0CAN039021, 1989 Annual Rept

1989 Annual Rept

ML20012E907
Person / Time
Site:	Arkansas Nuclear
Issue date:	12/31/1989
From:	James Fisicaro, Keith R, Maulden J ARKANSAS POWER & LIGHT CO.
To:	NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM)
References
0CAN039021, CAN39021, NUDOCS 9004090062
Download: ML20012E907 (53)

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March 30, 1990 s

1. CAN#39f21 U. S. Nuclear Regulatory Commission Document Control Dec Mail Ttation P1-137 Washington, DC 20555 l

Subject:

Arkansas Nuclear One - Units 1 & 2 Docket Nos. 50-?13 and 50-368 License Nos. DPR-51 and NPF-6 1989 Annual Financial Report Gentlemen:

f In accordance with 10CFR50.71(b) and 10CFR140.15(b)1, enclosed are 20 copies i

of the 1989 Annual Financial Report for Arkansas Power and Light Company.

This report contains certified financial statements for the fiscal years 1987, 19019, and 1989.

The financial st nements include balance sheets, L

.cperating statements, plus supporting schedules which may be needed for interpretation of the balance sheets and operating statements.

Very truly yours, Am chL. cn James J. Fisicaro Manager Licensing JJF: DEJ:MW: 1w Enclosures 1

l i

Oh'OCKosooo3)3 062 891231 e

I PDC l

An Entergr Company

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Our c<ner illustration ginluilins inrunsthin -

kican that illutninate au w '

horinwn. The eminal slvo i

nignifies ekttrkity-a lacalthrough ic< hnokgy that has inade gunnible anuh of the pngrenof the last rentury, c.

l'on tuost of that(cutury, Aikansas l'ower k 13ght Cannpany has supplied ekruicity to the ixople and laidnews of Aikauma and unithrastern Miwnui. A sulnidiary of I'.ntergy Coqxiration, AP&l.forins part of the foui state Middle

&wt 13ertiic kstrin.

' I'or a desciiption of the Company's business and a inap of the Sptem's menice area,we the inside tw k nnvi.

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NM hrhuraus l*rms't O ly lor Gnnjuous

's lot trane/

1989 19x8 (lin e rai.r)

Total opri ating t es tnur6 (niillions)................................

$1 SH2

$1.357 1.8 Opri ation anel suainte nane r esprmen (niillion6)........................

$1,072

$ 1.114 (3.8)

Allowanc e for iunds med duting < on6trut tion Onilliom).................

5 11

($4.5)

Net inn ome (inillionn)

$ 133

$ 131 0.7 Capitalitation-at yrar.cnct (millions)

$2,529

$2.499 1.2 (bmtr uction espondituirs (inilliom)...............

$ 138

$ 136 1.5 Total t: ::lity plant-al)rar.cnd Onilliom)

$4.265

$ 4.134 3.2 1.lcruit omtome 6-a t yea r e n d...........................

595,70N SH9.921 1.0 l'.ncigy Salr$ to irtail customri n (inillion Lw h)............................

14,575 14.345 1.6 1.inpinyern-at year.cnd....

4,765 4.673 2.0 Prak dema nd (inegawat ti)............................................

3.691 3,N93 (5.2)

Arriage irsidential use pri runtome (Lu b)............

9,950 10,229 (2.7)

Aye age rointner tial me per runtoinri (Lu h).............................

57,3 %

57.478 (0.U) l TABLE Of CONilllfl

/*erJcucner lhghlights I

Chairran's/l'ursident's letter 2

The l'ouv r of Ideas 4

Aldnaviations and Terrns N

lieport ej Alanngernent 9

A dit Connonitin Chainnan's Irtter 10 hl ;agrment's financialDisru niern and A nnipis

!I Jhe

• ial Atatronents jh Nunes tofinancial Statements 20 independont Auditon'Itrport di I:loven l'ran ojl'uogren 42 floard cof Dirrclon 46 Offierrs, Atookholder infonnation 4X Cannpany thescription insideluuL 1

(NARMalPS/PRIHMNPSLifflR A BLunuos 1%,wo # 1goa t.vio pnen i or Al'A 1 lLeN w as a u an i shr<l

• In }nh the ( 4 inpain s fin,uu tal u as M r i asi of f t he i iv u t n.n hoonal lesiinin allows il il to is tu e v' 0 w.n s e il a i rgniais <l n u n uip. ih anel nullpin in high4 osl <lebt in tunnig emhr.u rtl a usnin hat,u ire m ai ln ao new b ewri i nst cle bt in ukhtu ni. in enn e j n a nei al spu tt. i irainits.uul i as h two the (.onipun tr[noi hasoci the aggwwne inu uut oli hangt

$ lun milln ni of its onntasuhng

(.iniuahn rating nicas wric ge in iatt il

< onnno.i siin L as pan i al its long-triin alHl } nit intei t lIt'< t likt In'W' IM'h n t

} n i egi aiil n e i r(hn t tIH ( < >st t il t a} uld!

I u nis sluting the w.o sin m }nm

• ( hn i rau n on r<p uts. a goi nt t hese ultas.u e bi,u ing te int. hi m i nu "bononi lun ' r ubi atoi of oso e nciall usnin n liet onung a be au new is abn-f niant ial su rngtb. was 10 A pric ent, a foi ont su u L holih i s oni i ustninci s ino<lest un s e asr h um 10 7 pen ent m anil oui emph n ers 145%

8 ikt's t11tH'k liiiiil irtail biles un t raserl $ l' 's nulhon in hW9. np fiu prit eni liiinn l'le llewnurs s v.

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I w hile the iate of milatnin f or the sono pri n ul was 1 A prit ent. Msii w r < ator m vb innlhon hel.m i nn i e instr iu tion a spreubnur pirclu tnin.

1 fem i \\fnutilen, R lhdo krah

( a o nulci t hesi intasni es of pri f of main <

it honi questn in.

• I he (.ompain i l'lW not

\\PA 1 n a o nume<l riow n. i.inar tri nu omi of $132 nulhon nu irasect woi L nig. nn u r imn n aine opri ahon shghth ow 19 % Not opriatme than n u.n a icw war s ago I o< l.n.

nu omt m 19w9 nu irasril sewn

,,tabilumg pn uhu i < osts anil on t rav pritont mg i intoint i suntat tii ni th ennnate e lho (.omp.un i ori c ash hom oin pl.unung ainl esr< ntion oprianng.u inines pi n ti to t echu tion h n clef rie r<l puit hasoci p m 1 rurw i ap.u in was $2'i'l nulhon. w hu h mrt

< ash irquoi nu nis irtainig to p.ninent of <ln utrmis.nul tiu ( omp.u n ii on-sti tu non pi ogi am

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l parent.1;ntergs Go}xnation,that if we within the operating companics and I n 194fi,iollowing awuyra are to guesition our Mithtle kmih theougiumt the Spiem ricating a 1:lectric Splem (Spicm) for tomor.

Snuxith wo Ling team rapahic ol tow %umpetithe cinironment,we meeting the (undderalde challengen have to be willing to heck m w wilutima

uhead, and lnral with oki mns. Onngwinents of h ohtt Olive lham h hulude the weite ofI of Gntrul Gulf 2,a partially of gmblir contnnciv3 with ergulatori c ompleted nmleur unit in Miniwippi, 5f and rusunnee r a petiod of high by Splein I.ncr gy Rewmn ek. Inn, emslia profile-only S6 pen ent of mn -

another I;ntrigv un pun ation udnidi-nahnner s had a high }xnithe auitmic ary; a pro lwiwd that wtmklienunt -

. 'alunit ut T<ulay,62 [w u ent do; 22 appiotimatch $16M million hom our peu ent nicurutral and 16 percent say tunoLs and vate lose by the sale of <mr we need to do a betterjolt in 1989, Shair of twu generating units to(orm e hmr mu mnL AP&liwas awarded 1.ntergy uniun a-animlepcmlentlunver hupply one cut <mt for us While our finanelal tion's Chairman's Awant foi eu cl.

pany; a proixmst conmlidation of j u nition is impunext, the f utm e in ad-lem e in customes nenic c. Solid im-managementoperations(b the mittedly unnewhat mcu r um ci tain. lt

' piovement,)cs but we will a onlinue to Sptem's ihnt mu lcar units and a is mine important than eves to

pmsneimpuntd ruunmer selatium phxlge not to seek a genend rate impiove our competitive podtion sluvugh quality perfoimamr.

imicase untilatleast 1992if the r elath c to Sunuunding utilitich. That Om Tramwn:L A kanun/

AiLanun Publi< Senic c Omuniwinn piesenis gicat i hallengen, but if we can,

' Miwnui piognun of ec onomic (APSC) pennits the proposed ude and cominne to maiLet our puulurt and deselopment h matm ing into a the c onudidation.The APSC heht hohl down < ous,we ran, mrr time,

! significant ratalpt fin c< onomic beatings inJanuary mali chiuary. A Ius ome moic rompetitive.

growth ami was a Ley player in AiLan-t uling h pending, Om job hilcar: halam e the dedic

- sa'scroul)cm hi cronomir dewlop-to rut rosts and avoid rate inricasca L meint, it acc ounted for 4 A50 newjobs with the need to maintain quality hi our meni< c ten iton'; 227.900 mwh henic c to our ruuomers mas Let our were whled based on'pn jetted $dca 7[

product and our *cnic e ar ea, generate 4

hom new plant hiratioin and plant a fait acturn to our invcuon and

' cxpansions.

herome a nvne punturthr and highly We hanc aggrewhely supported h

motinued wo L force.

t

. pnigt nn toimpunt thejob stilhof eg rollowing the succ ewes of1989, our iuture work iin re,widpperial ff APkl.cmba Ls on a new decade with a emphash on math and science.Our Ah Ithe1980spunedany tenewed hense of vigos, innovation

. education cilinis weic 6 elected by ihr thing,it is that our emphneen haw the and m hievement.

. litiwS 1 leru it Institute to s eccht the ability to meet and conqt er tough We're accomplishing what we set gestigious unnmon Goah Amud in oint.nles.On ever) rung of th< AP&l.

out to do.

1989 fo outstanding m hictement in ladder.our employeck take pride in Our team is winning.

cunununit) senire.* In rehnamy, helping ran) forward the Company's J990, this piogram ma honon 4 with vidon ihr the futm e. llut in place of

/

. the Chainunn's Amuxl for ronununity ihcunir alumi dedication and pnxlur-

/

^^

eenire imm lintergy unpnation.

thity, the unnpany and the Sptem flhese atc gecat str!det Itut have initiated for 1990 an incentive Jerry L Maulden enmting a piofilat,1c futme will pi ogram. Called Teamsharing. it ties Chairman of the floatd wquis e ever-inuccing lumwatiom on pay and perIbrmam e to meeting Ome and Chlef liccutive Ollk er

the part of uulay's ciertiir company.

pany and Sptem goalt further,it Project Othelinun h h the best pnnnises to hnter grcate: cuhedvenew enmple.of what we're doing. It is an cihnt to make pearc mth regulators 1

jmd omtomeir randid a erognition on R. Drake Keith the part of this unnpany and its Picsident and Chief Operating Ollk er I

5

,m m mennu A vAanw 1%wo W laght Conojarug An exarnple is our Precisitin has dogged tis for the past twu du ades.

7[

Pricing prograrn for industry,in whk h its rflects promise to be f at-r cac hing:

we c an ofice mar Les rates when energy in exc hange for the write off or pric n are a determining factor in a Gr arvi Gulf 2,we will see an end to j

decision to kx ate or t o generate.

m<nt of the litigation invohing our Pi ccision Pric ing was instrumental in attempt to rennrr the unts of Grand attrac ting the Te efilARILLI) company Guli 1.The pro [xned formation of

{

< leas are onious things.

to Pine Illuff in 1989, with 400 jobs and Emergr Power as an irulependent

]

Nothing we eu inn c onnenrisy, stiis 6fi mw of lo.ul. In Malvern,it allowed

[xiwer pnghuri wouklienunr i

emotions or c atalyin action as a us to reac h an agirement with Willam-approsimately 516M million from our powerf ul idea. l listory is the in or d of ette huhistrin and retain 1I mwof rate base with its pusc base ofour l

ideas playing themselvn out in the kuul.

internt in tuu generating units and is a i fahiit of imman n ents.

• Wr air arcing ewdution, not nwJu-Le> to muiding a general rate inc: case.

l In 1989, the same powerful fou n tion /rn the rlectr# industr,11. A lenet v/

Ilutjust as imp <ntantly,it woukt dnne APkt Ideasandinnmution nre ewdution is that <mh fluar scho can adapt lxnition out (kunpany and the System re foiming om (kunpam, bringing its tothungrsa'l/sumitv. 3fartha D. lleur, at the foref tont of the new campetitive l

pinent actions and furut e dir ections charnnan <fshelkletalDuyg) Regulatory emit onment.

into sharp focus.

Comminien.

Pn ject Olive liranc h is an un-

}

Ideauur in and of themschn of

[ncredented move foi any ein uie liule consequem c. It is only when they m

system, but it is ah cady paying of! in an ar e eu hanged, gr asped boki of and s

ymm an, imin oved operating, polith al regula-thrust into action that they acquire Wy

, " 1.

ton and financial emironment. it l

i meaning.

shoukt set the stage for us to move con-To bring our ide as to fruition, we fidently into the 1990s.

l have dneloped a five-s eas businns

• lfwllike the nampaan a nd the statr af 7

y plan u hk h sets fonh the Entagv A r An rnas ni a ich<de rallget same /<nefI vision: *1huing the next decade, the fmm stopping the litigation and having a G<nnpany will hecome and he widely ferkt<fjeace nehne mayle APWI,umld l

t ewguised as a cwtomes <niented, umcentmte on some <Jthe ramomic douhp-l u n ially esponsible, financially su ong, successfulc ompetitor in the nuhing ment innes it 's Iren doing somefint mnk i

cin tric energy businns.*

M on...

• Alary Atalleup, A rkarnas depuy (g

allomey geneml, quoted in the At kansas s

The plan is a living, changing A

Democrat, Non 12,1989 docuinent,inised annually for the W

'C next five-year horizon. lt states not i

only sweeping aspirations, but measul-I I[

f I

able goah which mail om progios.

We are well on the way to achining

"" 'I Nf our vision. In 1989 we operated for the

<jurrue. It n only irhen thes me ruko crd, q

fit st full year under the plan, and inct t h<dd yad Armt ink acA,. hat

.J Or exceeded 29 Out of SS ruajor goah.

g4,1 argunt meaning.

N

• / think the mostimfuntant thingis VA,

1. iitical to AP&l/s nemtion. It d<rsni mohr ar9dif/nrnte A more sweeping example of our erhalyou run, as Amgasyou neruir, and a aggrewive new [xnitioning is emixxi-caning a more competitive mar Let iwl/necutedfJay takes pmrtirr, timing a nd ied in Pnject Olive liranc h, per haps position is avoiding a genend rate omfidena.

• Nolan Richanlum, head one of the most daring initiativo nrr inncase-w hich in turn rnts on its routh ef t/ r ArAarnai Ravn/mhi lunketball ach2un ed hy a utility.

suu ns in containing unts. We ar e i

team, in a menagr to AP&l.cmphyn.

Ajoint propowd by APkt., Entergy buikling a ndue mnscious corporate APkl.is feeling the nunpetitive Corporation, System operating cuhur e, w hich iecogniin ihe impor-hoc n that ar e s nhaping the elecuic companies and System Energy, Pn jeu tanc e of saving money in every fac et of l

indmuy, and in 1989 c ontinued Olive liram h is an attempt to nune our opcintion-fr om plant comtruc-I gxnitioning itself moie Iavorably, bc>und the more seriom iegulator) tion to paper c lips.

conflict and public contunrrsy that 4

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bail d wio Lb hiil IM14.ini tin'lt ak Hilin's y

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-c ahea.h fern odenlibril I ulo rr uwings o'ol/

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"Ila large d.dlar uwone odr o lun, y.

for tiu mont funt is tia n suit of a n a; en mu latum of noon iudwuluoth onallollouts

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that na o tona av uM lun, a lurco e mpac t I rum ria npat of an Al'cI tad pan 1

<harged with adentitune o m to empnon, tia t.vmpa n, s o n to of ro tu r n.m om nu m r etu rts

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\\\\ r.o a we o Ling ninli-l a 1.us h T*'

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y

.(

.uh.un es m l'89--ru i ribng ginals in a irsoninhug on peu eni l o ai incu

' " "'/" " '" ' l' " ' "' ' #" ""I " " " " "' "" h ' #"' N' " v' W I " ' """ "" '" """ #"' " '"I * " " " "'"

lin 4 il t hat, w t' riiilIh n t il aggli'ssn e In r< h a s.i 1.u in s ainl h isti i ra l a Inat kot nig i nste niit i an ait r u ss

} n un}.s li.n i nMi su n r tin \\i k,u i%n Results ni l'N'l she m t hat i nii ihionghoni ihr ( nmpain iIrai Pmup \\ssin iain in beg.m i iln ai mn in i.I i c.unwi o L \\i kanso

\\ new non-irsnIrnual hghnne mg i iion ai n o s in pn ipo u ntalb non Wsonii n an nica w hou inne has

gi ain h.ul m en hi n h sellmg m

\\l% I i hi al pomp ules ucri up '.

<ione l hr in cai ai. v l i nulhou i lh ir i I t W4 \\ r enewril etnphasn i m uniik pen e ni m P 6*s in e i lim begun m Ph7 loso n ilneh pment mg all emph ners m m.u krting nu oril

'/t va rt,vl o n6 mm, p<u/d, of. om ihn ingh pi n ate-pubin p,u t ori slup ile Lv hormen.unt othm s uno sonn-wh" Id. a o d

/h,"nchalot"I

\\l% 1 pri ialnts uor L s in t he one of the ( nmp.un iinosi aggn ssne anel p, opl, i r//or n. uv m urn I'm "I," r"a h.u n l to brip i onunninnes bei < inn I

sm i rulul bounem <lm olopmen t pom o n id,a e nt" n pirtt3 poun/ul. putts on o n ileu liipuu nt-um.u n t on ihr j

prisonnel sales we n 77h ;n n eni of umoc o,ca ra.utmn ' /on Ib o.cn "/

i st bri haini w or L l.

