to Entergy Texas prior to the jurisdictional separation of Entergy Gulf States, Inc. into Entergy Gulf States Louisiana and Entergy Texas, effective December 2007, as discussed in Note 2 to the financial statements.

The volume/weather variance is primarily due to increased electricity usage primarily in the residential and commercial sectors coupled with the effect of more favorable weather on residential sales.  Billed electricity usage increased a total of 521 GWh, or 7%.
 
138

 
Entergy Texas, Inc.
Management's Financial Discussion and Analysis
 

The securitization transition charge variance is due to the issuance of securitization bonds.  In November 2009, Entergy Texas Restoration Funding, LLC, a company wholly-owned and consolidated by Entergy Texas, issued securitization bonds and with the proceeds purchased from Entergy Texas the transition property, which is the right to recover from customers through a transition charge amounts sufficient to service the securitization bonds.  The securitization transition charge is offset with a corresponding increase in interest on long-term debt with no impact on net income.  See Note 5 to the financial statements in the Form 10-K for further discussion of the securitization bond issuance.

The purchased power capacity variance is primarily due to ongoing purchased power capacity expense.

Gross operating revenues and fuel and purchased power expenses

Gross operating revenues increased primarily due to an increase of $112.5 million in gross wholesale revenues as a result of increased customer contracts and an increase of $16.5 million related to volume/weather, as discussed above.  The increase was substantially offset by a decrease of $79.2 million in fuel cost recovery revenues primarily attributable to lower fuel rates and the interim fuel refund in the first quarter 2010 and a decrease of $32.8 million in rider revenues.  The interim fuel refund and the PUCT approval is discussed in Note 2 to the financial statements in the Form 10-K.

Fuel and purchased power expenses decreased primarily due to a decrease in deferred fuel expense as the result of lower fuel revenues as discussed above, partially offset by an increase in purchased power expenses due to an increase in net area demand and the average market price of purchased power.

Other Income Statement Variances

Second Quarter 2010 Compared to Second Quarter 2009

Other operation and maintenance expenses decreased primarily due to a charge of $6.8 million in June 2009 resulting from the Hurricane Ike and Hurricane Gustav storm cost recovery settlement with the PUCT.  See Note 2 to the financial statements in the Form 10-K for discussion of this settlement.

Other income decreased primarily due to carrying costs recorded in 2009 on storm restoration costs as approved by Texas legislation.  See Note 2 to the financial statements in the Form 10-K for further discussion of Hurricane Ike storm cost recovery filings.

Interest and other charges decreased primarily due to lower interest on deferred fuel costs and the pay-down of the debt assumption agreement liability, partially offset by the issuance of $546 million in securitization bonds in November 2009 and the issuance of $150 million of 7.875% Series mortgage bonds in May 2009.

Six Months Ended June 30, 2010 Compared to Six Months Ended June 30, 2009

Other operation and maintenance expenses decreased primarily due to:

·  
a charge of $6.8 million in June 2009 resulting from the Hurricane Ike and Hurricane Gustav storm cost recovery settlement with the PUCT.  See Note 2 to the financial statements in the Form 10-K for discussion of this settlement;
·  
a decrease of $2.7 million in customer service costs primarily as a result of write-offs of uncollectible customer accounts;
·  
a decrease of $1.8 million in local easement fees as a result of fuel refunds; and
·  
a decrease of $1.2 million in transportation and distribution costs primarily due to the timing of various projects.
 
139

Entergy Texas, Inc.
Management's Financial Discussion and Analysis
 

The decrease was partially offset by an increase of $5.6 million in fossil expenses primarily due to higher plant maintenance costs and plant outages.

Taxes other than income taxes increased primarily due to a provision recorded for potential additional sales and use taxes.

Other income decreased primarily due to carrying costs recorded in 2009 on storm restoration costs as approved by Texas legislation.  See Note 2 to the financial statements in the Form 10-K for further discussion of Hurricane Ike storm cost recovery filings.

Interest and other charges decreased primarily due to lower interest on deferred fuel costs, the repayment of Entergy Texas' $160 million note payable from Entergy Corporation in January 2009, and the pay-down of the debt assumption agreement liability.  The decrease was partially offset by the issuance of $546 million in securitization bonds in November 2009 and the issuance of $150 million of 7.875% Series mortgage bonds in May 2009.

Income Taxes

The effective income tax rate was 38.2% for the second quarter 2010 and 40.0% for the six months ended June 30, 2010.  The differences in the effective income tax rate for the second quarter 2010 and for the six months ended June 30, 2010 versus the federal statutory rate of 35% were primarily due to book and tax differences related to utility plant items and state income taxes, partially offset by book and tax differences related to allowance for equity funds used during construction and the amortization of investment tax credits.

The effective income tax rate was 54.3% for the second quarter 2009 and 46.8% for the six months ended June 30, 2009.  The differences in the effective income tax rate for the second quarter 2009 and for the six months ended June 30, 2009 versus the federal statutory rate of 35% were primarily due to book and tax differences related to state income taxes, payroll- and benefits-related items, and utility plant items, partially offset by book and tax differences related to the allowance for equity funds used during construction and the amortization of investment tax credits.

Liquidity and Capital Resources

Cash Flow

Cash flows for the six months ended June 30, 2010 and 2009 were as follows:

   
2010
 
2009
   
(In Thousands)
         
Cash and cash equivalents at beginning of period
 
$200,703 
 
$2,239 
         
Cash flow provided by (used in):
       
 
Operating activities
 
4,680 
 
(26,998)
 
Investing activities
 
(60,964)
 
(145,929)
 
Financing activities
 
(42,655)
 
246,220 
Net increase (decrease) in cash and cash equivalents
 
(98,939)
 
73,293 
         
Cash and cash equivalents at end of period
 
$101,764 
 
$75,532 
 
140

 
Entergy Texas, Inc.
Management's Financial Discussion and Analysis
 

Operating Activities

Entergy Texas' operating activities provided $4.7 million of cash for the six months ended June 30, 2010 compared to using $27 million of cash for the six months ended June 30, 2009 primarily due to Hurricane Ike restoration spending in 2009, partially offset by an $87.8 million fuel cost refund made in the first quarter 2010, which is discussed further in the Form 10-K, and the timing of collection of receivables from customers.

Investing Activities

Net cash flow used in investing activities decreased $85 million for the six months ended June 30, 2010 compared to the six months ended June 30, 2009 primarily due to money pool activity and a decrease in construction expenditures due to Hurricane Ike spending in 2009, offset by increased remittances to the securitization trust account as a result of the issuance of $546 million in securitization bonds in November 2009.  See Note 5 to the financial statements in the Form 10-K for further discussion of the issuance of the securitization bonds.

Decreases in Entergy Texas's receivable from the money pool are a source of cash flow, and Entergy Texas's receivable from the money pool decreased by $34.8 million for the six months ended June 30, 2010 compared to increasing by $48.4 million for the six months ended June 30, 2009.  The money pool is an inter-company borrowing arrangement designed to reduce Entergy's subsidiaries' need for external short-term borrowings.

Financing Activities

Entergy Texas's financing activities used $42.7 million of cash for the six months ended June 30, 2010 compared to providing $246.2 million of cash for the six months ended June 30, 2009 primarily due to:

·  
the issuance of $500 million of 7.125% Series mortgage bonds in January 2009;
·  
the issuance of $150 million of 7.875% Series mortgage bonds in May 2009;
·  
the issuance of $200 million of 3.60% Series mortgage bonds in May 2010;
·  
the retirement of $177.3 million of long-term debt in 2010 compared to $80 million in 2009; and
·  
an increase of $63.2 million in common equity distributions.

The use of cash was partially offset by:

·  
the repayment of Entergy Texas' $160 million note payable to Entergy Corporation in January 2009;
·  
the repayment of $100 million outstanding on Entergy Texas' credit facility in February 2009; and
·  
money pool activity.

Decreases in Entergy Texas' payable to the money pool is a use of cash flow, and Entergy Texas' payable to the money pool decreased by $50.8 million for the six months ended June 30, 2009.

Capital Structure

Entergy Texas's capitalization is balanced between equity and debt, as shown in the following table.

   
June 30,
 2010
 
December 31,
2009
         
Net debt to net capital, excluding the securitization
  bonds, which are non-recourse to Entergy Texas
 
 
47.9%
 
 
42.3%
Effect of excluding the securitization bonds
 
18.0%
 
21.0%
Net debt to net capital
 
65.9%
 
63.3%
Effect of subtracting cash from debt
 
1.4%
 
3.0%
Debt to capital
 
67.3%
 
66.3%
 
141

Entergy Texas, Inc.
Management's Financial Discussion and Analysis
 

Net debt consists of debt less cash and cash equivalents.  Debt consists of notes payable and long-term debt, including the currently maturing portion and the debt assumption liability.  Capital consists of debt and shareholder's equity.  Net capital consists of capital less cash and cash equivalents.  Entergy Texas uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Texas's financial condition.

Uses and Sources of Capital

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources" in the Form 10-K for a discussion of Entergy Texas's uses and sources of capital.  Following are updates to the information provided in the Form 10-K.

Entergy Texas's receivables from or (payables to) the money pool were as follows:

June 30,
2010
 
December 31,
2009
 
June 30,
2009
 
December 31,
2008
(In Thousands)
             
$34,505
 
$69,317
 
$48,363
 
($50,794)

See Note 4 to the financial statements in the Form 10-K for a description of the money pool.

As discussed in the Form 10-K, Entergy Texas has a credit facility in the amount of $100 million scheduled to expire in August 2012.  No borrowings were outstanding under the facility as of June 30, 2010.

In May 2010, Entergy Texas issued $200 million of 3.60% Series mortgage bonds due June 2015.  Entergy Texas used the proceeds to pay prior to maturity Entergy Texas' remaining obligations (with interest rates ranging from 4.875% to 6.18% per annum and maturities ranging from November 1, 2011 to March 1, 2035) pursuant to the debt assumption agreement with Entergy Gulf States Louisiana and for other general corporate purposes.

State and Local Rate Regulation

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - State and Local Rate Regulation" in the Form 10-K for a discussion of state and local rate regulation.  Following are updates to that discussion.

As discussed in the Form 10-K, in December 2009, Entergy Texas filed a rate case requesting a $198.7 million increase reflecting an 11.5% return on common equity based on an adjusted June 2009 test year.  The filing includes a proposed cost of service adjustment rider with a three-year term beginning with the 2010 calendar year as the initial evaluation period.  Key provisions include a plus or minus 15 basis point bandwidth, with earnings outside the bandwidth reset to the bottom or top of the band and rates changing prospectively depending upon whether Entergy Texas is under or over-earning.  The annual change in revenue requirement is limited to a percentage change in the Consumer Price Index for urban areas, and the filing includes a provision for ext raordinary events greater than $10 million per year that would be considered separately.  The filing also proposes a purchased power recovery rider and a competitive generation service tariff and will establish test year baseline values to be used in the transmission cost recovery factor rider authorized for use by Entergy Texas in the 2009 legislative session.  The rate case also includes a $2.8 million revenue requirement to provide supplemental funding for the decommissioning trust maintained for the 70% share of River Bend for which Entergy Texas retail customers are responsible, in response to an NRC notification of a projected shortfall of decommissioning funding assurance.  Beginning in May 2010, Entergy Texas implemented a $17.5 million interim rate increase, subject to refund.  Intervenors and PUCT Staff filed testimony opposing the riders discussed above and recommended disallowances that would result in a maximum rate increase of, based on the PUCT StaffR 17;s testimony, $58 million.  Hearings regarding the merits of the competitive generation service tariff, which was a proposal required by law that would allow certain larger customers to obtain alternative generation supply, were held in July 2010, and this issue is pending a PUCT decision.  
 
142

Entergy Texas, Inc.
Management's Financial Discussion and Analysis
 
The parties filed a settlement in August 2010 intended to resolve the other issues in the rate case proceeding.  The settlement provides for a $59 million base rate increase for electricity usage beginning August 15, 2010, with an additional increase of $9 million for bills rendered beginning May 2, 2011.  The settlement stipulates an authorized return on equity of 10.125%.  The settlement provides that Entergy Texas's proposed cost of service adjustment rider, purchased power recovery rider, and transmission cost recovery factors will not be approved in the rate case proceeding, although baseline values were established to be used in Entergy Texas's request for a transmission recov ery factor that will be made in a separate proceeding.  The settlement states that Entergy Texas's fuel costs for the period April 2007 through June 2009 are reconciled, with $3.25 million of disallowed costs.  The settlement also sets River Bend decommissioning costs at $2.0 million annually.  The current jurisdictional deadline by which the PUCT is required to issue a final order in this proceeding is November 1, 2010.
 
As discussed in the Form 10-K, in January 2008, Entergy Texas made a compliance filing with the PUCT describing how its 2007 rough production cost equalization receipts under the System Agreement were allocated between Entergy Gulf States, Inc.'s Texas and Louisiana jurisdictions.  In December 2008 the PUCT adopted an ALJ proposal for decision recommending an additional $18.6 million allocation to Texas retail customers.  Because the PUCT allocation to Texas retail customers is inconsistent with the LPSC allocation to Louisiana retail customers, the PUCT's decision results in trapped costs between the Texas and Louisiana jurisdictions with no mechanism for recovery.  The PUCT denied Entergy Texas' motion for rehearing and Entergy Texas commenced proceedings in both state and federal district courts seeking to reverse the PUCT's decision.  The federal proceeding had been abated pending action by the FERC in the proceeding discussed below.  

Entergy Texas filed with the FERC a proposed amendment to the System Agreement bandwidth formula to specifically calculate the payments to Entergy Gulf States Louisiana and Entergy Texas of Entergy Gulf States, Inc.'s rough production cost equalization receipts for 2007.  In May 2009 the FERC issued an order rejecting the proposed amendment.  Because of the FERC's order, Entergy Texas recorded the effects of the PUCT's allocation of the additional $18.6 million to Texas retail customers in the second quarter 2009.  On an after-tax basis, the charge to earnings was approximately $13.0 million (including interest).  In May 2010 the FERC rejected Entergy's request for rehearing of the FERC's order.  On July 14, 2010, Entergy appealed the FER C's decision to the U.S. Court of Appeals for the District of Columbia.
 
                In the settlement of Entergy Texas's December 2009 rate case proceeding, Entergy Texas agreed to credit to fuel factor customers $18.6 million, with the parties agreeing that this amount represents the remaining portion of the 2007 rough production cost equalization payments received by Entergy Texas.  Entergy Texas also agreed to dismiss the state and federal district court proceedings and its appeal of the FERC's decision, all of which were seeking to change the result of the December 2008 PUCT decision.

In June 2010, Entergy Texas filed with the PUCT a request to refund approximately $66 million, including interest, of fuel cost recovery over-collections through May 2010.  Entergy Texas requested that the proposed refund be made over a six-month period beginning no later than September 2010.  The request is pending consideration by the PUCT.

Federal Regulation

See "System Agreement Proceedings" and "Independent Coordinator of Transmission" in the "Rate, Cost-recovery, and Other Regulation" section of Entergy Corporation and Subsidiaries Management's Financial Discussion and Analysis for updates to the discussion in the Form 10-K.

Environmental Risks

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Environmental Risks" in the Form 10-K for a discussion of environmental risks.
 
143

Entergy Texas, Inc.
Management's Financial Discussion and Analysis
 

Critical Accounting Estimates

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates" in the Form 10-K for a discussion of the unbilled revenue and qualified pension and other postretirement benefits.

Federal Healthcare Legislation

See the "Critical Accounting Estimates - Federal Healthcare Legislation" section of Entergy Corporation and Subsidiaries Management's Financial Discussion and Analysis for an update to the Form 10-K discussion on critical accounting estimates.

 
144

 

ENTERGY TEXAS, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
For the Three and Six Months Ended June 30, 2010 and 2009
(Unaudited)
                         
   
Three Months Ended
   
Six Months Ended
 
   
2010
   
2009
   
2010
   
2009
 
   
(In Thousands)
   
(In Thousands)
 
                         
OPERATING REVENUES
                       
Electric
  $ 471,153     $ 377,319     $ 807,359     $ 790,793  
                                 
OPERATING EXPENSES
                               
Operation and Maintenance:
                               
   Fuel, fuel-related expenses, and
                               
     gas purchased for resale
    128,897       102,900       135,456       269,832  
   Purchased power
    188,882       138,160       381,576       279,417  
   Other operation and maintenance
    51,954       60,109       95,323       105,629  
Decommissioning
    51       48       102       96  
Taxes other than income taxes
    14,234       13,821       30,759       27,942  
Depreciation and amortization
    19,829       18,680       38,906       37,203  
Other regulatory charges - net
    13,691       27,167       29,539       33,787  
TOTAL
    417,538       360,885       711,661       753,906  
                                 
OPERATING INCOME
    53,615       16,434       95,698       36,887  
                                 
OTHER INCOME
                               
Allowance for equity funds used during construction
    3,497       1,149       4,138       3,519  
Interest and dividend income
    2,582       21,724       3,636       28,448  
Miscellaneous - net
    (305 )     (313 )     1,149       994  
TOTAL
    5,774       22,560       8,923       32,961  
                                 
INTEREST AND OTHER CHARGES
                               
Interest on long-term debt
    24,614       24,435       48,882       45,947  
Other interest - net
    680       3,764       320       4,059  
Allowance for borrowed funds used during construction
    (2,031 )     (531 )     (2,511 )     (1,719 )
TOTAL
    23,263       27,668       46,691       48,287  
                                 
INCOME BEFORE INCOME TAXES
    36,126       11,326       57,930       21,561  
                                 
Income taxes
    13,793       6,154       23,179       10,086  
                                 
NET INCOME
  $ 22,333     $ 5,172     $ 34,751     $ 11,475  
                                 
See Notes to Financial Statements.
                               

 
145

 
 
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146

 
 

ENTERGY TEXAS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2010 and 2009
(Unaudited)
             
   
2010
   
2009
 
   
(In Thousands)
 
             
OPERATING ACTIVITIES
           
Net income
  $ 34,751     $ 11,475  
Adjustments to reconcile net income to net cash flow provided by
(used in) operating activities:
 
  Reserve for regulatory adjustments
    686       -  
  Other regulatory charges - net
    29,539       33,787  
  Depreciation, amortization, and decommissioning
    39,008       37,299  
  Deferred income taxes, investment tax credits, and non-current taxes accrued
    96,423       (34,723 )
  Changes in working capital:
               
    Receivables
    (85,930 )     123,816  
    Fuel inventory
    315       (5,221 )
    Accounts payable
    60,626       (84,815 )
    Taxes accrued
    (67,785 )     (49,595 )
    Interest accrued
    8,031       14,303  
    Deferred fuel costs
    (38,134 )     108,688  
    Other working capital accounts
    (56,630 )     (20,771 )
  Provision for estimated losses and reserves
    (2,200 )     (2,905 )
  Changes in other regulatory assets
    33,603       (211,089 )
  Other
    (47,623 )     52,753  
Net cash flow provided by (used in) operating activities
    4,680       (26,998 )
                 
INVESTING ACTIVITIES
               
Construction expenditures
    (79,704 )     (104,047 )
Allowance for equity funds used during construction
    4,138       3,519  
Change in money pool receivable - net
    34,812       (48,363 )
Changes in transition charge account
    (22,528 )     2,962  
Increase in other investments
    2,318       -  
Net cash flow used in investing activities
    (60,964 )     (145,929 )
                 
FINANCING ACTIVITIES
               
Proceeds from the issuance of long-term debt
    198,534       637,692  
Retirement of long-term debt
    (177,289 )     (79,978 )
Changes in money pool payable - net
    -       (50,794 )
Repayment of loan from Entergy Corporation
    -       (160,000 )
Changes in credit borrowings - net
    -       (100,000 )
Dividends paid:
               
  Common stock
    (63,900 )     (700 )
Net cash flow provided by (used in) financing activities
    (42,655 )     246,220  
                 
Net increase (decrease) in cash and cash equivalents
    (98,939 )     73,293  
                 
Cash and cash equivalents at beginning of period
    200,703       2,239  
                 
Cash and cash equivalents at end of period
  $ 101,764     $ 75,532  
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
               
Cash paid during the period for:
               
  Interest - net of amount capitalized
  $ 39,083     $ 33,881  
  Income taxes
  $ 1,745     $ 6,000  
                 
See Notes to Financial Statements.
               


 
147

 

ENTERGY TEXAS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30, 2010 and December 31, 2009
(Unaudited)
             
   
2010
   
2009
 
   
(In Thousands)
 
             
CURRENT ASSETS
           
Cash and cash equivalents:
           
  Cash
  $ 1,873     $ 1,552  
   Temporary cash investments
    99,891       199,151  
    Total cash and cash equivalents
    101,764       200,703  
Securitization recovery trust account
    35,626       13,098  
Accounts receivable:
               
  Customer
    55,671       51,194  
  Allowance for doubtful accounts
    (2,294 )     (844 )
  Associated companies
    101,444       75,437  
  Other
    22,862       10,688  
  Accrued unbilled revenues
    50,931       35,727  
    Total accounts receivable
    228,614       172,202  
Accumulated deferred income taxes
    38,364       59,399  
Fuel inventory - at average cost
    54,642       54,957  
Materials and supplies - at average cost
    30,570       30,432  
Prepayments and other
    9,924       16,357  
TOTAL
    499,504       547,148  
                 
OTHER PROPERTY AND INVESTMENTS
               
Investments in affiliates - at equity
    837       845  
Non-utility property - at cost (less accumulated depreciation)
    1,369       1,496  
Other
    16,738       16,309  
TOTAL
    18,944       18,650  
                 
UTILITY PLANT
               
Electric
    3,139,904       3,074,334  
Construction work in progress
    79,258       82,167  
TOTAL UTILITY PLANT
    3,219,162       3,156,501  
Less - accumulated depreciation and amortization
    1,234,898       1,210,172  
UTILITY PLANT - NET
    1,984,264       1,946,329  
                 
DEFERRED DEBITS AND OTHER ASSETS
               
Regulatory assets:
               
  Regulatory asset for income taxes - net
    96,172       95,894  
  Other regulatory assets (includes securitization transition
       property of $793,286 as of June 30, 2010)
    1,201,347       1,232,101  
Long-term receivables
    33,535       34,340  
Other
    22,988       21,176  
TOTAL
    1,354,042       1,383,511  
                 
TOTAL ASSETS
  $ 3,856,754     $ 3,895,638  
                 
See Notes to Financial Statements.
               
 
 
 
148

 
 
ENTERGY TEXAS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDER'S EQUITY
June 30, 2010 and December 31, 2009
(Unaudited)
                 
      2010       2009  
   
(In Thousands)
 
                 
CURRENT LIABILITIES
               
Currently maturing portion of debt assumption liability
  $ -     $ 167,742  
Accounts payable:
               
  Associated companies
    101,342       47,677  
  Other
    75,703       70,147  
Customer deposits
    39,240       39,665  
Taxes accrued
    9,796       77,581  
Interest accrued
    38,606       30,575  
Deferred fuel costs
    64,614       102,748  
Pension and other postretirement liabilities
    1,080       935  
System agreement cost equalization
    55,594       117,204  
Other
    3,957       2,674  
TOTAL
    389,932       656,948  
                 
NON-CURRENT LIABILITIES
               
Accumulated deferred income taxes and taxes accrued
    827,068       740,074  
Accumulated deferred investment tax credits
    21,734       22,532  
Other regulatory liabilities
    20,479       20,417  
Asset retirement cost liabilities
    3,546       3,445  
Accumulated provisions
    6,510       8,710  
Pension and other postretirement liabilities
    72,541       78,722  
Long-term debt (includes securitization bonds
       of $828,816 as of June 30, 2010)
    1,680,776       1,490,283  
Other
    18,827       30,017  
TOTAL
    2,651,481       2,394,200  
                 
Commitments and Contingencies
               
                 
SHAREHOLDER'S EQUITY
               
Common stock, no par value, authorized 200,000,000 shares;
               
  issued and outstanding 46,525,000 shares in 2010 and 2009
    49,452       49,452  
Paid-in capital
    481,994       481,994  
Retained earnings
    283,895       313,044  
TOTAL
    815,341       844,490  
                 
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY
  $ 3,856,754     $ 3,895,638  
                 
See Notes to Financial Statements.
               


 
149

 

ENTERGY TEXAS, INC. AND SUBSIDIARIES
SELECTED OPERATING RESULTS
For the Three and Six Months Ended June 30, 2010 and 2009
(Unaudited)
                         
                         
   
Three Months Ended
   
Increase/
       
Description
 
2010
   
2009
   
(Decrease)
   
%
 
   
(Dollars In Millions)
       
Electric Operating Revenues:
                       
  Residential
  $ 125     $ 120     $ 5       4  
  Commercial
    85       86       (1 )     (1 )
  Industrial
    82       87       (5 )     (6 )
  Governmental
    6       6       0       -  
    Total retail
    298       299       (1 )     -  
  Sales for resale
                               
     Associated companies
    133       57       76       133  
     Non-associated companies
    14       1       13       1,300  
  Other
    26       20       6       30  
    Total
  $ 471     $ 377     $ 94       25  
                                 
Billed Electric Energy
                               
 Sales (GWh):
                               
  Residential
    1,251       1,162       89       8  
  Commercial
    1,044       994       50       5  
  Industrial
    1,402       1,393       9       1  
  Governmental
    64       61       3       5  
    Total retail
    3,761       3,610       151       4  
  Sales for resale
                               
     Associated companies
    1,019       955       64       7  
     Non-associated companies
    236       12       224       1,867  
    Total
    5,016       4,577       439       10  
                                 
                                 
   
Six Months Ended
   
Increase/
         
Description
    2010       2009    
(Decrease)
   
%
 
   
(Dollars In Millions)
         
Electric Operating Revenues:
                               
  Residential
  $ 238     $ 259     $ (21 )     (8 )
  Commercial
    151       184       (33 )     (18 )
  Industrial
    149       191       (42 )     (22 )
  Governmental
    11       12       (1 )     (8 )
    Total retail
    549       646       (97 )     (15 )
  Sales for resale
                               
     Associated companies
    190       115       75       65  
     Non-associated companies
    39       2       37       1,850  
  Other
    29       28       1       4  
    Total
  $ 807     $ 791     $ 16       2  
                                 
Billed Electric Energy
                               
 Sales (GWh):
                               
  Residential
    2,751       2,341       410       18  
  Commercial
    2,029       1,922       107       6  
  Industrial
    2,705       2,709       (4 )     -  
  Governmental
    129       121       8       7  
    Total retail
    7,614       7,093       521       7  
  Sales for resale
                               
     Associated companies
    1,651       1,843       (192 )     (10 )
     Non-associated companies
    694       41       653       1,593  
    Total
    9,959       8,977       982       11  


 
150

 

SYSTEM ENERGY RESOURCES, INC.
 
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS


Results of Operations

System Energy's principal asset consists of a 90% ownership and leasehold interest in Grand Gulf.  The capacity and energy from its 90% interest is sold under the Unit Power Sales Agreement to its only four customers, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans.  System Energy's operating revenues are derived from the allocation of the capacity, energy, and related costs associated with its 90% interest in Grand Gulf pursuant to the Unit Power Sales Agreement.  Payments under the Unit Power Sales Agreement are System Energy's only source of operating revenues.

Net income decreased $3.3 million for the second quarter 2010 compared to the second quarter of 2009 primarily due to a decrease in rate base resulting in lower operating income.

Net income decreased $5 million for the six months ended June 30, 2010 compared to the six months ended June 30, 2009 primarily due to a decrease in rate base resulting in lower operating income.

Liquidity and Capital Resources

Cash Flow

Cash flows for the six months ended June 30, 2010 and 2009 were as follows:

   
2010
 
2009
   
(In Thousands)
         
Cash and cash equivalents at beginning of period
 
$264,482 
 
$102,788 
         
Cash flow provided by (used in):
       
 
Operating activities
 
129,154 
 
112,296 
 
Investing activities
 
(99,483)
 
(56,142)
 
Financing activities
 
23,855 
 
(67,855)
Net increase (decrease) in cash and cash equivalents
 
53,526 
 
(11,701)
         
Cash and cash equivalents at end of period
 
$318,008 
 
$91,087 

Operating Activities

Net cash provided by operating activities increased $16.9 million for the six months ended June 30, 2010 compared to the six months ended June 30, 2009 primarily due to a decrease of $29.6 million in interest payments and income tax payments of $7.1 million in 2009.  This increase was partially offset by an increase of $4 million in pension contributions.
 
151

System Energy Resources, Inc.
Management's Financial Discussion and Analysis
 

Investing Activities

Net cash used in investing activities increased $43.3 million for the six months ended June 30, 2010 compared to the six months ended June 30, 2009 primarily due to:

·  
an increase of $129.3 million in nuclear fuel purchases; and
·  
an increase of $34 million in construction costs primarily due to the Grand Gulf power uprate project.

The increase was partially offset by:

·  
the proceeds from the transfer of $100.3 million in development costs related to Entergy New Nuclear Development, LLC, as discussed in the Form 10-K; and
·  
the repayment of $25.6 million by Entergy New Orleans of a note issued in resolution of its bankruptcy proceedings.

Financing Activities

Financing activities provided $23.9 million for the six months ended June 30, 2010 compared to using $67.9 million for the six months ended June 30, 2009 primarily due to the issuances in April 2010 of $60 million of 5.33% Series G notes and $62.7 million in commercial paper by the nuclear fuel company variable interest entity.  This was partially offset by an increase of $13.3 million in the January 2010 principal payment made on the Grand Gulf sale-leaseback compared to the January 2009 principal payment.

Capital Structure

System Energy's capitalization is balanced between equity and debt, as shown in the following table.

   
June 30,
 2010
 
December 31,
2009
         
Net debt to net capital
 
40.9%
 
40.1%
Effect of subtracting cash from debt
 
10.9%
 
9.6%
Debt to capital
 
51.8%
 
49.7%

Net debt consists of debt less cash and cash equivalents.  Debt consists of notes payable, capital lease obligations, and long-term debt, including the currently maturing portion.  Capital consists of debt and common shareholder's equity.  Net capital consists of capital less cash and cash equivalents.  System Energy uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating System Energy's financial condition.

Uses and Sources of Capital

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources" in the Form 10-K for a discussion of System Energy's uses and sources of capital.  The following is an update to the Form 10-K.
 
152

System Energy Resources, Inc.
Management's Financial Discussion and Analysis
 

System Energy's receivables from the money pool were as follows:

June 30,
2010
 
December 31,
2009
 
June 30,
2009
 
December 31,
2008
(In Thousands)
             
$105,977
 
$90,507
 
$57,000
 
$42,915

See Note 4 to the financial statements in the Form 10-K for a description of the money pool.

Nuclear Matters

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS – Nuclear Matters" in the Form 10-K for a discussion of nuclear matters.

Environmental Risks

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS – Environmental Risks" in the Form 10-K for a discussion of environmental risks.

Critical Accounting Estimates

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates" in the Form 10-K for a discussion of the estimates and judgments necessary in System Energy's accounting for nuclear decommissioning costs and qualified pension and other postretirement benefits.

Federal Healthcare Legislation

See the "Critical Accounting Estimates - Federal Healthcare Legislation" section of Entergy Corporation and Subsidiaries Management's Financial Discussion and Analysis for an update to the Form 10-K discussion on critical accounting estimates.
 
153

 


SYSTEM ENERGY RESOURCES, INC.
INCOME STATEMENTS
For the Three and Six Months Ended June 30, 2010 and 2009
(Unaudited)
                         
   
Three Months Ended
   
Six Months Ended
 
   
2010
   
2009
   
2010
   
2009
 
   
(In Thousands)
   
(In Thousands)
 
                         
OPERATING REVENUES
                       
Electric
  $ 124,419     $ 130,387     $ 253,002     $ 257,759  
                                 
OPERATING EXPENSES
                               
Operation and Maintenance:
                               
   Fuel, fuel-related expenses, and
                               
     gas purchased for resale
    12,307       15,561       27,625       31,328  
   Nuclear refueling outage expenses
    4,545       4,820       9,218       9,587  
   Other operation and maintenance
    31,405       33,110       60,290       58,465  
Decommissioning
    7,772       7,360       15,406       14,589  
Taxes other than income taxes
    6,058       6,323       12,089       12,506  
Depreciation and amortization
    24,930       24,868       53,301       52,161  
Other regulatory credits - net
    (4,890 )     (7,777 )     (5,615 )     (10,481 )
TOTAL
    82,127       84,265       172,314       168,155  
                                 
OPERATING INCOME
    42,292       46,122       80,688       89,604  
                                 
OTHER INCOME
                               
Allowance for equity funds used during construction
    2,414       4,713       4,232       6,614  
Interest and dividend income
    1,236       (1,761 )     6,622       1,556  
Miscellaneous - net
    (97 )     (90 )     (229 )     (262 )
TOTAL
    3,553       2,862       10,625       7,908  
                                 
INTEREST AND OTHER CHARGES
                               
Interest on long-term debt
    12,407       11,145       22,713       22,356  
Other interest - net
    4       108       7       127  
Allowance for borrowed funds used during construction
    (835 )     (1,578 )     (1,465 )     (2,217 )
TOTAL
    11,576       9,675       21,255       20,266  
                                 
INCOME BEFORE INCOME TAXES
    34,269       39,309       70,058       77,246  
                                 
Income taxes
    13,827       15,616       29,003       31,160  
                                 
NET INCOME
  $ 20,442     $ 23,693     $ 41,055     $ 46,086  
                                 
See Notes to Financial Statements.
                               


 
154

 

SYSTEM ENERGY RESOURCES, INC.
STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2010 and 2009
(Unaudited)
             
   
2010
   
2009
 
   
(In Thousands)
 
             
OPERATING ACTIVITIES
           
Net income
  $ 41,055     $ 46,086  
Adjustments to reconcile net income to net cash flow provided by operating activities:
 
  Other regulatory credits - net
    (5,615 )     (10,481 )
  Depreciation, amortization, and decommissioning, including nuclear fuel amortization
    88,363       66,750  
  Deferred income taxes, investment tax credits, and non-current taxes accrued
    (50,759 )     9,432  
  Changes in working capital:
               
     Receivables
    6,207       4,270  
     Accounts payable
    (397 )     1,604  
     Prepaid taxes and taxes accrued
    68,652       4,377  
     Interest accrued
    (39,416 )     (37,088 )
     Other working capital accounts
    (24,959 )     3,420  
  Provision for estimated losses and reserves
    (2,009 )     (99 )
  Changes in other regulatory assets
    (9,292 )     (16,761 )
  Pensions and other postretirement liabilities
    (5,602 )     1,804  
  Other
    62,926       38,982  
Net cash flow provided by operating activities
    129,154       112,296  
                 
INVESTING ACTIVITIES
               
Construction expenditures
    (70,695 )     (36,678 )
Proceeds from the transfer of development costs
    100,280       -  
Allowance for equity funds used during construction
    4,232       6,614  
Nuclear fuel purchases
    (129,331 )     -  
Proceeds from sale/leaseback of nuclear fuel
    -       180  
Proceeds from nuclear decommissioning trust fund sales
    138,232       322,003  
Investment in nuclear decommissioning trust funds
    (152,291 )     (334,176 )
Changes in money pool receivable - net
    (15,470 )     (14,085 )
Changes in other investments
    25,560       -  
Net cash flow used in investing activities
    (99,483 )     (56,142 )
                 
FINANCING ACTIVITIES
               
Proceeds from the issuance of long term debt
    57,859       -  
Retirement of long-term debt
    (41,715 )     (28,440 )
Changes in short-term borrowings - net
    44,411       -  
Dividends paid:
               
   Common stock
    (36,700 )     (36,500 )
Other
    -       (2,915 )
Net cash flow provided by (used in) financing activities
    23,855       (67,855 )
                 
Net increase (decrease) in cash and cash equivalents
    53,526       (11,701 )
                 
Cash and cash equivalents at beginning of period
    264,482       102,788  
                 
Cash and cash equivalents at end of period
  $ 318,008     $ 91,087  
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
 
Cash paid during the period for:
               
  Interest - net of amount capitalized
  $ 58,992     $ 88,615  
  Income taxes
    -     $ 7,136  
                 
See Notes to Financial Statements.
               

 
155

 



SYSTEM ENERGY RESOURCES, INC.
BALANCE SHEETS
ASSETS
June 30, 2010 and December 31, 2009
(Unaudited)
             
   
2010
   
2009
 
   
(In Thousands)
 
             
CURRENT ASSETS
           
Cash and cash equivalents:
           
  Cash
  $ 818     $ 926  
  Temporary cash investments
    317,190       263,556  
        Total cash and cash equivalents
    318,008       264,482  
Accounts receivable:
               
  Associated companies
    149,281       139,602  
  Other
    4,063       4,479  
    Total accounts receivable
    153,344       144,081  
Note receivable - Entergy New Orleans
    -       25,560  
Materials and supplies - at average cost
    80,979       80,934  
Deferred nuclear refueling outage costs
    32,559       8,432  
Prepaid taxes
    714       69,366  
Prepayments and other
    3,722       936  
TOTAL
    589,326       593,791  
                 
OTHER PROPERTY AND INVESTMENTS
               
Decommissioning trust funds
    334,687       327,046  
TOTAL
    334,687       327,046  
                 
UTILITY PLANT
               
Electric
    3,348,048       3,324,876  
Property under capital lease
    481,065       481,065  
Construction work in progress
    153,224       198,887  
Nuclear fuel under capital lease
    -       75,438  
Nuclear fuel
    191,057       9,333  
TOTAL UTILITY PLANT
    4,173,394       4,089,599  
Less - accumulated depreciation and amortization
    2,365,946       2,315,141  
UTILITY PLANT - NET
    1,807,448       1,774,458  
                 
DEFERRED DEBITS AND OTHER ASSETS
               
Regulatory assets:
               
  Regulatory asset for income taxes - net
    97,831       101,915  
  Other regulatory assets
    303,651       290,048  
Other
    21,525       11,824  
TOTAL
    423,007       403,787  
                 
TOTAL ASSETS
  $ 3,154,468     $ 3,099,082  
                 
See Notes to Financial Statements.
               
 
 
156

 
 
 
SYSTEM ENERGY RESOURCES, INC.
BALANCE SHEETS
LIABILITIES AND SHAREHOLDER'S EQUITY
June 30, 2010 and December 31, 2009
(Unaudited)
                 
      2010       2009  
   
(In Thousands)
 
                 
CURRENT LIABILITIES
               
Currently maturing long-term debt
  $ 33,740     $ 41,715  
Notes payable
    62,672       -  
Accounts payable:
               
  Associated companies
    5,267       5,349  
  Other
    57,525       45,826  
Accumulated deferred income taxes
    12,333       3,040  
Interest accrued
    13,162       51,257  
Obligations under capital leases
    -       50,445  
Other
    1,999       -  
TOTAL
    186,698       197,632  
                 
NON-CURRENT LIABILITIES
               
Accumulated deferred income taxes and taxes accrued
    538,053       588,722  
Accumulated deferred investment tax credits
    56,493       58,231  
Obligations under capital leases
    -       24,993  
Other regulatory liabilities
    232,708       197,437  
Decommissioning
    436,813       421,408  
Accumulated provisions
    -       2,009  
Pension and other postretirement liabilities
    69,846       75,448  
Long-term debt
    799,560       703,260  
TOTAL
    2,133,473       2,071,508  
                 
Commitments and Contingencies
               
                 
SHAREHOLDER'S EQUITY
               
Common stock, no par value, authorized 1,000,000 shares;
               
  issued and outstanding 789,350 shares in 2010 and 2009
    789,350       789,350  
Retained earnings
    44,947       40,592  
TOTAL
    834,297       829,942  
                 
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY
  $ 3,154,468     $ 3,099,082  
                 
See Notes to Financial Statements.
               

 
157

 

ENTERGY CORPORATION AND SUBSIDIARIES
PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

See "PART I, Item 1, Litigation" in the Form 10-K for a discussion of legal, administrative, and other regulatory proceedings affecting Entergy.  Following is an update to that discussion.  Also see "Item 5, Other Information, Environmental Regulation", below, for updates regarding environmental proceedings and regulation.

Entergy New Orleans Rate of Return Lawsuit

As discussed in more detail in the Form 10-K, in April 1998 a group of residential and business ratepayers filed a complaint against Entergy New Orleans in state court in Orleans Parish purportedly on behalf of all ratepayers in New Orleans.  The plaintiffs allege that Entergy New Orleans overcharged ratepayers in violation of limits on Entergy New Orleans' rate of return that the plaintiffs allege were established by ordinances passed by the City Council in 1922.  In May 2000, a court of appeal granted Entergy New Orleans' exception to jurisdiction in the case and dismissed the proceeding.  The Louisiana Supreme Court denied the plaintiffs' request for a writ of certiorari.  The plaintiffs then commenced a similar proceeding before the City Counci l.  In December 2003, the Council advisors filed a motion in the City Council proceedings to bifurcate the hearing in this matter, such that the effect of the provision of the 1922 Ordinance in setting lawful rates would be considered first.  Only if it is determined that this provision establishes a limitation would remaining issues be reached.

The motion to bifurcate was granted by the City Council in April 2004, and a hearing on the first part of the bifurcated proceeding was completed in June 2005.  After the submission of briefs and oral argument in April 2006, the City Council dismissed with prejudice the plaintiffs' claims on multiple grounds.  In May 2006, the plaintiffs appealed the City Council's decision.  Entergy New Orleans also appealed, separately, certain evidentiary rulings included in the City Council's decision.  These matters were consolidated and oral argument on these appeals took place before the Civil District Court in August 2008.  On July 6, 2010, one of the exceptions raised by Entergy New Orleans in response to plaintiffs' claims, the exception of no c ause of action, was granted by the Civil District Court, dismissing plaintiffs' claims with prejudice.  The period for appeal of the decision is still open.

Item 1A.  Risk Factors

There have been no material changes to the risk factors discussed in "PART I, Item 1A, Risk Factors" in the Form 10-K.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities (1)

 
 
 
 
Period
 
 
 
 
Total Number of
Shares Purchased
 
 
 
 
Average Price Paid
per Share
 
Total Number of
Shares Purchased
as Part of a
Publicly
Announced Plan
 
Maximum $
Amount
of Shares that May
Yet be Purchased
Under a Plan (2)
                 
4/01/2010-4/30/2010
 
-
 
$-
 
-
 
$750,000,000
5/01/2010-5/31/2010
 
780,000
 
$77.19
 
780,000
 
$750,000,000
6/01/2010-6/30/2010
 
1,036,000
 
$74.85
 
1,036,000
 
$674,972,756
Total
 
1,816,000
 
$75.85
 
1,816,000
   
 
158

 

(1)
In accordance with Entergy's stock-based compensation plans, Entergy periodically grants stock options to key employees, which may be exercised to obtain shares of Entergy's common stock.  According to the plans, these shares can be newly issued shares, treasury stock, or shares purchased on the open market.  Entergy's management has been authorized by the Board to repurchase on the open market shares up to an amount sufficient to fund the exercise of grants under the plans.  See Note 12 to the financial statements in the Form 10-K for additional discussion of the stock-based compensation plans.  In addition to this authority, in October 2009 the Board granted authority for a $750 million share repurchase program.
(2)
Maximum amount of shares that may yet be repurchased does not include an estimate of the amount of shares that may be purchased to fund the exercise of grants under the stock-based compensation plans.

The amount of share repurchases may vary as a result of material changes in business results or capital spending or new investment opportunities.

Item 5.  Other Information

Environmental Regulation

Following are updates to the Environmental Regulation section of Part I, Item 1 of the Form 10-K.

Clean Air Act and Subsequent Amendments

Ozone Nonattainment

As discussed in the Form 10-K, Entergy Gulf States Louisiana and Entergy Texas each operate fossil-fueled generating units in geographic areas that are not in attainment of the currently-enforced national ambient air quality standards for ozone.  The Louisiana nonattainment area that affects Entergy Gulf States Louisiana is the Baton Rouge area.  Texas nonattainment areas that affect Entergy Texas are the Houston-Galveston-Brazoria and the Beaumont-Port Arthur areas.  Areas in nonattainment are classified as "marginal," "moderate," "serious," or "severe."  When an area fails to meet the ambient air standard, the EPA requires state regulatory authorities to prepare state implementation plans meant to cause progress toward bringing the area into attainment with applicable standards.

In April 2004, the EPA issued a final rule, effective June 2005, revoking a 1-hour ozone standard, including designations and classifications.  In a separate action over the same period, the EPA enacted 8-hour ozone nonattainment classifications and stated that areas designated as nonattainment under a new 8-hour ozone standard shall have one year to adjust to the new requirements with submittal of a new attainment plan.

The Baton Rouge area was classified as a ''marginal" nonattainment area under the 8-hour standard with an attainment date of June 15, 2007.  On March 21, 2008, the EPA published a notice that the Baton Rouge area had failed to meet the standard by the attainment date and that the EPA was proceeding with a "bump-up" of the area to the next higher nonattainment level.  The Baton Rouge area is now classified as a "moderate" nonattainment area with an attainment date of June 15, 2010.  On June 25, 2010, the EPA published a notice in the Federal Register of a proposed determination that the Baton Rouge nonattainment area has attained the 1997 8-hour ozone standard.

The Beaumont-Port Arthur area was originally classified as a "marginal" nonattainment area under the 1997 8-hour standard with an attainment date of June 15, 2007.  On March 18, 2008, the EPA published a notice that the Beaumont-Port Arthur area had failed to meet the standard by the attainment date based on the area's 2004-2006 monitoring data and that the EPA was proceeding with a "bump-up" of the area to the next higher nonattainment level. The 2005-2007 and subsequent monitoring data showed the area to be in attainment, however, and on July 9, 2008, the Texas Commission on Environmental Quality proposed a plan for EPA re-designation of the area from nonattainment to attainment under both the 8-hour ozone standard and the previous 1-hour standard.  On May 17, 2010, the EPA published notice in the Federal Register of proposed approval of the redesignation request and maintenance plan for the Beaumont-Port Arthur area, and a determination that the area attained the revoked 1-hour ozone standard.
 
159

 

Interstate Air Transport

In March 2005, the EPA finalized the Clean Air Interstate Rule (CAIR), which is intended to reduce SO2 and NOx emissions from electric generation plants in order to improve air quality in twenty-nine eastern states.  The rule requires a combination of investment of capital to install pollution control equipment and increased operating costs through the purchase of emission allowances.  Entergy's capital investment and annual allowance purchase costs under the CAIR will depend on the economic assessment of NOx and SO2 allowance markets, the cost of control technologies, and unit usage.  Entergy began implementatio n in 2007, including installation of controls at several facilities and the development of an emission allowance procurement strategy.

Based on several court challenges, the CAIR was vacated by the U.S. Court of Appeals for the District of Columbia in July 2008.  The court found that the EPA failed to address basic obligations under the Clean Air Act's "good neighbor" provision regarding "upwind" states' contribution to air quality impairment in "downwind" states.  The court also ruled favorably on Entergy's challenge, finding that the EPA exceeded its statutory authority when it included a fuel adjustment factor to calculate the state NOx emission budgets.

On December 23, 2008, the U.S. Court of Appeals for the District of Columbia remanded the CAIR decision to the EPA without vacatur, allowing the CAIR to become effective on January 1, 2009, while the EPA revises the rule.  The revised rule must address all the flaws identified in the Court of Appeals decision, including the use of a fuel adjustment factor and the use of acid rain SO2 allowances for the CAIR.  Entergy has reactivated its compliance effort for the CAIR based on this court ruling.

The EPA released the proposed Transport Rule to replace the CAIR on July 9, 2010.  After the rule is published in the Federal Register, the EPA will accept comments and expects to issue the final Transport Rule in late spring 2011.  As proposed, the rule will become effective January 2012.  Entergy’s capital investment and annual allowance purchase costs under the Transport Rule will depend on the economic assessment of NOx and SO2 allowance markets, the cost of control technologies, and generation unit utilization.

Regional Haze

In June 2005, the EPA issued final Best Available Retrofit Control Technology (BART) regulations that could potentially result in a requirement to install SO2 and NOx pollution control technology on certain of Entergy's coal and oil generation units.  The rule leaves certain BART determinations to the states.  The Arkansas Department of Environmental Quality (ADEQ) prepared a State Implementation Plan (SIP) for Arkansas facilities to implement its obligations under the Clean Air Visibility Rule.  The ADEQ determined that Entergy Arkansas's White Bluff power plant affects a Class I Area's visibility and will be subject to the EPA's presumptive BART requirements to install scrubbers and low NOx burners.  Under then current regulations, the scrubbers would have had to be operational by October 2013.  Entergy filed a petition in December 2009 with the Arkansas Pollution Control and Ecology (APC&E) Commission requesting a variance from this deadline, however, because the EPA has not approved Arkansas's Regional Haze SIP and the EPA has recently expressed concerns about Arkansas's Regional Haze SIP and questioned the appropriateness of issuing an air permit prior to that approval.  Entergy Arkansas's petition requested that, consistent with federal law, the compliance deadline be changed as expeditiously as practicable, but in no event later than five years after EPA approval of the Arkansas Regional Haze SIP.  The APC&E Commission approved the variance at the Commission's March 26, 2010 meeting.  No party appealed the variance, and the ruling is final.  The timeline for E PA action on the Arkansas Regional Haze SIP is uncertain at this time.

In March 2009, Entergy Arkansas made a filing with the APSC seeking a declaratory order that the White Bluff project is in the public interest.  In May 2009 the APSC Staff filed a motion requesting that the APSC require Entergy Arkansas to file testimony on several issues.  In December 2009, in response to the EPA concerns regarding Arkansas's Regional Haze SIP, the APSC suspended the procedural schedule in the proceeding and directed Entergy Arkansas to file monthly status reports regarding developments between the EPA and the ADEQ concerning the EPA’s approval of the Arkansas Regional Haze SIP. In May 2010, Entergy Arkansas withdrew its petition for a declaratory order and the APSC closed the proceeding.
 
160

 

Potential Legislative, Regulatory, and Judicial Developments (Air)

As discussed further in the Form 10-K, in 2009, the EPA published an "endangerment finding" stating that the emission of greenhouse gases "may reasonably be anticipated to endanger public health or welfare" and that the emission of these pollutants from mobile sources (such as cars and trucks) contributes to this endangerment.  The EPA issued final mobile source emission regulations on April 1, 2010.  On April 2, 2010, the EPA issued a policy stating that the regulation of greenhouse gas emissions from mobile sources would, as of January 2, 2011 (the date that the mobile source rule "takes effect"), trigger the regulation of greenhouse gases from stationary sources under the Prevention of Significant Deterioration (PSD) and Title V programs of the Clean Air Act.

On June 3, 2010, the EPA published the final Tailoring Rule outlining the applicability criteria that determine which stationary sources and modification projects become subject to permitting requirements for greenhouse gas emissions under the Clean Air Act.  The Tailoring Rule establishes a two-step process for implementing regulation of greenhouse gas emissions under the PSD and Title V programs.  The first step, which will begin on January 2, 2011, limits the applicability of the PSD and Title V requirements for greenhouse gas emissions to sources that are already subject to PSD and Title V based on the emission of non-greenhouse gas pollutants.  Specifically, projects undertaken at stationary sources will trigger PSD permitting requirements if the projec t increases net greenhouse gas emissions by at least 75,000 tons per year carbon dioxide equivalent and significantly increases emissions of at least one non- greenhouse gas pollutant.  During step one, only sources subject to Title V based on their emission of non- greenhouse gas pollutants will be required to address greenhouse gas emissions in their Title V permit.

The second step of the Tailoring Rule, which will begin on July 1, 2011, subjects to Title V requirements any new or existing source not already subject to Title V that emits, or has the potential to emit, at least 100,000 tons per year carbon dioxide equivalent.  In addition, sources that emit or have the potential to emit at least 75,000 tons per year carbon dioxide equivalent will also be subject to PSD requirements.

The Tailoring Rule goes into effect on August 2, 2010 but will not immediately affect Entergy's cost of operations.