• alh. nanonaih ti.c goal..u i onntmg h o il l 7 Lw

\\lau ntain / /om,. peruden t "/ flu t el~ n.uo

.u ni miri nain inalh iiiileu lop irael,

.uhleil lo.nl.u ni v l h unthon in new

/ /< ut l'a mp l oo. "amn i/V/i h o orw i n i sp.u n hng u n hna ns "o

olermera e n as lau nd,nc l he b inion hne irsula h o Pie i n onne in.unithri clh o t binne i.onhui e<ri s mung tiips in nhngs aini ti.uk

.uul t inti ono utni.n tu in wit h brai p o n nal.n ts ulcu nheil ll'i pu npe i ts l

TNE POWit OF MA8

<,Aa,aro nn,< e i cht i on,pu,a an(l gef erratotl 76,u lual sitt et%iL%

tCsnltllig in I 13 fir ( lsnills b H Tit w alMl npanrimg nulustnes Iwe nn umo new k,

. j/.

plants < iraterl 2.x21 new pibs espan-

,,, ins.,i u emnng punm,r.,ica ms n

y' moir h n a inial of ifio now pibs ' rw l

6

~*

linIllstilaI lin'gdw alldu nti %dIt's lti II.NI g

arl< led a plopra irri 2273Hin inn h load W *'f 4'

A-

.m t

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g W.

es 9

.g7

, t

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yhr 4_.,

e s

je k*

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' 3,,

41 N

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V k

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A tb k

.i a%

/.., A l%! spinds n ulin ins of ib.ilai s ni n s tai toi m n ids g

.n, m,.._ h n b aui ew s n e i,mp.,

~

~

re onomu deu lopmeni m anotbei w as "I all \\hal t. lin Illlin illn IHisillt'%s 4'

pun hasmg poigt.un the ( a unpa"s st.n led in 1% 1. gle w hi $2ti 7 unHu en in g,.,

,g 4g4 4 toiai rsiirin hun es ( )ni ihn \\i tansas

,,,,,,y,,,

,,,,,,,y,,,,,

\\bssoin i pu igi.un ini astilhnal m.nmt.n tuiri and dnn ihutor pm ihasn uom 24 Isen eni i $2ti 2 nulin in i f.

~

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i, m nivi n. n prn oni rsim nnnnin i m

e<

j

'Neig y

+y@,g g

%,{Q$

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~l < ouhl nor do ball as mus h r whatr al

e%

o j

pimpe,tinc ol tt avion 'ilor \\/WI t hga o 0

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p;i

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- 9, ustn.,o be., va n a,,,,at h.c en,uch a,ul l

.),at 'l lun v tho h ono ract ng t< de llu ho l

,c l%cuhrlr.wlthIln

}

terou od ann A ru ouan for lagh t/nuhh pi s i[ n isrt l i i nnw ilulat n ni e il t he %s strin i k

n courn,c * /or, / 4.am, s,, a live <h", toi n/

mn ir.n grin i anng 1.n ihnes wr see L to

" %[

k i r k o n sa s / le lla lici v lopuern t t t rate ali ci e ine inn e il si ale and sj ig ( iah.

i o n,rmhr < hanene, of a

, anon ib.o uin ninin. ora nnsu ihese h

a i hangung uninsn s. \\ pal n malmg ih.

opri ain ins u ni s a positn in of natn inal.

)

[

,s kI dIIsIt n dI I ilii si { i disk I kl( (II ilI ( 4 iln

(*s ('ll ll \\ t('l l \\ sll): illd, ('\\( ('

'))l {

• m' y,t

[iald b l all d i[irl aillig ( q ilit} af n ( Illt lll aln illn'i r\\aill[ile, t I rat n t'

[

tast now br< onus gone s anne ihr management. uni tr.unwoi L among

~ i l

Inghest quahn, unist i ompemnrk if Nin rmph nrrs and t onn.H b d s l

pi n cd enrigs.n,ulabic-a task that allowed us to r rint i \\\\() s t Int 2 m a F

lequo rs t ontional n ihmL mg. M r ser

( a unp.u n in nul smashnig Titi d.n v U" ' #"

"! f"#

E'"N'

}H t yless ai illain les els 211 "i ln ini s

"'""h ' ' * *"I viato a n au. ant o l

\\ pelot plout.un i aned 'l's enmnn "I an tiu p<ot down or w van, u, as a aull no uruwro for n o drotni u ne n task. or o I

o

.. llri s unlusti nw engmerling stuu huiv /=rt, hm/dinc and n unc wrcu of l

l,i nw ri o

a n n,I n.wlede, nu ra vt a n ut,a u,Il anak ses atul, w hen nes essan. Ingh-liv hvunal bu on ng orllacobtun o n tlu J

tri h powri i oinhtionmg eqmpinent to

,,,u n to - w ov hai, abmdi p<n./ a sainta n

,,, m,,yj,,,,p

,,,,, jy

,,,,,,u,,u n l

lH eits a t st usitis t' t h t is t u ns s tit ut Ins / pn o 1. " r h a n an " I ' \\ \\rrustas / )<n.n/

sohage ihn inanons l'n,"i.n.\\lanh 2 lo'*/. musurntencon orn.piono u jnojunal to th> penda nc l,. term

,lra n an frL't la tt o n n

77 m.7,e j

in eth oldrih c sts/ ens wlue Itught not Mlart) Is rnri uv taAs for giantal ths otherwise have wought enedic al atten-crrtualh uranternspreviflow of r/ntnot) pi tu en. An aduh tratinng < rntri that e rsto ou r h<rnui need bu wraruri ar4d th, rl/errfi p),

APAl and l.nter gs ( W

,n er ation star ted en/uerni to Any, that l low diyrndahl,

(

wuth n $7UnM go ant to fight dhtrian through alltyfri of urather and <<nsdotwro

]

in Philhps(asunn was narned m

'IN ruwt temt sou w an ALVI

/

v c nueved abrad Jannan lWnin Presulent llush as *an erre/Juiry. hom ula rut a Thank I'ou '/or a in 14H9 in out etheris not onh to outstanchng rumpir* of a pinan vnm that maArt allo / our inri raun and ptonce t the cinitontnent, but to src tot

• Point of 1.ight

• and nune romforfahlt

• Captmn for photo enhan< c et A task forir unesugaird Wr thdn't hniit the ustainer

• wr graph o/ ALVI em/dg>w at u=nA, Ikdd rin'ip otune ntal issurs and des rloped he iped to our own, though APAl A'embltanner,.Vptender 6,19N9 hitategies fut sup[mit ung gioups mobihird 6ts foti es to Iespond to the Imunauon and < tretnan plaved a m inch wolkmg to prote< t and e rstoir devastatu en of liur t u anr llugo m Les t olr in tuaking 1989 a von un c ow the rinis onment.

( h tolu t, si ndmg l I 4 emph ners w ho f ul scar at APAl.. I of the tunne, we ate Situ r 19N7, pat tu spatan has restoted [mmer to thousands of people, posmoned to t ontmur tappmg the tripled m our "Rightwit w.n h.

APAl. etuphnres gather ed and w nt IN powre of ulcat G

Wildbir

• pt ogr am lo pl.uit wddhte tons ol s chel supphes Icued on APAI 's 4,9n0 unics of tian&

miwion hne :ightvoFw.n.

' the Al*wI lbghtvoj u=or for V

%(

~~

'~

Wddhfr pnpam o a gnat ningutumal tool I$

/

for Inschengpnt/dr, rijwoalb south groups, L

how to nuske weldhp haittat amjnmrna nts

• f

-. k C

l'ner flo'mn purudent of tfu Arkanun

, q.

,l' Mildhfr 1 ode ratwn h'

g

)

~

APAl 's edut ation nunatnes 4

.T y

( ontuiur bilu the h H us (.l M enu' isi its

^

most < teatne thought p

O'

'I o help addern the shot tag ol

,a

.w Indth atul w loin r tr.H het s ni the stato,

~l-F /.

los instaru t. APA1 oiler s up to ten j

$1,Wi *nnestment w holaishipJ < at h vrai to < olk go punoi s.ind winois w hii agter to trai h thew sublcc ts ni the

)f At h anw ptu elu v hoiih foi at least

.N; c

?

the re s car s alter gi.uluanon i,f 9

g a

• Du puIdu roeds to L nu tlon:

?.

N Arlaunto I'mero 3 Isght o <rn duph

• V ornvohrd >n pnmotrng a rut utpp<"11ng h

9 pnvano arolprac to,o w)w h puuluo o n E

y o

Juulth\\ nlwatronalehnmto en our stato

~

.s.

\\arno traa her ( I ordoor \\nnth an a curat V

nht<osal %rnemirr 1, l'IM), no tio % von l, '

'I-y y;_

vad - - n An oia phn-,phs n, dm eir. n u g-indusin ir ou,,uso,,me,,n - d u e In PH9, APA1 cmht.u rd esci moir fort etulh as new wah hwords "we need our i usiomet s

• h h elloit and S ~

mnovaoon was desoted to unpr ovmg

(

not unh ihr <piahn of,rnu e m oui

~

^-'

ar ea, but the quahn of hfr as well g,,,,,,,,,,, n,,, y,,,,, y ff f,yfu,, u f,,,, y,,,,,,y,,,g, y,yf,,yj,n,,3 f,,,,yf,y ys.y,, j,, ffg,, n,,n

"( dit r ( 1htiu * %ri e r\\paluh Al ili guy,j,u,g om }; g,,, n,jnu,,, 4, g}a gjunh,y oj sq.n,v, gja.y per rm e tout llerre tjuahti of hjo us ow'll 19H9 to prinide inedu al v t rennig t >

1 MIIONI W IIW Arkarnas 1%rt & l.oght Outrifurray j

$50 litst hjortgage Ikmds A

GreedGodf i

$$stlee Grand Gulf Steam 1;lectric Generi, ting Station (nuticar) j trend Seel l L1 nit No. I of the Grand Gulf Station

[

6 tend te4f 3 the No. 2 of the G and Gulf Station

(

1888 Independenc e Steam I:let tric Generat-bbreviations and ter:ns used in this ing Station (c oal) l ieport in< hide the following:

1888 3 t' nit No. 2 of ISl;S Jene 13 Dodeles The l'!;RC'sJune 13,1985, decision

{

APDC Allowaru e for l'unds t' sed thiring allocating Grand Gulf I rosts among i

i C<mstnu tion the Splem operating companies ANG Aumiated Natural Gas Company LP&L louisiana Power k I.ight Company l

Abe AP&l/s A Lausas Nuclear One Generat-Biddle $oetti ing Station liestrit Systeen Abe 1 l' nit No. I of ANO or System 1:ntergy Corporation and its various

[

ANO 3 l' nit No. 2 of ANO dis ec t and indir ect subsidiaries AP&L or Essey Peel hiiddle South I;lectric Spiern hioney Company Aikansas Power & IJght Company Pool w hic h allows c ertain Sptem (orn-AP8(

At lansas Public Servic e Commiuion panies to bonow f rom, of lend to, Det Department of 1:ncigy c ertain other Spirm companier, totetgy MP&L hiiniuippi Power & l.ight (kunpany Operstless I;ntergy Oper ations, Inc., a pioposed N9P$l New Orleans Public Senic e Inc.

subsidian of 1:nteigy (kn poration that NGC Nuc lear Regulatory (konminion will aumne operating responsibility for PSCM Public Senic e Comminion of hiiuourl Grand Gulf 1, Water ford 3 and Revised I

ANO Settlemeal Intergy Power I:nteigv Power, Inc., a pr oposed subsidi-Agrooment AP&l/s Septeinber 1985 Settlement i

ary of 1:ntergy (kn poration that will Agirement, as modified by the APSC ma:Let capacity and energy f rom order luued October 6,1988, to bring I

certain generating facilitics to other the Graml Gulf 1 selated phase-in plan par ties, principally non affiliates, for into compliance with the requirements resale of SFAS No. 92 falt l'inancial Auounting Standarch Ikiard tildile 3 1%t No. 2 of AP&l/s R.F.. Ritt hie Stearn l

PitC i ederal Faergy Regulatory Ccunminion 1:lec tric Generating Station (natmal fItt lettlement Settlement oIIer filed with the I'l:RC on gas / oil) l June 9,1989 by AP&l., l.P&l., hlP&l.,

$tt Securities and lichange Comminion l

NOPSI and Sptem 1:nergy and ap-lettlement t

pr oved by IT.RC onJuly 21,1989, to Agrooment Agicement elfcctive Septernber 9,1985, settle, among other things, < crtain adopted by the APSC, settling AP&l/s j

then pending Grand Gulf Station Grand Gulf 1 related and other rate related tunes, litigation and other rate iones for the state of AtLansas inatter$

$f&$

Statement ofI'inancial Accounting Standards SFl Sptem l'uch, Inc.

System Imorgy Spiem 1.nergy Reson:ces, Inc.

i lystem eP*retI#9 sempeeles AP&l., l.P&l., A1P&l.and NOPSI,

< ollec tively 8

w 4

u ainu t w u i s t w juon

'ihe irulependent i enified publir =c annanin punide k

an oljec tive awcument of the dege ec to whk h snanage-p s

niennnects iiiic,piniihiiin fin f ah new of financiai N

arput ng.'Ihey segular1 evaluate the mtern of internal i

3 an ounting < ontiof and perfonn $uc h tents and othes fI pnx edur es as the) drem nec ruary to scac h and expr ew an opinion on the f airnew of the financial u.ucinents.

MW <- he inanagesnent of As Lank.a Power k We believe that thene policies and paw eduien pnnide 1.ight Onnpan) has p epared and iu c>ponsible for the a casonable awuratu e that out oper.nions ar e can ied out financial staternents and arlated financialini' nnation with a high standar d of businco ronduct.

o inc luded in this annual r ep n t. 'the financ ial staternenta air hai.cd on generally au epted au ounWig principics, consii,tently applied. Financial infon i 6. m inc luded J ^,

!Y'----

clwwhe e in thiu cpirt is consiitent with the financial statements.

, eny 1., Maulden

'l; meet its o cuponsibilities with e rsp t t to financ ial in.

Chait man of the floaid & Chici F.strutisc Of fit ri funnation, management maintains and enfon c6 a mtem of inten nal an onnting i onu ols, w hic h punides s easonable awurain e on a c ost ellective t w.is, as to the integiity, 4d

%M

.agu,3,4tyand,ch.aiintyeid,enoa,u u n.oi,dsandaste the p ote< tion of aweis. This syucin includes c onununira-I cc W. Randall tiu tin ough wr itten politiek and pnx edm ch, an or ganita.

Senio Viu P esident & ChirlIinainialOflicer tional sta urime that puniden foi an appopriate division of irsponsibility, the selec tion and uaining of qmdified pc sonnel, a prifonnant c an ountabihr3 pmg am and a coinpc hensive inte nalaudit ptognun.'lo f m thes on-h:nc c the intri nal au ounting < onu of entit onment, ihr Oimpany has a Code of Conduct that addiewes om unmniunent to the highest uandants of integs ity and Iairnew.

The finaid of liir ector s put sucs its e esponsibility f or us ported financial infonnation thr ough its audit mnunitter, rompised entiirly of outside divernors. The audit mmmit-tre meets pesiculically with inanagunent, the internal auditor s and the independent < ra tified public ac countants (lleloitti 4 Tom hr) to discuw anditing,inica nalmntiol and finan.d iern ting mattein and iep n ts ther eon to the Itoard of Diverton s.The independent (citified public ac countants have f ull and f r ec ao cw io inces w ith the audit uuninittee at an) time without mena ct> of Dunpany management being present.

t 4

b l

p,pe-u.

i AWDft (tamtffit Cem8 Lifflt blamus l'enm 0 light i;ompan l

au c ountants (Deloitte & Tota he) the i rall u ope aiul t

(

specif,ie plans fic their iespec the snulits.

L aho disenwe<l the Gunpany's financial staternents and the aulequ;u y of the G unpany '$ inter nal c onu oh. The c orninis-q tre met,iogether and sepaiately,with the Gunpan3 6 my internal auditor s arul independent < ci tified gmblic au c ount-

,.?

ants.without enanagement pr esent, to div uw the r esults of

.aAAN he AtLanwn Powei & l.ight Onnpany Audit thein audits, their evaluation of the unnpanf6 internal Qinanittee of the ikiard of Dis c< tors iu omprised of $nen c ontrols, atul the ovendl qualitt of the Qunpan)*$ financial Din eran a w ho ar e not of fic cr s of the Gunpany: Dr, Itav-e eporting. The meetings alviwer e designed to f acilitate and inond P. hiiller, Sr.,(:haii man: Tomm3 11. I tillman; Ilai l'.

em om age private < ommunication between the < onunitter lluntes.Jr.;johnj.11 ate: Robert D. Pugh: W<n ukon D.

aunt the intei nal atulitor s anul/or independent c ertified i

Walter ; and hti< hael l'.. Wehon. The < ommitter held four public ac(ountantt meetings shuing 19H9 The Audit unnmittee oves sees the Gunpanis finan.

s c ial sepos ting pnu ew on behalf of the ths.u-d of Diiertois and punides casonable awaram e to the lloa d that e

suHicieni oper ating, au ounting, and fimuu ial c ontr oh ai e in existein e and ar e adequately iniew ed liy pn.graim of imer nal and exter nal audits.

Dr. Ray:nond P. htiller, St.

The Audit uninnitter div uwed with the nonpany's Chainnan, Audit Ginunittee laternal mulitoi s and the independrnt t ei tified publie 0

manneumsmusamou nummen ano amatmi A rktenuus /*vun W lyht Cunnfsuery imled that fituun ial staternents for 1957 huge riot lHrit

[

toktated foi the dis}Hi%itiolt of kNG sklu f Nu' Ofify i of c onw.hdation is immaterial. (her Noir I to the l'ina:Hial

)

htatrinents. *hununat) of hignilirant At rountif tg Polit irs.*')

'** g 19M9 f rMLits wot r favot ahl) af ferted $2.2 tuilliott due tu a f

omstinn s e nht in thrd ff om System l:nergy putwuant to (B

k the I'lIlliI hellirturnt. (Mt Note 2 to ihe l'inaru i.d htate-Da R$U(flef 9 Pit &flehl merits. *ltaic arui llegulatory Mat ti i n. ll itC het ticinent.)

a In addition,1988 irsults wrie Iedm ed ap;n osimatel> $14.8 Ghanges hetueen 1989 atul 1988 arut hetw en 195%

million, au ompar nl to 1987, dur m ints raws in a cherven and 19N7 in scln ied iarior 6 afin ting ir$ults of oper ations foi run lea maintenanc r espense, injuries and damagn.

ar e detiled in l able I. l loweves,iriciem e is made to both hospitalitation and emironmental onlingem iet T hle I alul the $tatrinetits of 1 M onic Iof plir posen of the following divuwion.

Sevenues andleergy Sales L

linenue is om i etail(m.:ume: 6 inrs cawd $ 15.5 million Retloseene or 4.7 peu eniin 1989 au ompaied io 1988 due in pari to in-7 The t kunpai:3's 1989 e rsuits wcic basis ally uiu hariged i irased ener gv wiles aint to iru irased ruiirnt in overy of 3

h om 1988 as evidem ed by an ino case in not itu ome of Irw G and Gull 1 irlated iosto itedm tions in udn for e rsale of than i peu ent, w hile 198N net im ome clln trd a o rdur-

$"0.2 million oi 5 5 peu eni in 1989 au ompared to 1988 tir:n of 7.1 prit out llotti 1987 net itu utne. l'artolh Itnpart-pai tially oflwt int Irased totail inrtinen iokulting in att ili-ing s nults ol oprimions m e diwourd in mor e dctail o caw in 1989 oper ating i n cime. hales for i nale dco rawd

below, piinnarily due io den cawd sysicm sdes of $M.2 millior, aint Thr eApiration onJuly 1,1988, of the Gompany's au-to deurawd saln to ihe City of Noith 1.ittic ilm L of $9.5 thori/Etioil by the APh( to in old a irturin on imostinent in tuillion due to the iltstallation ll) that City of new hydandro

( llegod CM on 4 apa(Ity to be uthwquetilly in mvied llh getu a ating capacity,

(

icdiu ed c.u h of the 1989 and 1988 inuits when Iompaird The den caw in 19sM operating ievenun compar ed to lo the [ Hint )ral by appt oximatcl) $7.9 tuillion 1989 lesults 1987 g rudted ptituatily h om the low of gas inenue of $39.N wa r iedm ed am t <Hnpat od to 198N due to llic $5.1 Inillion tuillion due to the Adr of AN(1. l.lcruif tnetturs dertrased attei tas gain in 14NM fiom the sale of ANG. It should he

$8.3 million oi 0.6 peu cut in 19AM au ornpat ed to 1987.

TABLE 1 1989 to 19s8 1988 to 1987 Inrt raw / l'en ont Itu rraw/ Pru erst Twelve Slonths 1:nded' 1989 1988 19M7 LDenraw) Change (Dn e raw)Charyge 4 in Alnthonu Net im oine

$132.0

$ 131.1

$ 141.2

$0.9 0.7

$(10.1 )

(7.1 )

Oper; ting ictenue

$ 1,381.9 $ 1,356.8 $ 1.401.9

$25.1 1.8

$(48.1)

(3.4 )

l'ucl and iurl : elated esprnse electiit

$297.8

$282.1

$350.1

$ 15.7 5.6

$(68.0) (19.4)

Pun hawd power expenw 379.1 435.M 431.7 (56.7) ( 13.0) 4.1 0.9 Defnsed pun hawd pown..

(N1.1)._ $589.0

$613.8

$6.H 1.2

. $(24.8)

(4.0) 168.0) 47.8 37.1 (128.9)

Not tost of one:gy Clrrttit

$595.H

_._ 39.I.

23.3

(

Othe: operations k maintenasu e

$39f. 5

$395.9

$335.1

$(0.4 )

(0. l )

$60.8 18.1 Total enrigy sales tiertsir (hlIMII) 26.703 27,189 "9,401 (786)

(2.9)

(),912)

(6.5)

• 1hrjonenuint antemenuJur iM7 have ned Inn untatrdpn the dofwntwn of ANG una the rJJat of emauhdntwn o omnatenni. An Note i to the f)nunoal \\tatemenn + %mmary of Argnpfunut Anounamgl*<Juies

• f II

(

R416408mIIrr$ PillAIKlAL MMIpl61001 AIIS AllMY$15 t

Art.arnas /*mm W l.rght fornpuny Revenues itotn r etail < untornern inricawd $3M.1 inillion or 90 lier Speesting Iaponses 4.j pen ent in 1984 rornpau ed to 1987, due gnimarily so Other o}waation atut inaintenaru c expenwn sernairuxi ben eawd ules to inulustrial rustorner n. ~Ihe Cr nnpan3 's stable in 19H9 au ornp.u ed to 19sM. Othei opes ation i.

I uln for r esale det lined in 19M8 pr innatily due to a $28.8 expenwa inricawd $3.7 :nillion in 1989 au innpar ed to inillion ders eaw in udn to the Kliddle South Syucen Power 1988 due tv ocicaws in the rewsre for lunpitalization of pinil as a inuit of the u heduled suulear icineling outagn

$ 1.9 :nillion,irn irawd arnortiration of patiously delcried i

foi luith ANO I aiul ANO 2 dming 198M arnt dericawd a ctur n on ou ens rapacity of $3.9 million, a s edm tion of total kystem uln to Trimener Yallev Autlun iry of $ 16.0

$ l(i.2 :nillion due to vari uu e in the u heduled enncry of inillion.

G: aiul Guli 1 elated rostu ompar ed to attual rollenions. a 19N8 :cduction of $6.9 millien in inesyn for contingencien feeland Perelieeed Peiper acc c ded gnu suant to applicable ac counting Statulards and Net ont of encigy in 1989 au-unpared to 1988 a s eduction in 1988 of $7.5 :nidion due to the disgunition of ino cawd gnimarily due to a $17.0 :uillion inricaw in the ANG. The den eaw s elating to collection vmianc n for.

Iuel e ctated mu leur n ewrve whic h was innparted by the Gi aint Gulf I-i rlat ed c osts avul the imwaw r clated to the u heduled iclueling outage of ANO 2 in 1989 aint at both anun tiration of the peniumly defened ietur n on eu en s

ANO units in 1988. Ac ontah to the mu lcas inent imwaw rapacity ar e the t endt of an tumting entiin to ollwt like fm I expenw w hen the units at e in operaticm atul ar e uwd anu sunts of i cvenue im luded in operating s evermn.

to of twt other iucl e osts during r ef uciing maintenam e Tiu 1988 inricaw in other operatiem expenso of $53.8 outagn. (See Note I to the l'in mrial Statements. *Smn-million auompar ed to 1987 waulue to an inn raw of $22.9

. nary of Signific ant An ounting Policin.*) A seduction in million doe to viuiance in the u heduled a crovery of Gnuul hlRWil puu haws of 7.5 parent in 1989 auompaird to Gulf 1 ahi t ost6 compar ed to actual collections, in-198H c onuihuted to den eawd pun hawd gumer espenw.

n eawd i nesyn for injur in and damagn. cmir onmental Ilowner, nignif'rantly c onu ihuting to the n eduction in c ontingem in and hmpitali/ation of $6.2 million,increawd puu hawd ;xmes expenw was the $18 million a edit building ient expenw of $5.2 million, a s eduction of s creh ed fr om System l'.ncrgy pur suant to the IT.RG appr oximately $5.9 million in 19N7 : elating to a credit for Settlement and the n edm tion in System 1:ner gv'n ietm n on don to I:leruir Power Rewan h Imtitute and ino cawd its intnunent in Grand Gulf 1, $14.5 million of the $18 mate iah and Supplin selating to nuclear openitiota of inillion a edit was t elunded to cmtomn n. (See Note 2 to

$2.9 million. 'l hew ina raws wer e offwt in paii due to the the l'inamialStatements

• Rate and Regulatory hiatton-dis;xnition of ANG w hith den rawd other operation IT.RC hettlement.")

expenws $7.5 million.

The n eduction in fuel expenw in 1988 au ompaied to hiaintenam e expenw deo cawd $ 1.1 million in 1989 1987 was primarily due to iedm ed nuc lear and gas genera-auompaied to 1988 and ino cawd $7,0 million in 1988 as tion of 21.8 penent and 31.1 pn c ent, s espectiwly,inulting compas ed to 1987 due to con ogxnuling c hangen in from schedtded refueling outagn at both ANO units in r ewrven for nuc lear iciurling snaintenance expeme.

i 1988 and to an outage at the Ccnnpany's Ritt hic Steam Elo;uir Geneniting Station. In 1988 anompared to 1987.

MinotInseene the amount of puu hawd powei (hlKWII) inricased 22.3 Auompared to 198H, other income and deductions peu ent u hile puu hawd power omt iner cawd len than one dencawd $ l 4.9 million in 1999 due in part to a $3.6 petrent. Thew proportionately lower puu hawd power million neduction in Al'DC.cudting from nuclear fuel

< mts on a SlKWII hasiustrun ed becauw of lower capacity being leawd in 1989 nither than finam ed by the Company, costs fin Gnmd Gulf I and an innraw in the amount of r ' eduction of $M.4 million awwiated primarily with the dis-puu hawd powei provided by Grand Gull 1.

routinuam e injuly 1988 of defening a s eturn on im nt-Reductiom in puu hawd pown deferrahin 1989 ment in alleged eu eu capacity and the $5.4 :nillion net compar ed to 1988, as well m 1988 c ompar ed to 19x7, wer e altes-tax gain awiriated with the diqwnition of ANG leJune due primarily toinnrawd cun ent rollertion of puu hawd 1988.

power costs awiriated with the Gumpany's alkirated shaic of Gratul Gulf I cmts pursuant to the Rniwd Settlement Agicement.

M

~~ ~

l latereelOierges reduction for defened pun haust gamer costs /cu ra Internt < har gn dc< reased $2.3 million in 1989 m c apacity of $73.5 million, $138.1 rnillion and $195.6 miUion 4 ompar ni to 1988 dur in par 1 to dett cased inteint in 1989,19% atul 1987, r espec thrly, oct (mh ham openit.

l arenied on potentialitu ome tax liabilit) of $3 0 inillion and ing at thitin was $259.2 millum. $211.8 million arul $134.2 dericasalinter nt an hank loaut of $ 1.5 million of fset in a snillion for tiu>se t esperthr peii(xis. Other wo Ling rapital dencase in AITsC of $2.5 million arulim tcased inte nt as-an ounts inricased $28.4 million in 1989 as c ompar ed to moriated with ahe Department of liner gv Spent Niu lear l'uci 1988 af ter dett casing $39.2 million in 19sM as compar ed to t hsposal c ontrac of $2.0 million. Inter ni < haign de-1987 primarily due to variano s in the mu lear maintenaru e c icased $ 12.3 million in 198N au ompar ed to 1987 primar-o neno awx iated with maintenatu e dming tof ueling ily due to a favonible inter al hu orne tauettlement with the outagn. Redm ed contributions to mu lear dec omminion-Internal Revenue Senic c in 198N w hk h alk med the inrrsal ing tnist funds in 1989 af $ 15.5 million wer e s clated to the of $M.5 million of accrued internt for the yrars 197719M2, ntablishment of external dec omminioning tmsts in 1988, and p,9 ment in 1988 to em h inist of.dl c ollectiom gui<n to and imluding 19x8 of $25.4 mittinu. Alvicontributing to the ders ease in net rash h om openiting arthitin in 1988

___7 a

was a dericase in taxn acuued of $14.8 million as com-pared to 1987 primarily due to the rcreipt in 1987 of an J

merpavnient of 1986 payments under the System im ome tax allocation agierment.

H The unnpany's invntment in utility plant of $131.8 inillion, $103.9 million atul $146.5 milhon wer e,2.6

.,J L. tilallC4MCellDm001 peu ent,141.0 peu ent and 61.4 peu ent of nei rash h om i

open ting arthitin in 1989,1988 and 1987, inperthrly, uguidity Nm lear inei espenditm n dertcased $"6.0 million in 19M9 Cash and cash equivalents den cased $28.1 million oi as comp,u ed to 1988 due to financing under a new nuclea:

95.9 peu cut in 1989 as compaied to 198M and $57.1 mi' lion f uct lease of nuclear iuct prnioudy purchased by the or 66.1 peu ent in 1988 as compan ed to 1987. Refen em e is Gunpany, (See Note 4 to the l'inancial Statemento made to the Statements of Cmh flows for pm posn of the

%nmitments and Omtingentin Nuclear fuel.*)

following disruulon.

Proc reds of $27.1 million in ched h om the s.de of ANG Net cash h om operating arthitin was $185.6 million in and s epayment of $27.7 million to the Gunpany of notn 1989, $73.7 million in 1988 and $238.6 million in 1987.

in ch able fr om SI'l increased 1988's net cash h om imrst-Reductiom in defen ed pun based power /excru capacity ing ac thities m compared to 1989 and 1987.

awiciated with increased reoncr) of Grand Gulf 1 related Net < ash flow med 1 4 nancing ac tivitin was $80.3 fi rosts under the Rnised Settlement Agrcement inncased million, $M3.4 million and $142.5 million in 1989,1988 and net cash Ir om openiting arthities $6t6 million in 1989 and 1987, r espn tively, den easing $31 million hetween 1988

$57.5 million in 1988. Reduc ed deferrah and irn icased and 1989 and $59.1 million between 1987 and 1988. Thne run cut recoverin have a positive impac t on net c ash f rom varianc n wer e primarily due to 1989 and 1987 rash r njuiu-opercting arthitin. Ilowever, sut h delerratu ontinue to inents of $55.7 million and $85.0 tr llion, respectively, to u

r edm e net rash f rom operating arthitin since actual a ctir e Thllt in those r espective years and by the inn case in rollection ofievenues to lermri thne omts will not orrur payment of common suu L dhidends of $19.5 rnillion in until the futus c. I.ven though deferThl of Gr and GulI I 1989 m rotnpar ed to 1988 azul $2b.6 ruiIliort in l988 m puu hased power costs (whk h ar e not run ently s erover ed c ompar ed to 1987. Net proc ceds of $73.3 million hom the through rain to the extent of the dein rah) inn case cash 1989 sale of Phill and $27.0 million in shot t-tenn bornms equirements, nuc h delerral of Gnmd Guli 19 elated (mts ings ponidnl 121.9 peu ent of net cash hom finam ing t enunts the impac t of the phase-in plan h om the im orne m thitin in 1989.

Statement.cu luding the portion ietained by the Onnpany (Retained Share). (See Notn I and 2 to the 1 inancial Statements.*summan ofSignificant Accounting Policin*

and

• Rate and Regulatory Stattns,* roperthely.) Piior to D

f f

ammunwr menu munma me mums l

A dora n her if light Gmjens The O nninin) and h1PA 1.we:e Iwo ties io a l' nit Power Capitel Roseatees Pon haw Agn+ ment, w hi< h tenninaterl on inc< emhe 6, The Onnpan) haat ehtvl regulaor) aut nniration to i

19N9, for the oile to hlP&l.of the Onnpany's S t.5 lu rc ent sell up to $270 rnillion of I'ht!! ihr ough lthniary 28, IM61, f'

shaic of < ap.u ity and energs from ($1 A 2. Rewsme funn the Pur suant to un h autinnitation, the unnpan) iwurd $75 s,ic o,,m i, c apad,, te hm was appn.u,na,d, $27 i,,i.et w o.,3d,i9suand $i$o n,...n iwn,,i b n.us l

inilhon in 1989. The O nnpan> *n lirjo net ira ome will be IVKl. Pnu cedsinom theJuh lits 9 nah were used in par t for athra sel) imp.a ted unicu the Gimpan) is ahic to sell this the cai1 nxiemption of $50 million nun,tatuling highc 3

(apat it) o other pas ticon to mitiga'e its imp.u i h other o nt i h1ll and pnw tech f unn Ihe I chniary itF30 ude wer e 3

ancans. Regulatory apin ovals foi the ode of the Onnp.uif s uwd in inu t ior the sepavinent of duwi-ter m debt itu un cd intes chi in 1%I A 2 and Rik hic V to a new subsidiary of in counce tion with, anumg other ihings the ieinn haw of l'.ntesgs On gunation, named linicsg3 Pouw,Inc.,are

$1(kiinillion of the unnpany'u onunon suu L inJamiary priuling, but sulie< t to a ontest. Ther e is no amn atu e that imKL A :echirtion in the Onnpan3's lesel of < ommon sus h apgmnah will be obtained. (See Note V to the l'inan-equity sho ud hase the efiniof lowering the Gunpany's

< ial Staternentu

• Rate and Regulaton hiattes o 1.mergy c ost of apital. (See Notes 9 and 10 to the l'inatu ial State.

Powcr* for inionnation on the unnpan3's pro;xnal to mentu *Piciencd and Onnmon St'u ominu tion program c ontemplatch Rniwd Settlement Agirement, to thc luiwihte a rtis ement I

npenditutes (im huling Al'l)C amt eu luding nudcar inel) of high omt scrutitics,amllos othes < orixnate pmlown.

of apin oomatdy $148.4 million in 1990, $113.8 million in in whlition, the Onnpany iequested and haun einxl

!!PJ1,and $151.7 million in 1932. In whhtion to a omtr uo un ewan s egma.,y appunal to puu ced with arrange-tion eq cnditutes the Onnpany will base capitalicquins inents im ihe powible s edemption, pun haw or other ments in IWK)of appiosimatd) $ 15.4 million in < onnn.

m quidtion of < crtain of its scrurities itu huling all or a tion with the phaw in of a portion of G:and Gull'l-rdated portion of < criain outstanding sciirs of the Onnp.my's high rmts into r etail s ateA in lirJ1 1Mt2 the u nnp.my will bc c ol-inter est s ate I hill up to an ;.ggiegate pt incipal amount of' letting Grand Gull I < mis incuncd but not c ollened in

$200 inillion, in.uldition, the Onnpany inay ente into previom)cais pur suant to ehe phase-in plan. Ihning an angements for the sale on ude and leawh.u L of propet ty periods whe edencd < mts aie ierovcied,inenue in whic h the pu u ceds Ii oin un h tramartionu ould be uwd Colin tium wdl eu red, to the nient of suc h rm ient to ictie c certain debt iwurs at spn ial s edemptlon piic es at in overy, em t ent < ash Ieqitit rincuts for these rmto of neas par, (See Note 10 to the l'inancial Statemento in addition to the alm ne rapital requireinents $43.3

• long Term Debt.*)

[

million will he a cquired dming the peiiod IM61992 to in this connn tion, the Onnpany has fit a e b the f

meet long-term debt matm ities and to satisfy sinking f und APSG and the SI C applications uxpiesting, wng other sequir ementt The Onnpan) anticipatch that a signilitani things appnwal to sdl and tramfer its inter est in 1%I.S 2 and

xntion of its rapital and icfinancing s equiirments will be Rit< hic 2 to l'.nter g3 Power, Other nn ewary s egulatory met from internally generated Iunds foi ihe year s iVKL appanah have ahn been equested. Ther e is no awus ance iM'2.The Onnpany will require limited amounts of nier nal financing during the period, w hic h it eq cc ts to I

obtain through udes of Philland/or pielened him L and/

or sus h othm finaru ing an angements m may be appropri-anc.