Clean Water Act

NPDES Permits and Section 401 Water Quality Certifications

Indian Point

As discussed further in the Form 10-K, in a February 2010 feasibility report, Non-Utility Nuclear provided an updated estimate of the cost to retrofit Indian Point 2 and Indian Point 3 with cooling towers.  Construction costs for retrofitting with cooling towers are estimated to be at least $1.19 billion, in addition to lost generation of approximately 14.5 terawatt-hours (TWh) during the estimated 42-week forced outage of both units.  Non-Utility Nuclear also proposed an alternative to the cooling towers, the use of Wedgewire screens, that are now expected to cost approximately $200 million to $250 million to install.  Due to fluctuations in power pricing and because a retrofitting of this size and complexity has never been undertaken at an operating nuclea r facility, significant uncertainties exist in these estimates and, therefore, they could be materially higher than estimated.

As discussed further in the Form 10-K, on April 6, 2009, with a reservation of rights regarding the applicability of the section, Entergy's Indian Point facility submitted a Section 401 water quality certification to the New York State Department of Environmental Conservation (NYSDEC).  The certification, or a waiver or exemption of the same, is potentially required pursuant to Section 401 of the Clean Water Act as a supporting document to the NRC's license renewal decision.  On April 2, 2010, the NYSDEC denied Indian Point’s water quality certification concluding that Indian Point’s continued operation during a renewed NRC license period would not comply with existing New York state water quality standards.  The denial was a NYSDEC staff decisio n and Entergy filed comments on this decision and has requested a hearing before a NYSDEC ALJ.  The ALJs held the Legislative Hearing (agency public comment session) and the Issues Conference (pre-trial conference) in July 2010.  Pre-trial decisions concerning proper party status or standing and the selection
 
 
161

 
of issues to be resolved are pending.  After the full hearing on the merits (not expected to begin prior to mid-2011), a party to the proceeding can appeal the decision to the Commissioner of the NYSDEC and then to state court.  The NYSDEC staff decision does not restrict Indian Point operations, but the issuance of a certification is potentially required prior to NRC issuance of renewed unit licenses.

316(b) Cooling Water Intake Structures

See the Form 10-K for a discussion of the EPA regulations governing the intake of water at large existing power plants employing cooling water intake structures and the regulations' potential effect on Entergy.  In March 2010 the NYSDEC released a new proposed policy establishing closed cycle cooling as the presumptive performance goal for best technology available (BTA) determinations for cooling water intake structures.  The proposed policy applies primarily to electric generating facilities with thermal discharges and capacity factors of greater than fifteen percent that also are designed to withdraw at least 20 million gallons of water per day.  If closed cycle cooling is not available for a particular facility because of construction, operational, or ot her relevant reasons, then the facility must implement an alternative technology that achieves a level of protection for aquatic life that is within ten percent of the expected or projected reductions associated with closed cycle cooling.   The NYSDEC would make BTA determinations through the State Pollution Discharge Elimination System (SPDES) permitting program, but BTA decisions would be subject to further review and modification under the State Environmental Quality Review Act.  Public comments on the draft policy were due July 9, 2010.  Entergy filed comments and will continue to monitor these developments.

Groundwater at Certain Nuclear Sites

As discussed further in the Form 10-K, in January 2010, Vermont Yankee was notified by its off-site analytical laboratory that a sample collected from a groundwater monitoring well in mid-November 2009 showed elevated levels of tritium.  Tritium is a radioactive form of hydrogen that occurs naturally and is also a byproduct of nuclear plant operations.  In March 2010, Vermont Yankee announced that it has identified the source of the tritium leakage at the plant, and that it has stopped the leakage.  Remediation of the soil and groundwater is underway.  There has been no detectable tritium found in any drinking water well samples at the Vermont Yankee site or in the Connecticut River.  Both the NRC and the Vermont Department of Health have stated that tritium in the groundwater at Vermont Yankee has not been a threat to public health and safety.  Non-Utility Nuclear expects to incur approximately $13.5 million in operating expenses related to the investigation of the leakage and its remediation, including approximately $11 million incurred through June 2010.

On February 25, 2010, the Vermont Public Service Board (VPSB) began a proceeding in which it will conduct an investigation into whether Non-Utility Nuclear should be required to cease operations at Vermont Yankee, or take other ameliorative actions, pending completion of repairs to stop releases of tritium or other radionuclides into the environment.  This investigation will also consider whether good cause exists to modify or revoke the Vermont Yankee certificate of public good that the VPSB issued in 2002 and whether any penalties should be imposed on Non-Utility Nuclear for any identified violations of Vermont statutes or VPSB orders related to those releases.  The proceeding and VPSB investigation were opened prior to Non-Utility Nuclear locating the source and beginni ng the remediation of the tritium leaking into groundwater at Vermont Yankee.  The VPSB conceded in its order that its jurisdiction to conduct all or portions of the investigation may be preempted by federal law or regulation, and the parties were asked to brief preemption issues during the initial phase of the proceeding.  The proceeding remains in the initial discovery phase.

As part of the industry's voluntary groundwater initiative, Entergy continues to monitor groundwater wells at each of its other nuclear sites.  Entergy has notified the NRC and appropriate state or local officials in Massachusetts, Mississippi and New York of low levels of tritium that have been detected in groundwater monitoring wells at the Pilgrim, Grand Gulf, and Indian Point nuclear sites.  In each case, no new leaks have been identified, and the tritium levels detected are not necessarily indicative of a leaking plant system.  Nonetheless, Entergy is taking measures to identify the source of the tritium at these sites and to fully inform appropriate officials.
 
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Other Environmental Matters

Entergy Gulf States Louisiana and Entergy Texas

The Texas Commission on Environmental Quality (TCEQ) notified Entergy Gulf States, Inc. that the TCEQ believed that Entergy Gulf States, Inc. is one of many potentially responsible parties (PRP) concerning contamination existing at the Spector Salvage Yard proposed state superfund site in Orange, Texas.  The TCEQ conducted a removal action consisting of the excavation and offsite disposal of contaminated surface soil.  Entergy Gulf States Louisiana and Entergy Texas do not believe that the former Gulf States Utilities contributed any significant amount of hazardous substances to this site.  Entergy Gulf States Louisiana and Entergy Texas, as members of a site response group, have negotiated a settlement with TCEQ and the Texas Attorney General to complete th is litigation within its existing cleanup provisions.  Final judicial approval of the settlement is pending.

Entergy Arkansas and Entergy Gulf States Louisiana

On June 21, 2010, the EPA issued a proposed rule on coal combustion residuals (CCRs) that contains two primary regulatory options: (1) regulating CCRs destined for disposal in landfills or received (including stored) in surface impoundments as so-called "special wastes" under the hazardous waste program of RCRA Subtitle C; or (2) regulating CCRs destined for disposal in landfills or surface impoundments as non-hazardous wastes under Subtitle D of RCRA.  Under both options, CCRs that are beneficially used would remain excluded from hazardous waste regulation.

As written, the proposed regulations would require new compliance requirements including modified storage, new notification and reporting practices, new financial assurance requirements, and product disposal considerations.  According to EPA estimates, the annualized cost of on-site disposal under the two proposals would be $3.6 million to $9 million for Entergy’s Arkansas facilities and $1.7 million to $3.3 million for the Entergy Gulf States Louisiana facility.  If Entergy utilized off-site disposal, which it would not plan to do, the EPA’s total cost estimates for disposal of CCRs under Subtitle C regulation ranges from $250 to $350 million per year.

Property

Following is an update to the Non-Utility Nuclear, Property section of Part I, Item 1 of the Form 10-K.

Generating Stations

As discussed further in the Form 10-K, the operating license for Pilgrim expires in 2012.  A license renewal application is pending at the NRC.  The NRC's Atomic Safety and Licensing Board (ASLB) proceeding regarding the license renewal was completed, but Pilgrim Watch filed a petition for NRC review of the ASLB's decision.  In March 2010 the NRC issued a decision reversing and remanding part of the ASLB's decision in which it had granted a summary disposition dismissing Pilgrim Watch's contention that challenged the Entergy Environmental Report's severe accident mitigation alternatives analysis.  The NRC remanded consideration of this contention to the ALSB for hearing.  A hearing date has not been scheduled.  Pilgrim Watch's t wo other contentions were dismissed by the NRC in June 2010.

Spent Nuclear Fuel

As discussed in Part I, Item 1 of the Form 10-K, as a result of the DOE's failure to begin disposal of spent nuclear fuel in 1998 pursuant to the Nuclear Waste Policy Act of 1982 and the spent fuel disposal contracts, Entergy's nuclear owner/licensee subsidiaries have incurred and will continue to incur damages.  In November 2003 these subsidiaries, except for the owner of Palisades, began litigation to recover the damages caused by the DOE's delay in performance.  In October 2007 the U.S. Court of Federal Claims awarded $48.7 million, jointly to System Fuels and Entergy Arkansas, in damages related to the DOE's breach of its obligations.  In a revised decision issued in March 2010, in a separate proceeding, the court awarded $9.7 million jointly to System Fuels, System Energy, and SMEPA.  Also in March 2010, in two separate decisions, the court awarded $106.1 million to Entergy Nuclear Indian Point 2 and $4.2 million to Entergy Nuclear Generation Company, the owner of the Pilgrim plant.  All of these decisions are subject to appeal by the DOE, and appeals have been filed of
 
163

 
the Entergy Arkansas, Entergy Nuclear Generation Company, Entergy Nuclear Indian Point 2, and System Energy decisions with the U.S. Court of Appeals for the Federal Circuit.  Management cannot predict the timing or amount of any potential recoveries on other claims filed by Entergy subsidiaries, and cannot predict the timing of any eventual receipt from the DOE of the U.S. Court of Federal Claims damage awards.

Earnings Ratios (Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

The Registrant Subsidiaries have calculated ratios of earnings to fixed charges and ratios of earnings to combined fixed charges and preferred dividends/distributions pursuant to Item 503 of Regulation S-K of the SEC as follows:

 
Ratios of Earnings to Fixed Charges
 
Twelve Months Ended
 
December 31,
 
June 30,
 
2005
 
2006
 
2007
 
2008
 
2009
 
2010
                       
Entergy Arkansas
3.75
 
3.37
 
3.19
 
2.33
 
2.39
 
2.85
Entergy Gulf States Louisiana
3.34
 
3.01
 
2.84
 
2.44
 
2.99
 
3.29
Entergy Louisiana
3.50
 
3.23
 
3.44
 
3.14
 
3.52
 
3.57
Entergy Mississippi
3.16
 
2.54
 
3.22
 
2.92
 
3.25
 
3.37
Entergy New Orleans
1.22
 
1.52
 
2.74
 
3.71
 
3.66
 
3.77
Entergy Texas
2.06
 
2.12
 
2.07
 
2.04
 
1.92
 
2.26
System Energy
3.85
 
4.05
 
3.95
 
3.29
 
3.73
 
3.62


 
Ratios of Earnings to Combined Fixed Charges
and Preferred Dividends/Distributions
 
Twelve Months Ended
 
December 31,
 
June 30,
 
 
2005
 
2006
 
2007
 
2008
 
2009
 
2010
 
                         
Entergy Arkansas
3.34
 
3.06
 
2.88
 
1.95
 
2.09
 
2.53
 
Entergy Gulf States Louisiana
3.18
 
2.90
 
2.73
 
2.42
 
2.95
 
3.25
 
Entergy Louisiana
3.50
 
2.90
 
3.08
 
2.87
 
3.27
 
3.34
 
Entergy Mississippi
2.83
 
2.34
 
2.97
 
2.67
 
3.01
 
3.14
 
Entergy New Orleans
1.12
 
1.35
 
2.54
 
3.45
 
3.38
 
3.49
 

The Registrant Subsidiaries accrue interest expense related to unrecognized tax benefits in income tax expense and do not include it in fixed charges.
 
164

 


Item 6.  Exhibits *

 
4(a) -
Officer's Certificate No. 3-B-3 dated May 18, 2010, supplemental to the Entergy Texas, Inc. Indenture, Deed of Trust and Security Agreement dated as of October 1, 2008, establishing the form and certain terms of the Mortgage Bonds, 3.60% Series due June 1, 2015.
     
 
10(a) -
Second Amended and Restated Limited Liability Company Agreement of Entergy Holdings Company LLC dated as of July 22, 2010.
     
 
12(a) -
Entergy Arkansas's Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined.
     
 
12(b) -
Entergy Gulf States Louisiana's Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Distributions, as defined.
     
 
12(c) -
Entergy Louisiana's Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Distributions, as defined.
     
 
12(d) -
Entergy Mississippi's Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined.
     
 
12(e) -
Entergy New Orleans's Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Pre­ferred Dividends, as defined.
     
 
12(f) -
Entergy Texas's Computation of Ratios of Earnings to Fixed Charges, as defined.
     
 
12(g) -
System Energy's Computation of Ratios of Earnings to Fixed Charges, as defined.
     
 
31(a) -
Rule 13a-14(a)/15d-14(a) Certification for Entergy Corporation.
     
 
31(b) -
Rule 13a-14(a)/15d-14(a) Certification for Entergy Corporation.
     
 
31(c) -
Rule 13a-14(a)/15d-14(a) Certification for Entergy Arkansas.
     
 
31(d) -
Rule 13a-14(a)/15d-14(a) Certification for Entergy Arkansas.
     
 
31(e) -
Rule 13a-14(a)/15d-14(a) Certification for Entergy Gulf States Louisiana.
     
 
31(f) -
Rule 13a-14(a)/15d-14(a) Certification for Entergy Gulf States Louisiana.
     
 
31(g) -
Rule 13a-14(a)/15d-14(a) Certification for Entergy Louisiana.
     
 
31(h) -
Rule 13a-14(a)/15d-14(a) Certification for Entergy Louisiana.
     
 
31(i) -
Rule 13a-14(a)/15d-14(a) Certification for Entergy Mississippi.
     
 
31(j) -
Rule 13a-14(a)/15d-14(a) Certification for Entergy Mississippi.
     
 
31(k) -
Rule 13a-14(a)/15d-14(a) Certification for Entergy New Orleans.
     
 
31(l) -
Rule 13a-14(a)/15d-14(a) Certification for Entergy New Orleans.
     
 
31(m) -
Rule 13a-14(a)/15d-14(a) Certification for Entergy Texas.
     
 
31(n) -
Rule 13a-14(a)/15d-14(a) Certification for Entergy Texas.
 
 
165

 
 
     
 
31(o) -
Rule 13a-14(a)/15d-14(a) Certification for System Energy.
     
 
31(p) -
Rule 13a-14(a)/15d-14(a) Certification for System Energy.
     
 
32(a) -
Section 1350 Certification for Entergy Corporation.
     
 
32(b) -
Section 1350 Certification for Entergy Corporation.
     
 
32(c) -
Section 1350 Certification for Entergy Arkansas.
     
 
32(d) -
Section 1350 Certification for Entergy Arkansas.
     
 
32(e) -
Section 1350 Certification for Entergy Gulf States Louisiana.
     
 
32(f) -
Section 1350 Certification for Entergy Gulf States Louisiana.
     
 
32(g) -
Section 1350 Certification for Entergy Louisiana.
     
 
32(h) -
Section 1350 Certification for Entergy Louisiana.
     
 
32(i) -
Section 1350 Certification for Entergy Mississippi.
     
 
32(j) -
Section 1350 Certification for Entergy Mississippi.
     
 
32(k) -
Section 1350 Certification for Entergy New Orleans.
     
 
32(l) -
Section 1350 Certification for Entergy New Orleans.
     
 
32(m) -
Section 1350 Certification for Entergy Texas.
     
 
32(n) -
Section 1350 Certification for Entergy Texas.
     
 
32(o) -
Section 1350 Certification for System Energy.
     
 
32(p) -
Section 1350 Certification for System Energy.
     
 
101 INS -
XBRL Instance Document.**
     
 
101 SCH -
XBRL Taxonomy Extension Schema Document.**
     
 
101 PRE -
XBRL Taxonomy Presentation Linkbase Document.**
     
 
101 LAB -
XBRL Taxonomy Label Linkbase Document.**
     
 
101 CAL -
XBRL Taxonomy Calculation Linkbase Document.**
     
 
101 DEF -
XBRL Definition Linkbase Document.**
 
___________________________

Pursuant to Item 601(b)(4)(iii) of Regulation S-K, Entergy Corporation agrees to furnish to the Commission upon request any instrument with respect to long-term debt that is not registered or listed herein as an Exhibit because the total amount of securities authorized under such agreement does not exceed ten percent of the total assets of Entergy Corporation and its subsidiaries on a consolidated basis.
 
166

 

      *
Reference is made to a duplicate list of exhibits being filed as a part of this report on Form 10-Q for the quarter ended June 30, 2010, which list, prepared in accordance with Item 102 of Regulation S-T of the SEC, immediately precedes the exhibits being filed with this report on Form 10-Q for the quarter ended June 30, 2010.
    ** To be filed by amendment.
 
167

 
 
SIGNATURE


Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.  The signature for each undersigned company shall be deemed to relate only to matters having reference to such company or its subsidiaries.

ENTERGY CORPORATION
ENTERGY ARKANSAS, INC.
ENTERGY GULF STATES LOUISIANA, L.L.C.
ENTERGY LOUISIANA, LLC
ENTERGY MISSISSIPPI, INC.
ENTERGY NEW ORLEANS, INC.
ENTERGY TEXAS, INC.
SYSTEM ENERGY RESOURCES, INC.
 
 
 
                          /s/ Theodore H. Bunting, Jr.                         
Theodore H. Bunting, Jr.
Senior Vice President and Chief Accounting Officer
(For each Registrant and for each as
Principal Accounting Officer)


Date:           August 6, 2010


 
168

 


EX-4.A 2 a041104a.htm ETI'S OFFICER'S CERTIFICATE a041104a.htm
Exhibit 4(a)
 
ENTERGY TEXAS, INC.

 OFFICER’S CERTIFICATE
3-B-3

Establishing the Form and Certain Terms of the
Mortgage Bonds, 3.60% Series due June 1, 2015
THIS INSTRUMENT GRANTS A SECURITY INTEREST
BY A UTILITY

THIS INSTRUMENT CONTAINS AFTER-ACQUIRED
PROPERTY PROVISIONS

The undersigned, FRANK WILLIFORD, ASSISTANT TREASURER, an Authorized Officer of Entergy Texas, Inc., a Texas Corporation (the “Company”) (all capitalized terms used herein which are not defined herein but are defined in the Indenture referred to below, shall have the meanings specified in such Indenture), pursuant to Board Resolutions dated August 29, 2008 and May 18, 2010 and Sections 201 and 301 of such Indenture, does hereby certify to THE BANK OF NEW YORK MELLON, as trustee (the “Trustee”) under the Indenture, Deed of Trust and Security Agreement of the Company dated as of October 1, 2008 (the “Indenture”) that:
 
1.  
The Securities of the third series to be issued under the Indenture (the “Bonds”) shall be issued in a series designated “Mortgage Bonds, 3.60% Series due June 1, 2015”; the Bonds shall be in substantially the form set forth in Exhibit A hereto; the Bonds shall initially be issued in the aggregate principal amount of $200,000,000; however, the aggregate principal amount of Bonds which may be authenticated and delivered under the Indenture is unlimited; and the Bonds issued on the original issue date and any additional Bonds issued thereafter shall be considered one and the same series of Securities under the Indenture;
 
2.  
The Bonds shall mature and the principal shall be due and payable together with all accrued and unpaid interest thereon on June 1, 2015, and the Company shall not have any right to extend the Maturity of the Bonds as contemplated in Section 301(d) of the Indenture;
 
3.  
The Bonds shall bear interest as provided in the form thereof set forth in Exhibit A hereto; the Interest Payment Dates for the Bonds shall be June 1 and December 1 of each year, commencing December 1, 2010;
 
4.  
Each installment of interest on the Bonds shall be payable as provided in the form thereof set forth in Exhibit A hereto; the Company shall not have any right to extend any interest payment periods for the Bonds as contemplated in Section 301(e) of the Indenture;
 
5.  
The principal of, premium, if any, and each installment of interest on the Bonds shall be payable, and registration of transfers and exchanges in respect of the Bonds may be effected, at the office or agency of the Company in The City of New York and as otherwise provided in the form of Bond set forth in Exhibit A hereto; and notices and demands to or upon the Company in respect of the Bonds may be served at the office or agency of the Company in The City of New York; the Corporate Trust Office of the Trustee will initially be the agency of the Company for such payment, registration of transfers and exchanges and service of notices and demands, and the Company hereby appoints the Trustee as its agent for all such purposes; and the Trustee will initially be the Security Registrar and the Paying Agent for the Bonds; provided, however, that the Company reserves the right to change, by one or more Officer’s Certificates, any such office or agency and such agent;
 
6.  
The Regular Record Dates for the interest payable on any given Interest Payment Date with respect to the Bonds shall be the close of business on the Business Day immediately preceding such Interest Payment Date;
 
7.  
The Bonds are subject to redemption as provided in the form thereof set forth in Exhibit A hereto;
 
8.  
No service charge shall be made for the registration of transfer or exchange of the Bonds; provided, however, that the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with the exchange or transfer;
 
9.  
The Bonds shall be issued initially in global form registered in the name of Cede & Co. (as nominee for The Depository Trust Company (“DTC”)); provided, that the Company reserves the right to provide for another depository, registered as a clearing agency under the Exchange Act, to act as depository for the global Bonds (DTC and any such successor depository, the “Depository”); beneficial interests in Bonds issued in global form may not be exchanged in whole or in part for individual certificated Bonds in definitive form, and no transfer of a global Bond in whole or in part may be registered in the name of any Person other than the Depository or its nominee except that (i) if the Depository (A) has notified the Company that it is unwilling or unable to continue as dep ository for the global Bonds or (B) has ceased to be a clearing agency registered under the Exchange Act and, in either case, a successor depository for such global Bonds has not been appointed by the Company within ninety (90) days after the Company receives such notice or becomes aware of such condition, as the case may be, (ii) the Company executes and delivers to the Trustee an Officer’s Certificate providing that the global Bonds shall be so exchangeable or (iii) there shall have occurred and be continuing an Event of Default with respect to the Bonds, in each case, the Company will execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of definitive Bonds, will authenticate and deliver Bonds in definitive certificated form in an aggregate principal amount equal to the principal amount of the global Bonds representing such Bonds in exchange for such global Bonds, such definitive Bonds to be registered in the names provided by the Depository; each global Bond (i) shall represent and shall be denominated in an amount equal to the aggregate principal amount of the outstanding Bonds to be represented by such global Bond, (ii) shall be registered in the name of the Depository or its nominee, (iii) shall be delivered by the Trustee to the Depository, its nominee, any custodian for the Depository or otherwise pursuant to the Depository’s instruction and (iv) shall bear a legend restricting the transfer of such global Bond to any person other than the Depository or its nominee; none of the Company, the Trustee, any Paying Agent or any Authenticating Agent will have any responsibility or liability for any aspect of the records relating to, or payments made on account of, beneficial ownership interests in a global Bond or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests; the Bonds in global form will contain restrictions on transfer, substantially as described in the form set forth in Exhibit A hereto;
 
10.  
None of the Trustee, the Security Registrar or the Company shall have any liability for any acts or omissions of the Depository, for any transfers of beneficial interests in the Bonds, for any Depository records of beneficial interests, for any transactions between the Depository and beneficial owners or in respect of any transfers effected by the Depository or by any participant members of the Depository or any beneficial owner of any interest in any Bonds held through any such participant member of the Depository;
 
11.  
If the Company shall make any deposit of money and/or Eligible Obligations with respect to any Bonds, or any portion of the principal amount thereof, as contemplated by Section 801 of the Indenture, the Company shall not deliver an Officer’s Certificate described in clause (z) in the first paragraph of said Section 801 unless the Company shall also deliver to the Trustee, together with such Officer’s Certificate, either:
 
(A)           an instrument wherein the Company, notwithstanding the satisfaction and discharge of its indebtedness in respect of such Bonds, shall assume the obligation (which shall be absolute and unconditional) to irrevocably deposit with the Trustee or Paying Agent such additional sums of money, if any, or additional Eligible Obligations (meeting the requirements of Section 801), if any, or any combination thereof, at such time or times, as shall be necessary, together with the money and/or Eligible Obligations theretofore so deposited, to pay when due the principal of and premium, if any, and interest due and to become due on such Bonds or portions thereof, all in accordance with and subject to the provisions of said Section 801; provided, however, that such instrument may state that the obligation of the Company to make additional deposits as aforesaid shall be subject to the delivery to the Company by the Trustee of a notice asserting the deficiency accompanied by an opinion of an independent public accountant of nationally recognized standing, selected by the Trustee, showing the calculation thereof; or
 
(B)           an Opinion of Counsel to the effect that, as a result of a change in law occurring after the date of this certificate, the Holders of such Bonds, or portions of the principal amount thereof, will not recognize income, gain or loss for United States federal income tax purposes as a result of the satisfaction and discharge of the Company’s indebtedness in respect thereof and will be subject to United States federal income tax on the same amounts, at the same times and in the same manner as if such satisfaction and discharge had not been effected.
 
12.  
The Eligible Obligations with respect to the Bonds shall be Government Obligations;
 
13.  
The Bonds shall have such other terms and provisions as are provided in the form set forth in Exhibit A hereto;
 
14.  
No Event of Default under the Indenture has occurred or is occurring;
 
15.  
The undersigned has read all of the covenants and conditions contained in the Indenture, and the definitions in the Indenture relating thereto, relating to the issuance and authentication and delivery of the Bonds and in respect of compliance with which this certificate is made;
 
16.  
The statements contained in this certificate are based upon the familiarity of the undersigned with the Indenture, the documents accompanying this certificate, and upon discussions by the undersigned with officers and employees of the Company familiar with the matters set forth herein;
 
17.  
In the opinion of the undersigned, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenants and conditions have been complied with; and
 
18.  
In the opinion of the undersigned, such conditions and covenants, and all conditions precedent provided for in the Indenture (including any covenants compliance with which constitutes a condition precedent) relating to the authentication and delivery of the Bonds requested in the accompanying Company Order have been complied with.
 
[Remainder of page intentionally left blank]
 
IN WITNESS WHEREOF, I have executed this Officer’s Certificate as of this 18th day of May, 2010.
 
By: /s/ Frank Williford                                                                       
Name: Frank Williford
Title:   Assistant Treasurer
 

 

Exhibit A

 
[FORM OF BOND]
 
[Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to Entergy Texas, Inc., or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.]

 

 
No.  ___                                                               CUSIP No. 29365T ABO
 
MATURITY DATE: June 1, 2015                                                PRINCIPAL AMOUNT: ____________
 
ENTERGY TEXAS, INC.
 
MORTGAGE BONDS, 3.60% SERIES DUE JUNE 1, 2015
 
ENTERGY TEXAS, INC., a corporation duly organized and existing under the laws of the State of Texas (herein referred to as the “Company,” which term includes any successor Person under the Indenture referred to below), for value received, hereby promises to pay to
 
or registered assigns, the principal amount specified above on the Maturity Date set forth above and to pay interest on the unpaid principal hereof and on any overdue interest from and including May 25, 2010 or from and including the most recent interest payment date to which interest has been paid or duly provided for semiannually on June 1 and December 1 of each year, commencing December 1, 2010, and on the Maturity Date (each, an “Interest Payment Date”), at the rate of 3.60% per annum (the “Interest Rate”) to but excluding the date on which the principal hereof is paid or made available for payment. In the event that any Interest Payment Date is not a Business Day, then payment of interest payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of such delay) with the same force and effect as if made on the Interest Payment Date. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Business Day immediately preceding such Interest Payment Date (each a “Regular Record Date”), except that interest payable at Maturity will be payable to the Person to whom principal shall be paid.  Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Sec urities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture referred to herein.
 
A-1
 
 
 
Payment of the principal of (and premium, if any) and interest at Maturity on this Security shall be made upon presentation of this Security at the office or agency of the Company maintained for that purpose in The City of New York, in the State of New York, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that, at the option of the Company, interest on this Security (other than interest payable at Maturity) may be paid by check mailed to the address of the person entitled thereto, as such address shall appear on the Security Register, and provided, further, that if such person is a securities depositary, such payment may be made by such other means in lieu of check as shall be agreed upon by the Company, the Trustee and such person.
 
All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture and in the Officer’s Certificate establishing the terms of the Securities of this series (the “Series Officer’s Certificate”).
 
This Security is one of a duly authorized issue of securities of the Company (herein called the “Securities”), issued and to be issued in one or more series under an Indenture, Deed of Trust and Security Agreement dated as of October 1, 2008 (herein, together with any amendments or supplements thereto, called the “Indenture”, which term shall have the meaning assigned to it in such instrument), between the Company and The Bank of New York Mellon, as Trustee (herein called the “Trustee”, which term includes any successor trustee under the Indenture), and reference is hereby made to the Indenture, for a statement of the property mortgaged, pledged and held in trust, the nature and extent of the security, the conditions upon which the Lien of the Indenture may be released and to the Indenture, Board Re solutions and Series Officer’s Certificate creating the series designated on the face hereof, for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered.  The acceptance of this Security shall be deemed to constitute the consent and agreement by the Holder thereof to all of the terms and provisions of the Indenture.  This Security is one of the series designated on the face hereof.
 
Securities of this series shall be redeemable at the option of the Company in whole at any time, or in part from time to time, prior to the Stated Maturity, upon notice mailed at least 30 days but not more than 60 days prior to the date fixed for redemption (the “Redemption Date”), at a price (the “Redemption Price”) equal to the greater of (a) 100% of the principal amount of Securities of this series being redeemed and (b) as determined by the Independent Investment Banker, the sum of the present values of the remaining scheduled payments of principal of and interest on the Securities being redeemed (excluding the portion of any such interest accrued to the Redemption Date), discounted (for purposes of determining such present values) to the Redemption Date on a semiannual basis (assuming a 360-day year consis ting of twelve 30-day months) at the Adjusted Treasury Rate plus 0.25% plus accrued interest thereon to the Redemption Date.

Adjusted Treasury Rate” means, with respect to any redemption date:

(1) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated “H.15(519)” or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the remaining term of the Securities of this series, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue shall be determined and the Adjusted Treasury Rate shall be interpolated or extrapolated f rom such yields on a straight line basis, rounding to the nearest month); or
 
A-2
 
 

(2) if such release (or any successor release) is not published during the week preceding the calculation date for the Adjusted Treasury Rate or does not contain such yields, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date.

The Adjusted Treasury Rate shall be calculated on the third Business Day preceding the redemption date.

Business Day” means any day other than a Saturday or a Sunday or a day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed or a day on which the corporate trust office of the Trustee is closed for business.

Comparable Treasury Issue” means the United States Treasury security selected by the Independent Investment Banker as having a maturity comparable to the remaining term of the Securities of this series that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Securities of this series.

Comparable Treasury Price” means, with respect to any redemption date, (1) the average of five Reference Treasury Dealer Quotations for such redemption date after excluding the highest and lowest such Reference Treasury Dealer Quotations or (2) if the Independent Investment Banker obtains fewer than five such Reference Treasury Dealer Quotations, the average of all such Reference Treasury Dealer Quotations.

Independent Investment Banker” means one of the Reference Treasury Dealers that we appoint to act as the Independent Investment Banker from time to time or, if any of such firms is unwilling or unable to select the Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the Company.

Reference Treasury Dealer” means (1) BNP Paribas Securities Corp., Credit Suisse Securities (USA) LLC and RBS Securities Inc. and their respective successors; provided, however, that if any of the foregoing shall cease to be a primary U.S. Government securities dealer in New York City (a “Primary Treasury Dealer”), the Company will substitute therefor another Primary Treasury Dealer, and (2) any other Primary Treasury Dealer selected by the Independent Investment Banker after consultation with the Company.

Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Independent Investment Banker at 5:00 p.m. on the third Business Day preceding such redemption date.

Notice of redemption (other than at the option of the Holder) shall be given by mail to Holders of Securities all as provided in the Indenture.  As provided in the Indenture, notice of redemption at the election of the Company as aforesaid may state that such redemption shall be conditional upon the receipt by the applicable Paying Agent or Agents of money sufficient to pay the principal of and premium, if any, and interest, if any, on this Security on or prior to the date fixed for such redemption; a notice of redemption so conditioned shall be of no force or effect if such money is not so received and, in such event, the Company shall not be required to redeem this Security.
 
A-3
 

In the event of redemption of this Security in part only, a new Security or Securities of this series of like tenor representing the unredeemed portion hereof shall be issued in the name of the Holder hereof upon the cancellation hereof.

The Indenture contains provisions for defeasance at any time of the entire indebtedness of this Security upon compliance with certain conditions set forth in the Indenture and the Series Officer’s Certificate.

If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of this series at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Securities of all series at the time Outstanding to be directly affected thereby.  The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences.  Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Securities of this series, the Holders of a majority in aggregate principal amount of the Securities of all series at the time Outstanding in respect of which an Event of Default shall have occurred and be continuing shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as the Trustee and offered the Trustee reasonable indemnity, and the Trustee shall not have received from the Holders of a majority in aggregate principal amount of Securities of all series at the time Outstanding in respect of which an Event of Default shall have occurred and be continuing a direction inconsistent with such request, and shall have failed to institute any such proceeding for 60 days after receipt of such notice, request and offer of indemnity.  The foregoing shall not apply to any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof or any premium or interest hereon on or after the respective due dates expressed herein.

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed.

The Securities of this series are issuable only in registered form without coupons in denominations of $1,000 and integral multiples thereof.  As provided in the Indenture and subject to certain limitations therein and herein set forth, Securities of this series are exchangeable for Securities of this series, of authorized denominations and of like tenor and aggregate principal amount, as requested by the Holder surrendering the same.
 
A-4
 

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

The Company shall not be required to execute, and the Security Registrar shall not be required to register, the transfer of or exchange of (a) Securities of this series during a period of 15 days immediately preceding the date notice is to be given identifying the serial numbers of the Securities of this series called for redemption, (b) any Security during the 15 days before an Interest Payment Date, or (c) any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part.

The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the absolute owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

This Security shall be governed by and construed in accordance with the laws of the State of New York (including without limitation Section 5-1401 of the New York General Obligations Law or any successor to such statute), except to the extent that the Trust Indenture Act shall be applicable.

As provided in the Indenture, no recourse shall be had for the payment of the principal of or premium, if any, or interest on any Securities, or any part thereof, or for any claim based thereon or otherwise in respect thereof, or of the indebtedness represented thereby, or upon any obligation, covenant or agreement under the Indenture, against, and no personal liability whatsoever shall attach to, or be incurred by, any incorporator, shareholder, member, limited partner, officer, manager or director, as such, past, present or future of the Company or of any predecessor or successor of the Company (either directly or through the Company or a predecessor or successor of the Company), whether by virtue of any constitutional provision, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expres sly agreed and understood that the Indenture and all the Securities are solely corporate obligations and that any such personal liability is hereby expressly waived and released as a condition of, and as part of the consideration for, the execution of the Indenture and the issuance of the Securities.

Unless the certificate of authentication hereon has been executed by the Trustee referred to herein by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.
 
A-5
 
 
IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.
 

 

ENTERGY TEXAS, INC.
 
By:_______________________________________
  Name:
      Title:

 
[FORM OF CERTIFICATE OF AUTHENTICATION]
 
CERTIFICATE OF AUTHENTICATION
 
This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.
 
Dated:
 

THE BANK OF NEW YORK MELLON, as Trustee
 
By:_______________________________________
Authorized Signatory

 
 
A-6
EX-10.A 3 a0411010a.htm 2ND AMENDED & RESTATED LIMITED LIABILITY COMPANY AGREEMENT a0411010a.htm
Exhibit 10(a)

 

 

 

 

 

 

 

 


 
SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
 
OF
 
ENTERGY HOLDINGS COMPANY LLC
 
Dated as of July 22, 2010
 

TABLE OF CONTENTS
 
ARTICLE I
 
DEFINED TERMS
 
Section 1.1 Definitions 1
Section 1.2
Headings 
6
 
ARTICLE II
 
FORMATION AND TERM
 
Section 2.1
Formation. 
6
Section 2.2
Term 
7
Section 2.3
Registered Agent and Office 
7
Section 2.4
Principal Place of Business 
7
Section 2.5
Qualification in Other Jurisdictions 
7
 
ARTICLE III
 
PURPOSE AND POWERS OF THE COMPANY
 
Section 3.1
Purpose 
7
Section 3.2
Powers of the Company. 
8
 
ARTICLE IV
 
CAPITAL CONTRIBUTIONS, INTERESTS AND ADVANCES
 
Section 4.1
Capital Contributions 
9
Section 4.2
Nature of Interest 
9
Section 4.3
Status of Capital Contributions. 
10
Section 4.4
Advances 
10
 
ARTICLE V
 
MEMBERS
 
Section 5.1
Powers of Members 
10
Section 5.2
Reimbursements 
10
Section 5.3
Partition 
10
Section 5.4
Resignation 
11
Section 5.5
Meetings of Members. 
11
Section 5.6
Voting Rights of Members. 
13
Section 5.7
Redemption. 
15
 
ARTICLE VI
 
MANAGEMENT
 
Section 6.1
Board of Directors 
16
Section 6.2
Meetings of the Board 
17
Section 6.3
Quorum and Acts of the Board 
17
Section 6.4
Electronic Communications 
17
Section 6.5
Committees of Directors 
18
Section 6.6
Removal of Directors 
18
Section 6.7
Directors as Agents 
18
Section 6.8
Notice of Meetings 
18
Section 6.9
Resignation 
18
 
ARTICLE VII
 
OFFICERS
 
Section 7.1 Officers  18 
Section 7.2 The Chief Executive Officer  19 
Section 7.3 The Chairman of the Board  19 
Section 7.4 The President  19 
Section 7.5 The Vice Presidents  19 
Secton 7.6 The Secretary 19 
Section 7.7
The Treasurer 
19 
Section 7.8 Tax Officer 20 
Section 7.9
Transfer of Duties 
20 
Section 7.10
Vacancies; Absences 
20 
Section 7.11
Removal 
20 
Section 7.12
Resignation 
20 
Section 7.13
Compensation of Officers 
20 
Section 7.14
Delegation of Powers 
20 
Section 7.15 Officers as Agents  21 
Section 7.16 Execution of Documents  21
 
 
ARTICLE VIII
 
COVENANTS
 
Section 8.1
Financial Covenants 
21
 
ARTICLE IX
 
DISTRIBUTIONS
 
Section 9.1 Distributions to Holders of Preferred Interests.  21 
Section 9.2 Distributions to Holders of Common Interests  23 
Section 9.3 Limitations on Distribution 23 
 
 
ARTICLE X
 
COMMON INTERESTS, PREFERRED INTERESTS, AND ADDITIONAL INTERESTS
 
Section 10.1
Classes of Interests 
23
Section 10.2
Additional Limited Liability Company Interests. 
24
 
ARTICLE XI
 
BOOKS AND RECORDS
 
Section 11.1
Books, Records and Financial Statements. 
28
Section 11.2
Accounting Method 
28
Section 11.3
Annual Audit 
28
 
ARTICLE XII
 
TAX MATTERS
 
Section 12.1
Taxation as Corporation 
29
 
ARTICLE XIII
 
LIABILITY, EXCULPATION AND INDEMNIFICATION
 
 
Section 13.1 Liability  29 
Section 13.2 Exculpation.  29 
Section 13.3
Indemnification  29 
Section 13.4 Expenses  30 
Section 13.5
Insurance  30 
Section 13.6 Duties of Directors and Officers  30 
Section 13.7 Outside Businesses  30 
Section 13.8 Affiliated Transactions  30 
Section 13.9 Duty of Disclosure  31 
Section 13.10 Conflicts of Interest 31 
Section 13.11 Discretion 31 
Section 13.12 Duties  31 
 
 
ARTICLE XIV
 
ADDITIONAL MEMBERS
 
Section 14.1
Admission 
32
 
ARTICLE XV
 
ASSIGNABILITY AND SUBSTITUTE MEMBERS
 
Section 15.1
Assignability of Interests 
32
Section 15.2
Recognition of Assignment by Company 
33
Section 15.3
Effective Date of Assignment 
33
Section 15.4
Pledge 
33
 
ARTICLE XVI
 
DISSOLUTION, LIQUIDATION AND TERMINATION
 
Section 16.1
No Dissolution 
33
Section 16.2
Events Causing Dissolution 
33
Section 16.3
Winding Up 
34
Section 16.4
Termination 
35
Section 16.5
Claims of the Interest Holders 
35
 
ARTICLE XVII
 
MISCELLANEOUS
 
 
 
Section 17.1 Notices  35
Section 17.2 Cumulative Remedies 35
Section 17.3 Binding Effect  35
Section 17.4 Interpretation  35
Section 17.5 Severability   36
Section 17.6 Counterparts   36
Section 17.7 Integration   36
Section 17.8 Governing Law   36
Section 17.9 Amendments   36
Section 17.10 No Implied Rights or Remedies  36
 

 


SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT OF
ENTERGY HOLDINGS COMPANY LLC
 

This Second Amended and Restated Limited Liability Company Agreement of Entergy Holdings Company LLC (the “Company”) is dated effective as of  July 22, 2010 among Entergy International LTD LLC (“EIL”), Entergy Gulf States Louisiana, L.L.C. (“EGSL”), Entergy Louisiana, LLC (“ELL”), Entergy Nuclear Generation Company (“ENGC”), Entergy Nuclear New York Investment Company I (“ENNY& #8221;), Entergy Nuclear Midwest Investment Company, LLC (“ENMIC”), Entergy Nuclear Holding Company #3, LLC (“ENHC #3”), Entergy Nuclear Vermont Investment Company, LLC (“ENVIC”), and any other Persons who become Members of the Company in accordance with the provisions hereof and whose names are set forth as Members on Schedule A hereto.
 
WHEREAS, the Company was formed as a Delaware limited liability company by the filing of a Certificate of Formation with the Secretary of State of the State of Delaware on August 19,1997;
 
WHEREAS, the Company is currently governed by an Amended and Restated Limited Liability Company Agreement of the Company dated as of July 29, 2008 (the “Prior Agreement”);
 
WHEREAS, since July 29, 2008 and prior to the date hereof, the Company has issued (i) Class A Preferred Membership Interests to EGSL as specified on Schedule A hereto, and EGSL has been admitted as a Class A Preferred Member of the Company, and (ii) Class B Common Membership Interests to ENGC, ENNY, ENMIC, ENHC #3 and ENVIC as specified on Schedule A hereto, and each of ENGC, ENNY, ENMIC, ENHC #3 and ENVIC has been admitted as a Class B Common Member of the Company;
 
WHEREAS, effective as of the date hereof, the Company is issuing Class B Preferred Membership Interests to ELL and EGSL, in each case as specified on Schedule A hereto, and ELL and EGSL shall each become a Class B Preferred Member of the Company; and
 
WHEREAS, the Members desire to amend and restate the Prior Agreement to reflect the creation of the Class B Common Membership Interests and the Class B Preferred Membership Interests and certain other matters.
 
NOW, THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and intending to be legally bound, the Members hereby agree as follows:
 
ARTICLE I
 
DEFINED TERMS
 
Section 1.1 Definitions.  Unless the context otherwise requires, the terms defined in this Article I shall, for the purposes of this Agreement, have the meanings herein specified.
 
Act” means the Delaware Limited Liability Company Act, 6 Del. C. § 18-101, et seq., as amended from time to time.
 
Additional Members” is defined in Section 14.1 hereof.
 
Affiliate” means with respect to a specified Person, any Person that directly or indirectly controls, is controlled by, or is under common control with, the specified Person.  As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.
 
Agreement” means this Second Amended and Restated Limited Liability Company Agreement of the Company, as amended, modified, supplemented or restated from time to time.
 
Applicable Liquidation Price” means, with respect to Class A Preferred Membership Interests, the Class A Preferred Liquidation Price, and, with respect to Class B Preferred Membership Interests, the Class B Preferred Liquidation Price.
 
Board” means the board of directors of the Company established pursuant to Section 6.1 hereof.
 
Business Day” means any day other than a Saturday, Sunday and those legal public holidays on which banks in New York, New York or New Orleans, Louisiana are authorized or required by law to be closed.
 
Capital Contribution” means, with respect to any Member, the aggregate amount of money and the fair market value of any property (other than money) contributed to the Company pursuant to Article IV hereof.
 
Certificate of Formation” means the Certificate of Formation of the Company and any and all amendments thereto and restatements thereof filed on behalf of the Company with the office of the Secretary of State of the State of Delaware pursuant to the Act.
 
Class A Common Member” means a Member owning Class A Common Membership Interests.  The initial sole Class A Common Member is EIL.
 
Class A Common Membership Interests” means the Common Interests created under this Agreement identified as the Class A Common Membership Interests.
 
Class A Preferred Liquidation Price” means $100.
 
Class A Preferred Members” means the Members owning Class A Preferred Membership Interests.  The Class A Preferred Members are EGSL and ELL.
 
Class A Preferred Membership Interests” means the Preferred Interests created under this Agreement identified as the Class A Preferred Membership Interests.
 
 
-2-
 
 
Class A Preferred Yield Protection Date” means July 29, 2018.
 
Class A Senior Interests” is defined in Section 5.6(iii)(C).
 
Class B Common Member” means a Member owning Class B Common Membership Interests.  The Class B Common Members are listed on Schedule A hereto.
 
Class B Common Membership Interests” means the Common Interests created under this Agreement identified as the Class B Common Membership Interests.
 
Class B Preferred Liquidation Price” means $100.
 
Class B Preferred Members” means the Members owning Class B Preferred Membership Interests.  The Class B Preferred Members are EGSL and ELL.
 
Class B Preferred Membership Interests” means the Preferred Interests created under this Agreement identified as the Class B Preferred Membership Interests.
 
Class B Preferred Yield Protection Date” means July 22, 2020.
 
Class B Senior Interests” is defined in Section 5.6(iv)(C).
 
Common Interest” means a common limited liability company interest in the Company, which represents an economic interest in the Company, including the right to receive distributions of the Company’s assets in accordance with the provisions of this Agreement and the Act.  The Common Interests currently consist of the Class A Common Interests and the Class B Common Interests, and shall include any other series or other class of Common Interests issued by the Company in accordance with Article X.  The holders of each class of Common Interests shall have such relative rights and duties as are set forth in this Agreement.
 
Company” is defined in the preamble to this Agreement.
 
Covered Person” means a Member, a Director, an Officer, any Affiliate of the Company, a Member, a Director or an Officer, any officers, directors, shareholders, partners, members, managers, employees, representatives or agents of a Member, a Director or an Officer, or their respective Affiliates, or any employee or agent of the Company or its Affiliates.
 
Director” means a Person designated as a director of the Company pursuant to Section 6.1 hereof.  Each Director shall be a “manager” of the Company (within the meaning of the Act).
 
Dissolution Date” is defined in Section 16.2 hereof.
 
Distribution Coverage Ratio” means, as to any given calendar quarter of the Company, the ratio of (A) the total amount of interest, calculated on a consolidated post-tax basis, earned by the Company and its consolidated subsidiaries in that calendar quarter (including, for the avoidance of doubt, both interest earned on loans made by the Company to any of its Affiliates other than consolidated subsidiaries and interest earned by the Company on securities issued by Affiliates other than consolidated subsidiaries or non-Affiliates of the Company) to (B) the total amount of distributions made by the Company in that calendar quarter to the holders of Preferred Interests pursuant to Section 9.1 hereof.  For purposes of this definition, “consolidated post-tax basis” shall mean a calculation which reduces the amount of interest income of the Company and its consolidated subsidiaries for a fiscal quarter determined on a consolidated basis by an amount equal to the total current income tax expense of the Company and its consolidated subsidiaries for such fiscal quarter determined on a consolidated basis, divided by the total taxable income of the Company and its consolidated subsidiaries for such fiscal quarter determined on a consolidated basis and multiplied by the amount of such interest income.
 
 
-3-
 
 
Distribution Payment” is defined in Section 9.1 hereof.
 
Distribution Payment Date” is defined in Section 9.1 hereof.
 
Distribution Period” is defined in Section 9.1 hereof.
 
EGSL” is defined in the preamble to this Agreement.
 
EIL” is defined in the preamble to this Agreement.
 
ELL” is defined in the preamble to this Agreement.
 
ENGC” is defined in the preamble to this Agreement.
 
ENHC #3” is defined in the preamble to this Agreement.
 
ENMIC” is defined in the preamble to this Agreement.
 
ENNY” is defined in the preamble to this Agreement.
 
ENVIC” is defined in the preamble to this Agreement.
 
Event of Default” means (i) the failure of the Company to pay a Distribution Payment on or before the applicable Distribution Payment Date for any Distribution Period or (ii) a breach by the Company of any Financial Covenant (taking into account, for the avoidance of doubt, the thirty (30) day cure period referenced in Section 8.1).
 
GAAP” means accounting principles generally accepted in the United States.
 
GCL” means the General Corporation Law of the State of Delaware, 8 Del. C. § 101, et seq., as amended from time to time.
 
Interest” means a limited liability company interest in the Company, which represents an economic interest in the Company, including the right to receive distributions of the Company’s assets in accordance with the provisions of this Agreement and the Act.
 
 
-4-
 
 
Interest Holder” means any Person who holds an Interest, regardless of whether such interest was initially acquired by such Person from the Company or by assignment from another Interest Holder.
 
Laws” means:
 
(i)  
all constitutions, treaties, laws, statutes, codes, ordinances, orders, decrees, rules, regulations and municipal by-laws, whether domestic, foreign or international;
 
(ii)  
all judgments, orders, writs, injunctions, decisions, rulings, decrees and awards of any governmental body;
 
(iii)  
all policies, practices and guidelines of any governmental body; and
 
(iv)  
any amendment, modification, re-enactment, restatement or extension of the foregoing,
 
in each case binding on or affecting the party or Person referred to in the context in which such word is used; and “Law” means any one of them.
 
Material Action” means to consolidate or merge the Company with or into any Person, to convert the Company into any other form of entity, or to sell all or substantially all of the assets of the Company, or to institute proceedings to have the Company be adjudicated bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency proceedings against the Company or file a petition seeking, or consent to, reorganization or relief with respect to the Company under any applicable federal or state law relating to bankruptcy, or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or a substantial part of its property, or make any assignment for the benefit of creditors of the Company, or admit in writing the Company’s inability to pay its debts generally as they become due, or take action in furtherance of any such action, or, to the fullest extent permitted by law, dissolve or liquidate the Company.
 
Members” means the parties listed on Schedule A hereto, and includes any Person admitted as an Additional Member or a Substitute Member pursuant to the provisions of this Agreement, in such Person’s capacity as a member of the Company.
 
Net Worth” means, as of any date of determination, the excess of the total assets of the Company over the total liabilities of the Company.  For purposes of calculating Net Worth, (i) total liabilities of the Company shall include only (A)  debt owed by the Company or any of its consolidated subsidiaries to any of Affiliates of the Company (other than consolidated subsidiaries) and (B)  recourse debt of the Company or any of its consolidated subsidiaries owed to third parties (with any non-recourse debt of the Company or its consolidated subsidiaries owed to third parties being excluded), and (ii) total assets of the Company shall exclude the book value of any assets securing non-recourse debt of the Company or any of its consolidated sub sidiaries owed to third parties.  For the avoidance of doubt, the Class A Preferred Membership Interests and the Class B Preferred Membership Interests shall be considered equity, and not debt, for purposes of calculating Net Worth.
 
 
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Officer” means a Person designated as an officer of the Company pursuant to Article VII.
 
Percentage Interest” means the ratio of a Member’s Common Interests to the aggregate Common Interests of all Members, expressed as a percentage, as shown on Schedule A hereto.  The Percentage Interest of a Member may be adjusted from time to time by the Board, in the Board’s sole discretion, in connection with the issuance of additional Interests in the Company pursuant to Article X or the assignment of Interests pursuant to Article XV.
 
Person” includes any individual, corporation, association, partnership (general or limited), joint venture, trust, estate, limited liability company, or other legal entity or organization.
 
Preferred Interest” means a preferred limited liability company interest in the Company, which represents an economic interest in the Company, including the right to receive distributions of the Company’s assets in accordance with the provisions of this Agreement and the Act.  The Preferred Interests currently consist of the Class A Preferred Membership Interests and the Class B Preferred Membership Interests, and shall include any other series or other class of Preferred Interests issued by the Company in accordance with Article X.  The holders of each class of Preferred Interests shall have such relative rights and duties as are set forth in this Agreement.
 