4 r

H h

W(

%MnW hh to W ital r<insurninaliten (if sla( In tiaviu< ti(in windd (a(( H:

. [._, NM$

or that this pro lu N11 tiansartioin willin far i he vinsum-hi()ctraidw11987 thel'A%lliwutsiSt A% No.96 mated. In addition, the Gimpan) has been approar hed

• Au ounting los income 'l ases*, w hi< h wau lic< tive for a

c onc er ning a powihte une of its a ttail operatiom in hiiv fht al years beginning afirr Dec ember 15,19s.The l'ANIL souri. Pirliminar) dist uwions have been hehl with inter-sulustuently iwned statements numix1s 100 and 103, ested paities, but the Onnpany hm made no decision with w hit h delayed the rilective date of hl'A% No. 96 to ihral irgard to thiunatter.lf either ni lueh of these tianwu tions

)cais beginning alten Dec rmher 15,1101. Dur ing this wea r e onsununated, the unnpany touhl use all or a por tion rsiension pericul, the l'Asin will bc < onsidening various of the pnw redun tedeem all or a poition of < ritain u1ics iequests los aunendments to $1'AS No. 96. liased upon a of its outstanding I'hllt at sins ial r edernption pr ic es, at or pu liininas) snulv, the unnpany espects that the adoptioni neas pas, put suani to and in < ompliana e with applic able of NI'As No. 96, in its pr eseni for m, would iesult in a net poivii,iom of its moi tgage and deed of tr ust. The un ies of ino case in m rumtdated deler red itu ome tases with a the O unpany's l'Allt being c onsidened for sedemption c on osponding int irase in awets. It is not es pected that pur suant to these ln ovisions itu lude.but mas not he icsultn of operatiom los the unnpain wouhl be signifi-limited so,ihe balam e of the 1M 3/8% scrictslue De< ember

< anil impac ted in the adoption til Al'AN No. 96 in its 3

1,2012, and the 1 I I /8% series duc Dn endier 1,2011.

picsent Io m. (Nec Note 3 to l'inancial Statementu *In-(See Notch 2 and 10 to the l'inatu ial Statementu

• Rate and

< ome "I ases *)

Regulator) Main 1s* (l;nicigs Pimes and Aliwouri()pria.

tiom sectiom) and *lnng/l enn Debt *,irsperthch.)

liased upon the mmt r estric tive punisiom of the O upanis unn tgage and < hann aunt awunting an Lun-est/ dividend sate of 10% (and beloir giving(fic< t to the iwuaiu e of $ 150 million of I Min in l'cht uar) 1100), at De

< emlu131,1989, the O onpany would base bec,a pennitted to iwuc $3*(4 inillion in sulditimnl l'M11 and $20 i million additir ial pirici ted snu L s espe < thcly. (See Notes 10 and 9 to thc l'inain ial statemento -I nng Tea m Debt' and

• lS cirn ed and u immon him L*, i ctpcct h ely, los inf oi ma-tion icgaiding mininmm carningu osciage requin-ments.)

Shoit-tci en imin owinguif $125 million base Ix cri authniired by the St.C du ough 1100, subje< : to the m aila-bilit) of a edit iesomt es. Shot teim f x n sowings ran he clicued through the Money Pixel suhic< t to the availability of f unds u hit h at any pai tirular time tua) he limited, and iough available t.,iitorial hant lines of o edit. At Dei cin-In131,1989, the unnjsmy had $27.0 million in short tenn bor nmings outstanding h om the Money Pool and had available hant lines of'o edit of $62.5 rnillion all of whit h were unutiliicd. ($ce Note 7 to the l'inatu ial Statementu

• l.ines of Cr edit and Shoi t Tenn lion owings.')

ki l

1e

l~

MMMI $NH$

A rka nun l'ouer W ligl.1 %)en.s

____At Dec ce_nber 31 1989 _.._.._1988 an % mao A$$R$

\\

[

Udl6ty Plant (Notes I and 4):

i l'.lec trir

$5,999,576

$3,797,479 Peoper ty under rapital Icas.n (Note 5).......

97,373 98.038 D m s t ru c t ion wo: L i n p.- 1;i ns.............................................

90,125 75,387 N m ic a r f u el...........................................................

55 198 Nuc lear iurl under cap. ital lease.s (Notes 4 and 5)......._..........._....,.........

. ' -168,060.

162,744..

Total 4,133,846 4,265,139

'.. _I 55.*. armn,iutated 5 cps eriation and aunortiration.............................

1,218,703

_3.018.251 f

1 1,115.595 L

i

...._U. tility Lila.nt_ net 0

_._ 3.,_4_6,4 3_6.

_e.

l Odier Property and Imretments:

Imtstments in nuociated companics, at equity (Note 4)........................

I1,219 11.303 Other, at mst (Iru artmnulated deprcriation) -..............................

213 150 Total 11,432 11.453 Curtent Anneta Cash and cash equivalents (Note 12):

Onh _

1.190 6.279 Temporary invntments. at rost whic h apinusimates snarket:

. Anociated companies (Note 7) 20 (H80 Other.........................

3,(KK)

Total.............................................................

1,190 29,279 Not eu r(c h able. n e t.......... -..........................................,

8,336 2.70n Acmunts icrcivable:

' Aworiat ed com pan in...................................................

25,585 23,103 Customer (less allowance for doubtful arrounts.

. $ 4,290.(KKl in 1989 an d 1988).... -,........................................

58,707-48.?87 Other................................................................

5,915 5.109 Deferr ed fuel mst (Note 1 )................................................

(6,989)

(9.297) l'uct inventory at average cost.

35,874 22.30$

Materials and supplies, at average mit...................

58,901 49.887 Pi cpaym e n t s an d ot h er...................................................

17,4t6 13,461_

Total 204,943 184,840 Deferred Debits:

Deferred purc hased power msts (Notn 2 and 4)..............................

666,256 584,527 Deferred exc eu rapacity (Note 2) 72.250 80,462 Other................................................................

$1,290 48.549 Total 789,796 713,538 Total.

$4,052,607 _$3.9_28.082 mmm.-__ _ _._

_m__.._.___m_=__._.._.___

kr Nosn it. I'unancial Statemenn.

l 16

At Detesnher 31 1989 1988 tl.n 1%snud.)

(AMV&u14fml Allt H&ttuftt$

Capitalir.atinni Guninon stoc L. $0.01 par value: authorised 325.000.0(Ki shares; issued and outstanding. 54,980,196 shares in 1988 and 1989 (Note 9).............

550

$50 Pai d -i n c a pi t al.............................................................

695,301 695.254 Retained can ning6 ( Note 8 ).................................................

314,602 303,105 lotal..................................................................

1,010,453 998.909.

hefensed sto(L net of preenluin and rspense (Note 9):

Wit ho u t si n ki n g i u n d....................................................

126,890 126.890 Wi t h $1 n ti n g f u n d..........,.............................................

127,554 137.379

. 'Iotal....

.. _ -.__ _,_.... _.. _................................_..._. _.... _....__1,264,049._.1 2. 35._4 _40

,_long-tenu_ debt (N_ote 10) 2,528,946... _.

2.498,618 Other Nonc urant ljabilitic.

Obligatioin unider capitsu.',,e s ( N o t e 5 ).......................................

192,012 195,051 Other (Note 1) 2M,054 28.2s9 Total 220,066 221.2H0 '

Current IJabilities:

Cun emly inaturing long tenn debt (Note 10)...................................

3,(e80 2.580 Notes payabic (Note 7):

A sw i n t ed c oin pa nies....................................................

27,000 Othe 667 667 Anoun9 payable:

Aworiat ed com pa nies.....................,,.................,............

26,635 30.163 Other.

105,737 91,644 Customes deposits......,,,......................

8,344 7,598 Tas es ac crued........................

4 79,R53 67,357 Accumulated delen ed income taxes (Note 3)...................................

(3.526)

I n t ri est artru ed.........................................................

33,395 41.795 Dividends declared (Note 8)..

5,584 5,863 Nuc lear nfueling resene (Note 1).............

7,136 S,834 umnener advames (Note 1) 27,543 16,815 Obligations under capital leases (Note 5).....................................,

73,421 67,731 Other....................................

11.164 9.665 Total 409,559 342,186 Deferred Credits and Other 1. labilities:

Ac cumulated delened income tases (Noic 3)...

604,834 575.013 Arrumulated defened investment tax credits (Note 3)..........

187,152 183.609

-}'h. '221. '::: u:.'.: ' * ' ' ' ' ':: 's.uu: ' ' ' ': : u.': * ' :

• 21.'.:::' '::1:: a : ::.:_.

I?2',???-... I?t I?..

S

_. Total.

__. _. _ 894 036 _..- _865,9_9 _8 Commitments and Contingencies (Notes 2. 4 and 5)

Total

$4,052,607

$3,928.082 ae

.cm

_.c=.

n. =.=._e

..=

M Neotrs it. I natunatal hitstemesnh.

I7

r.

y l

(

99470EINtlCJ INCOME (Note 1)

A*aarnas 1.vun W lagla Company I'or the Yrata l'.nded De< cmler $1 1989 1988 1987 (In neuwndo k

Operadng Recenues (Notes 1,2 and 11):

1.letuir....................................................

$1.381,871

$ 1.356.789

$1,365.080

_ N a t u t a l g a s...................................................

39,776

_o._._..,.. _ 'Istal __..

I +331.871_

l.,356.789 1,404356 peradng r.ipcasest

, Operation (Notr !!):

l'uc t and f uel t ela ted......................................

297,795 282.051 350,059 Puu hased powc 379,095 435,811 431,716 Gas puu haned int s chale....................................

26,000 Other...................................................

300,502 296.835 243,048 M ai n t e n a m e.......................................,.........

95,002 99.096 92.048 Dej u ccia tio n.................................................

123,493 120,030 119.104 Taxes other than income tasen..................................

34,858 36,400 39,466 i nc ome tas es (Note 3).........................................

(1,903)

(23.390)

(10.684)

Rate driceral:

Driert ed puichahtvl power (Notes 2 and 4)....................

(81,122)

(128,897)

(167.956) inwme iasci (Note s) 30,769 48.89 73.170 Total 1,178,489 1,166,827 1,195,971 Operat):yg income 203,382 189.962 208.885 Other income ami Deductions:

Allowan< c for ecluin funds med dusing constrm tion................

2,657 6.303

' 5,605 Mis <ctlancom. net (Notes 1 and 2) 60,274 72.626 69.264 1 m o me ta s eqN ote 3 ).........................................

_ (20,3841 gi.M 4) _t:4.06q Total.

42,547 57d15 60,807, Intercot Charges:

In ter est on long-t erm <lcht......................................

120,164 117.873 119,287 Other interest. net of debt premium.............................

(3,910) 3,114 13.410 Allowame for borrowed funds used during mnstruction.

_(2,304)

(4,759}

(4.165)

To.tal Net income (Note 13) 113,950 116 ?.28 128,532--

$ 131,979

$ 131.149

$ 141,160 u

StAflRINTS Of RifAIIIED EARIIIIIt$ (N6te 1) for the Year a l'.nded Dec crnher 31 1989 1988 1987 fin 1kmsanda Retained F.amings. january I

$ 303,105

$ 244,025

$ 151,063

. [ Add

• Net _I ).Co. file.dNnic I 3}....................................

131,979 131,149 141,160 J

f Total 435.084 375.174 292,223 Deduct. Cash Dividends:

? '

Pa ciers ed st oc k............................................

22,790 23,858 25,554 Common stoc L (Note 8).........................

97,692 48.211 22,644

. Total 120,482 72.069 48,198 Retained F.arnings. December 31 (Note 8)

$ 314,602

$ 303.105

$ 244.025 w=mmm m a m-=- -

n----m====---~==

.%Notn tolirwrwialStatements.

18 h

$fAf880Nf8 (0 Glu PLMPS (Noir 1)

Adornsas num W lyst t.vonfount Ior Ihe % ais I mic<l 1)ce embr 31 19H9 19M6L 19N7 e l,, 'lkunstoutlu Operating Activities:

Notm<ome

$131,979 5131,149

$ 141,160 Nom ash noms im lucirci in not inn ninr:

1)rpin iation 123,493 12ti,030 119,104 inrierini tases A mve6 ment tas einhts 40,811 37,4kl 63,0$0 Allow.mi r im equin hm<ls uw<l cluimg c onstr uction (Note 1)

(2,657)

(6.303)

(5,6M)

Ps ovisions lot estiinnini lowra (1,673)

(6.628)

(4,551) 1)clenni pun haw <l powr c osi esicas < apa< in (Noir 2)

(73,517 n (138,077)

(195.612)

Nel g,un on sair of AN(. t Notr 1)

(5,350)

I.h.mges m wo: Ling < apital An nunta i n en able (13,706) 11,615 14,921 Au nunis p,nahir 9,4 k0 l10.731) 11,652 I nel uni nton (13,569) 6,820 (970) licien ni turl i o.ts (2.308 570 4.968

( hhre wo: Ling rapital au nunts (10,733)

(39,131) 44 I ases ao i uol 12,496 N26 45,618 lin omnnwinnmg it mi e onttibutu nn (9 H37)

(25,3h5) t hhn opn aimg.u tivmes (4,614)

(3,216) 44,776 Net e ash opo ating,u tivitics 1 M5,645 73,700 238,555 tencating Activities:

l'Ohn plant-(.onstnu non espemlitm ca (not of au t uals)

(137,56N)

(136,395) t 140,N65)

Nuc leai turl rspriuhtmes not 143 26,182

( 11,"53)

Allow.uu r leo equin huuh uw<l ciming c ointnu tion (Note 1) 2,657 6,303 5,605 (lthei pr opn n - not 1,320 1,724 3,468 l'ioc ents in enni f rom sale of AN(. (Notr 1) 27,095 lintut iion of innestments in awo< iaint < ompanics 27,674 Net c ash unesung a< tivines (133,448)

(47,117)

(143,045) l'inancing Activities:

Pnx enh Inom sale of first inorigage lumth 73,282 llop ivment of imtallinent pun haw < ontiac is (925)

(865)

(837)

I ung triin oble viom 1M 11' 6,659 4,628 4,377 Itetiremem of fi. moi tgage boinh (55,700)

(1,603)

(84,959) liiviciench g-( hmmon stot L (97.692)

(48,211)

(22.644) l'iriet icci sim L (23.070)

(24,255)

(25,321) lletirmphoin of prefetic<l slm L (9.766)

(l3,147)

(13,459)

( :hariges in shoe (-tet m luis iowmg 27,000 667 (hher fisiain ing at hvitics (74) 99 (2MS)

Not < ash fittatu itig at tivt6rs (80.286)

(83,354:

(142,461)

Net decrea%c in rush and rash equivalentn

$ (2N,0M9 )

$(57,071 )

$ ( 16,951 )

Cash and rash npalvalerith at begirmitig of year 29,279 86,350 133,30]

Cash and ra6h eqtaivalenth al cod of year iNotes 7 <tnct 12)

$ I,190

$ 29.279

$ 86,350

% Mon to I unn ur sul \\tusenu nas

/V

s

{

90fts te PIRAIK6M $TAf8880tf8 Arlaroua howr W light Gmpuro is used to e cdtu e furl espeme ior iurl adjmtenent pur]wnos during the maintenaru e avuliefueling period.

DelDty Plant and Z ' "

The unt of additions to utihiy plant inc hulcu on-tractul wo:L, dis c< t talwn urut materials alha able over-heads aiul an allowatu e for the < oml unite < ou of f muts IgER&BY W $40lIIPICAlli M(SWIfflet Peutet8 med during < omtruction. The onts of units of pio;wi ty artis ed me removed f rom utilit3 plant and un h unit plur.

Prinelplot of (dahta=

i cimival < ous, leu Salvage, ai e < har ged to at cumulated Psion to 19M, the fimuu ial staternents im huled the depr e< iation. hiaintenaru e mul s epair of pioperty and m rosmts of the (kimpany arul its wim!! ownni subsidiary, iept.u ement of items deinmined ni he leu than imits of 3

ANG. OnJune 1,19M the ('umpan), au nguis ed by the property m e < har ged primar ily to oper ating expeines.

Sl'C,dhjuned of its ininest in ANG b) meam of a rash Depicolation in om;mted on the straighidine b.nis at merges of ANG with and luto Aikansn Western Gas rates based on the estimaint servic e lives of the nu icms Company (At Lanon Westein), a subsidiar) of Southwestern

< lawes of property, liepiniation on aver age depi niable 1:nny Onnpany. The rash mer ge c omider ation wm pr operty in 1989,1958 atul 19M7 anumnted to approsi-matel 3.3 peu ent em h cas. Ndntantiall all the Ome approximately $27.1 million with A LamasWestern 3

3 3

awuming all liabilitics int huling appi oximately $3.8 million pan 3% utility plant h suljett to the lien of its umrigage amt of outstandinglong in m debt of ANG. (See Note 6 to the deed of trmt.

I mannal statements. *Pmu rait ement ikenefits.*) The Company s e<uided an $8.2 million gain on the mm ger.

Solotly tweed T- - 24 tellens S

with a las ofictt of $2.M million,iesuhing in a net af ter tas The unnpan)]ointh owm two c oal-f ueled genentting gain of $5.4 million.The net gain on the site of ANG, stations both of whic h have twu unitt The Gimpan) is the im huling the eesults of 19M operatiom prior to the sde, agent ior the iespective co ownes s and operates the m e im huled in miwellancom other im ome and chshu+

statiom. Ii iecor ds its investment and expemes anociated tions finam tal data shown for 1987 has not been e cstated with thesc statiom to the extent of its ownee ship inin ests in for the disinuition of ANG since the oflett olionsolidation the gennating stations isimmaterial.

At lin embe 31,1989, the unnpany's peu ent of ownn ship, investment and accumulated depi cciation, Systemiof Aseeents s espectively, in these statium ar c: White Bhill Steam The au ounts of the Gimpany aie maintained in 1 lecuic Generating Station 57% $396,332,(KKI, accoidam e with the uniform mtem of auounts presnibed

$ 106.257,(KK) and ISI.b S t.59'i, $294,405,(KK), $55,114,(KiO.

In thell.RC.

Revenees and PoolCosts Pestretitesseet Boeofits The Company a ccon du ctenues m billed to its cmtom-The Company haqxnu etirement benefit plam ers on a c>t le billing basit Revenue iumt au rued for c overing substantially all of its emphryces. Thc lxdicy of the

• enne delivn ed but not billed

• at the end of the fiscal Company is to f und pension onts in ac cor dant c with

peiiod, contribution guidelines cuablished b) the F.mployee Sulntantiallyallof the rate v hedules of the Onnpany Retir ement income Security Art of 1974, as amended, and include adjmtment c lames under whic h Iuct and pm-the Internal Revenue Q wie of 198ti, m amended, and to

< hased powe c mts above or below the leveh allowed in the f und other Iwati ctir ement plan onts m incurt ed. The rmts var iom tate w hedules m e penniued to le billed or r e-of gxnuctirement heahhtaic and life imuraiu e benefit

<;uir ed to be n edited to customet s. The Company has plam ar e an ounted for on a cash basis adopted a delenal metlagt of m couming foi those f url and puithased ower untuccoverable under fuel a@mtment loseeneTeses l

< lameA Under thh metinul, Mu h unts ar e deloiled to the The Compain joim its par ent in filing a o msolidated month in whk h the s clated s evenues ar e billed.