Prior Agreement” is defined in the recitals to this Agreement.
 
Redemption Notice” is defined in Section 5.7 hereof.
 
Secretary” means the Person appointed by the Board as the secretary of the Company, who shall perform the duties described in Section 7.6 of this Agreement.
 
Substitute Member” means a Person who is admitted to the Company as a Member pursuant to Article XV hereof, and who is named as a Member on Schedule A to this Agreement.
 
Section 1.2 Headings.  The headings and subheadings in this Agreement are included for convenience and identification only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision hereof.
 
ARTICLE II
 
FORMATION AND TERM
 
Section 2.1 Formation.
 
(i) The Certificate of Formation has been filed with the Secretary of State of the State of Delaware by an “authorized person” within the meaning of the Act.  Each Officer of the Company is hereby authorized to execute, deliver and file any certificates (and any amendments and/or restatements thereof) (i) required or permitted to be filed in the office of the Secretary of State of the State of Delaware, or (ii) necessary for the Company to qualify to do business in any jurisdiction in which the Company may wish to conduct business.
 
 
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(ii) Effective as of the date of this Agreement, each of EGSL and ELL is admitted to the Company as a Class B Preferred Member of the Company (and shall remain a Class A Preferred Member of the Company).  As of the date of this Agreement, the Interests are owned by the Members as set forth on Schedule A attached hereto.
 
(iii) The name and mailing address of each Member, the number of each class of Interests owned by each Member, and the Percentage Interest of each Member owning Common Interests shall be listed on Schedule A attached hereto.  The Secretary shall be required to update Schedule A from time to time as necessary to accurately reflect the information therein.  Any amendment or revision to Schedule A made in accordance with this Agreement shall not be deemed an amendment to this Agreement.  Any reference in this Agreement to Schedule A shall be deemed to be a reference to Schedule A as amended and in effect from time to time.
 
Section 2.2 Term.  The term of the Company commenced upon the date the Certificate of Formation was filed in the office of the Secretary of State of the State of Delaware and shall continue in perpetuity until the Company is dissolved in accordance with the provisions of this Agreement.  The existence of the Company as a separate legal entity shall continue until cancellation of the Certificate of Formation in the manner required by the Act.
 
Section 2.3 Registered Agent and Office.  The Company’s registered agent and registered office in the State of Delaware shall be The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801.  At any time, the Board in its sole discretion may designate another registered agent and/or registered office.
 
Section 2.4 Principal Place of Business.  The principal place of business of the Company shall be at 2001 Timberloch Place, The Woodlands, Texas 77380.  At any time, the Board in its sole discretion may change the location of the Company’s principal place of business to another location.
 
Section 2.5 Qualification in Other Jurisdictions.  The Board shall cause the Company to be qualified, formed or registered under assumed or fictitious name statutes or similar Laws in any jurisdiction in which the Company transacts business.
 
ARTICLE III
 
PURPOSE AND POWERS OF THE COMPANY
 
Section 3.1 Purpose.  The Company is formed for the object and purpose of, and the nature of the business to be conducted and promoted by the Company is, engaging in any lawful act or activity for which limited liability companies may be formed under the Act and engaging in any and all activities necessary, convenient, desirable or incidental to the foregoing, including, without limitation, (i) to acquire, hold and dispose of investments, including investments in Affiliates of the Company and of the Members, and (ii) to lend money to, borrow money from, act as surety, guarantor or endorser for, provide collateral for, and transact other business with third parties, including transactions with Members and Affiliates of the Company.
 
 
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Section 3.2 Powers of the Company.
 
(i) Except as otherwise provided in this Agreement, the Company shall have the power and authority to take any and all actions necessary, appropriate, proper, advisable, incidental or convenient to or for the furtherance of the purpose set forth in Section 3.1, including, but not limited to, the power to:
 
(A) conduct its business, carry on its operations and have and exercise the powers granted to a limited liability company by the Act in any state, territory, district or possession of the United States, or in any foreign country, that may be necessary, convenient or incidental to the accomplishment of the purpose of the Company;
 
(B) enter into, perform and carry out contracts of any kind, including, without limitation, contracts with the Directors, the Officers, any Member, any Affiliate of any Director, any Officer or any Member, or any agent or Affiliate of the Company necessary to, in connection with, convenient to, or incidental to the accomplishment of the purpose of the Company, including transactions with Members and Affiliates of the Company on terms that are not arms-length;
 
(C) lend money to, borrow money from, act as surety, guarantor or endorser for, provide collateral for, and transact other business with third parties including Members and Affiliates of the Company, any Member, any Director or any Officer, including, without limitation, lending money to Affiliates of the Company or the Members at the Company’s effective cost of capital or otherwise or at less favorable rates and on less favorable terms than could be obtained by the Company in transactions with unrelated parties;
 
(D) purchase, take, receive, subscribe for or otherwise acquire, own, hold, vote, use, employ, sell, mortgage, lend, pledge, or otherwise dispose of, and otherwise use and deal in and with, shares or other interests in or obligations of domestic or foreign corporations, associations, general or limited partnerships (including, without limitation, the power to be admitted as a partner thereof and to exercise the rights and perform the duties created thereby), trusts, limited liability companies (including, without limitation, the power to be admitted as a member or appointed as a manager thereof and to exercise the rights and perform the duties created thereof), or individuals or direct or indirect obligations of the United States o r of any government, state, territory, governmental district or municipality or of any instrumentality of any of them;
 
(E) lend money for its proper purpose, invest and reinvest its funds, and take and hold real and personal property for the payment of funds so loaned or invested;
 
 
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(F) sue and be sued, complain and defend, and participate in administrative or other proceedings, in its name;
 
(G) appoint employees and agents of the Company, and define their duties and fix their compensation;
 
(H) indemnify any Person in accordance with the Act and obtain any and all types of insurance;
 
(I) cease its activities and cancel its Certificate of Formation;
 
(J) negotiate, enter into, renegotiate, extend, renew, terminate, modify, amend, waive, execute, acknowledge or take any other action with respect to any lease, contract or security agreement in respect of any assets of the Company;
 
(K) borrow money and issue evidences of indebtedness, and secure the same by a mortgage, pledge or other lien on the assets of the Company;
 
(L) pay, collect, compromise, litigate, arbitrate or otherwise adjust or settle any and all other claims or demands of or against the Company or hold such proceeds against the payment of contingent liabilities; and
 
(M) make, execute, acknowledge and file any and all documents or instruments necessary, convenient or incidental to the accomplishment of the purpose of the Company.
 
(ii) Notwithstanding any other provision of this Agreement or any provision of law that otherwise so empowers the Company, any Member, the Board, any Officer or any other Person, no Member, Director, Officer or any other Person shall be authorized or empowered, nor shall they permit the Company, (A) so long as no Event of Default has occurred and is continuing, take any Material Action without the prior written consent of the Members owning a majority of the Class A Common Membership Interests, voting as a single class, or (B) use any proceeds from the issuance of the Class A Preferred Membership Interests or Class B Preferred Membership Interests specified on Schedule A hereto other than (1) to pay for capital expenditures or the ac quisition of capital assets, or (2) to repay debt incurred in connection with the payment of capital expenditures or the acquisition of capital assets, or (3) to lend funds to Entergy Corporation in order for Entergy Corporation to pay for capital expenditures or the acquisition of capital assets, or to repay debt.
 
ARTICLE IV
 
CAPITAL CONTRIBUTIONS, INTERESTS AND ADVANCES
 
Section 4.1 Capital Contributions.  No Member shall be required to make any capital contribution to the Company.
 
Section 4.2 Nature of Interest.  An Interest Holder’s Interests shall for all purposes be personal property.  An Interest Holder has no interest in specific Company property.
 
 
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Section 4.3 Status of Capital Contributions.
 
(i) Except as otherwise provided in this Agreement, the amount of an Interest Holder’s Capital Contributions may be returned to it, in whole or in part, at any time, but only with the consent of the Board.  Notwithstanding the foregoing, no return of an Interest Holder’s Capital Contributions shall be made hereunder if such distribution would violate applicable law.  Under circumstances requiring a return of any Capital Contribution, no Interest Holder shall have the right to demand or receive property other than cash, except as may be specifically provided in this Agreement or as may be specifically agreed to by the Board in its sole discretion.
 
(ii) No Interest Holder shall receive any interest, salary or drawing with respect to its Capital Contributions or for services rendered on behalf of the Company or otherwise in its capacity as an Interest Holder, except as otherwise specifically provided in this Agreement.
 
(iii) Except as otherwise provided herein and by applicable law, no Member shall be required to lend any funds to the Company or to make any additional capital contributions to the Company.  No Member, Director or Officer shall have any personal liability for the repayment of any Capital Contribution of any Interest Holder.
 
Section 4.4 Advances.  If any Interest Holder shall advance any funds to the Company in excess of its Capital Contributions, the amount of such advance shall not entitle it to any increase in its share of the distributions of the Company.  The amount of any such advance shall be a debt obligation of the Company to such Interest Holder and shall be subject to such terms and conditions acceptable to the Board, in its sole discretion, and such Interest Holder.  Any such advance shall be payable and collectible only out of Company assets, and neither the Members, the Directors nor the Officers shall be personally obligated to repay any part the reof.  No Person who makes any non-recourse loan to the Company shall have or acquire, as a result of making such loan, any direct or indirect interest in the profits, capital or property of the Company, other than as a creditor.
 
ARTICLE V
 
MEMBERS
 
Section 5.1 Powers of Members.  The Members shall have the power to exercise any and all rights or powers granted to the Members pursuant to the express terms of this Agreement.  Except as specifically provided herein, the Members shall have no power to bind the Company.
 
Section 5.2 Reimbursements.  The Company shall reimburse the Members for all ordinary and necessary out-of-pocket expenses incurred by the Members acting on behalf of the Company in accordance with this Agreement.  Such reimbursement shall not be deemed to constitute a distributive share of profits or a distribution or return of capital to any Member.
 
Section 5.3 Partition.  Each Interest Holder waives any and all rights that it may have to maintain an action for partition of the Company’s property.
 
 
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Section 5.4 Resignation.  Except in connection with a transfer of all of its Interests pursuant to Article XV, a Member may not resign from the Company prior to the dissolution and winding up of the Company.
 
Section 5.5 Meetings of Members.
 
(i) The annual meeting of the Members for the election of Directors and the transaction of other business shall be held (a) at a time fixed by the Board, on the third Friday in May, if not a legal holiday; (b) if a legal holiday, then at the same time on the next Business Day which is not a legal holiday; or (c) at such date and time during such calendar year as shall be stated in the notice of the meeting or in a duly executed waiver or notice thereof.  The annual meeting of Members shall be held at the principal business office of the Company or at such other place or places either within or without the State of Delaware as may be designated by the Board and stated in the notice of the meeting.  W ritten notice of the annual meeting of the Members stating the place, date and hour of such meeting shall be delivered personally or mailed to each Member entitled to vote thereat not less than ten (10) and not more than sixty (60) days prior to the date of the meeting, but at any meeting at which all Members shall be present, or of which all Members not present have waived notice in writing, the giving of notice as above described may be dispensed with.  If mailed, such notice shall be directed to each Member at its address as the same appears on Schedule A hereto unless a Member shall have filed with the Secretary of the Company a written request that notices intended for it be mailed to some other address, in which case the notice shall be mailed to the address designated in such request.
 
(ii) At the annual meeting of the Members, the Members shall elect Directors and transact such other business as may properly be brought before the meeting in accordance with Section 5.6.
 
(iii) Special meetings of the Members, for any purpose or purposes, shall be held whenever called by (A) the Board, the Chairman of the Board or the President, (B) so long as no Event of Default has occurred and is continuing, the Members owning a majority of the issued and outstanding Class A Common Membership Interests or (C) upon the occurrence of an Event of Default, and during the continuation thereof, the Members owning a majority of the issued and outstanding Class A Preferred Membership Interests and the Class B Preferred Membership Interests, voting together as a single class.  Any such special meeting of Members may be held at the principal business office of the Company or at such other place or places, eith er within or without the State of Delaware, as may be specified in the notice thereof.  Business transacted at any special meeting of Members shall be limited to the purposes stated in the notice thereof.  Written notice of each special meeting, stating the day, hour and place, and in general terms the business to be transacted thereat, shall be delivered personally or mailed to each Member entitled to vote thereat not less than ten (10) and not more than sixty (60) days before the meeting.  If mailed, such notice shall be directed to each Member at its address as the same appears on Schedule A hereto unless a Member shall have filed with the Secretary of the Company a written request that notices intended for it be mailed to some other address, in which case it shall be mailed to the address designated in such request.  At any special meeting at which all Members shall be present, or of which a ll Members not present have waived notice in writing, the giving or notice as above described may be dispensed with.
 
 
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(iv) At any meeting of the Members, there must be present, either in person or represented by proxy, in order to constitute a quorum, Members owning a majority of the issued and outstanding Interests entitled to vote at such meeting.  At any meeting of Members at which a quorum is not present, the holders of, or the holders of proxies for, a majority of the Interests entitled to vote and represented at such meeting, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented.  At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed.  If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each Member of record entitled to vote at the meeting.
 
(v) For so long as no Event of Default has occurred and is continuing, each holder of record of Class A Common Membership Interests shall, at every meeting of the Members, be entitled to one (1) vote for each Class A Common Membership Interest standing in its name on the books of the Company; provided, however, that if the question is one upon which by express provision of this Agreement (including, without limitation, Section 5.6), a different vote is required, such express provision shall govern and control the decision of such qu estion.  Upon the occurrence of an Event of Default, and during the continuation thereof, each holder of record of Class A Preferred Membership Interests and Class B Preferred Membership Interests, respectively, shall at every meeting of the Members, be entitled to one (1) vote for each Class A Preferred Membership Interest and one (1) vote for each Class B Preferred Membership Interest, in each case standing in its name on the books of the Company, and no holder of Common Interests shall be entitled to vote on any matter with respect to such Common Interests held.  A Member may exercise any vote to which it is entitled either in person or by proxy appointed by an instrument in writing, subscribed to by such Member or by its duly authorized attorney, and filed with the Secretary of the Company before being voted on, but no proxy shall be voted on after three (3) years from its date, unless such proxy provides for a longer period.
 
(vi) The vote on all elections of Directors and other questions before any meeting of the Members need not be by ballot, except upon demand by the Members owning the majority of the Interests entitled to vote thereon present in person or by proxy.
 
(vii) Members may participate in a meeting of the Members by means of conference telephone or similar communications equipment, provided all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.  If all the participants are participating by conference telephone or similar communications equipment, the meeting shall be deemed to be held at the principal business office of the Company.
 
(viii) Any action required to be taken at any annual or special meeting of the Members or any action which may be taken at any annual or special meeting of such Members, 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 Members 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 Members entitled to vote thereon were present and voted.  Prompt notice of the taking of the action without a meeting by less than unanimous consent shall be given to those Members entitled to vote on the matter who have not consented in writing.
 
 
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(ix) The Chairman of the Board or the President, or in their absence, any Vice President, shall call to order meetings of the Members and shall act as chairman of such meetings.  The Board or the Members may appoint any Member or any Director or Officer to act as chairman of any meeting in the absence of the Chairman of the Board, the President and all of the Vice Presidents.  The Secretary of the Company shall act as the secretary of all meetings of the Members, but in the absence of the Secretary, the presiding officer of the meeting may appoint any other person to act as secretary of any meeting.
 
Section 5.6 Voting Rights of Members.
 
(i) The Members owning Class B Common Membership Interests shall possess no voting power with respect to such Class B Common Membership Interests held.  For so long as no Event of Default has occurred and is continuing, and except as otherwise provided in this Agreement or the Act, (A) the Members owning the Class A Common Membership Interests shall exclusively possess all voting power for the election of Directors and for all other purposes and are entitled to vote on each matter to be voted on at a meeting of Members and (B) the Members owning the Preferred Interests shall possess no voting power with respect to such Preferred Interests held.
 
(ii) Upon the occurrence of an Event of Default, and during the continuation thereof, and except as otherwise provided in this Agreement or the Act, (A) the Members owning the Class A Preferred Membership Interests and the Class B Preferred Membership Interests, voting together as a single class, shall exclusively possess all voting power for the election of Directors and for all other purposes and shall be entitled to vote on each matter to be voted on at a meeting of Members and (B) the Members owning the Class A Common Membership Interests shall possess no voting power with respect to such Common Interests held.
 
(iii) Notwithstanding the foregoing, so long as any Class A Preferred Membership Interests are outstanding, the Company shall not, without the prior written consent of Class A Preferred Members owning a majority of the Class A Preferred Membership Interests then outstanding:
 
(A) amend, alter, change or repeal any of the express terms of the Class A Preferred Membership Interests in a manner prejudicial to the holders thereof;
 
(B) convert any Class A Preferred Membership Interests into another class or series of Interests; or
 
(C) (i) authorize, create, or increase the number of authorized or outstanding Interests that rank senior or equal to the Class A Preferred Membership Interests as to the payment of dividends or of distributions upon the liquidation, dissolution or winding up of the Company (such class or series being referred to herein as “Class A Senior Interests”); or (ii) authorize, create or issue any obligation or security convertible into or otherwise exercisable for, or any rights or options entitling the holder thereof to purchase, Class A Senior Interests;
 
 
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(D) create, incur or assume any indebtedness, or increase any existing indebtedness, of the Company, other than in the ordinary course of business;
 
(E) consolidate or merge with or into any Person, convert from a limited liability company into any other form of entity, or to sell all or substantially all of its assets;
 
(F) institute proceedings to be adjudicated bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency proceedings against the Company or file a petition seeking, or consent to, reorganization or relief with respect to the Company under any applicable federal or state law relating to bankruptcy, or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator  (or other similar official) of the Company or a substantial part of its property, or make any assignment for the benefit of creditors of the Company, or admit in writing the Company’s inability to pay its debts generally as they become due; or
 
(G) dissolve or liquidate other than as provided in Section 16.2.
 
(iv) Notwithstanding the foregoing, so long as any Class B Preferred Membership Interests are outstanding, the Company shall not, without the prior written consent of Class B Preferred Members owning a majority of the Class B Preferred Membership Interests then outstanding:
 
(A) amend, alter, change or repeal any of the express terms of the Class B Preferred Membership Interests in a manner prejudicial to the holders thereof;
 
(B) convert any Class B Preferred Membership Interests into another class or series of Interests; or
 
(C) (i) authorize, create, or increase the number of authorized or outstanding Interests that rank senior or equal to the Class B Preferred Membership Interests as to the payment of dividends or of distributions upon the liquidation, dissolution or winding up of the Company (such class or series being referred to herein as “Class B Senior Interests”); or (ii) authorize, create or issue any obligation or security convertible into or otherwise exercisable for, or any rights or options entitling the holder thereof to purchase, Class B Senior Interests;
 
(D) create, incur or assume any indebtedness, or increase any existing indebtedness, of the Company, other than in the ordinary course of business;
 
(E) consolidate or merge with or into any Person, convert from a limited liability company into any other form of entity, or to sell all or substantially all of its assets;
 
 
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(F) institute proceedings to be adjudicated bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency proceedings against the Company or file a petition seeking, or consent to, reorganization or relief with respect to the Company under any applicable federal or state law relating to bankruptcy, or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator  (or other similar official) of the Company or a substantial part of its property, or make any assignment for the benefit of creditors of the Company, or admit in writing the Company’s inability to pay its debts generally as they become due; or
 
(G) dissolve or liquidate other than as provided in Section 16.2.
 
Section 5.7 Redemption of Class A Preferred Membership Interests.
 
(i) At any time and from time to time after the Class A Preferred Yield Protection Date, the Company may, at its election, expressed by resolution of the Board, redeem, in whole or in part, the Class A Preferred Membership Interests at a price per Class A Preferred Membership Interest equal to the Class A Preferred Liquidation Price plus any accumulated and unpaid Distribution Payments thereon (including all Distribution Payments which have accrued since the most recent Distribution Payment Date).
 
(ii) Except as set forth in Section 5.7(i) and Section 5.8(i), neither the Company nor any Member shall have any right to redeem or request the redemption of any Interest.
 
Any redemption pursuant to Section 5.7(i) shall be accomplished by the Company delivering a notice (a “Redemption Notice”) no less than thirty (30) nor more than sixty (60) days prior to such redemption to each holder of record of the Class A Preferred Membership Interests at such holder’s address as it appears on the books of the Company.  In consideration for the payment specified in Section 5.7(i), each such holder shall transfer to the Company, in accordance with the procedures set forth in the Redemption Notice, its Class A Preferred Membership Interests free and clear of all liens and encumbrances, and shall furnish to the Company all documentation reasonably required by the Company, which shall be set forth in the Redemption Notice, to effect and evidence the redemption of such Class A Preferred Membership Interests.  If less than all the outstanding Class A Preferred Membership Interests are to be redeemed, the selection of Class A Preferred Membership Interests for redemption shall be made pro-rata among the outstanding Class A Preferred Membership Interests and the Redemption Notice given to each holder shall state the number of Class A Preferred Membership Interests of such holder to be redeemed.
 
Section 5.8      Redemption of Class B Preferred Membership Interests.
 
(i)           At any time and from time to time after the Class B Preferred Yield Protection Date, the Company may, at its election, expressed by resolution of the Board, redeem, in whole or in part, the Class B Preferred Membership Interests at a price per Class B Preferred Membership Interest equal to the Class B Preferred Liquidation Price plus any accumulated and unpaid Distribution Payments thereon (including all Distribution Payments which have accrued since the most recent Distribution Payment Date).
 
 
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(ii) Any redemption pursuant to Section 5.8(i) shall be accomplished by the Company delivering a Redemption Notice no less than thirty (30) nor more than sixty (60) days prior to such redemption to each holder of record of the Class B Preferred Membership Interests at such holder’s address as it appears on the books of the Company.  In consideration for the payment specified in Section 5.8(i), each such holder shall transfer to the Company, in accordance with the procedures set forth in the Redemption Notice, its Class B Preferred Membership Interests free and clear of all liens and encumbrances, and shall furnish to the Company all documentation reasonably required by the Company, which shall be set forth in the Redemption Notice, to effect and evidence the redemption of such Class B Preferred Membership Interests.  If less than all the outstanding Class B Preferred Membership Interests are to be redeemed, the selection of Class B Preferred Membership Interests for redemption shall be made pro-rata among the outstanding Class B Preferred Membership Interests and the Redemption Notice given to each holder shall state the number of Class B Preferred Membership Interests of such holder to be redeemed.
 
ARTICLE VI
 
MANAGEMENT
 
Section 6.1 Board of Directors.  Except as otherwise specifically provided in this Agreement, the business and affairs of the Company shall be exclusively managed by or under the direction of a board of directors of the Company (the “Board”) consisting of one or more natural persons designated as directors of the Company as provided below (“Directors”).  The number of Directors which shall constitute the whole Board shall be not less than one (1) nor more than ten (10).  Subject to th e foregoing, the number of Directors may be fixed from time to time by (i) the Board, (ii) so long as no Event of Default has occurred and is continuing, the Members owning a majority of the issued and outstanding Class A Common Membership Interests or (iii) upon the occurrence of an Event of Default, and during the continuation thereof, the Members owning a majority of the issued and outstanding Class A Preferred Membership Interests and Class B Preferred Membership Interests, voting together as a single class.  The number of Directors as of the date of this Agreement is hereby set at three (3) and the current Directors are listed on Schedule B attached hereto.  Schedule B shall be amended from time to time by the Board to reflect the current Directors, and any such amendment to the information contained therein made in accordance with the provisions of this Agreement shall not constitute an amendment of this Agreement to which Section 17.9 applies.  Except as provided in this Article VI, the Directors shall be elected at the annual meeting of the Members by the Members owning a majority of the Class A Common Membership Interests outstanding; provided, however, that upon the occurrence of an Event of Default, and during the continuation thereof, the Directors shall be elected by the Members owning a majority of the issued and outstanding Class A Preferred Membership Interests and Class B Preferred Membership Interests, voting together as a single class.  Each Director elected shall hold office until a successor is elected and qualified or until such Dire ctor’s earlier death, resignation or removal.  Directors need not be Members.  Vacancies and newly created directorships resulting from any increase in the authorized number of Directors may be filled by resolution duly adopted by the Members owning a majority of the issued and outstanding Class A Common Membership Interests, at a special meeting held for such purpose, or by action taken in lieu of such meeting, at or the next annual meeting of Members following any vacancy; provided, however, that upon the occurrence of an Event of Default, and during the continuation thereof, such vacancies and newly created directorships may be filled by (and only by) the Members owning a majority of the issued and outstanding Class A Preferred Membership Interests and Class B Preferred Membership Interests, voting together as a single class.  Any Direct or so chosen to fill a vacancy or a newly created directorship shall hold office until the next annual meeting of Members and until his or her successor is duly elected and qualified or until such Director’s earlier death, resignation or removal.
 
 
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Section 6.2 Meetings of the Board.  The first meeting of each newly elected Board shall be held immediately after the annual meeting of Members and at the same place at which regular meetings of the Board are held, or at such other time and place as may be provided by resolution of the Board, and no notice of such meeting to the newly elected Directors shall be necessary in order to legally constitute the meeting, provided a quorum shall be present.  In the event such first meeting of the newly elected Board is not held at that time and place, such meeting may be held at such time and place as shall be specified in a notice given as hereinafter provi ded for special meetings of the Board, or as shall be specified in a written waiver signed by all of the Directors.  Regular meetings of the Board may be held without notice at such time and at such place, either within or without the State of Delaware, as shall from time to time be determined by the Board.  Special meetings of the Board may be called by the Chairman of the Board or by the President by giving notice as set forth in Section 6.8, and such meetings shall be held at the principal business office of the Company or at such other place or places, either within or without the State of Delaware, as shall be specified in the notice thereof.
 
Section 6.3 Quorum and Acts of the Board.  At all meetings of the Board, a majority of the Directors shall constitute a quorum for the transaction of business and, except as otherwise provided in this Agreement, 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.  If a quorum shall not be present at any meeting of the Board, a majority of the Directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.  Any action required or permitted to be taken at any meeting of the Board or o f any committee thereof may be taken without a meeting, without prior notice and without a vote if Directors (or members of such committee) 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 Directors (or members of such committee) were present and voted, as the case may be, consent thereto in writing, and such writing or writings are filed with the minutes of proceedings of the Board or committee.
 