Federal im ome tas r eturn. Pur suant to an intra-Systnn The iuel adjmtinent f actor c omaim an amount for a im ome tas alkication agiecment,im ome tases ate alke umlear teserve, estimated torover the ont of replar ement cated to the Compan) in pr oportion to itu nnuihution to enngvwhen either ANO 1 or ANO2intown for xheduled the aimolidated taxable inoone, in annidanc e with SFC maintenaru e aud ief ucling. The ieserve bear s inter est and 20

1, r af tdatiolu sul bystein ( or:1 pali) is Npiired to l lay seior e defe aful N 8.fves difIce illg [MI:' lions oI Nic }nir( hased tru ome taxes than would have been paid had a separate gulwer c osts awn lated with its 36 peu ent alku ated share of im cne ras s etm n tv en filed. Defen ed im ome taws ar e the rapacity and eneig) fr oin Gt arid Gulf 1. !!y delcriing pun kled foi differem en between tw = >L and tasable itu ome Graial Gulf 1 nin hasnl powes ants whk b are not rur-i to the essent per mitted by the e rgidatory lu ulics foi re sidy renntred disoingli rates, theiinpart of Gravid Gulf 1-racmaling ptu;wnet. Imestment tax nedin alhu ated to n elated nats has been ienanal funn the iruunne statement, Oc (bmpany ar e defmied and anun tired enrr the average cuhuling the por tion n etained by the Caunp4ny (Retained melut hic of the rclated property,beginning with the 3 car Shau c), Only thow c osts pennanently tetained Imt : wit allowed in the c onudidated tas t etur n.

s ennvied th ough rates of through sales to third parties acudt in a seductkm of net inounc. Iterause the actual Allowenee ter Ponds poed Dewleg (eastreellen

< ollertion of inenues to rennes the defen cd amcmnts will l o the extent that the (kunpany is not permitted in its not a u nu until the iutm e, the (k unpany innu 5 rash a rgulator) lu ulics to s co nti in < un ent rain the < arn ing iequisenu nts in the anumnt of dine delerrals and at the urt of luiuh med for omstnu tion, the (kunpany rapital-same tiene t enn ds a defer r ed awet s epichenting the ires, m an approgniate unt of utility pl mt, All)C whh h is anunmtof thedeferralThecarryii phargoawniated

< alculated and icroided as punided in the n egulatory with the finam ing of the delenids a c iennrred runendy unifoi m system of m rounts. L'nder this utihty indmity f r om omtome: 5. Ihiring pe kxh V sen delen cd omts ar e pnirth e, romtt urtion wo L in pnigrew on the balam e in ovo ed s evenue rolleniom will ou ced, to the extent of sheet in han ged and the im ome statement is o ediutt foi sm h nu s ent g ennny, run ent rash s equir ements for these the tpprosimate non)w nine inicant cost of honowed Iunds c osts.

and for a irmonable acturn on the npiity Iunds used for romtrunion. This pu n edm e is intended io s emovc h om the hu ome watement the effen of the ont of financing the

< oniti m tions pr ogram avul t emhs in to cating the Al'DC

< h: gn in the same manner au omtrm tion latun and mater ial o nts. As noin ash iteim, u edits to the innune rtatement for the s eturn on npiity f unds have no ellert on

< mh flows f om ope:ating anhitin. Af ter the pioperty h plac ed in u nic c, the Al 1)C c han ged to comtruction omis h BM AI00 kl6DLATMY M4fftt$

in me able f:um omtomers theough depieriation puni-siom im huled in ateu harged Ior utility senice.The Grend $sliliedeer $tetles effertnr com[ unite All)C noe for the (kunpany wm 9.0 The Company h a party to tet tain agreements and peu ent,9.2 peu ent, and 9.2 peu ent for 1989,1988 and procenlings com erning System linergv and the Grand Guli 1987, e nperth cly.

Station. of whk h 90 percent iniwned or leased by System 1:nergy, (See *l? nit Power Sales Agicement and (imtunri-9thet16em CorroelLiehilities sin Concerning Gnual Gulf 1

• below and Note 4 to the l'i-It iube polky of the (iimpany to pnnide punisium nancial Statemente(imunitments and ( k mtingencies.

for uninuu ed pr operty :id s, n1 tain employer benefits.

Availability Agterment and Reallocation Agreement",with mul claiim f or injurin and damagn through < haign to respect to thne matters.)

operating expeme on an m crual basis. Ac cruah for thne punisiom have been alkmrd for ratemaking purgunes.

Unit Powet !Icles Agreeeneet and Centroeersies Consoreing trend esti1 Redeselfloations Pmutant to the allocation specified in the IJnit Power Certain v erlawilitatiom of pr eviomly s eported S.dn Agirement among Sy> tem 1:ner gy and the System amounts hm e been made to conform with nin cut c lawifi-oper ating companin m m der ed by the IT.RC in itsjune 13 catiom. Thne r n lawilitatiom had no ef fert on net Deci ion, System 1:ncrgy seth to the Syuem operating it u ome.

rompanin all of its 90hhaic of the rapacity and enngy f r om Gnuul Guli 1 in an on dasu e with specified peu entagn Rete Dolerrels (the (innpany, Sti% ; l.P&l. I 44; hlPkt.,33%; and NOPSI, t?nder the tenm of the Revhed Settlement Agmunent 17% ). Chaign under the l' nit Pown Sain Agreement ar e (see Ai Lam.n-Retail, Revhed Settlement Agm ment h.ned on System 1:ncign total unt of senic c,im luding m tion of Noic 2 to the l'inam ial Statemenn

• Rate and Sutem linn gn operating npemn, depi n iation, and Regulaton hiatters*L the Company willvanomly actain,

< apital onts attiihutalJe to the unit im the month. The 21

\\

i

Artamm hwr Wikit Gmofern (kunpany's inunthly obligati<m for payments to Sptem Arbeness

• toteE, $6Mleseent Ayeomeet I;nergy for Grand Gulf I rapm it) and energy is approxi-On Septemler 9,19N'i, the APSC appunist the terms mately $22 inillion.

of a Settlement Agreement whic h, knuing other things, Afict varican appeals of theJune 13 Dec ision on enohrd all ismes (cu ept alh aration and rate design, whic h remaral fium the United States (knirt of Appeah foi the were dealt with in a subwsluent in der ) : elating to renntry Distrh i uf (idumbia Cir niit Giurt (Dn Circuit), on No-In the Gunpany of the punkm, attributable to As Lansas vemler 30,1987, tlw IT.RCismed an or der maintaining the r etall customers, of ituusts asygiaint with its alk wated prnious allor ation of Grand Gulf I ca}uuity and energy share of capacity aint eneigt is om Grand Gulf 1 (As Lansas aiming the Sptem o; crating c ompanies as mandatatt by Costs),

theJune 13 Decision. In inning the N<ntmler 30,1987 The APSC orvier appuning the Settlement Agreement was contested 1 pleadings filed in separate (k g Lets with c<ler, the 11 RC ftumd that the athx ation in theJune 13 9

lierision was not undul) diwe iminatory, Rnpichts for the APSCin N<nember 1985.The Gunpany aral the APSC schearing of the l'I:RC's N(nrmler 30,1987 onder weie stati hmr answeied and mcn cd to dismiss these complaints filed by various parties and in order datedJanuar) 99,1988 These mattus are pemling.

the IT.RC denied sm h ntpests. Petitions for iniew of the N<ntmbe 30,1987 andJanuar) "9,1988 orders were filed Arbomeos. hotet, Bevised SoM6esment 7 "

with the Dn Cir cuit by various panies, and crrtain panies Tlw defenal punisions of the Company's Settlement ettempted to raise again the isaw of I'l;RCjuriulirtion to Agecement relating to actuver) by the Company of the clhu ate capac ity and ener gy and s etated nists anamg the Ai kansas Costs did imt comply with the r equh ements of Spiem ope: ating c ompanies. In a fev nm'am decision dated SI'AS No. 92, an an ounting stamlard invwd in August 1987 hia) 26,1989, the DE Ciiruit summarily s eierted the by the FA$h irlating to n eroiding of delcirut amounts as juriulic tional arguments and denied the petitlom for awets for arrounting pur} news.Therefore,the gwties, iniew of the i1;RC's Ntnrmler 30,1987 and theJanuary pummut to the tenm of the Settlement Age cement, 29,1988 oi ders, hulding that the IT.RC's action was both negotiated an ameixhnent thereof which biought suc h r:tional mal within the IT.RC4 range of diu s etion. InJuly punisioin int (n ompliance (Reviwxt Settlement Agice-1989, separate motionsior schearing of the Dn Cirruit's ment), whk h was approved by the APSC on October 6, hiay 26,1989 orden wr:c filed by the City of New 0:leana 1988, azul became ch'ertivejanuary 1,1989. The Gunpany and by the hiiwiwippi Attonwy General and the hiiwiwippi believes, and has been achiwxt by its independent auditots, Public Service Qumniwion. On Augmt 28,1989, the Dn that the Rnised Settlement Agicement satisfies the rniulu-Citruit denied the hiiwiwippi Public Senic e unnminion's ments of SFAS No.92, end the hilwiwippi Attonwy Generars petition for schcas.

1.ike the Settlement Ap cement, the Revised Setths ing and e rjened the City of New Oricam' petition as not ment Agt cement provides that the Gunpany permanently being filed in a timely manner. On Dercraber 27,1989, the ietain and not recover (except through other udes as hiiwiwippi Public Senire Qnnminion and the hiiwiwippi describal below) a ponion ofits At Lanuu Costs (Retained Attonw) Genend filed a petition for writ of ocrtiorari to the Shaic),The Retained Share (stated as a peirentage of Dn Circuit setting s eview by the United States Supicme Sptem f.nerg)% hare of Gnmd Gulf I) ranges from $.67 unu t, of the hlay 26,1989 decision of the Dn Cirruit. The pee rent in 1989 to 7.92 pen ent in 1991 and all surreeding matter is pending.

years of <cmmercial operation of the unit.

It is not powihle at this time to pntliet the ultimate Under the terna of the Reviwxt Settlement Agreement, outunne of this inatter, including powible realkiration,if the Onnpany is pendited to vennrr on a run ent basis a any,or the effect the colupon the Gunpany, the other portion of its Artamas Gmts (Cur rent Renntry Shar e).

Sptem operating companies, or Spiem f.ncrgy, including (See *At Lanuo Rate Riders'diwuwed below.) The gamible nelunds,if any. Any materialinodification of the Settlement Agrcement had provided that prior tojanuary tlhiration established by thejune 13 Decision nndd gh e 1,1989, a portion of the Gun eut Renntry Shan e wouhl le rise to additional litigation, disputes and < hallenges in the phauxl in, with the Gunpany defening for iutur c ienntry afin tedjuriulirtions. (See Note 4 to the Financial State-

< enain costs in the first thece years. Under the Rnised ments. %mmitments and Contingencies Availability Settlement Agicement, these pr eviomly delen cd ainounts Agirement and Reallocation Agicement"with icspect to ar e now included in the Defened halain e descriled below, c enain c outractual an angementuunong the System oper-and these is no Iunher defernd of any part of the Cunent ating c ompanieu elating to Gr and Guli 1.)

Recovery Share. The Cunent Rennery Shm e (stated as a peu entage of System I;nergi% hare of Grand Gulf 1) ranges fium 17.86 peu ent in 19N9 to 28.08 peu ent in 1991 and ther eaf ter.

22

3 s

,1, s

l' l,

Under the punisions of die Settlement Agierment.

from such rapacity to its t etail customers at a price equal to l

through December 31,1988, the Onnpany had deferred its avoided energy cost. Proceeds from sales of capaeny L

appoximately 5578 millico ofits At Lanw Q>sts foi future -

and/or energy from the Company's Retained Share shall

rnmrry, through both the phasing-in of part of the accnic to the sole benefit of the Q>mpany's stockholders l

' Cunent Recmrty Share (as desc ribed aboW and the and shall not be used to reduce the $ eterinination of the '

l imentorying of an additional mrtion ofAikansasGuts.

appropriate revenues to be a ccovered frnm the Company's -

3 i

l

,The Rnised Settlement Agreement prmides for au customers. Hownrr, any suc h sales of capacity and energy additional 12.47 percent and 6.95 percent of sucip costs inun 'he Ar Lansas Costs to thir d parties during the pericxl

- (stated as a jn rcentage of Sysicm Energy's share of Gnmd -

between, January 1,1989, and December 31,1995, will be Gulf 1) to be defen td in 1989 and 1999, respectively, for allocated in the following mannen (1) fifty percent of the ',

f.itm e collection (Deferral Shat e).The Deferm! Share, plus capacity and/or energy sold (not to exceed the amount of..

the $578 million of p, miously defen cd costs (callectively, capacity allocated to the Retained Share) will be considered Defeired lir! mcc) will be recovered by the Company in to be a sale of capacity and/or energy from the Retained p

increasing percentages from 1991 tiu ough 1998, at which '

Shai c; (2) the remainder of the capacity and/or energy ~

time tir Defe:Ted llalance will have been fully collected, sold w;.1, unless the APSC determines otherwise, he considi The btfened 11alance at December 31,1989 was 5662 cred to be a sale proimrtionately from the Defemd Share million. The Company is pennitted to ret over on a cun ent and the Qirrent Recovery Share and the proceeds of such L buis the iner emental cost of financing the unrecovered sale simil be applied to reduce the Deferred llalance, portion of the Defened 11alance, The R< med Settlement Agreement prmides that.

The Company's agreement to defer the recovery of should any otner System operating company enter into an

. As Lansas Onts is contingent upon and conditioned by (a) agreement to absorb a greater imrtion of Gnmd Gulf 1 Itw3elity to finance such deferral on reasonable tenns and related costs than the Gnupany, or should System Enugy (b) its ability to record on its books, on a current basis, enter into a settlement agreement to reduce its el arges to deferral of any Ai kansas Costs under applicable accounting the Company under thejune 13 Decision, tlic Retained ctandants. In the event the Gunpany is not able to finance Share will be correspondingly increased or decreased, all or any portion ofits delerred Grand Gulf 1-1 elated costs respecthely. (See " Unit Power Sales Agreement and on reasonable tenns,Ihen, prmided the Gunpany gives Gmtnnrrsies umccrning Gmnd Gulf l" above for a proper notice and subject to possible proceedings before discussion of thejune 13 Decision.)

the APSC contc<..ig the Comp mv's assertion ofinability to

$ ence, the Deferral Shane will be reduced dering the Arkeeses Retetiders period of such inability to finance, and the Current Recov-In conjunction with the Revised Settlement Agree-cry Share will be inct cased to the extent necessary to ment, the Company was permitted to implement its third recover, on a current basis, the costs which would otherwise annual update to the Cnmd Gulf rate rider (Rider MSS),

have been allocated to the Defes 01 Share. In the event the clicctiveJanuary 1,1989, whereby the Company increased Gunpany is not able to record on its books, on a curren, its Arkansas retail rates by approximately 2.7 peirent. The basis, the defenul of any Arkansas Costs, the parties to the 2.7 per cent increase reflects a 4.1 percent scheduled phase.

Revised Settlement Agreement have agreed to attempt to in plan increase offset by a 1.4 percent decrease in nues negotiate a mutually acceptable amendment, failing w hich r elating to a prior year overcollection, The APSC approved the Revised Settlement Agicement will thereafter be on December 28,1989 the Q>mpany's request for the tenninated.The Revised Settlement Agreement also fourth annual update to the Grand Gulf rate rider under specifies that in the event accounting standards ar e tenus of the Revi ed Settlement Agreement. Inc cased nites changed such that the Onnpanywould he pennitted to under Rider M33 of approximately 4% becmne cfrective defer Gnmd Guli 1-related costi v ithout having to satisfy January 1,1990.

j the eriteria established in SFALo. 92, then any party to the Effective in September 1986 the APSC appro"ed a j

Revised Settlement Agiecment may progmse a revision to Company proposed tax adjustment rider (Rider M38).

the Q3mpany's phase-in plan, and all parties agree to Rider M38, as modified,was designed to reduce Arkansas negotiate in good fdth wil > cspect to such proposal, retail nues by approximately $31 million annually to reficct The Onnpany has the right undes the Resised Settle-the reduction in the corporme income tax rate included in ment Agreer 'ent to sell ca,.acity and energy andlable f rom the Tax Reform Act of 1986. Rider M38 also included a i

its Retained Share to third parties, which shall not include corresponding refund over a three-year period wh;ch the Onnpany's wholesale customers. In the event the concluded in 1989 of approximately $88.6 million to reflect Gunpany is not r.ble to sell st.ch capacity and ergy to such reductions in certain accumulated deferred income tax third parties,it has the right to sell the energy antilable accounts.

)

i 1

23 I

VW

[-

lI N0ff5 C PillAPCIAL STMININTS j

Marwa 1% UIMa Gronjway i

l, in 1985, the Settlement Aj pcen cet des.ied the IT.RC staff, st ate and local s egulator s and ollicials, aiul Company a runent ictur n on @ged cuess capacit>mf 969 ollwr intenwed parties and was approved by the FERC on 3

megawatts, but allowed the Onr.pany to car n a f ull deferred July 21,1989.

seturn on she irvestment in stu h capacity tiiroughjurie 30, linplenwritadori e if the tenus of clic lYRC Sculemena l

1988. Defcrialu casedJune 30,1986 and pur suant to Rider in 1989 :esulted in, aniong ollwr thingo the following: (1) hl39, whic lavaulesigned to rc< oves sm h delen cd amounis Sptem Encryv canceled ami winte of1in Septeauber 1989 mer u lD car actovery pesimi, the Omipany began renn*

approximately 5!KKs million ofits $926 millian inwstment cring such delen cd amountsjuly 1,1988.

In Gnuul Gulf 2 { construction on whic h had been suv On March 9,1988, alw APSC appr oved a Qunguny-pemled since Sepcmtwr 1985) without seeking rate ptoposed revisioit to the existing Nuclear Detommiwlon.

renncry f rom itsstomers, tlw Sptem operating unmpa-ing Cost Rider hl26 aint a new Depreciation Rate Reduction nics, including the Company; and (2) System Encigy abo Rider hi il.The riders weie simuhaneomlyimplemented made a onw dme e redit t: the System operating companice hiarch 23,1988, and wer e designed to s educe the hills in an aggnyam amount of $50 million whic h wm Qnnpmy's rates by approximately $ 1,7 million annually, allocated umong the Splem operating com)nnies in compned of a $7.6 million increase in deconunissioning accord.um with their iespective pen entage amicathmif cost ami a $9.3 million decrene in depreciation aat. This Grand Gulf I aymchy nnd energy The Onnpanyhhas e of or der aim appnnrd the fumling of decommiwioning a wts this credit totaled $18.0 million ofwhich $14.fi milhon was with external trusts due to tax incentives pnnided by tlw refunded to cmtonwrs ' n 1989.

i Tax Reform Act of198 I and provided for an annual update While all parties to llw FERC Settlement agreed not to of the Decomminioning Ont Rider.On December 1,1989, pursue am pnulem e disallowance of Graml Gulf I tow the APSC approved the annual adjustment to Ridct hl26 str uction cmts und operating and maintenam e expenwa l

which i csuhed in an annual ina case to Ar Lansas ietail recorded tinoughjaue 9 W89abe IT.RC Settlenent.will nuepayers of approximately 0. l%, effective fromJanuary 1, not prejudice any partyWight to seek disaE: nance of such 1990 through December 31,1990. (See Note 4 to the costs recorded after that date or to continue to appeal dw f-

- ' financialStatements 'Omunitmentsand Contingen.

EERC's orders with respect to the idlocation of Grand Golf i

' ies.") -

I capacity and energy and related cosa among the Sntem operating companiesor the right of parties to seek Inture l

Hisseerl.1985 Rete tegnest changes to the Unh Power Sales Ags cement which are not l

Onjune 7,1985,' the O unpany filed an application incomistent with the FERC Settlement. (See " Unit Power with the PScht for un annualincrease in hiiwonri retail Sales Agreement ar d Omtroversies Concerning Gnmd rates of apinuximately $5.0 million mui an additional rate Ctdf l'above.)

rider to provide approximately $12.2 million fin Gnux i

Gulf 1 related costs usociated with Missouri retail custom-Arkesses. $tipolotles and 8ettlenient Agreesment i

ers (Missemri Cost) On April 21,1986, the PScht entered in addition to settlement oflTRGrelated iwues an order allowing the Onnpany to recover the Miswnd embodied in the FERC SettJement, the Gunpany, the Staff Cost of $9.0 million, offset by a reduction of approximately of the APSCand the Aihmsas AtmrneyGeneml hmv L

$3 million in other costs, phased in over five years. On entener'intoaStipulatbn and Senjement Agreement March 11,1988, the PSCM issued an order Approving requesung, among other things, that (1) the APSC permit Stipulation and Agi ecment and Tariff Sheus disiming of du Onnpany to recover in 1998 certain deferrals, amount-l allissues in this rate cmc.

ing to $4 A million, previoudy acenwd by the Qnnpmiy in connection with the APSC's findings in 1985 that < errain of HRC Settleenent t he Onnpany's generating capac,ity wm " excess", (2) in f

in connection with an cifort, referred to by the System order to muid an humediate application by the unnpany m "Pn ject Olive llranch", to settle outstanding issues and Ibr incicaseeiietad rates in Arkansas, the APSC appnnc tiu f

. litigation surrounding System Energy and the Onuul Gulf s:de mal tmester of the Company's interestin ISES 2 and Station and to stabilire retail rates in the System senice Rixhie 2 to Entergy Power bec "Entergy Power

• beknv),

area, onjune 9,1989, the Company, the oth er Sptem (3) the APScapprove conwlidation within the Sptem of

, operating companics, and Spiem Energy filed with the operating i esponsibility f or a he System's mn leur generating FFRC an offer of setticnwnt (FERC Settiement) that would units, including ANO (the Onnpany had previously fi%d an resolve variom FERGrelated funes in a way that would be application with the APSC with respect to this matter) (see

- beneficial to the Sptem, its investors and its customers. The

" Nuclear Management Comolidation" below), (4) the offer of settlement was subsequently supp"rted by the APSC permit amor tiration by the Company of o rtain im estmem tax credits, whhout changing the (.ompany's 21 t

5h

s eta;l rates to e clln i un h amos tiration and 6) the APS(:

appioval1on the sale atul trainte of its inter est in ISLS "

appant a iate c hange nunatorium whcich) the Osmpam and Riu hie" to i nierp Powei. A Powet Gundination would ma cel dangrs in iciail r ancs until Dn emhe 31, inica hange anal Tr ansiniwion Senic e Agicement between 1991, eu ep! neder sperib rin m,ntain et 1;flectivenesuil the unt'pam and Emcip Power has alwi heen filed foi ibis Stipulatum m..I Se+tlenaut Agieement is nintingent apin ous! with the ITRC Thes e iuun awunmre an to when ugnen APSC approval. Certain indmuial setail ru tomet s of uimuinmation of sut h tramartion wuuld o(rui on that this the unnpam base intencued in the puu ceding. Certain of

[n opmed transaction will in f act he consummated. If these intentnors hme imbrated op;wnition to some unnummated, the unnpany < ould me all or a portion of pimhiom of the Stipulati<m aiut Settiement Agreeinent, the piorceds to s edecin all or a lxirtion of c crtain series of tuul these is no asun mu e that APSC appioval will ultimatch its outstanding 1%lin at speciali edemption prices, at or near he obtained. Heanine on the Stipulation aiul Settlement pai, inu suaiu to amt in compliance with applicable puni-Agirement omrluded on l'chruaiy 13, IWO. Pmt hearing sioin of its neartgage mul deed of inist. The series of the biich hme been filed. These matten are pending.

Company's 13111 being < onsidet ni for redempti<m in wluile oi ni part, pursuant to these inovisionsinclude, but may suit Nwiest _

_ t Consolidetion he bmited to, the balam e of the 13 3/89 series due inJune 1989, plam weic aiuuum< ed wheich) a n udrai Decembri 1 "012, aiul the 141/89 sciies due December management rompam to he limwn as Entesp Opciatimn 1,"014.

in juoposnt subsidia 3 of Enteip Girporation) would to ruime( tion with its apphration to the APSC for awume ogn, ating i es} uinsibility Ior ANO, l.P&l ?s siiu lcai apl):oud of titis tininartion, the unnpany lias pio}x> sed a Waterioul Steain 1:lemii< Geneiating Suition l' nit No. 3 IM cai "raic cap," wherein the Gimpany would agree suit (Wawilout 3) aini';nuul Gmf I subject, tespeniveh to the to ierose h am Aikamas noepayers costs ol new generating Coinpam 's, l.P&l f s and System Lucrgis oversight. U s uiei capacity in cu ew of the rmt3 the customer woukt have the pn yn nal, which mmt he appmved by uu ious s egulatmy lunne if the Cumpany had ictained ISES 2 and Ritchie 2.

luke +, the Gimpany, l.P&l. Spiem Encigv and the othet The unnp.my has entered into a \\lemorandum of Gr.uul Gulf I and Wateiloid 3 oxiwner s uould r etain l'nderstanding with (ertain wholesale < ustomer s to ownctshipof their icsperthe nudear generating unit.

pmvide,in the event of approvalof formation of Enteigv l'urthu, the Company,l.P&l., and System Enerp vunld Powes, thme rustomen, with trummiwinn an ess at the a ctain theit aworiated capacity and enn gv entitlements earlier of: (I) :he expiraties of their ruisent contrart, or and would pay or reimbuise Entes p Openitions for the (2) thirty months af ter appioud of Entergy Power h the 3

ruso aworiated with operating these units in arrm dance SI'C These customers hase agreed to supp 'irt the wlh apph< able rutes and iegulaimm of the SEC which Company 's filinp beiWe m ;om n pdaion authorities ior icquire that sm h scivices he icudered at rmt. Applications inunmiwinn ac ress and appumi of Lnterp oower.

Ior appioud at or non. opposition to, the propmed ai-rangemenn hase been filed with the 1 ouisiana Pubhr Missowl Sporetkas Sa rvic e Omunis, ion (1.PSC), the APSC, the Omuril of the The Gimpany ha,been approa(hed routerning a City of New ( h Icam, l.ouisiana, the SEC and the NRC. The pmsible sale of its ician openitiom in hiissou i. The Arkansas Electric Encip Comumen petitioned to intei-Company's Missomi pmpern romtitutes less than 2% of vene at the SEC and s equested a hearing to comidei, the Gunpany s total puyo tv Pichminan disemsiom have among othen things, whether the claimed ellh ictu ies and been held with inter ested pani"s, but the Gunpany has t ost iedoniom that we uld r esult imm the new subsidiary made no decisions with regard to thk mattei. Any pr oposed may be achieved under l'nt< im Corporation's exi tic' ok wouhl be subject to appioud by variouu egulaton wrporate strurtm c. O:hers :nchuling the Cin of New ageia ies While their is no awurance that thh transaction 0:leum, base enteird app < arain es in this msttei. Appmval will in ias Se mmmumated,if romununated the Company of the NRC was ict ei ed on Dn ember 15,198n

'.,ui surh muld me all or a ponion of the pm< eeds to t edecin all or a appmuni k not elin the muil all otbei regula'an approuih ponton of iertain series Ouchuhr.g but not hmiwd to the hme been ierched and expir es 180 das ah' i issu;un e series ief cienced in the pierniing p aragraphi of its out-unless extended. Appiovalin the 1.PSC was reccia d in standing FMit at san ial tedemption pnrev in o near pai, Februiuy,1990, subject to < ettain miulitiom that ha r been pm suam i aed m < ompliam e with applicable pmvisions of au epted h) 1.P&L it mongage nd ked of innt.

Intergy Power The Compam has filed with the AP% the PSCM awl the SE(. apphratiom irquesnng, among othm things, 1

1 25

q,(

4 p u:

i b.'

4

- Netts to psNANClf1 STATIABOWil 4-

~

Arkarnas 1%rm t.tlight Company r

i 4

v fd i

'4.

j s

W i

[

llKGEETAIES

.t' l

- The components of hicome tax expense (credit) are shown in Table S-A.

l

.i Table 3 4

(

For the Years l'nded December 31 1989 i1988 1987!>

I

~

(in wwwnsh)'

1 l

Currents s

Federal.................................................................

$ 9,227 - $ 2,222

$i33314 1j State.

(788]

' 4.50T -

167L l

3 Total 8,439 6.727

_ 13.498. l' Deferred nets

-r.

a l.iberallied depreciation, '..................................................

' 28,697 30,960;. 28.419 L j

1J Altern ative minimum tax...............................................

(16,126).

5,850, ~(19,704).i l{

Coal freig h t se t t le m e n t...................................................

4,987 (6,406)

' Ne t operatin g loss carryforward............................................

10,025 (31.053).

a-l I nter est on tax deficiency.................................................

4,369 i 3.237 (812)

Amortization of excess deferred tax (13,287)'. (21,385)- (16,008).

Nuclear main tenance expenses.........................................

- (1,920) 8,459 (10,813);

Nuclear reserve and related interest...............

(1,165)_

(1.817)

(8,810): [

Deferred revenue and related interest (2,116) 5,683

. (5,980).

Provision un estimated losses..............................................

864 5.542 3.017 l

Deferred purchased power costs............

32,614 45,492 78,659 L j

Deferred cxcess capacity costs..............

(3,114) 1,548' 11,842 j

U n bille d reve n u e....................................,..................

(9,620)

-(798)'

124>

l Other.

3,060

. (3.052),,

(1.074)

...... m............................

~

Total 37,268 42.260 58,860 Investment tax credit ad.justments net 3,543 (1.972) 4.190 Recorded income tax expense

$49,250

$47,015

$76,548

[

z a--.

w

.a a

't Charged to operations... ;...........

$28,866 J $25.501

$62,486 Charged to other income 20,384 21,514 14,062 Recorded income tax expense........

49,250 47,015 76,548; income taxes applied agnhist the debt component of AFDC 77 72 182' Totalisuome taxes

$49,327

$47,087

$76.730 r.

r-w s

t 26 m,

e

~

(

9

n 1

['

y

~

1 p

e Totalincome taxes differ hom the amounts coinputed by applying the statutory fedemi income tax rate to income before taxes. The icasons for the differem es m e shown in Table SB.

M

• Tame H i

For the Years Ended December 31 1989 1988 1987.

S

% of

% ot-Pse.' lax-

' % of Amount Ps e. Tax Amount Pre. Tax

' Amount (000) hwome (000)

Income

((NIO)

Income -

[ fomputed at statutory rate

$61,618 34.0 %

$60,576 ' 34.0%

$87,083 40.0%,

increames (reductions)in tax resulting f rome b

' Amortiration,of extras deles s ed tax.............

(13,287) (7.3)

(21,385) (12.0)

(16,008) ' (7.4)

State income t uten net of federal income tax elfect,,.........

6,514 3.6 6.831 3.8 8,291 3.8 e

8

' Other net (5,595) (3,1) 993 0.6 -

(2,821) (1.2)

Recorded income tax expeme...............

49,250 27.2 47.015 26.4' 76,548 35.2 income taxes applied against debt

" component of AFl*C 77 72' -

182 l

Total income taxes

$49,327 27.2 %

, $47.087 '26.4%

$76,730 - 35.2 %

w w - = m - - = =..

=

Unmed imestment tax credits at December 31,1989, in December 1987, the FASilissued SFAS No. 96, aniounted to $22.1 million af ter the 35% ieduktion

" Accounting for income Taxes", which was scheduled to be,

, required by the Tax Reform Act of 1986.These credits may effective for fiscal years beginning after December 15,1988.

j be applied against iederal incomc tax liabilities in future years. If not used theywill expire in 1993 through 2004.

.The FASH subsequently issued statements numbers 100 and.

103, which delayed the effective dateofSFAS No. 96 to The alternative minimmn tax (AMT) credit at Decem-liscal years beginning after December 15,1991. During this her 31,1989 is $30 million.This AMT credit can be carried extension period, the FAS11 will be considering various Iorward indefinitely and used agaimt regular income tax. A s equests for mnendmenis to SFAS No. 96. SFAS No. 96 ex-net operating loss carryfinvar d at December 31,1989, pands the requirements to record deferred income taxes -

puounted to approximately $52.6 million and is available for all temporary dilTerences that are reported in one year to oilset taxable income in future yem s. If not med,it will for financial reporting purposes and a difTerent year for ax expire in 2003.

purposes. This will require the recognition ofdeferred tax Pursuant to an order of the APSC dated March 1,1982, balances for certain items not previously reflected in the the Gunpany remed prmiding defen cd taxes on certain financial statements, such as a deferred tax liability relating I

timing differ ences which were previomly nonnalized.

to AFDC. Under the liability method adopted by SFAS No.

L

' Iloweer, the order n;quir es the Onnpany to continue 96, deferred tax balances will be based on enacted tax laws prmiding deferred taxes on applicable decommissioning at tan rates that are expected to be in effect when the tem-

. costs of nudcar plant and provides for continued normali-pomry dilferences reverse. Ilowever, based on a pr elimi-ration of timing dilferences which are required by the nary study, the Lunpany expects that the adoption of SFAS o

Internal Revenue Code or state law. in addition, the APSC No. 96, in its present fonn, would result in a net increase in approved normalization for deferred purchased power accumulated deferred income taxes with a corresponding cats per the Revised Settlement Agreement.

inct case in assets, it is not expected that results ofopera-

' Cumulative income tax timing differences for which tions fier the Gunpanywoulu be significantlyimpacted by deferred income tax expeme has not been prmided are the adoption of SFAS No. 96 in its present form.

. $279.7 million $272.2:nillion and $251.9 million at December 31,1989,1988 and 1987, respectively.

1 i

i 27 i

y f

110738 C) FIIIAllCIAL STAflattlifS Arkarnas nmn WligM Gmpany Regulatory hiatteau FERC Settlement") would be amoi-tired for AntilabilityAgreement jun]nises over 27 years rather than in the month the write offwas recognised on System Energy's lxx Ls. This amendment was made m that the write-ofIof Grand Gulf 2 in September,1989 would not cauw a paynwnt by the Sy stem operating companies to be requised nnder the Availability Agieen ent.Since comme:-

COMMITMtilT8 Allt C00 mils 811 Cit $

cial operation of Grand Gulf 1, payments tuuler the Unit Power Sales Agicement (which include a eturn on equity)

Constrwelen have exceeded the amounts payable uvuler the Asullability The Q>mpany's construction program contemplates Agicement (which does not cover a s eturn on equity).

1 expenditm es (inchuling AFDC and ext huling nuclear fuel)

Acon dingly, no pay 1nents have ever been s equir ed uruler of apin oximately $148A million in 1990, $143.8 miuion in alw Availability Agreement.

1991,and $151.7 in 1992.

In November 1981, the System operating annpanies entered into a Reallocation Agicement, which would have.

3 Aveliability W :-!ensi n=Ma= ties Agrooseent allocated the capacity and energy muilable to Sy stem l'

The System operating compaules are wvendly obli-Encigy from the Gnmd Gulf Station and the related costs to gated, under the Availability Agreement in accordance uith 1.P&l, h!P&l, and NOPSI.These companies thus agreed to J

stated lica centages (the Company,17.1 %; LP&l,26.9%;

assume all the responsibilities and obligations of the hlP&l,31.3%; and NOPSI,24.7%), to make payments or Gompany with respect to the Grand Gulf Station under the i

mbordinated advances in amounts that, when added to any Availability Agreement, with the Gunpany s elinquishing its amounts :cceived by System Energy under the Unit Power rights to the capacity and eneigy of the Grand Gulf Station.

Sales Agreement or uthenvise, are adequate to cover all of Fach of the System operating companies, including the the operating expenws, including dept criation and unnpany, would have iemained primarily liable to System interest chaiges, of System Energy, (See Note 2 to the Energy and its assignees for payments or advances under Financial Statements # Rate and Regidatory hiattern Unit the Availability Agreement and assignmems thereof.The Power Sales Agreement and Qmiroversies Omccruing Company was obligated to make its share of the payments Grand Gulf 1.") System Energy has, with the con ent of the or mhunces only if the other System operating companies System operating companies, msigned its rights to pay-were unable to meet their contmetual obligations. Ilow-ments mul whunces fnnn the System operating companies ever, the TERC'sjune 13 Decision allocating a portion of under the Amitability Agreement to certain creditors as Grand Gulf I capacity and energy to the Company super-security for certain ofits indebtedness for borrowed money.

sedes the Reallocation Agicement inmfar as it rehacs to Paymeats or mhunces imder the Availability Agreement are Gntnd Gulf 1.

only icquired to be made to the extent System Energy's Responsibility for Grand Gulf 2 amortiration amounts receipts from all sources, including the Unit Power Sales described above has been alhicated to LP&l, MP&L and Agreement approved by the FERC, are less than the NOPSI under the terim of the Reallocation Agreement muonut requiied under the Amilability Agreement. InJune entered into in 1981. The unnpany is liable fbr its share of 1989, System Energy and the System operating companies, such amounts only if the other System operating companies with the prior consent of such creditors, amended the are unable to meet their contractual obligatiom. No Availability Agreement m that the Gnuul Gulf 2 writecII payments of any amortization amounts will be required as (disemsed in Note 2 to the Financial Staternents," Rate and long as amounts paid to System Energy under the Unit Power Sales Agr eement, together with other funds muilable l

in System Energy, exceed amounts required uruler the Amilability Agreement, which is expected to be the caw for the foreseeable futm c.