Section 6.4 Electronic Communications.  Members of the Board, or any committee designated by the Board, may participate in a meeting of the Board, or any committee thereof, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.  If all the participants are participating by conference telephone or similar communications equipment, the meeting shall be deemed to be held at the principal business office of the Company.
 
Section 6.5 Committees of Directors.  From time to time the Board, by the affirmative vote of a majority of the whole Board, may designate other committees, each committee to consist of one or more of the Directors, for any purpose or purposes, and any such committee shall have such powers as shall be conferred by the resolution designating such committee.  In the absence or disqualification of a member of any committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another Director to act at the meeting in place of any such absent or disqu alified member.  Each such committee shall keep regular minutes of its meetings and report the same to the Board when required.
 
 
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Section 6.6 Removal of Directors.  Unless otherwise restricted by Law, any Director or the entire Board may be removed, with or without cause, by the Members owning a majority of the issued and outstanding Class A Common Membership Interests, and any vacancy caused by any such removal shall be filled by the Members owning a majority of the issued and outstanding Class A Common Membership Interests; provided, however, that upon the occurrence of an Event of Default, and during the continuation thereof, any Director or the entire Boar d may be removed, with or without cause, by (and only by) the Members owning a majority of the issued and outstanding Class A Preferred Membership Interests and Class B Preferred Membership Interests, voting together as a single class, and any vacancy caused by any such removal shall be filled by (and only by) the Members owning a majority of the issued and outstanding Class A Preferred Membership Interests and Class B Preferred Membership Interests, voting together as a single class.
 
Section 6.7 Directors as Agents.  The Directors, to the extent of their powers set forth in this Agreement, are agents of the Company for the purpose of the Company’s business, and the actions of the Directors taken in accordance with such powers shall bind the Company.
 
Section 6.8 Notice of Meetings.  Notice of any meeting of the Board or any committee thereof requiring notice shall be given to each Director or member of such committee by personal delivery or by mail or by telegram, in any case at least forty-eight (48) hours before the time fixed for the meeting.  At any meeting at which all Directors, or members of a committee, shall be present, or at which all Directors, or members of a committee, not present have waived notice in writing, the giving of notice may be dispensed with.  Attendance of a Director at a meeting shall constitute waiver of notice of such meeting, except when such Director atten ds such meeting for the express purpose of objecting at the beginning of such meeting, to the transaction of any business because such meeting is not lawfully called or convened.
 
Section 6.9 Resignation.  Any Director may resign at any time by giving written notice to the Board, the Chairman of the Board, the President or the Secretary.  Any such resignation shall take effect at the time specified therein, or, if the time be not specified, upon receipt thereof, and unless otherwise specified therein, acceptance of such resignation shall not be necessary to make it effective.
 
ARTICLE VII
 
OFFICERS
 
Section 7.1 Officers.  The Board may select natural persons who are agents or employees of the Company to be designated as officers of the Company (“Officers”), with such titles as the Board shall determine in its sole discretion.  The Board may elect a Chairman of the Board and/or a Chief Executive Officer, and shall elect a President, a Secretary, a Treasurer, and in its discretion, one or more Vice Presidents and/or a Tax Officer.  Any number of offices may be held by the same person.  The Board may appoint, or may authorize the Chief Executive Officer to appoint (and to remove), such assistant secretaries, assistant treasurers and other subordinate officers as it may deem desirable.  The Officers shall hold office until their successors are chosen and qualify.  The Officers as of the date of this Agreement are listed on Schedule C attached hereto.  Schedule C shall be amended from time to time by the Board to reflect the current Officers, and any such amendment to the information contained therein made in accordance with the provisions of this Agreement shall not constitute an amendment of this Agreement to which Section 17.9 applies.
 
 
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Section 7.2 The Chief Executive Officer.  The Chief Executive Officer, or, if no Chief Executive Officer is elected, the President, subject to the direction of the Board, shall have direct charge of and general supervision over the day-to-day business and affairs of the Company.
 
Section 7.3 The Chairman of the Board.  The Chairman of the Board shall be a member of the Board.  He shall preside at all meetings of the Board and shall have such other duties as from time to time may be assigned to him by the Board or by the Chief Executive Officer.
 
Section 7.4 The President.  The President shall perform all duties incident to the office of a president of a corporation organized under the GCL and such other duties as from time to time may be assigned to him by the Board or by the Chief Executive Officer.
 
Section 7.5 The Vice Presidents.  Each Vice President shall have such powers and shall perform such duties incident to the offices of a vice president of a corporation organized under the GCL, and such other duties from time to time as may be conferred upon or assigned to him by the Board or as may be delegated to him by the Chief Executive Officer or the President.  In the absence of the Chief Executive Officer and the President, or in the event of the Chief Executive Officer’s and the President’s inability to act, the Vice President, if any (or in the event there be more than one Vice President, the Vice Presidents in the order designat ed by the Board, or in the absence of any designation, then in the order of their election) 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 7.6 The Secretary.  The Secretary shall attend all meetings of the Board and all meetings of the Members and record all the proceedings of the meetings of the Members and of the Board in a book to be kept for that purpose and shall perform like duties for the standing committees of the Board when required.  The Secretary shall cause notices of all meetings of the Members and the Board to be given in accordance with this Agreement, shall be custodian of the records and the seal, if any, of the Company, and shall cause the Company seal, if any, to be affixed to all documents the execution of which under seal is duly authorized, and when the Com pany seal is so affixed, may attest to the same.  The Secretary shall perform such other duties as are incident to the office of secretary of a corporation organized under the GCL or as may be prescribed by the Board or the President, under whose supervision the Secretary shall be.
 
Section 7.7 The Treasurer.  The Treasurer shall have charge and custody of, and be responsible for, all funds, securities, receipts and disbursements of the Company, and shall deposit or cause to be deposited all moneys and other valuable effects in the name and to the credit of the Company in such banks, trust companies or other depositories as shall, from time to time, be designated by the Board, or by the Treasurer if so authorized by the Board.  The Treasurer:  (i) may endorse for collection on behalf of the Company checks, notes and other obligations, (ii) may sign receipts and vouchers for payments made to the Company, (iii)  may, singly or jointly with another person as may be authorized by the Board, sign checks on the Company’s accounts and pay out and disburse the funds of the Company under the direction of the Board, taking proper vouchers for such disbursements, (iv) shall render or cause to be rendered to the Chief Executive Officer, the President and the Board, whenever requested, an account of all of the Treasurer’s transactions and of the financial condition of the Company.  The Treasurer shall perform such other duties as are incident to the office of treasurer of a corporation organized under the GCL, or as may be assigned from time to time by the Chief Executive Officer, the President or the Board.
 
 
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Section 7.8 Tax Officer.  One or more Tax Officers shall have the authority to communicate with the Internal Revenue Service and with state and local tax authorities, may sign tax returns, shall pay or cause to be paid taxes and shall have the authority to settle tax liabilities in the name or on behalf of the Company.
 
Section 7.9 Transfer of Duties.  The Board in its sole discretion may transfer the powers and duties, in whole or in part, of any Officer to any other Officer or person(s), notwithstanding anything to the contrary contained in this Agreement.
 
Section 7.10 Vacancies; Absences.  If the office of Chairman of the Board, Chief Executive Officer, President, Vice President, Secretary or Treasurer, or of any other Officer or agent of the Company, becomes vacant for any reason, the Board may, but is not required, to choose a successor to hold office for the remainder of the unexpired term.  The Board, whenever necessary, may in the absence of any Officer, designate any other Officer or properly qualified employee to perform the duties of the absent Officer for the time being, and such designated Officer or employee shall have, when so acting, all the powers herein given to such absent Officer.
 
Section 7.11 Removal.  At any meeting of the Board called for the purpose, any Officer or agent of the Company may be removed from office, with or without cause, by the affirmative vote of a majority of the entire Board.  The Board may authorize the Chief Executive Officer to remove any Officer or agent of the Company, with or without cause.
 
Section 7.12 Resignation.  Any Officer or agent of the Company may resign at any time by giving written notice to the Board, the Chairman of the Board, the Chief Executive Officer, the President or the Secretary.  Any such resignation shall take effect at the time specified therein, or, if the time is not specified therein, upon receipt thereof, and unless otherwise specified therein, acceptance of such resignation shall not be necessary to make it effective.
 
Section 7.13 Compensation of Officers.  The Officers shall receive such salary or compensation as may be determined by the Board, in its sole discretion.  No Officer shall be prevented from receiving such salary or compensation by reason of the fact that he is also a Director of the Company.
 
Section 7.14 Delegation of Powers.  Each Officer may delegate to any other Officer and to any official, employee or agent of the Company, such portions of his powers as he shall deem appropriate, subject to such limitations and expirations as he shall specify, and may revoke such delegation at any time.
 
 
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Section 7.15 Officers as Agents.  The Officers, to the extent of their powers set forth in this Agreement or otherwise vested in them by action of the Board or the other Officers, are agents of the Company for the purpose of the Company’s business, and the actions of the Officers taken in accordance with such powers shall bind the Company.
 
Section 7.16 Execution of Documents.  Unless the Board shall otherwise specifically direct, and except as otherwise specifically provided in this Agreement, all contracts, checks, drafts, bills of exchange and promissory notes and other negotiable instruments of the Company shall be executed in the name of the Company by the Chairman of the Board, the Chief Executive Officer, the President, a Vice President, the Secretary or the Treasurer, or any other Officer that may be designated by the Board.
 
ARTICLE VIII
 
COVENANTS
 
Section 8.1 Financial Covenants.  For so long as any Class A Preferred Membership Interests or Class B Preferred Membership Interests remain outstanding, the Company shall comply with the following financial covenants, measured as of the last day of each calendar quarter beginning with the quarter ending December 31, 2010 and, with respect to the financial covenant set forth in Section 8.1(a) only, as of the date hereof (collectively, the “Financial Covenants”):
 
(a) the Company’s Net Worth shall be equal to or greater than $1,000,000,000; and
 
(b) the Company’s Distribution Coverage Ratio shall be at least 1:1.
 
The Company shall not be deemed to have breached, violated or otherwise not complied with a Financial Covenant if such breach or non-compliance is cured or otherwise remedied within sixty (60) days of the determination date.
 
ARTICLE IX
 
DISTRIBUTIONS
 
Section 9.1 Distributions to Holders of Preferred Interests.
 
(i) The holders of Class A Preferred Membership Interests shall be entitled to receive, if, when, and as declared by the Directors, out of funds legally available for the payment of distributions and in preference to the Common Interests, cumulative cash distributions with respect to each Class A Preferred Membership Interest owned in an amount equal to 10% of the Class A Preferred Liquidation Price per annum.  Such distributions shall be payable quarterly on March 15, June 15, September 15, and December 15 of each year, or if any such date is not a Business Day on the next succeeding Business Day (each such distribution, and each distribution payable to  holders of Class 60;B Preferred Membership Interests pursuant to Section 9.1(iii), a “Distribution Payment”, each such date a “Distribution Payment Date” and each such quarter a “Distribution Period”), beginning on September 15, 2008, to holders of record of the Class A Preferred Membership Interests as of a date to be fixed by the Board not exceeding sixty (60) days and not less than ten (10) days preceding the applicable Distribution Payment Date.  Such distributions shall be made by the Company by mailing a check or sending a wire transfer, in the amount of such distribution, to such holder’s last registered address listed in the transfer records of the Company, in the case of a check, or to an a ccount specified by such holder at least ten (10) days prior to the applicable Distribution Payment Date, in the case of a wire transfer.
 
 
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(ii) The distributions with respect to Class A Preferred Membership Interests provided for in Section 9.1(i) shall be cumulative, whether or not earned or declared, so that, subject to Section 9.1(v), if at any time full cumulative distributions at the rate specified in Section 9.1(i) on all Class A Preferred Membership Interests then outstanding to the end of the Distribution Period next preceding such time shall not have been paid, the amount of the deficiency shall be paid before any dividend or other distribution shall be paid or declared and set apart for payment on any Interest or any sum shall be set aside for or applied by the Company to the purchase, redemption or other acquisition of any Interest.  No interest, or sum of money in lieu of interest, shall be payable in respect of any Distribution Payment on the Class A Preferred Membership Interests which may be in arrears.
 
(iii) The holders of Class B Preferred Membership Interests shall be entitled to receive, if, when, and as declared by the Directors, out of funds legally available for the payment of distributions and in preference to the Common Interests, cumulative cash distributions with respect to each Class B Preferred Membership Interest owned in an amount equal to 9% of the Class B Preferred Liquidation Price per annum.  Such distributions shall be payable quarterly on each Distribution Payment Date, beginning on September 15, 2010, to holders of record of the Class B Preferred Membership Interests as of a date to be fixed by the Board not exceeding sixty (60) days and not less than ten (10) days preced ing the applicable Distribution Payment Date.  Such distributions shall be made by the Company by mailing a check or sending a wire transfer, in the amount of such distribution, to such holder’s last registered address listed in the transfer records of the Company, in the case of a check, or to an account specified by such holder at least ten (10) days prior to the applicable Distribution Payment Date, in the case of a wire transfer.
 
(iv) The distributions with respect to Class B Preferred Membership Interests provided for in Section 9.1(iii) shall be cumulative, whether or not earned or declared, so that, subject to Section 9.1(v), if at any time full cumulative distributions at the rate specified in Section 9.1(iii) on all Class B Preferred Membership Interests then outstanding to the end of the Distribution Period next preceding such time shall not have been paid, the amount of the deficiency shall be paid before any dividend or other distribution s hall be paid or declared and set apart for payment on any Interest or any sum shall be set aside for or applied by the Company to the purchase, redemption or other acquisition of any Interest.   No interest, or sum of money in lieu of interest, shall be payable in respect of any Distribution Payment on the Class B Preferred Membership Interests which may be in arrears.
 
 
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(v) The respective rights of holders of Class A Preferred Membership Interests and Class B Preferred Membership Interests to receive such distributions as set forth in this Section 9.1 shall rank pari passu with each other, so that if distributions on the Class A Preferred Membership Interests and the Class B Preferred Membership Interests are not paid in full, the holders of the Class A Preferred Membership Interests and the Class B Preferred Membership Interests shall share ratably in the payment of such distributions including accumulations, if any, in proportion to the sums which would be payable on the Class A Preferred Membership Interests and the Class B Preferred Membership Interests if all distributions thereon were declared and paid in full.  If the distributions on any Preferred Interests of any class and series ranking equally in the payment of distributions with the Class A Preferred Membership Interests and Class B Preferred Membership Interests are not paid in full, the Preferred Interests of such classes and series, including the Class A Preferred Membership Interests and Class B Preferred Membership Interests, shall share ratably in the payment of such distributions including accumulations, if any, in proportion to the sums which would be payable on such Preferred Interests if all distributions were declared and paid in full.
 
Section 9.2 Distributions to Holders of Common Interests.  Subject to Section 9.1, the Class A Common Membership Interests and Class B Common Membership Interests  shall rank pari passu with each other with respect to, and share ratably in, any and all distributions made on the Common Interests; provided, however, that so long as any Class A Preferred Membership Interests or Class B Preferred Membership Interests are outstanding, the Company shall n ot declare or pay any distributions on the Common Interests, except as follows:
 
(A) Distributions may be paid upon the Common Interests only after all the distributions provided for in Section 9.1, with respect to the then-current Distribution Period and all preceding Distribution Periods, have been paid in full, or have been declared in full and funds set apart for the payment of such distributions.
 
(B) After the payment of the distributions provided for in Section 9.1, as to which, for the avoidance of doubt, the Class A Preferred Membership Interests and Class B Preferred Membership Interests are expressly entitled in preference to the Common Interests and to any other Preferred Interests, the Common Interests alone (subject to the rights of any other class or series of Preferred Interests) shall receive all further distributions, if any.
 
Section 9.3 Limitations on Distribution.  Notwithstanding any provision to the contrary contained in this Agreement, the Company, and the Board on behalf of the Company, shall not make a distribution to any Interest Holder on account of its interest in the Company if such distribution would violate Section 18-607 or Section 18-804 of the Act or other applicable Law.
 
ARTICLE X
 
COMMON INTERESTS, PREFERRED INTERESTS, AND ADDITIONAL INTERESTS
 
Section 10.1 Classes of Interests.  Initially, the Interests shall consist of Common Interests and Preferred Interests.  The Common Interests currently consist of the Class A Common Membership Interests and Class B Common Membership Interests and the Preferred Interests currently consist of the Class A Preferred Membership Interests and Class B Preferred Membership Interests.
 
 
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Section 10.2 Additional Limited Liability Company Interests.
 
(i) Subject to the consent rights of the Class A Preferred Members and Class B Preferred Members set forth in Section 5.6(iii) and (iv) hereof, the Company is authorized, in the Board’s sole discretion, in order to raise additional capital, acquire assets, redeem or retire Company debt, or for any other Company purpose, to cause the Company to issue:
 
(A) an unlimited number of additional Common Interests, Preferred Interests, or any other type of limited liability company interest in the Company, which may be of a new class or classes or series, from time to time to Members or to other Persons and to admit them to the Company as Additional Members, all without the approval of the Members or any other Persons who may acquire an interest in any of the limited liability company interests in the Company or
 
(B) an unlimited number of any other type of security of the Company, including, without limitation, unsecured and secured debt obligations of the Company, debt obligations of the Company convertible into any class or series of Common Interests or other limited liability company interests that may be issued by the Company, options, rights or warrants to purchase any such class or series of Common Interests or other limited liability company interests in the Company, or any combination of any of the foregoing, from time to time to Members or other Persons on terms and conditions to be established in the sole discretion of the Board, all without the approval of the Members or any other Persons who may acquire an interest in any of th e limited liability company interests in the Company;
 
provided, however, that the Company shall not issue any such limited liability company interest in the Company or any such other type of security of the Company if, immediately thereafter, the Company would reasonably be expected to be in breach, default or violation of, or non-compliance with, any of the Financial Covenants (without taking into account, for the avoidance of doubt, the sixty (60) day cure period referenced in Section 8.1).
 
(ii) With respect to any limited liability company interests in the Company or other securities issued or issuable by the Company pursuant to Section 10.2(i), subject to the limitations referred to in Section 10.2(i) and except as prohibited by the Act:
 
(A) there shall be no limit on the number of such limited liability company interests in the Company or other securities that may be so issued, and the Board shall have sole discretion in determining the consideration and terms and conditions with respect to any such limited liability company interests in the Company or other securities;
 
(B) the Board shall do all things necessary to comply with the Act and is authorized and directed to do all things it deems to be necessary or advisable in connection with any such issuance, including without limitation compliance with any statute, rule, regulation or guideline of any federal, state or other governmental agency;
 
 
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(C) the Company may assume liabilities and hypothecate its property in connection with any such issuance;
 
(D) such limited liability company interests shall be issuable from time to time in one or more classes or series, at such price, and with such designations, preferences and relative, participating, optional or other special rights, powers and duties, including rights, powers, and duties senior to existing Interests or classes or series thereof, all as shall be fixed by the Board in the exercise of its sole discretion, including, without limitation: (i) the right of such additional limited liability company interests in the Company or class or series thereof to share in Company distributions; (ii) the rights of such additional limited liability company interests in the Company or class or series thereof upon dissolution a nd liquidation of the Company; (iii) whether such additional limited liability company interests in the Company or class or series thereof are redeemable by the Company and, if so, the price at which, and the terms and conditions on which, such additional limited liability company interests in the Company or class or series thereof may be redeemed by the Company; (iv) whether such additional limited liability company interests in the Company or class or series thereof are issued with the privilege of conversion and, if so, the rate at and the terms and conditions upon which such additional limited liability company interests in the Company or class or series thereof may be converted into any other limited liability company interest in the Company or class or series thereof; (v) the terms and conditions of the issuance of such additional limited liability company interests in the Company or class or series thereof; and (vi) the rights of such additional limited liability company interests in the Company or class or series thereof to vote on matters relating to the Company and this Agreement; and
 
(E) upon such issuance, the Board, in its sole discretion and without the approval of any Member or other Person who may acquire an interest in any limited liability company interests in the Company, may amend any provision of this Agreement (each Person accepting limited liability company interests in the Company being deemed to approve such amendment), and execute, swear to, acknowledge, deliver, file and record whatever documents may be required in connection therewith, as shall be necessary or desirable to reflect the authorization and issuance of such additional limited liability company interests in the Company or class or series thereof or other securities and the relative rights and preferences of such additional limited li ability company interests in the Company or class or series thereof or other securities, and any such action shall not be subject to Section 17.9 of this Agreement.
 
Section 10.3 Certificates.
 
 
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(i) An Interest Holder's Interests in the Company (including the Common Interests and the Preferred Interests) shall be represented by one or more certificates issued to such Interest Holder by the Company (any such certificate is referred to herein as a “Certificate”).  Each such Certificate shall be denominated in terms of the number of Interests evidenced by such Certificate and shall be signed by at least one Officer on behalf of the Company.  Each Interest shall constitute a “security” within the meaning of (i) Article 8 of the Uniform Commercial Code (including Section 8-102(a)(15) thereof) as in effect from time to time in the State of Delaware and (ii) the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995.  On the date hereof, the Company shall issue to each Member one or more Certificates in the name of such Member to represent the Common Interests and/or Preferred Interests owned by such Member as of the date hereof, to the extent such Member has not hereto been issued a Certificate representing such Common Interests and/or Preferred Interests owned by such Member as of the date hereof.
 
(ii) Upon the issuance of additional Interests to any Person in accordance with the provisions of the Agreement, the Company shall issue to such Person one or more Certificates in the name of such Person.  Each such Certificate shall be denominated in terms of the type and number of Interests evidenced by such Certificate and shall be signed by at least one Officer on behalf of the Company.
 
(iii) The Company shall issue a new Certificate in place of any Certificate previously issued if the holder of the Interests represented by such Certificate, as reflected on the books and records of the Company:
 
(A) makes proof by affidavit, in form and substance satisfactory to the Board, in its sole discretion, that such previously issued Certificate has been lost, stolen or destroyed;
 
(B) requests the issuance of a new Certificate before the Company has notice that such previously issued Certificate has been acquired by a protected purchaser;
 
(C) if requested by the Board in its sole discretion, delivers to the Company a bond, in form and substance satisfactory to the Board in its sole discretion, with such surety or sureties as the Board in its sole discretion may direct, to indemnify the Company against any claim that may be made on account of the alleged loss, destruction or theft of the previously issued Certificate; and
 
(D) satisfies any other reasonable requirements imposed by the Board.
 
(iv) Upon an Interest Holder's transfer of any or all of its Interests represented by a Certificate in accordance with the provisions of this Agreement, such Interest Holder shall deliver such Certificate to the Company for cancellation (endorsed thereon or endorsed on a separate document), and any Officer shall thereupon cause to be issued a new Certificate to such Interest Holder's transferee for the type and number of Interests being transferred and, if applicable, cause to be issued to such Interest Holder a new Certificate for that type and number of Interests that were represented by the canceled Certificate and that are not being transferred; provided, however, that the Company shall have no duty to register the transfer unless the requirements of Section 8-401 of the Uniform Commercial Code as in effect in the State of Delaware are satisfied.
 
 
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Section 10.4 Legends.
 
(i) Each Certificate issued by the Company shall include the following legend:
 
"THE RIGHTS, POWERS, PREFERENCES, RESTRICTIONS (INCLUDING TRANSFER RESTRICTIONS) AND LIMITATIONS OF THE LIMITED LIABILITY COMPANY INTERESTS REPRESENTED BY THIS CERTIFICATE ARE SET FORTH IN, AND THIS CERTIFICATE AND THE LIMITED LIABILITY COMPANY INTERESTS REPRESENTED HEREBY ARE  ISSUED AND SHALL IN ALL RESPECTS BE SUBJECT TO THE TERMS AND PROVISIONS OF, THE SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF ENTERGY HOLDINGS COMPANY LLC, DATED AS OF [  ], 2010, AS THE SAME MAY BE FURTHER AMENDED OR RESTATED FROM TIME TO TIME (THE “AGREEMENT”).  THE TRANSFER OF THIS CERTIFICATE AND THE LIMITED LIABILITY COMPANY INTERESTS REPRESENTED HEREBY ARE RESTRICTED AS DESCRIBED IN THE AGREEMENT.

EACH LIMITED LIABILITY COMPANY INTEREST REPRESENTED HEREBY SHALL CONSTITUTE A “SECURITY” WITHIN THE MEANING OF (I) ARTICLE 8 OF THE UNIFORM COMMERCIAL CODE (INCLUDING SECTION 8-102(a)(15) THEREOF) AS IN EFFECT FROM TIME TO TIME IN THE STATE OF DELAWARE AND (II) THE UNIFORM COMMERCIAL CODE OF ANY OTHER APPLICABLE JURISDICTION THAT NOW OR HEREAFTER SUBSTANTIALLY INCLUDES THE 1994 REVISIONS TO ARTICLE 8 THEREOF AS ADOPTED BY THE AMERICAN LAW INSTITUTE AND THE NATIONAL CONFERENCE OF COMMISSIONERS ON UNIFORM STATE LAWS AND APPROVED BY THE AMERICAN BAR ASSOCIATION ON FEBRUARY 14, 1995.”

(ii) In addition, unless counsel to the Company has advised the Company that such legend is no longer needed, each Certificate shall bear a legend in substantially the following form:
 
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“THE LIMITED LIABILITY COMPANY INTERESTS REPRESENTED HEREBY HAVE NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS, AND SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THE SAME ARE REGISTERED AND QUALIFIED IN ACCORDANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR, IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY, SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED.”

ARTICLE XI
 
BOOKS AND RECORDS
 
Section 11.1 Books, Records and Financial Statements.
 
(i) At all times during the continuance of the Company, the Company shall maintain, at its principal place of business, separate books of account for the Company that shall show a true and accurate record of all costs and expenses incurred, all charges made, all credits made and received and all income derived in connection with the operation of the Company business in accordance with generally accepted accounting principles consistently applied, and, to the extent inconsistent therewith, in accordance with this Agreement.  Such books of account, together with a copy of this Agreement and of the Certificate of Formation, shall at all times be maintained at the principal place of business of the Company and shall be open to inspection and examination at reason­able times by each Member and its duly authorized representative for any purpose reasonably related to such Member’s interest in the Company.
 
(ii) The Company, and the Board on behalf of the Company, shall prepare and maintain, or cause to be prepared and maintained, the books of account of the Company.  The Company, and the Board on behalf of the Company, shall prepare and file, or cause to be prepared and filed, all applicable federal and state tax returns.
 
Section 11.2 Accounting Method.  For financial and tax reporting purposes, the books and records of the Company shall be kept on the accrual method of accounting applied in a consistent manner in accordance with generally accepted accounting principles and shall reflect all Company transactions and be appropriate and adequate for the Company’s business.
 
Section 11.3 Annual Audit.  At any time at the Board’s sole discretion, the financial statements of the Company may be audited by an independent certified public accountant, selected by the Board in its sole discretion, with such audit to be accompanied by a report of such accountant containing its opinion.  The cost of such audits will be an expense of the Company.  A copy of any such audited financial statements and accountant’s report will be made available for inspection by the Members.
 
 
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ARTICLE XII
 
TAX MATTERS
 
Section 12.1 Taxation as Corporation.  Unless otherwise determined by the Class A Common Member, the Company shall be treated as a corporation for U.S. federal income tax purposes.
 
ARTICLE XIII
 
LIABILITY, EXCULPATION AND INDEMNIFICATION
 
Section 13.1 Liability.  Except as otherwise provided by the Act, the 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, and no Member or Director shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a Member or Director.
 
Section 13.2 Exculpation.
 
(i) No Covered Person shall be liable to the Company or any other Covered Person for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such Covered Person in good faith on behalf of the Company and in a manner reasonably believed to be within the scope of authority conferred on such Covered Person by this Agreement, except that a Covered Person shall be liable for any such loss, damage or claim incurred by reason of such Covered Person’s bad faith.
 
(ii) A Covered Person shall be fully protected in relying in good faith upon the records of the Company and upon such information, opinions, reports or statements presented to the Company by any Person as to matters the Covered Person reasonably believes are within such other Person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Company, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, income or any other facts pertinent to the existence and amount of assets from which distributions to Members might properly be paid.
 
Section 13.3 Indemnification.  To the fullest extent permitted by applicable law, a Covered Person shall be entitled to indemnification from the Company for any loss, damage or claim incurred by such Covered Person by reason of any act or omission performed or omitted by such Covered Person in good faith on behalf of the Company and in a manner reasonably believed to be within the scope of authority conferred on such Covered Person by this Agreement, except that no Covered Person shall be entitled to be indemnified in respect of any loss, damage or claim incurred by such Covered Person by reason of bad faith with respect to such acts or omissions; provided, however, that any indemnity under this Section 13.3 shall be provided out of and to the extent of Company assets only, and no Covered Person shall have any personal liability with respect to such indemnity.
 
 
 
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Section 13.4 Expenses.  To the fullest extent permitted by applicable law, expenses (including legal fees) incurred by a Covered Person in defending any claim, demand, action, suit or proceeding shall, from time to time, be advanced by the Company prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by the Company of an undertaking by or on behalf of the Covered Person to repay such amount if it shall be determined that the Covered Person is not entitled to be indemnified as authorized in Section 13.3 hereof.
 
Section 13.5 Insurance.  The Company may purchase and maintain insurance, to the extent and in such amounts as the Board shall, in its sole discretion, deem reasonable, on behalf of Covered Persons and such other Persons as the Board shall determine in its sole discretion, against any liability that may be asserted against or expenses that may be incurred by any such Person in connection with the activities of the Company or such indemnities, regardless of whether the Company would have the power to indemnify such Person against such liability under the provisions of this Agreement.  The Company may enter into indemnity contracts with Covered Persons and such other Persons as the Board shall determine in its sole discretion and adopt written procedures pursuant to which arrangements are made for the advancement of expenses and the funding of obligations under Section 13.4 hereof and containing such other procedures regarding indemnification as are appropriate.
 
Section 13.6 Duties of Directors and Officers.  Except as otherwise provided in this Agreement, including this Article XIII, in exercising their rights and performing their duties under this Agreement, each Director and Officer shall have a fiduciary duty similar to that of a director or officer, respectively, of a business corporation organized under the GCL.  Each Member, by execution of this Agreement, agrees to, consents to, and acknowledges the delegation of powers and authority to the Board, and to actions and decisions of the Board within the scope of the Board’s autho rity as provided herein.
 
Section 13.7 Outside Businesses.  Any Covered Person may engage in or possess an interest in other profit-seeking or business ventures of any nature or description, independently or with others, similar or dissimilar to the business of the Company, whether now existing or hereafter acquired or initiated, and whether or not such ventures are competitive with the Company, and the doctrine of corporate opportunity, or any analogous doctrine, shall not apply to any Covered Person.  No Covered Person who acquires knowledge of a potential transaction, agreement, arrangement or other matter that may be an opportunity for the Company shall have any duty to c ommunicate or offer such opportunity to the Company, and such Covered Person shall not be liable to the Company or to any Member for breach of any fiduciary or other duty by reason of the fact that such Covered Person pursues or acquires for, or directs such opportunity to, another Person or does not communicate such opportunity or information to the Company.  Neither the Company nor any Member or other Interest Holder shall have any rights or obligations by virtue of this Agreement or the relationships created hereby in or to such independent ventures or the income or profits or losses derived therefrom, and the pursuit of any such venture, even if competitive with the activities of the Company, shall not be deemed wrongful, improper, or the breach of any duty to the Company or any Member or other Interest Holder existing at law, in equity or otherwise.
 
Section 13.8 Affiliated Transactions.  The Members hereby acknowledge that the purposes of the Company include the Company’s engaging in dealings, transactions, agreements and contracts with Covered Persons and Affiliates of the Company, and the Members hereby agree that the Company may deal, transact and contract with Affiliates of the
 
 
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Company and Covered Persons on such terms as such Affiliate or Covered Person and the Company shall agree, and the Members agree that any such dealings, transactions, agreements or contracts shall not be deemed a breach of such Covered Person’s or any Member’s or Director’s duty of loyalty to the Company or to the Members or other Interest Holders, or any other duty to the Company or to the Members or the other Interest Holders existing at law, in equity or otherwise, or be void or voidable, by reason of the fact that such Covered Person or any Member or Director is in any way interested in such transaction, participated in any Member or Board approval of such transaction, or realized profits or income, directly or indirectly, from any such transaction, so long as the terms of any such transaction are entered into in good faith.
 
Section 13.9 Duty of Disclosure.  Notwithstanding anything to the contrary contained in this Agreement or any duty existing at law, in equity or otherwise, the Company and any Covered Person shall fully satisfy its duty of disclosure to any Member, other Interest Holder or any other Person if the Company and any such Covered Person do not act in bad faith.
 
Section 13.10 Conflicts of Interest.  Whenever a conflict of interest exists or arises between a Covered Person and another Covered Person, or whenever this Agreement or any other agree­ment contemplat­ed herein pro­vides that a Covered Person shall act in a manner that is, or provides terms that are, reasonable to the Company or any Member or other Interest Holder, the Covered Person shall resolve such conflict of interest, take such action or provide such terms, considering in each case the relative interest of each party (includ­ing its own interest) to such conflict, agreement, transaction or situation and the benefits and burdens relat ing to such interests, any customary or accepted industry practices, and any applicable generally accepted accounting practices or principles. In the absence of bad faith by such Covered Person, the resolution, action or term so made, taken or provided by the Covered Person shall not consti­tute a breach of this Agreement or any other agreement contemplated herein or of any duty or obligation of the Covered Person at law or in equity or otherwise.
 
Section 13.11 Discretion.  Notwithstanding any other provision of this Agreement or otherwise applicable law, whenever in this Agreement a Member or the Board is permitted or required to make a decision (i) in its “sole discretion” or “discretion” or under a grant of similar authority or latitude, such Member and/or each Director shall be entitled to consider such interests and factors as it desires, including its own interests (or, in the case of any of the Directors, the interests of the Members that appointed such Director), and shall, to the fullest extent permitted by applicable law, have no duty or obligation to give any cons ideration to any interest of or factors affecting the Company or any other Person, or (ii) in its “good faith” or under another expressed standard, such Member or the Board shall act under such express standard, and in no circumstance addressed in this Section 13.11 shall a Member, the Board or any Director be subject to any other or different standards.
 
Section 13.12 Duties.  To the extent that, at law or in equity, a Covered Person has duties (including fiduciary duties) and liabilities relating thereto to the Company or to any Member or other Interest Holder, a Covered Person acting under this Agreement shall not be liable to the Company or to any Member or other Interest Holder for its good faith reliance on the provisions of this Agreement.  The provisions of this Agreement, to the extent that they restrict the duties and liabilities of a Covered Person otherwise existing at law or in equity, are agreed by the parties hereto to replace such other duties and liabilities of such Covered Person.
 
 
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ARTICLE XIV
 
ADDITIONAL MEMBERS
 
Section 14.1 Admission.  By approval of the Board, in its sole discretion, and without the vote of any Members (except as may be required pursuant to Section 5.6(iii) or (iv)), or any other Person, the Company is authorized to admit any Person as an additional member of the Company (each, an “Additional Member” and collectively, the “Additional Members”).  Each such Perso n shall be admitted as an Additional Member at the time such Person (i) executes this Agreement or a counterpart of this Agreement and (ii) is named as a Member on Schedule A hereto.  The legal fees and expenses associated with such admission shall be borne by the Company.
 
ARTICLE XV
 
ASSIGNABILITY AND SUBSTITUTE MEMBERS
 
Section 15.1 Assignability of Interests.  Except as otherwise specifically provided in this Article XV, no Member or other Interest Holder may assign the whole or any part of its Interests (including, without limitation, any direct or indirect assignment, whether by operation of law or otherwise, pursuant to a merger, consolidation or conversion involving an Interest Holder) without the prior written consent of (i) so long as no Event of Default has occurred and is continuing, the Members (which may include such assigning Member) owning a majority of the issued and outstanding Class A C ommon Membership Interests or (ii) upon the occurrence of an Event of Default, and during the continuation thereof, the Members (which may include such assigning Member) owning a majority of the issued and outstanding Class A Preferred Membership Interests and Class B Preferred Membership Interests, voting together as a single class, in either case which consent may be given or withheld in the sole discretion of each such Member.  If the prior written consent of such Members is obtained for any such assignment, such assignment shall not entitle the assignee to become a Substitute Member or to exercise or receive any of the rights, powers or benefits of a Member other than the right to receive distributions to which the assigning Member would be entitled, unless the assigning Member designates, in a written instrument delivered to the other Members, its assignee to become a Substitute Member and the admission of such assignee as a Member is consented to in writing by (i) so long as no Event of Default has occurred and is continuing the Members (which may include such assigning Member) owning a majority of the issued and outstanding Class A Common Membership Interests or (ii) upon the occurrence of an Event of Default, and during the continuation thereof, the Members (which may include such assigning Member) owning a majority of the issued and outstanding Class A Preferred Membership Interests and Class B Preferred Membership Interests, voting together as a single class, in either case which consent may be given or withheld in the sole discretion of each such Member; and provided, further, that such assignee shall not become a Substitute Member without having first executed an instrument reasonably satisfactory to the Board accepting and agreeing to the terms and conditions of this Agreement, which instrument may be a counterpart of this Agr eement, and without having paid to the Company a fee sufficient to cover all reasonable expenses of the Company in connection with such assignee’s admission as a Substitute Member.  If a Member assigns all of its interest in the Company and the assignee of such interest is entitled to become a Substitute Member pursuant to this Article XV, such assignee shall be admitted to the Company effective immediately prior to the effective date of the assignment, and, immediately following such admission, the assigning Member shall cease to be a member of the Company, and the Company shall continue without dissolution.  
 
 
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Section 15.2 Recognition of Assignment by Company.  To the fullest extent permitted by law, no assignment, or any part thereof, that is in violation of this Article XV shall be valid or effective, and neither the Company nor the Members shall recognize the same for the purpose of making distributions pursuant to Article IX hereof with respect to such Interest or part thereof.  To the fullest extent permitted by law, neither the Company, the Members, the Directors nor the Officers shall incur any liability as a re sult of refusing to make any such distributions to the assignee of any such invalid assignment.
 
Section 15.3 Effective Date of Assignment.  The Company shall maintain books for the purpose of registering the transfer of Interests.  Any valid assignment of an Interest Holder’s Interests, or part thereof, pursuant to the provisions of Section 15.1 hereof shall be effective when the transfer of the Interests is registered upon books maintained for that purpose by or on behalf of the Company.  The Company shall, from the effective date of such assignment, thereafter pay all further distribu­tions on account of the Interests (or part thereof) so assigned, to t he assignee of such interest(s), or part thereof.
 
Section 15.4 Pledge.  No Interest Holder may pledge or otherwise encumber the whole or any part of its Interests without the prior written consent of (i) so long as no Event of Default has occurred and is continuing, the Members (which may include such assigning Member) owning a majority of the issued and outstanding Class A Common Membership Interests or (ii) upon the occurrence of an Event of Default, and during the continuation thereof, the Members (which may include such assigning Member) owning a majority of the issued and outstanding Class A Preferred Membership Interests and Class B Preferred Membership Interests, voting together as a single class, in either case which consent may be given or withheld in the sole discretion of each such Member.
 
ARTICLE XVI
 
DISSOLUTION, LIQUIDATION AND TERMINATION
 
Section 16.1 No Dissolution.  The Company shall not be dissolved by the admission of Additional Members or Substitute Members in accordance with the terms of this Agreement.
 
Section 16.2 Events Causing Dissolution.  The Company shall be dissolved and its affairs shall be wound up upon the occurrence of any of the following events (the day on which any such event occurs is referred to as the “Dissolution Date”):
 
(i) the written consent of (i) so long as no Event of Default has occurred and is continuing, the Members owning a majority of the issued and outstanding Class A Common Membership Interests and the Members owning a majority of the issued and outstanding Class A Preferred Membership Interests and Class B Preferred Membership Interests, voting together as a single class, or (ii) upon the occurrence of an Event of Default, and during the continuation thereof, the Members owning a majority of the issued and outstanding Class A Preferred Membership Interests and Class B Preferred Membership Interests, voting together as a single class;
 
 
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(ii) at any time that there are no members of the Company unless the Company is continued in accordance with the Act; or
 
(iii) the entry of a decree of judicial dissolution of the Company under Section 18-802 of the Act;
 
provided, that neither the merger or consolidation of the Company with another entity nor the sale of all or substantially all of the assets of the Company shall be deemed to be a liquidation, dissolution or winding up of the Company within the meaning of this Section 16.2 unless one or more of the foregoing events shall have also occurred.
 
Section 16.3 Winding Up.  Upon dissolution of the Company, the Board shall carry out the winding up of the Company and shall immediately commence to wind up the Company’s affairs; provided, however, that a reasonable time shall be allowed for the orderly liquidation of assets of the Company and the satisfaction of liabilities to creditors so as to enable the Members to minimize the normal losses attendant upon a liquidation.  Upon dissolution of the Company, the assets of the Company, including any proceeds of liquid ation thereof, shall be distributed in the following order and priority:
 
(i) To creditors of the Company, including Members who are creditors, to the extent otherwise permitted by law, in satisfaction of the liabilities of the Company (whether by payment or the making of reasonable provision for payment thereof).
 
(ii) To the Members holding the Class A Preferred Membership Interests and Class B Preferred Membership Interests, in an amount equal to the sum of (A) the Applicable Liquidation Price multiplied by the number of Class A Preferred Membership Interests and Class B Preferred Membership Interests held by such Member, and (B) any Distribution Payments accumulated on such Class A Preferred Membership Interests and Class B Preferred Membership Interests remaining unpaid as of the Dissolution Date, and to the holders of any other Preferred Interests, in an amount equal to the liquidation price thereof multiplied by the number of such Preferred Interests held by such Member, plus any distributions thereon accumulated and unpaid as of the Dissolution Date.  In the event of any voluntary liquidation, dissolution, or winding up of the Company, the Class A Preferred Membership Interests and Class B Preferred Membership Interests, together with and on par with all other Preferred Interests (except as may be specifically provided with respect to any other Preferred Interests), shall have a preference over the Common Interests until the amounts set forth in the first sentence of this Section 16.3(ii) shall have been paid to the Members holding the Class A Preferred Membership Interests and Class B Preferred Membership Interests and any other Preferred Interests.  Neither the merger or consolidation of the Company with another entity nor the sale of all or substantially all of the assets of the Company shall be deemed to be a liquidation, dissolution or winding up of the Company within the meaning of this Section 16.3.
 
 
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(iii) To the Members holding Common Interests according to their Percentage Interests.
 
Section 16.4 Termination.  The Company shall terminate when all of the assets of the Company, after payment of or due provision for all debts, liabilities and obligations of the Company, shall have been distributed to the Members in the manner provided for in this Article XVI and the Certificate of Formation shall have been canceled in the manner required by the Act.
 
Section 16.5 Claims of the Interest Holders.  The Interest Holders and former Interest Holders shall look solely to the Company’s assets for the return of their Capital Contributions, and if the assets of the Company remaining after payment of or due provision for all debts, liabilities and obligations of the Company are insufficient to return such Capital Contributions, the Interest Holders and former Interest Holders shall have no recourse against the Company, any Member, any Director or any Officer.
 
ARTICLE XVII
 
MISCELLANEOUS
 
Section 17.1 Notices.  Unless otherwise specifically provided in this Agreement, all notices provided for in this Agreement shall be in writing, duly signed by the party giving such notice, and shall be delivered, mailed via an overnight courier service, telecopied or mailed by registered or certified mail, as follows:
 
(i) If given to the Company at the address specified in Section 2.4 of this Agreement;
 
(ii) if given to a Director, at such Director’s mailing address as provided to the Company; or
 
(iii) if given to any Member at the address set forth opposite its name on Schedule A attached hereto, or at such other address as such Member may hereafter designate by written notice to the Company.
 
All such notices shall be deemed to have been given when received.
 
Section 17.2 Cumulative Remedies.  The rights and remedies provided by this Agreement are cumulative and the use of any one right or remedy by any party shall not preclude or waive its right to use any or all other remedies.  Said rights and remedies are given in addition to any other rights the parties may have by Law or otherwise.
 
Section 17.3 Binding Effect.  This Agreement shall be binding upon and inure to the benefit of all of the parties hereto and, to the extent permitted by this Agreement, their successors, legal repre­sentatives and assigns.
 
Section 17.4 Interpretation.  Throughout this Agreement, nouns, pronouns and verbs shall be construed as masculine, feminine, neuter, singular or plural, whichever shall be applicable.  Unless otherwise stated, all references herein to “Articles,” “Sections” and “Paragraphs” shall refer to corresponding provisions of this Agreement.
 
 
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Section 17.5 Severability.  The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision were omitted.
 
Section 17.6 Counterparts.  This Agreement may be executed in any number of counterparts with the same effect as if all parties hereto had signed the same document.  All counterparts shall be construed together and shall constitute one instrument.
 
Section 17.7 Integration.  This Agreement constitutes the entire agreement among the parties hereto pertaining to the subject matter hereof and supersedes all prior agreements and understandings pertaining thereto.
 
Section 17.8 Governing Law.  This Agreement and the rights of the parties hereunder shall be interpreted in accordance with the laws of the State of Delaware, and all rights and remedies shall be governed by such laws without regard to principles of conflict of laws.
 
Section 17.9 Amendments.  Except as otherwise specifically provided herein, any amendment to this Agreement shall be adopted and be effective as an amendment hereto only upon the affirmative vote of (i) so long as no Event of Default has occurred and is continuing, the Members owning a majority of the issued and outstanding Class A Common Membership Interests or (ii) upon the occurrence of an Event of Default, and during the continuation thereof, the Members owning a majority of the issued and outstanding Class A Preferred Membership Interests and Class B Preferred Membership Interests, voting together as a single class, in either case which consent may be given or withheld in the sole discretion of each such Member; provided, in either case, that such amendment is in writing and executed by such Members entitled to vote thereon.
 
Section 17.10 No Implied Rights or Remedies.  Nothing expressed or implied shall be construed to confer upon any Person, except the Members, the other Interest Holders, the Directors, Officers and Covered Persons any rights or remedies under or by reason of this Agreement.
 
[Remainder of page intentionally left blank.  Signature page follows]
 
 
 
 
 
 
 
 
 
 
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the date first above stated.
 
CLASS A COMMON MEMBER:

ENTERGY INTERNATIONAL LTD LLC

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

CLASS B COMMON MEMBERS:

ENTERGY NUCLEAR GENERATION COMPANY
ENTERGY NUCLEAR NEW YORK INVESTMENT COMPANY I
ENTERGY NUCLEAR MIDWEST INVESTMENT COMPANY, LLC
ENTERGY NUCLEAR HOLDING COMPANY #3, LLC

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

ENTERGY NUCLEAR VERMONT INVESTMENT COMPANY, LLC
By: /s/ Joseph Aluise                                                                            &# 160;          
    Name:  Joseph Aluise
    Title: Vice President and Secretary


CLASS A PREFERRED MEMBERS:

ENTERGY LOUISIANA, LLC
ENTERGY GULF STATES LOUISIANA, L.L.C.

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

CLASS B PREFERRED MEMBERS:
ENTERGY LOUISIANA, LLC

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

ENTERGY GULF STATES LOUISIANA, L.L.C.

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

SCHEDULE A
 
MEMBERS
 
 

 
Name
Mailing
Address
Class and
Number of Interests
Percentage
Interest
Entergy International LTD LLC
 2001 Timberloch Place
The Woodlands, Texas 77380
1,000 Class A
Common Membership Interests
44.63%
       
Entergy Nuclear Generation Company
600 Rocky Hill Road
Plymouth, MA  02360
55 Class B Common Membership Interests
2.46%
       
Entergy Nuclear New York Investment Company I
1340 Echelon Parkway
Jackson, MS 39213
495 Class B Common Membership Interests
22.10%
       
Entergy Nuclear Midwest Investment Company, LLC
1340 Echelon Parkway
Jackson, MS 39213
23 Class B Common Membership Interests
1.03%
       
Entergy Nuclear Holding Company #3, LLC
2001 Timberloch Place
The Woodlands, Texas 77380
405 Class B Common Membership Interests
18.08%
       
Entergy Nuclear Vermont Investment Company, LLC
1340 Echelon Parkway
Jackson, MS 39213
262 Class B Common Membership Interests
11.70%
       
Entergy Louisiana, LLC
446 North Boulevard
Baton Rouge, Louisiana 70802
5,449,861.85 Class A
Preferred Membership Interests
 
 2,624,297.11 Class B Preferred Membership Interests
 
n/a
Entergy Gulf States Louisiana, L.L.C.
446 North Boulevard
Baton Rouge, Louisiana 70802
1,893,918.39 Class A
Preferred Membership Interests
 
1,502,643.04
Class B Preferred Membership Interests
n/a

SCHEDULE B
 
DIRECTORS
 



Steven C. McNeal
Eddie Peebles
Andrew Rosenlieb

SCHEDULE C
 
OFFICERS
 

 
Officer Title
Eddie Peebles President
Steven C. McNeal Vice President and Treasurer
Andrew Rosenlieb Vice President
Thomas G. Wagner Assistant Secretary
Paul Wichers Tax Officer
 


EX-12.A 4 a0411012a.htm SEC RATIO a0411012a.htm
         
Exhibit 12(a)
             
Entergy Arkansas, Inc.
Computation of Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Combined Fixed Charges and Preferred Dividends
             
             
           
30-Jun
             
 
2005
2006
2007
2008
2009
2010
             
  Total Interest Charges
$84,992
$85,809
$91,740
$87,732
$92,340
$92,917
  Interest applicable to rentals
13,911
11,145
10,919
20,687
14,440
15,038
 
           
Total fixed charges, as defined
98,903
96,954
102,659
108,419
106,780
107,955
 
           
Preferred dividends, as defined (a)
12,093
10,041
11,104
20,957
15,275
13,677
 
           
Combined fixed charges and preferred dividends, as defined
$110,996
$106,995
$113,763
$129,376
$122,055
$121,632
 
           
Earnings as defined:
           
             
  Net Income
$174,635
$173,154
$139,111
$47,152
$66,875
$105,037
  Add:
           
    Provision for income taxes:
           
       Total
96,949
56,824
85,638
96,623
81,756
95,112
    Fixed charges as above
98,903
96,954
102,659
108,419
106,780
107,955
 
           
Total earnings, as defined
$370,487
$326,932
$327,408
$252,194
$255,411
$308,104
             
Ratio of earnings to fixed charges, as defined
3.75
3.37
3.19
2.33
2.39
2.85
 
           
Ratio of earnings to combined fixed charges and
           
 preferred dividends, as defined
3.34
3.06
2.88
1.95
2.09
2.53
             
             
------------------------
           
(a) "Preferred dividends," as defined by SEC regulation S-K, are computed by dividing the preferred dividend
       
      requirement by one hundred percent (100%) minus the income tax rate.
           
EX-12.B 5 a0411012b.htm SEC RATIO a0411012b.htm
 
          Exhibit 12(b)
             
Entergy Gulf States Louisiana, L.L.C.
Computation of Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Combined Fixed Charges and Preferred Dividends
             
             
           
30-Jun
             
 
2005
2006
2007
2008
2009
2010
             
Fixed charges, as defined:
           
  Total Interest charges
$126,788
$149,780
$163,409
$131,197
$118,243
$114,185
  Interest applicable to rentals
8,832
8,928
8,773
9,197
3,767
4,896
 
           
Total fixed charges, as defined
135,620
158,708
172,182
140,394
122,010
119,081
 
           
Preferred dividends, as defined (a)
6,444
5,969
6,514
1,151
1,306
$1,349
 
           
Combined fixed charges and preferred dividends, as defined
$142,064
$164,677
$178,696
$141,545
$123,316
$120,430
 
           
Earnings as defined:
           
             
Income from continuing operations before extraordinary items and
           
  the cumulative effect of accounting changes
$206,497
$211,988
$192,779
$144,767
$153,047
$167,361
  Add:
           
    Income Taxes
110,270
107,067
123,701
57,197
89,185
105,397
    Fixed charges as above
135,620
158,708
172,182
140,394
122,010
119,081
 
           
Total earnings, as defined
$452,387
$477,763
$488,662
$342,358
$364,242
$391,839
             
Ratio of earnings to fixed charges, as defined
3.34
3.01
2.84
2.44
2.99
3.29
 
           
Ratio of earnings to combined fixed charges and
           
 preferred dividends, as defined
3.18
2.90
2.73
2.42
2.95
3.25
             
(a) "Preferred dividends," as defined by SEC regulation S-K, are computed by dividing the preferred dividend
       
      requirement by one hundred percent (100%) minus the income tax rate.
           