Delt Power Pordiese Agreenient The Company and hlP&L were parties to a Unit Power Purchaw Agicement, which terminated in December 1989, 28 l

+

f l

/ for the sale to MP&l.of the unnpany's 31.5 gwu ent shar e inventory. In connection with these aringements, the ofcapacity and energy Irom ISFS 2.The Gimpany*n Company, I.P&l., amt System Energy, as purchawrs from -

. ievenue associated with alw sale of sm h capacity to MP&l.,

SFI of the nuclear materials and senices, age red to pur-wxpproximately $27 million in 1989. Futm e carnings will chaw fr om SFI the nuclear materials and wnices financed bc ;ulver sely impacted, unleu the Gimpany is able to wil under the agieement il SFI shoukt default in its obligations -

this capacity to other parties or to mitigate its impact by thereunder The purchases under these circumstances Lothn means. (See Note 2 to the Financial Statements-would le of peerentages agreed upon letween the parties

• Rate and Regulatoiy Matter n Entergy Power"with tespect hut,in tl e abwnce of such agreement, the Cc..npany, to the Gunpany's propmal to wil its inter est in ISFS 2 and 1.P&l., and Syecm Energy wuuld each be obligated to -

Ritchic 2 to Enteigy Power.)

purt haw one-thir d of SFFs nm lear materials and wnices

imentory,

. j

.. Nl The Gunpany has u 35 percent interest in SFI, ajointly Cool owned subsidiaiy of the System operating companies. SFI SFI contracted with ajoint venture fbr a supply ofcoal '

olx rates on a non-profit hasis for the purpose of hnpk-from a mine in Wyoming which, based on estimated menting pt ograim for the procurement, ddivery and r esen es, is pr esently expectni to provide the projected storage of fuel supplies ihr the Sptem operating compa-requirements ofISFS through at least 2014. This contract nies. Its costs aic primarily a ccovered through charges for was assigned to the Company with SFI having no further fuel delhcied.

obligations or involvement under the contmet elTective -

E

' As of December 31,1989 the unnpany had Sii million Dec ember 31,1987. Under the contract with thejoint

ofloam outstanding us SFI which mature December 31, venture, investment in the mine for leases, plant and -

2008.

equipment is the res}mnsibility of thejoint venture, In SFPs parent companics, inclotling the Company, have order to limit thejoint wnture's investment and, hence, the em enanted and agreed, wvemlly in accordance with their amount to be paid to it'as a component of the price ofcoal, i espective shai es of ownership of SITS conunon stm L, that the contract prmided that SFl invest all funds fbr plant and they will take any and all action necess:uy to Lecp SFl in a equipment in excess of a specified amount.The Onnpanye sound financial condition and to place SFI in a position to AIP&L, Arkamas Electric Q> operative Corponition (AECC).

s discharge, and to cause SFI to discharge, its obligatiom in and the City orjonesboro, as co<muers, in part, ofISES conacetion with long-term lea es of oil storage and han-(owning 96.5% collectively), pnaiously agreed to make, or dling facilities and coal cars basing, at December 31,1989, cause to be made, the investments mther than SFI and, an aggi egate discounted vahic of approximately $67.0 accordingly, rcimburse SFl for SFPs previous investn.ents.

L

million, At December 31.1989, the Company had a net investment Fuel exploration and development activities of SFI of $ 15.6 million in mine facilities and related capitalized h:ve declined over recent years and some fuel programs are amets. The unnpany has made the required investments on being phased out or traEferred to other parties. In this behalf of the other co<mmers ofISFS (owning 3.5%

connection, certain charges and credits relating to SFFs collectively) and is billing them monthly (br the deprecia-investment in the fuel programs may be allocated to the tion and can)ing cost of these investmems.

Sptem openuing nunpanics, including the Gunpany. Any such charges or ciedits allocated to the Onnpany are not expected to significantly affect future results of operations.

On October 3,1989, SFI entered into a revohing credit agreement with banks that provides for up to S45 million of borrowings to finance SFI's nuclear materials and senices i

l l

.I i

I 1

1i 1

i

~

)

r i

v.

N9ft$ 0 FINANCIAL 5W.MENTS A rkarnen hwi W 14ht Comparoy

.l The O>mpany has agreed to pun haw, over an up-one-time fees for gerweationi pnor to that date.The O>m-proximate 2(hear period, whic h twgan in 1980,100 million paay has selected an option inade available by alw DOE to tons of a oal for tne at ihe White Illuff Steam Electric pa) the om~ time fee, plus interest accnied, no earlier than j

Generating Station.

1998. The fees payable to the DOE may tw adjusted in the future to awure full cost s ecovery. The unnpany has 2

Ilesleer Feel recos ded a liability of approximately $82A million includ-The Gunpany has agi cements with liabcock & Wilcox ing acenwd interest at th cemlwr 31,1989, for payment to Onnpany and the Combustion Engineering Company for the DOE tbr the dis;x> sal of all speni nuclear fuel on hami the Iabrication of f nel awemblica uwd at the ANO Station.

at April 6,1983. The Gimpany considers all costs incun ed -

On Dec ember 22,1988, the Onnpany enter ed into a or to be incun ed in connection with disposal of nuclear new nuc lear fuel lease which per mits the lease of up to $ 195 fuel to be proper comixments of nuclear fuci expense and ~

million of nuclear fuel. The lessor finances its acquisition punisions to recover auch costs have twen or will le made -

und ownen. hip of nuclear fuel under a credit agreement in applications to reg'datory authorities.

l and ihnmgh the iwuance ofiniernwdiate term notes.The Under the Act, the DOE was to begin A repting spent cr edit agreem.. has a tenn of Hve years and the intenaedi-fuel in 1998 and untinue until the disposal of all fuel from

[

- ate term notes bare var)ing maturities of up to 10 years. It is reactor sites is accomplished. Ilowever, the DOE's reposi-t ontemplated that the credit arrangement will be extended tmy progmm has been delayed. Ilased on the DOE's or ahernati e financing will be secured by the lessor upon current schedule for ac ceptance of spent nuclear fuel, the the matmity of the turrent ammgements based on the Gunpany's initial shipment of spent fuel to the DOE Onnpany's nuclear fuel re<piirements. If the lessor cannot storage facilities will occur in 2011, in the meantime, the arrange for alternative financing upon the iegularly Onnpany will be responsible for storage of spent fuel. The scheduled maturity of its lxirrowings, the Onnpany inust Onupany estimates that on-site spent fuel storage capacity pmchase nuclear fuel in an amount equal to the amount at ANO I and ANO 2 will be sullicient to stm e hwl fr om Ieqeired by the lessor to retire such borrowings. (See Note normal opemtion untilib tid limps. It is expected that 5 to the FinancialStatements

• Leases.")

any additional storage c city rcquired due to, among other things, delay of. DOE re[msitory program will be '

Spent Ilesleet f sol and Desonumissienlag Cost prmided by the Onnpany.

r

. Under the Nuclear Waste Policy Act of1982 (Act), the in addition to the recoveryofrosts associated with the DOE is required to construct storage facilities for and disposal of spent nuclear fuel, the Onnpany is also s ecover-disixne of all spent nuclear fuel and other high level ing decommissioning costs for its two nuclear units. These -

radioacthe waste generated by domestic nuclear power amounts are deposited in external trust ihnds that cam only reactors, for a specified fee. The NRC, pursuant to this Act, he used for future decommissioning costs. The Gunpany -

'C aim requires operators of nuclear power s cactors to enter regular ly resiews and ulxiates estimated decommissioning into spent fuel disinsal contracts with the DOP. Under the costs to reflect inflation and changes in regulatory. require- -

l-terms of the Onnpany's nuclear fuel lease, the Qnnpany is ments and technology, Decommissioning costs for ANO are L

responsible ihr the disposal of spent nuclear fuel The estimated to be approximately $399A million (in 1986 l

.Gimpany has entered into contracts with the DOE, dc'lars).The Onupany has been authorized to recover l

whereby ahe DOE will furnish disposal senice ihr the through rates, amounts which,when added to estimated

~ Onnpany's spent nuclear fuel at a cost of one mill per tnat investment income during the collection period, are kikiwatt-hour of net generation aher April 7,1983, plus expected to be suflicient to meet estimated deconunission.

i l

ing costs. These rates are roiewed and adjusted annually and are subject to regulatory approval. (See A Lamas Rate -

Riders section of Note 2 to the FinancialStatements

• Rate.

and Regulatory Matters.")

l l

l i

l' f

4

. I M

[

o l

1 Iledserinseresse IIM Adless The Pric c-Andet um Act punides for a limit of public During 1989, several chil penalties wer e awessed by the

liaWity for a single nuclear incident. As of Dec ember 31, NRC against the Company that iesulted in lines paid by the 1989 the liinit of gmblic liability for smh type of incident is Company aggregating $200,0(X). In addition, on April 24,

$7.741 billion.The Q>mpany is protected against this 1989, tlw NRC stafTpropowd to fine die Cornpmy $75JX)0 '

i lialflity by a combination of private insurance (piewntly for ha ing inadequate documentation in 1986 to ensurc

$200 miUion) and an indmiry assessment program. Under that certain electrical comp (ments at ANO would [wrfonn the escwment prognun, the maximum amount the as designed when subjected to harsh conditions predicted Company would be s eguired to pay,with respect ta cach to occur during a " worst case

• accident. Ilowever, the NRC nuch ar lucident at a licensed nuclear facility would be concluded that the equipment would have gwrfonned as approximately $66 million per i cactor (such amount to be required in such c onditions and at no point was plant safety indexed nrry fhr >cai s for inflation and includes a 5 compromised. OnJ une 22,1989, the Gunpany contested lwr(ent surcharge in ti e event total public liability clainn the viobtion.The matter is pending, and legal costs approach or exceed the limit of pmtection As a result ofincidents such as those that led to the otheruiw established), payable at a nite of $10 million per assenment of these cisil penalties by the NRC, the Com.

lic, n mi s eactor per incident per year At December 31, pany initiated a rniew ofits management controls and 1989, the unnpany had two licensed reactors.

policies at ANO.This rniew n uulted in significant organ-The Company is a member ofcertain insurance irational, procedurali,nd management changes at ANO in prognuns that prmide coverage foi property damage, 1989.

luchiding dec ontamination expeme, to members' nuclear in August and September,1989, the NRC conducted a generating plants. At December 31,1989, the Company was special Diagnostic Evaluation (*DE") ofANO to more fully insured against such losses up to $1.675 billion. In addition, nuluatt-ANO's over all perfonnance and the etfects of the Gimpany is a member of an insurance program that corrective actions piniously implemented by the Com-pmvides insurame coverage for certain costs of replaces pany.The DE, which is a broad-bawd enluation of overall -

ment power incurred due to certain prolonged outages of plant operations designed to be uwd to improve plant nuclear units. Under the property damage and replace-performance and more piccisel) bcus the NRC inspection -

ment power insunmce prognuns, the Compmy could be prograin, reported chat, while recent management changes subject to assessments iflosses exceed the accumulated and initiatives were having a positive effect, ANO had -

funds amilable to the immer, At December 31,1989, the several substantial management, orgimizational and techni-maximum amount of such msessments for the Company ca! 2rohkims that needed increased management atten-was $12.92 million.

tion. These problems, the report concluded, were camed.

The amount of property insunmce presently carried by by a number oflongstanding deficiencies at ANO.

the Quupany exceeds the NRUs minimum requirement

' Also, the NRC, as part ofits continuing review and Ior nuclear power plant licemees of $1 J)G billion per site, usessment program, performed a Systematic Assessment of -

The NRC regulations funher provide that the pmceeds of 1.icensee Performance ("SAIF) evaluation ofANO -

this insurance must be used, first, to place amt maintain the covering the periodJuly 1,1988 through September 30,-

' reactor in a safe and stable condition and, sacond, segre-1989. In the SAI.P report, the NRC determined that lower :

gated in a trust administered by <, independent trustee ratings for the latest SALP perfonnance period relative to and used to' complete reqmred dec ontamination oper a-the prior period were warnmted in four of seven functional tions. Only after pmceeds are used or dedicated for such areas. ANO received ratings of"3"in two ftmetional areas,.

me and appropriate regulatoiy appunal obtained would indicating perfonnance not significantly exceeding that the balance of these pmceeds,if any, be muitable to plant needed to meet minimal regulatory requirements.The owners or their creditors. On October 27,1989, the NRC findings of the DE rniewers were considered in the SALP -

propowd an amendment to its property insunmcc regula-icport ratingt

tjom to climinate the independent trustee requitement. It is anticipated that the pmgxised rule willin finalized in J

' arly April 1990. The Onnpany is unable to predict what l

c cfTect the NRC's regulations would have at the time when q

insurance proceeds wouhl be made muitable.

R j

i it

[ d 5 b,

vr-110785 CJ FIIIAIKlM STA788R81875 4

l Adansas twr &ligM Company in addition.onJanuaq 22,1990, the N7C notified the to sen.cc in December 1989 at a maximum power -

Onnpany of a siolation und a pro}msed $75,000 finc Dir 80% o which levelit is pennitted io iemain until ij wiring di ;repandes at ANO brought to the unnpany's

• sysmm problem is corrected.Tiic Company -

attention by the DE team. On Februaq 22,1990, the

. to con ett this problem during ANO l's next

')

Onnpany Iespoink d to the siolation by paying the $75,(X0 s ef acting outage, scheduled for late 1990.

)

One.

On hlan h 15,1990, the unupany submitted to the Ilierolioider utigetles

- i

?

NRC ajoint response to the DE nnd SALI' a cianu. In the re-

. Electric Sptem companies and individuals ar e defendants Entergy Q>rporation and certain other hiiddle South :

sponse, the Company addiessed eat h of the $1rcific i

pi ob'em areas nised by the NRC and set forth a compie-in a consolidated purported class action suit.The initial henyhr action plan that should significantly impunt the complaint was filed on August 19,1985, by an Entergy operations and safety of ANO over the next few years. The Corimration shareholder (purporting to rept esent a class '.

' Qunpany believen that the management, pn >< cdmul and that purchased Entergy Corponulon common stock). Four J.

- organizational changes effected in 1989.and inrther.

23,1985, Septendier 6,1985 and September 19,1985,-

similar complaints were filed on August 20,1985, August changes to be made in response to the NRC reports, should produce signi6nmt improvement in t he problem areas respectively, by shareholders of Entergy Corporation (puts t

rited by the NRC. I lowever, the Q,mpany cumot pretlict porting to represent classes tha, purchased Entergy ANO The Q>mpanyis annunned to mL'ing the actions

~

Coiparation common sto< L).The five actions were consoli-what additional action, if any, the NRG inay take regarding dated in the United States District Court for the Eastern 4

necewuy to achieve high vandards ofopenttion and safety District oflouhlana (District Court), The consolidated,

at ANO,.

amended and supplemental complaint alleges violations of ;

in hlay 1989, the NRC iwued a lin use mnendment, the disclosure requir ements of the Securities Exchange Act -

' based upon the Qnnpany's identificmion of a previously

' of 1931 and the Securities Act of 1933, common law fraud -_

unanalyred small break in the iligh Pressure lujection

-and common law negligent.uisrepresentation in connei L(" IIP!") Sptem piping, limiting ANO l's maximum power tion with the financial condition of Entergy Qwpora ion level to 80% The Gunpany made mvdifications to the iIPl and prays for compentatog and punitive damages, legal System to address this problem in December 1989. I low-costs niid fees imd other pmper relief arp inst Entergy ever, these modifications intuxluced unacceptable v'. bra.

Corporation, System Energy, LP&L, AIP&L, the Company J

' tions in the 1IPl System and were removed. ANO 1 was and NOPSI: certain current members and former mentbers -

p of Entergy Corporation's P,oard of Directors; certain officers and former ollicers of Entergy Quporation, System Energy, LP&L, MP&L, the Gnupany and NOPSI: the independent auditor of Entergy Corporation: and certain i

underwriters of Entergy Corporation common stock. On Alarch 14,1986, the plaintif1s in the ammlidated action filed a Alotion for Class Action Determination. On April 18, 1986, Entergy Corporation and certain other System com-panies, including the Company and indhidual delendants t

(System defendants), filed a hiotion to Dismiss or,in the j

alternative, a hiotion for Summaryjudgment. Onjanuaq 12,1987, the District Court entered ajudgment gnmting defendantv hiotions for SummaryJudgment and dismiswd the suit. On February 6,1987, the plaintiffs in the consoli-dated action filed a Notice of Appeal with the United States Court of Appeals for the Fif th Circuit (Fifth Circuit). On June 7,1988, the Fifth Circuit rendered a decision vacating 32 h.

~

7 h

1i

' w a

i a

,t o

f-I

{

. thejudgment of the District Qiurt. based,in part. ou the

- crot tunion that the District Gmrt had not adecluately j

t e..plained the bases for its decision. In remanding the raw L

. to the District Gmrt for further pioceedings, the Fifth A

' Circuit suggested that the District Court could again y

vonsider the merits of the Sysicm defendants' Motions for SummnyJudgment and determine, with the lwnefit of

. catain guidelines as to the interpretation of governitig law 184988 r

p a ticulated by the Fifth Circuit,whether the defendants are :

entitled to summaryjudgment aka matter oflaw,The At December 31,1989,'th'e unnpany had obligations 4

District Court was directed,ifit makes such a determina-

' under capitalized leases of approximately $265.4 million.

tion, to provide a detailed analpis supporting its conchi..

Included in this amount is approximately $168.0 million D

., sions that would facilitatejudicial review. Alternathrly, the associated with its nuclear fuellease. (See Note 4 to the.

, Fifth Circuit noted, the District unirt could decline to rule FinancialStatements.*Qunmitments and Contingencies. ' '

~

on the defendants' Motions for Summaryjudgment until Nuclear Fuel,")

further development of the case has takei, place and the Rental expense for capital and operating leases -

.I lasues have tren narrowed through the mallable pre-dial (excluding the miclear fuellease expense) amounted to up-

techniques. Ilased upon the Fifth Circuit's decision, the.

~ proximately $24.3 million, $23.6 million and $18.3 million District Gmrt allowed the parties to'rchrief the Motion for.

In 1989,1988 and 1987, respectively. Nuclear fuel expense.

i Summaryjudgment and, onJanuary 17,1989, the System exclusiw of negative sahnge, of $60.2 million in 1989, $61.1 e

defendants filed a Renewed Motion for Summaryjudg.

' million in 1988 and $74.1 million in 1987 was charged to -

l ment and a verified amwer to the consolidated, amended operations.

, and supplemental complaint. Onjuly 20,1989, the plain.

At December 31,1989, there were nuncancellabic j

tifTs filed a memorandum in opposition to the Re icwed leases with minimum rental commlunents as shown in i Motion for SummaryJudgement. On Septemlwr 29,'1989 Table 5-A. Table 5-A excludes nuclear fuel obligations ;

i y ' the System' defendants illed reply papers to plaintiffs'.

relating to the unrecoverad cost base of the Gunpany's '

7 opposition.The District Court has uheduled the trial to lease.which at Decen 'v.- 31,1989,was $168.0 million.

conmuence on March 4,1991.The outcome of this matter Reduction of this obligation for nuclear fuelis based upcm.

j

' and its impact on the Gnupany's financial condition nuclear fuel usage.

cannot be predicted.The matter is pending.

TeWe 6 At Mielmen Rental Commitments Capital; Opemting '

j 3

O Years leases leases j

(in TIwuutnds) 1990.....................

$ 19,271

$ 7,395',

l-

_1991.................'..,

19.289 ~

6,986 1992.....................

19,289-

'6,218.

, l py-1993......................

16,432

' 6,122 1

0

'1994..,..................

13.376 5,992 ~.

1 For years thereafter....',....

98,240 12,243.

t Total '

$185,897

$44.956 '

l less: Amount Representing Interest (88,524)

Present Value of Net Minimum lease Payments..........

$ 97,373 -

s p

33 T

~

r, t

' mens GD FINANCE STATE 84tNTS Arlaiam Powv & light Gm/mny pr ojected benefit obligation u cre 9.0 perreni atul 5.6 percent, e es[wctively tbr both 1989 and 1988. The ex.

perted long-tenn rate of return on plan assets was 8.5 peicent in 1989 and 1988. Transition awets are being am-ortised over 15 years.