EX-12.C 6 a0411012c.htm SEC RATIO a0411012c.htm
           
Exhibit 12(c)
             
Entergy Louisiana, LLC
Computation of Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Combined Fixed Charges and Preferred Distributions
             
             
             
           
30-Jun
             
 
2005
2006
2007
2008
2009
2010
             
Fixed charges, as defined:
           
Total Interest
$85,418
$92,216
$85,729
$94,310
$103,671
$113,747
  Interest applicable to rentals
4,585
4,833
7,074
12,099
6,810
7,785
 
           
Total fixed charges, as defined
$90,003
$97,049
$92,803
$106,409
$110,481
121,532
 
           
Preferred distributions, as defined (a)
                       -
10,906
10,998
10,067
8,295
8,470
 
           
Combined fixed charges and preferred distributions, as defined
$90,003
$107,955
$103,801
$116,476
$118,776
$130,002
             
Earnings as defined:
           
             
  Net Income
$128,082
$137,618
$143,337
$157,543
$232,845
$254,409
  Add:
           
    Provision for income taxes:
           
Total Taxes
96,819
78,338
83,494
70,648
45,050
58,278
    Fixed charges as above
90,003
97,049
92,803
106,409
110,481
121,532
 
           
Total earnings, as defined
$314,904
$313,005
$319,634
$334,600
$388,376
$434,219
             
Ratio of earnings to fixed charges, as defined
3.50
3.23
3.44
3.14
3.52
3.57
 
           
Ratio of earnings to combined fixed charges and
           
 preferred distributions, as defined
3.50
2.90
3.08
2.87
3.27
3.34
             
             
             
(a) "Preferred distributions," as defined by SEC regulation S-K, are computed by dividing the preferred distribution
       
      requirement by one hundred percent (100%) minus the income tax rate.
           
EX-12.D 7 a0411012d.htm SEC RATIO a0411012d.htm
            Exhibit 12(d)
             
Entergy Mississippi, Inc.
Computation of Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Combined Fixed Charges and Preferred Dividends
             
             
           
30-Jun
             
 
2005
2006
2007
2008
2009
2010
             
Fixed charges, as defined:
           
  Total Interest
$43,707
$51,216
$47,020
$46,888
$51,282
$56,745
  Interest applicable to rentals
771
1,427
1,577
1,638
1,959
1,691
             
Total fixed charges, as defined
$44,478
$52,643
$48,597
$48,526
$53,241
58,436
 
           
Preferred dividends, as defined (a)
5,129
4,373
4,144
4,402
4,370
4,183
 
           
Combined fixed charges and preferred dividends, as defined
$49,607
$57,016
$52,741
$52,928
$57,611
$62,619
 
           
Earnings as defined:
           
             
  Net Income
$62,103
$52,285
$72,106
$59,710
$77,636
$92,933
  Add:
           
    Provision for income taxes:
           
    Total income taxes
33,952
28,567
35,850
33,240
42,323
45,501
    Fixed charges as above
44,478
52,643
48,597
48,526
53,241
58,436
 
           
Total earnings, as defined
$140,533
$133,495
$156,553
$141,476
$173,200
$196,870
             
Ratio of earnings to fixed charges, as defined
3.16
2.54
3.22
2.92
3.25
3.37
 
           
Ratio of earnings to combined fixed charges and
           
 preferred dividends, as defined
2.83
2.34
2.97
2.67
3.01
3.14
             
             
------------------------
           
(a) "Preferred dividends," as defined by SEC regulation S-K, are computed by dividing the preferred dividend
       
      requirement by one hundred percent (100%) minus the income tax rate.
           
EX-12.E 8 a0411012e.htm SEC RATIO a0411012e.htm
            Exhibit 12(e)
             
Entergy New Orleans, Inc.
Computation of Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Combined Fixed Charges and Preferred Dividends
             
             
             
           
30-Jun
             
 
2005
2006
2007
2008
2009
2010
             
Fixed charges, as defined:
           
  Total Interest
$13,555
$19,329
$21,497
$20,982
$16,965
$16,325
  Interest applicable to rentals
426
527
407
444
593
712
             
Total fixed charges, as defined
13,981
19,856
21,904
21,426
17,558
17,037
 
           
Preferred dividends, as defined (a)
1,172
2,501
1,745
1,602
1,454
1,342
 
           
Combined fixed charges and preferred dividends, as defined
$15,153
$22,357
$23,649
$23,028
$19,012
$18,379
 
           
Earnings as defined:
           
             
  Net Income
$1,250
$5,344
$24,582
$34,947
$31,025
33,659
  Add:
           
    Provision for income taxes:
           
     Total
1,790
5,051
13,506
23,052
15,713
13,475
    Fixed charges as above
13,981
19,856
21,904
21,426
17,558
17,037
 
           
Total earnings, as defined
$17,021
$30,251
$59,992
$79,425
$64,296
$64,171
             
Ratio of earnings to fixed charges, as defined
1.22
1.52
2.74
3.71
3.66
3.77
 
           
Ratio of earnings to combined fixed charges and
         
 preferred dividends, as defined
1.12
1.35
2.54
3.45
3.38
3.49
             
             
------------------------
           
(a) "Preferred dividends," as defined by SEC regulation S-K, are computed by dividing the preferred dividend
      requirement by one hundred percent (100%) minus the income tax rate.
     
EX-12.F 9 a0411012f.htm SEC RATIO a0411012f.htm
           
Exhibit 12(f)
             
Entergy Texas, Inc.
Computation of Ratios of Earnings to Fixed Charges
             
             
             
             
           
30-Jun
             
 
2005
2006
2007
2008
2009
2010
             
Fixed charges, as defined:
           
  Total Interest
$59,882
$70,479
$85,250
$80,197
$106,163
$105,359
  Interest applicable to rentals
2,299
2,356
3,572
2,760
3,069
3,349
 
           
Total fixed charges, as defined
$62,181
$72,835
$88,822
$82,957
$109,232
$108,708
 
           
Earnings as defined:
           
  Net Income
$48,916
$54,137
$58,921
$57,895
$66,474
$89,750
  Add:
           
    Provision for income taxes:
           
      Total
17,192
27,325
36,249
28,118
34,282
47,375
    Fixed charges as above
62,181
72,835
88,822
82,957
109,232
108,708
 
           
Total earnings, as defined
$128,289
$154,297
$183,992
$168,970
$209,988
$245,833
             
Ratio of earnings to fixed charges, as defined
2.06
2.12
2.07
2.04
1.92
2.26
EX-12.G 10 a0411012g.htm SEC RATIO a0411012g.htm
           
Exhibit 12(g)
             
System Energy Resources, Inc.
Computation of Ratios of Earnings to Fixed Charges
             
             
             
             
           
30-Jun
             
 
2005
2006
2007
2008
2009
2010
             
Fixed charges, as defined:
           
  Total Interest
$60,424
$59,931
$57,117
$56,667
$47,570
$47,807
  Interest applicable to rentals
3,039
3,914
4,463
9,057
5,885
5,073
 
           
Total fixed charges, as defined
$63,463
$63,845
$61,580
$65,724
$53,455
$52,880
 
           
Earnings as defined:
           
  Net Income
$111,644
$140,258
$136,081
$91,067
$48,908
$43,877
  Add:
           
    Provision for income taxes:
           
      Total
69,343
54,529
45,447
59,494
96,901
94,744
    Fixed charges as above
63,463
63,845
61,580
65,724
53,455
52,880
 
           
Total earnings, as defined
$244,450
$258,632
$243,108
$216,285
$199,264
$191,501
             
Ratio of earnings to fixed charges, as defined
3.85
4.05
3.95
3.29
3.73
3.62
EX-31.A 11 a0411031a.htm CERTIFICATIONS a0411031a.htm
Exhibit 31(a)
CERTIFICATIONS

 
I, J. Wayne Leonard, certify that:
   
1.
I have reviewed this quarterly report on Form 10-Q of Entergy Corporation;
   
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
   
 
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
   
 
b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
   
 
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
   
 
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
   
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
   
 
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
   
 
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


                    /s/ J. Wayne Leonard           
J. Wayne Leonard
Chairman and Chief Executive Officer
of Entergy Corporation
Date:           August 6, 2010
EX-31.B 12 a0411031b.htm CERTIFICATIONS a0411031b.htm
Exhibit 31(b)
CERTIFICATIONS

 
I, Leo P. Denault, certify that:
   
1.
I have reviewed this quarterly report on Form 10-Q of Entergy Corporation;
   
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
   
 
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
   
 
b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
   
 
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
   
 
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
   
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
   
 
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
   
 
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


                             /s/ Leo P. Denault                                   
Leo P. Denault
Executive Vice President and Chief Financial Officer of
Entergy Corporation
Date:           August 6, 2010
EX-31.C 13 a0411031c.htm CERTIFICATIONS a0411031c.htm
Exhibit 31(c)
CERTIFICATIONS

 
I, Hugh T. McDonald, certify that:
   
1.
I have reviewed this quarterly report on Form 10-Q of Entergy Arkansas, Inc.;
   
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
   
 
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
   
 
b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
   
 
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
   
 
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
   
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
   
 
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
   
 
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


                           /s/ Hugh T. McDonald               
Hugh T. McDonald
Chairman, President, and Chief Executive Officer of
Entergy Arkansas, Inc.
Date:           August 6, 2010
EX-31.D 14 a0411031d.htm CERTIFICATIONS a0411031d.htm
Exhibit 31(d)
CERTIFICATIONS

 
I, Theodore H. Bunting, Jr., certify that:
   
1.
I have reviewed this quarterly report on Form 10-Q of Entergy Arkansas, Inc.;
   
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
   
 
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
   
 
b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
   
 
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
   
 
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
   
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
   
 
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
   
 
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

                       /s/ Theodore H. Bunting, Jr.            
Theodore H. Bunting, Jr.
Senior Vice President and Chief Accounting Officer of
Entergy Arkansas, Inc.
(acting principal financial officer)
Date:           August 6, 2010
EX-31.E 15 a0411031e.htm CERTIFICATIONS a0411031e.htm
Exhibit 31(e)
CERTIFICATIONS

 
I, William M. Mohl, certify that:
   
1.
I have reviewed this quarterly report on Form 10-Q of Entergy Gulf States Louisiana, L.L.C.;
   
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
   
 
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
   
 
b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
   
 
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
   
 
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
   
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
   
 
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
   
 
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


                           /s/ William M. Mohl              
William M. Mohl
Chairman of the Board, President, and Chief Executive
Officer of Entergy Gulf States Louisiana, L.L.C.
Date:           August 6, 2010
EX-31.F 16 a0411031f.htm CERTIFICATIONS a0411031f.htm
Exhibit 31(f)
CERTIFICATIONS

 
I, Theodore H. Bunting, Jr., certify that:
   
1.
I have reviewed this quarterly report on Form 10-Q of Entergy Gulf States Louisiana, L.L.C.;
   
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
   
 
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
   
 
b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
   
 
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
   
 
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
   
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
   
 
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
   
 
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

                       /s/ Theodore H. Bunting, Jr.            
Theodore H. Bunting, Jr.
Senior Vice President and Chief Accounting Officer of
Entergy Gulf States Louisiana, L.L.C.
(acting principal financial officer)
Date:           August 6, 2010
EX-31.G 17 a0411031g.htm CERTIFICATIONS a0411031g.htm
Exhibit 31(g)
CERTIFICATIONS

 
I, William M. Mohl, certify that:
   
1.
I have reviewed this quarterly report on Form 10-Q of Entergy Louisiana, LLC;
   
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
   
 
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
   
 
b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
   
 
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
   
 
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
   
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
   
 
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
   
 
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


                           /s/ William M. Mohl               
William M. Mohl
Chairman of the Board, President, and Chief Executive
Officer of Entergy Louisiana, LLC
Date:           August 6, 2010
EX-31.H 18 a0411031h.htm CERTIFICATIONS a0411031h.htm
Exhibit 31(h)
CERTIFICATIONS

 
I, Theodore H. Bunting, Jr., certify that:
   
1.
I have reviewed this quarterly report on Form 10-Q of Entergy Louisiana, LLC;
   
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
   
 
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
   
 
b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
   
 
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
   
 
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
   
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
   
 
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
   
 
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

                     /s/ Theodore H. Bunting, Jr.                          
Theodore H. Bunting, Jr.
Senior Vice President and Chief Accounting Officer of
Entergy Louisiana, LLC
(acting principal financial officer)
Date:           August 6, 2010
EX-31.I 19 a0411031i.htm CERTIFICATIONS a0411031i.htm
Exhibit 31(i)
CERTIFICATIONS

 
I, Haley R. Fisackerly, certify that:
   
1.
I have reviewed this quarterly report on Form 10-Q of Entergy Mississippi, Inc.;
   
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
   
 
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
   
 
b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
   
 
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
   
 
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
   
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
   
 
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
   
 
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


                                 /s/ Haley R. Fisackerly                                       
Haley R. Fisackerly
Chairman of the Board, President, and Chief Executive Officer
 of Entergy Mississippi, Inc.
Date:           August 6, 2010
EX-31.J 20 a0411031j.htm CERTIFICATIONS a0411031j.htm
Exhibit 31(j)
CERTIFICATIONS

 
I, Theodore H. Bunting, Jr., certify that:
   
1.
I have reviewed this quarterly report on Form 10-Q of Entergy Mississippi, Inc.;
   
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
   
 
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
   
 
b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
   
 
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
   
 
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
   
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
   
 
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
   
 
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

                       /s/ Theodore H. Bunting, Jr.                            
Theodore H. Bunting, Jr.
Senior Vice President and Chief Accounting Officer of
Entergy Mississippi, Inc.
(acting principal financial officer)
Date:           August 6, 2010
EX-31.K 21 a0411031k.htm CERTIFICATIONS a0411031k.htm
Exhibit 31(k)
CERTIFICATIONS

 
I, Charles Rice, certify that:
   
1.
I have reviewed this quarterly report on Form 10-Q of Entergy New Orleans, Inc.;
   
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
   
 
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
   
 
b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
   
 
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
   
 
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
   
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
   
 
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
   
 
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


                      /s/ Charles Rice                           
Charles Rice
President and Chief Executive Officer of
Entergy New Orleans, Inc.
Date:           August 6, 2010
EX-31.L 22 a0411031l.htm CERTIFICATIONS a0411031l.htm
Exhibit 31(l)
CERTIFICATIONS

 
I, Theodore H. Bunting, Jr., certify that:
   
1.
I have reviewed this quarterly report on Form 10-Q of Entergy New Orleans, Inc.;
   
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
   
 
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
   
 
b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
   
 
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
   
 
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
   
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
   
 
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
   
 
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

                       /s/ Theodore H. Bunting, Jr.                             
Theodore H. Bunting, Jr.
Senior Vice President and Chief Accounting Officer of
Entergy New Orleans, Inc.
(acting principal financial officer)
Date:           August 6, 2010
EX-31.M 23 a041103m.htm CERTIFICATIONS a041103m.htm
Exhibit 31(m)
CERTIFICATIONS

 
I, Joseph F. Domino, certify that:
   
1.
I have reviewed this quarterly report on Form 10-Q of Entergy Texas, Inc.;
   
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
   
 
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
   
 
b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
   
 
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
   
 
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
   
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
   
 
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
   
 
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


                          /s/ Joseph F. Domino                               
Joseph F. Domino
Chairman, President, and Chief Executive Officer of
Entergy Texas, Inc.
Date:           August 6, 2010
EX-31.N 24 a0411031n.htm CERTIFICATIONS a0411031n.htm
Exhibit 31(n)
CERTIFICATIONS

 
I, Theodore H. Bunting, Jr., certify that:
   
1.
I have reviewed this quarterly report on Form 10-Q of Entergy Texas, Inc.;
   
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
   
 
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
   
 
b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
   
 
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
   
 
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
   
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
   
 
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
   
 
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

                      /s/ Theodore H. Bunting, Jr.                           
Theodore H. Bunting, Jr.
Senior Vice President and Chief Accounting Officer of
Entergy Texas, Inc.
(acting principal financial officer)
Date:           August 6, 2010
EX-31.O 25 a0411031o.htm CERTIFICATIONS a0411031o.htm
Exhibit 31(o)
CERTIFICATIONS

 
I, John T. Herron, certify that:
   
1.
I have reviewed this quarterly report on Form 10-Q of System Energy Resources, Inc.;
   
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
   
 
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
   
 
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
   
 
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
   
 
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
   
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
   
 
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
   
 
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


                            /s/ John T. Herron                                 
John T. Herron
Chairman, President, and Chief Executive Officer of
System Energy Resources, Inc.
Date:           August 6, 2010
EX-31.P 26 a0411031p.htm CERTIFICATIONS a0411031p.htm
Exhibit 31(p)
CERTIFICATIONS

 
I, Wanda C. Curry, certify that:
   
1.
I have reviewed this quarterly report on Form 10-Q of System Energy Resources, Inc.;
   
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
   
 
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
   
 
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
   
 
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
   
 
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
   
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
   
 
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
   
 
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


                  /s/ Wanda C. Curry                        
Wanda C. Curry
Vice President and Chief Financial Officer
of System Energy Resources, Inc.
Date:           August 6, 2010
EX-32.A 27 a0411032a.htm CERTIFICATIONS (SARBANES-OXLEY) a0411032a.htm
Exhibit 32(a)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


I, J. Wayne Leonard, Chairman and Chief Executive Officer of Entergy Corporation (the "Company"), certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)
The Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2010 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
   
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods presented in the Report.



              /s/ J. Wayne Leonard                   
J. Wayne Leonard
Chairman and Chief Executive Officer
of Entergy Corporation

Date:           August 6, 2010

EX-32.B 28 a0411032b.htm CERTIFICATIONS (SARBANES-OXLEY) a0411032b.htm
Exhibit 32(b)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


I, Leo P. Denault, Executive Vice President and Chief Financial Officer of Entergy Corporation (the “Company”), certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)
The Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2010 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
   
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods presented in the Report.



                     /s/ Leo P. Denault                           
Leo P. Denault
Executive Vice President and Chief Financial
 Officer of Entergy Corporation

Date:           August 6, 2010

EX-32.C 29 a0411032c.htm CERTIFICATIONS (SARBANES-OXLEY) a0411032c.htm
Exhibit 32(c)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


I, Hugh T. McDonald, Chairman, President, and Chief Executive Officer of Entergy Arkansas, Inc. (the “Company”), certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)
The Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2010 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
   
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods presented in the Report.



                      /s/ Hugh T. McDonald                            
Hugh T. McDonald
Chairman, President, and Chief Executive Officer
of Entergy Arkansas, Inc.

Date:           August 6, 2010

EX-32.D 30 a0411032d.htm CERTIFICATIONS (SARBANES-OXLEY) a0411032d.htm
Exhibit 32(d)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


I, Theodore H. Bunting, Jr., Senior Vice President and Chief Accounting Officer of Entergy Arkansas, Inc. (the "Company"), certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)
The Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2010 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
   
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods presented in the Report.



                     /s/ Theodore H. Bunting, Jr.                          
Theodore H. Bunting, Jr.
Senior Vice President and Chief Accounting Officer of
Entergy Arkansas, Inc.
(acting principal financial officer)

Date:           August 6, 2010

EX-32.E 31 a0411032e.htm CERTIFICATIONS (SARBANES-OXLEY) a0411032e.htm
Exhibit 32(e)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


I, William M. Mohl, Chairman of the Board, President, and Chief Executive Officer of Entergy Gulf States Louisiana, L.L.C. (the “Company”), certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)
The Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2010 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
   
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods presented in the Report.



                 /s/ William M. Mohl                       
William M. Mohl
Chairman of the Board, President, and
Chief Executive Officer of
Entergy Gulf States Louisiana, L.L.C.

Date:           August 6, 2010

EX-32.F 32 a0411032f.htm CERTIFICATIONS (SARBANES-OXLEY) a0411032f.htm
Exhibit 32(f)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


I, Theodore H. Bunting, Jr., Senior Vice President and Chief Accounting Officer of Entergy Gulf States Louisiana, L.L.C. (the "Company"), certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)
The Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2010 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
   
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods presented in the Report.



                      /s/ Theodore H. Bunting, Jr.            
Theodore H. Bunting, Jr.
Senior Vice President and Chief Accounting Officer of
Entergy Gulf States Louisiana, L.L.C.
(acting principal financial officer)

Date:           August 6, 2010

EX-32.G 33 a0411032g.htm CERTIFICATIONS (SARBANES-OXLEY) a0411032g.htm
Exhibit 32(g)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


I, William M. Mohl, Chairman of the Board, President, and Chief Executive Officer of Entergy Louisiana, LLC (the “Company”), certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)
The Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2010 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
   
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods presented in the Report.



                              /s/ William M. Mohl                                    
William M. Mohl
Chairman of the Board, President,
and Chief Executive Officer of Entergy Louisiana, LLC

Date:           August 6, 2010

EX-32.H 34 a0411032h.htm CERTIFICATIONS (SARBANES-OXLEY) a0411032h.htm
Exhibit 32(h)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


I, Theodore H. Bunting, Jr., Senior Vice President and Chief Accounting Officer of Entergy Louisiana, LLC (the "Company"), certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)
The Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2010 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
   
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods presented in the Report.



                        /s/ Theodore H. Bunting, Jr.                              
Theodore H. Bunting, Jr.
Senior Vice President and Chief Accounting Officer of
Entergy Louisiana, LLC
(acting principal financial officer)

Date:           August 6, 2010

EX-32.I 35 a0411032i.htm CERTIFICATIONS (SARBANES-OXLEY) a0411032i.htm
Exhibit 32(i)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


I, Haley R. Fisackerly, Chairman of the Board, President, and Chief Executive Officer of Entergy Mississippi, Inc. (the "Company"), certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)
The Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2010 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
   
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods presented in the Report.



                            /s/ Haley R. Fisackerly                                  
Haley R. Fisackerly
Chairman of the Board, President, and Chief Executive
Officer of Entergy Mississippi, Inc.

Date:           August 6, 2010

EX-32.J 36 a0411032j.htm CERTIFICATIONS (SARBANES-OXLEY) a0411032j.htm
Exhibit 32(j)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


I, Theodore H. Bunting, Jr., Senior Vice President and Chief Accounting Officer of Entergy Mississippi, Inc. (the "Company"), certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)
The Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2010 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
   
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods presented in the Report.



                      /s/ Theodore H. Bunting, Jr.            
Theodore H. Bunting, Jr.
Senior Vice President and Chief Accounting Officer of
Entergy Mississippi, Inc.
(acting principal financial officer)

Date:           August 6, 2010

EX-32.K 37 a0411032k.htm CERTIFICATIONS (SARBANES-OXLEY) a0411032k.htm
Exhibit 32(k)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


I, Charles Rice, President and Chief Executive Officer of Entergy New Orleans, Inc. (the "Company"), certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)
The Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2010 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
   
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods presented in the Report.



                        /s/ Charles Rice                             
Charles Rice
President and Chief Executive Officer of
Entergy New Orleans, Inc.

Date:           August 6, 2010

EX-32.L 38 a0411032l.htm CERTIFICATIONS (SARBANES-OXLEY) a0411032l.htm
Exhibit 32(l)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


I, Theodore H. Bunting, Jr., Senior Vice President and Chief Accounting Officer of Entergy New Orleans, Inc. (the "Company"), certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)
The Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2010 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
   
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods presented in the Report.



                       /s/ Theodore H. Bunting, Jr.                             
Theodore H. Bunting, Jr.
Senior Vice President and Chief Accounting Officer of
Entergy New Orleans, Inc.
(acting principal financial officer)

Date:           August 6, 2010

EX-32.M 39 a0411032m.htm CERTIFICATIONS (SARBANES-OXLEY) a0411032m.htm
Exhibit 32(m)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


I, Joseph F. Domino, Chairman, President, and Chief Executive Officer of Entergy Texas, Inc. (the “Company”), certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)
The Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2010 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
   
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods presented in the Report.



                            /s/ Joseph F. Domino                                 
Joseph F. Domino
Chairman, President, and Chief Executive Officer
of Entergy Texas, Inc.

Date:           August 6, 2010

EX-32.N 40 a0411032n.htm CERTIFICATIONS (SARBANES-OXLEY) a0411032n.htm
Exhibit 32(n)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


I, Theodore H. Bunting, Jr., Senior Vice President and Chief Accounting Officer of Entergy Texas, Inc. (the "Company"), certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)
The Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2010 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
   
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods presented in the Report.



                       /s/ Theodore H. Bunting, Jr.            
Theodore H. Bunting, Jr.
Senior Vice President and Chief Accounting Officer of
Entergy Texas, Inc.
(acting principal financial officer)

Date:           August 6, 2010

EX-32.O 41 a0411032o.htm CERTIFICATIONS (SARBANES-OXLEY) a0411032o.htm
Exhibit 32(o)

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


I, John T. Herron, Chairman, President, and Chief Executive Officer of System Energy Resources, Inc. (the “Company”), certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)
The Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2010 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
   
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods presented in the Report.



                          /s/ John T. Herron                               
John T. Herron
Chairman, President, and Chief Executive Officer of
System Energy Resources, Inc.

Date:           August 6, 2010

EX-32.P 42 a0411032p.htm CERTIFICATIONS (SARBANES-OXLEY) a0411032p.htm
Exhibit 32(p)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


I, Wanda C. Curry, Vice President and Chief Financial Officer of System Energy Resources, Inc. (the "Company"), certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)
The Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2010 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
   
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods presented in the Report.



                      /s/ Wanda C. Curry                            
Wanda C. Curry
Vice President and Chief Financial Officer
of System Energy Resources, Inc.

Date:           August 6, 2010

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