The Gimpany also pi mides certain healthcare and life insurance lwncfits for retired emph>yees. Substantially POPRtilREMElliBENEFITS all employees may become eligible for these benefits if tlwy reach t etirement age while still wo: Ling for the Company, in conjimct on with the sale of ANG (see Note I to the' These benefits and similar lwncfits for active emplo)ces i

' financialStatements *Summaryof Signifinmt Accounting are pr ovided through utrious means including payments c

Policies"),in 1988 the awets and benefit ohhgtiom of the of pi emimm to an insurance c ompany and/or accamtis for

(

Onnpany's pension plans weie merged, elh ctivejanuary 1, selfinsurance policies managed by an insurance company.

1987, thinugh an amendment and restatement of the The cost of pnniding these benefits Ihr retired employees Oimpany's primaiy pemion plan. The prmisions of the is not separable from the imt of prmiding benefits for the plans were substantially the sene bui covci ed employees in active employees. The total cost of prmiding these benefits dif fer ent siivisions of the Company and ANG. OnJune 1, and the average munber,of active and tetit ed emphiyees 1988, under the terms of the sale agreement between the for the last three years are shown in Table 04 Company, ANG and At Lamas Western Gas Onnpany

( At Lansas Westein), At Lamas Western auumed the awets Table 6 A Penslem Cost Coenponents and benefit obligatiom, clicctivejannaiy 1,1987, which weie ielated to active ANG participants atJune 1,1988. The December 31 1989 1988 1987 Company's plan, m amended, retained the net assets and

. (h, no.wmio benefit obligations awociated with all ANG retir ees as of Senice cost. benefits g

June 1,1988 carned during the period $ 5,968 S 5,619 S 6,87,5.

The Onnpany's pension plan, as amended, coven s Interest cost on pntjected substantially all employees of the Onnpany. llenefits are benefit obligation......

15,196, (23,737). W.33 14,212 ~ Li,004 based on years of senice and the employce's compensation Actual return on plan asseti (42,495)

'dming the last ten > cars of employment. The Company's Net amortization and funding ;wilicy is to fund pemion costs in accordance with de ferral..............

23,672 4,286 (11,887).

mutribution guidelines established by the Employee Net pension cost

$ 2,341 $

410 $ 2,660 Retirement Inrome Security Act of 1974, as amended, and

=--

the Internal Revenue Owle of 1986, as amended.

TeWe 64 fonM Hates of Men The plan is administered by a inntee who in espon-

^

sible ihr pension payments to iedred employees. Various December 31 1989'

'1988 investment managers have esponsibility for management un nimmr,@

of the plan's awets. In addition, an independent actuar7 Actuarial present value of perfbrms the necessary ac tuarial uduatiom Ibr t he Com-accumulated pension pany's plan.The components of the % pany's 1989 1938 plan benefits:

and 1987 pemion mst,as detennine W iheactuary are Vested.

... $ 147,005 $ 126,299 -

shown in Tabic 6-A.

Nonvested 8,298 10,665.

Total pemion expense of the Cc,mpany for 1989.1988 Accumulated benefit l

and 1987 was approximately S2.3 million,50.4 millioa and obligation

$ 155,303 $ 136,964

$6.3 million, respectively. The Gunpany adojued SFAS No.

. 87

• Employers' Accounting ihr Pensions"cifecthejanuary Projected benefit obligation.. $(197,371) $(173,179) 1,198E Plan assets at fair udue 229,759 198,335 The assets of the plan comist primarily of conunon and Plan awets in excess of projected l

l pr efen ed sto< Ls, fixed inmme securities and insurance benefit obligation.

32,388 25,156 mutracts-Um ecogniecd prior senice costs 296 TSc f unded statm ofihe plan at December 31,1989 Unrecognifed transition awets.

(28,029)

(30.365) and 19881s presented in Tabic 641. The weighted average Umemgnized net (gain) loss

_ _ 27,976)__ 15,771)

(

(

discount rate and rate ofincicase in future compemation Accrued pemion med in determining the actuarial present uducs of the asc, 4iabilitv)

$ (23,321) S (20.980)

=

.=

Isble FC Table 7 A I)c<e m bes 31 1989 1988 1987 Eu s Ended 1)cc emhei 31 1989

. H8 1987 Total e osi of health oui alld lllc nisuialu e (In limummlo

$12.874 $8,37

$6,524 hladnuun numth-end borrowing

$30,968 $51,172 $667 Average mnnhet of artise einpimces 4,711 4,658 4,922 Year end lunwwing

$27,667

$ 667 $667 Asciuge numhei of "it ed emphnees 1,319 1,213 1,214 Average borrowing:

llank loans

$6,023 $21,001

$361 Associat<wl ro.npanies

$1.881 Othei

$667

$667 $667 j

i Average interest rate:

1)uring the period -

llanL loans 11.05'fr 9,15 % 8.28 %

Aworiated companies 8.62%

Other i1.00%

9.35 % 8.30 %

At end of period -

LINE$ OF CREDif AND SNORT TERM SORROWNIS$

Ilan. loans.

k Aworiated companies 7.97%

Under the Publir 1'tility Ilokling(innpam Art of Other 10.50 %

10.50 % 8.75 %

1935. the (kunpany has authorization fiom the SEC to have outstanding short-icnn horrowings aggr egating $125.0 million at any one time through 1990. See Table 7-A f or short-tenn honowings and the applicable interest rates (detennined by dividing applicable iniciest expense in the aserage amot.nt horrowed) for the Cinnpany.

'I he Gmnpam had $62.5 milbon and 512.8 million in linemt credit with Aikansas banks at 1)eremhe: 31,1989 and '988,icspectively.The Company had no outstanding hon owinp under thesc hnes of tredit at 3cai end 1989 or RETAINED EARN #198 1988. In addition, the Omnpany had approximately

$667,000 in other short-ter m horrowings at I)eremhe: 31, The indentm es relating to the Company's long-term debt and n ovisions of the amended and iestated articles of 1989 and 198E iesperthcly.

i Th" Compan3 par ticipates with res tain other compa-incorporation relating to the Company's preten cd stock nics of the Middle South 1:lectric System in a mones pool provide for t estrictions on the payinent of cash dividends (hloney Pool) arnmgement wherchy those System compa-on ronunon stock and arquisition o' outstanding shaies of nies with available iunds make short-term loans to other the Company's common stock. As of1)erember 31,1989, System (ompanies (other than Enterp Corporation)

$123.2 million of :"tained earning. were free from surl-having short-tenn hon owing requir ements The Company t estrictions. Ilowever, as discuwed in Note 9 to the Finan-may hon ow f rom these som res soldert only to its maximum rial Statements "Piefen ed and (kunmon Stock, the authori/cd lewl of short-ter m lun s owings At I)ct ember 31, Company a< quired $100 million of its outstanding mm-22.1990, thereb ieducing retained 1989, the Compam had 527 million in outstanding luin ow-mon stock onJanuai) 3 ings f rom the Money Pool.

carnings f ree lioin such t estrictions h $100 million.

3 The Compan3 did not dc< lat e am muunon stock divi-dends f ruin ihe sewnd quarter of 1985 untiljuly,1987.

Situ e 1987, the (:oinpam has paid quaiicih cononon stock dividends to i ntcigs Corporation aggregating $97.7 inilhon. $ IX.2 inithon and $22.6 inillion in 1989.1988 and 19X7, i espe tiich.

75 i

' T I OTES TO PIllAIKIAL STAftatBIff$

Arkarnas 1%un ff1.ight Gmpany ihat the Onnpany mayissue preferred sork to r efund outstanding preferr ed soc k without meeting an earnings coverace test.The carnings coverages for prefen cd stock were 1.71 and 1,74 at Decemtwr 31,1989 r4nd 1988, s esper-tively. Ilased upon the most resuictive test and on an amuned duided rate of 10 percent, the issuable amount of additional preferred stock was $204 million at Decemi.wr i

PREPERASD AlID COMmell$f0CE 31,1989, i

in Decemtwr,1987, the Gunpany reduced tac par A s;wcial meeting of the unnpany's conunon and pre-value of all common stock from $12.50 ps r share to $0.01 ferred stockholders was held on October 19,1988, and ad-per share.This resulted in an increase in paid-in capital of journed to November 9,1983.The stockholders adopted a approximately $G86.7 million and a corresponding de.

,'d proposal to create a new class'of 15,00(),000 shairs of pre-cicase in par value ofcommon "ock.

,1 ferred stock with a par ulue of $0.01. As of December 31, The Qnnpany rc ecxed SEC appromt to purchase from : '!

1989. none of this stock had tven issued.

Its parent, Entergy Quporation, up to $100 million of the '

'l To issue additional preferred stock, the Gunpany must Qunpany's common stock. OnJanua y 22.1990, the '

t r

meet a minimum camings covemge requirement of1.5 Onnpany repm chased from Entergy Corporation,8 times mumal interest recluirements and preferred stock million shares of the Company's common stock, $0.01 par :

dividend requirements. The Gunpany's charter provides value, at a purchase price of$12.50 per share for an aggre-gate purcha$c price of $ 100 million.-

. Table 9 A Cheoges le Shores Getsteedlag

. During the Year.

1989'

'1988 1987 Common stock shares sold..'...,

n:

Preferred stock nhares sold (retired):

(53,337)

(38,555)

' $ 100 par val u e.,................................................

(48,000),

$25 par value.....................

(199,086)'-

(337,218)l (391.325):

i:

. Tehle 9 9: Preferred Stock Outstanding l

l,

> At December 31 -

1989 1988 i;

(in Tiwusands)

-l

' Without n!nking fund:

Stated at $ 100 a share.......................

$101,350

$101,350 Stated at $25 a share...

25,000' 25,000 Premium and expense. net.......

540 540 3

Total preferred stock without sinking fund

$126,890

$126,890 L

. With sinking fund:

e Stated ut $100 a share.........

$ 73,030

$ 77,800

(

Stated at $25 a share..............

55,688 60,665

(

_ Premium and expense, net.

(1,134)

(1,086)

~~~ Total preferred stock with sinking fund

$127,554

$137.379 2.

?

36 i

\\,

.I I

i fable 9.Ct Prefereed plustos Detsteading e

Cutl'ent

[

Shares Shares Outstanding Call Price y

Anthorized 1989 1988

'. Share i

W A..t D. eccinber 31 i

Cuanulative, $100 Par Values

,Without sinking final:

(

4.3 2 % series..............................,

70.000 70,000 70,000

$ 103.647 -

'4.72 % se r les......,..,.....................

93.500 93,500' 93.500, 107.(KK) 4.56 % se ries...............................

75.000 75,000 75.000 e 102.830:

I 4.50% 19G5 se ries........,.......,..........

15,000 75,000 -

75,000

'102.500 6.08% serles 100.000 100,000 100,000-

.102.830.

7.32 % se ri e s.....,..,....,.................

100,000 100,000 100,000-103.170 7.80% series 150.000 150,000 150,000 103.250

. 7.4 0 be ries..............................

200,000 200,000 200,000 102.800 7.88% series 150,000 150,000 150.000 1')3.000' Total 1,013,500 1,01S,500.

1,013,500 With sin' Ling fund *:

10.60% series 96,000 90,000 98.000 -

106.740 1 1.01 % series.................... ;.........

I40.000 140,000 180.000 107.020

,)'

?

- 8.52% series 500.000 500,000 500,000-108.520 Tott.1 730.000 730,000

' 778,0(K)

U'niwned 1,086.500' y

Total S100 Par Value 3,730,000 1,743,500 -

1,791.500-

==a=w-

-a

. Cumulative, $25 Par Values

.Without sinking funde 8.84 % se ri ce '...............................

400,000.

400,000 400.000' 27.110 10.40% series 600.000 600,000 600.000 -

27.300-Total 1.000,000 1,000,000 -

1.000.000

, With sinking fund *:

9.92% series 1,027.518.

1,b27,518 1,109,478 26.910 13.28% series 1,200.000 1,200,000 1,317.126 28.220

. Total 2.227.518 2,227,518 2,420.604 i

Unissued........

5.772.482

Total. S25 l'ar Value '

9,000.000 '

3,227,518 5426,60-1 y -

_m-------=w.=w--

mm --

Cnmul'athe, $0.01 Par Value:

'I L

. U n i ss u e d...................................

15,000,000 i

Total. S0.0i Par Value 15,000.000

i l

= = = - - - - -

m==.

'

• Tiwu serin aor te a rctirnlin}Ollthrout h thr opnatiumfsinkingfunds. 7'hr V.92% snies,10.60%eries, f 1.01% serin and 13.28% snirs arrir.ng

' miermn!nuhymr at Ilw rate olNO.lMW),10,txx), 20,tKKIami 200,tXX)sharn, unfertiwit. Ileginning Newmber !, I991, the 8.52 %nies is to tw miennnt at j

the rate of23,tKK)si r, *s mch yar. In addition, liv Gnnpa ny hn the nonmunulatiw tplion to mhun an tulditwnnihkr amou nt ofsaid shain each yar.

i 37 I

- - O

o

<4 p.

E' 99788 TO FIIBAIICIAL STAflabillTS Mansus kvr & light Company

,a I,

LOW 6.flRM D881 y

futle 10 A Leag Teesi Debt ;

M At December 31 1989 1988 (In Thousands) 7..at Mortgage Ronds:

r. 5 /8 % se ries' d u c 1990...................................................,

5,)0.

S.

600-e

'4 7 / 8 % series d u e 199 )................,..................,............,,,

12,000 12,000 4 - 3 /8 % sc rica d u c 1993,,..........................,.......................

15,000 15,0(H)

' 4. 5 / 8 % serics d n e 1995...... i.............................................

25,000 25,000 ;

5 3/4 % series duc 1996..................

25,000 25.000:

6 1 / 4 % se ries d u e 1996..............................................,...,

1,760 1,960 5 7 / 8 % seric s d uc 1997..................................................

30,000

. 30,000?

8 3/4% serien due 1998....... ;,...

6,200

= 6.600. i '

o 7.

3 / 8 % sciic a d ue 1998..........................................,........

15,000 115,000 19 - 1/ 4 % series due 1999. 4,...................................

25,000 25.000 9 5/8% scrics due f 000......

' 25,000 25.000:

9.3/4% serica due 2000.....

2,800 3,0(H) 7 - 5 / 8 % se ries d uc 2001 ',.................................................

30,000 30,000 3

% serica d ue 2 001..................................................

30,000 30,000 s

7 - 3 / 4 % serica d u c 2002...................................................

35,000 35,000 :

' 7 ' l / 2 % scrica d ue 2002 4,..................................................

15,000 15,000 8

% serien d u e 2003...............................................

40,000 40,000-8 1/8% series due 2003......................

40,000 40,000 10 ; l /2 % series d ue 20Gl................................................

. 40,000 40,000

, 10. 1/ 8 % se s ic s d uc 2005.,.................................................

40,000 40.000' 9. 1/ 8 % se ries ' d ue SIO7....................................................

75,000 75.000 9 7/ 8 % series d ue 2008.................................................

75,000 75,000 s

- F 10 ~ 1/ 4 % scrics d u c 2009................................................

60,000 60,000 13 3 / 8 % se ries d n e 2012...................................................

50,000 75,000 13 1/4 % series d ue 2013.....................................

25,000 14 ~ 1/8% series due 2014.................

100,000 100,000-

10 1/ 4 % seric s d uc 2016.............................................

50,000 50.000.

9 3/4% series dne 2019..,

75,000 Totall'irst Mortgage ihmds 938,260 914.160 Installment Purrhne Contracts:

Pope County, A Lansas: due 1989 to 2015 at rates nmginn from 7-1/4% to 11%

• 140,505 140,580

,Jellerson County. Arkamas: due 1989 to 2008 at rates nmging from 61/8% to 10%

67,525 68,375 Independence County, A Lamas; due 2013 at rate of 11 1/8%.......

45,000 45,000 Total Installment Purchase Contracts 253,030 253.455 temg. Term Obligation Department of Energy (Note 4) 82,393 75,743 Unamortized Premlum and Disemmt on Debt. Net (6,554)

(5.828)

Total 1.ong-Term Debt..

1,267,129 1,238.020 te ss: Currently Maturing Portion 3.080 2,580 1.ong-Term Debt Excluding Amount Due Within unc Year

$1,264,049

$1,235.440

. m.a.=.

• $120 million,1! % l' ope County. Mansas l'allution Contnd lin enue floruh dur Ikeemir, 2015, inurd threm!wr i4X5, are secured 1 $128.8 9

million, 0.0% Fint Mortgagr ihnuh.

38 -

r r

L At Dec ember 31,19N9, the sinking luvul seguire-In mklition, the Onnpan) has also s ec ch ed regulat<>ry y mentdmd malmities f or long term debt for the )cais appiond to pnx ced with arrangements for the possible J

1990 tipough 199I aic illmtrated in Table 1011.

redemptien, puu hase or other acquisition of all or a portion ofrertah outstanding series of the Onnpany4 high '

.' fable 10-8: Slaislag Feed Regelrements and Leag form Debt inter est rate rhill up to an aggiegate principal amount of Esterities

$200 million.The icmaining se:les of the Qnnpany's l'Allt beinpm.ider en for miemption oracquisition inchule. -

Cash Sinking Imt may not be limited to, the balance of the 133/8% series

,Y_ ear._._ _ Sinking futul Fund

• Alaturitics*

• due Derember 1,2012, and the 141/8% series due Decem.

m g gg, g,

,7

,p g

himomi Opetutions sections of Note 2 to ihe Financial 1990..,,,,,

$900

$6.388 S 1,425 Statenu nts Tate and Regulatmy hlattet s"for information 1991...,,,..

800 6,26H 13.135 reganHug die possible wdemption of all or a portion of

'1992...,,..

800 6,268 1,225 cenain sesin of the unnpanp outstanding Phill at special redemption prices, at or near par, pursu,mt to and m 1993..,,..

800 6,898 16,350 1994.,..,,

800 7,118 1,470 cmnph un c with applicable provisions ofits or: gage and deed of rust.

,* These annuedsinkingfund mpmements may le mrt1 mtif asianuf 9

pwpeny additiona nt a utr of fb7% ofsuch mtuurments WDuv marunoin do not irflect $755.U(K)prdiulian omtnd mme lumds which arr.subj,rt to redemption at the optian of theludden ofsuch Imuls nia rrdemptionpuhr ofilMI%.

The unnpany receimi regulatory approval allowing the sale of up io $270 million additional Fhill tbrough TRAIISACflells Wlfil F< bruaiy 28,1991. Puisuant to this authoritation, the ASSOCIATED C08BPAlllES Onupany issued $75 million 93/4% FhillinJuly,1989, and

$150 million 10% rhin February 1,1990.

The Company buys ftom and sells electricity to the To Iwue additional Fhill the Conipany nuist meci a operating companies of the hiiddle South Elecuic minimum carnings coverage requir ement of 2.0 times the System, under mte schedules Gled with the FERC. The mismal mortgage inten st icquis ements.The amount of Onnpany also purchases capacity and energy from additional Phill the unnpany may issue is limited to the System Energy's Grand Gulf 1. In addition, the Onnpany lesser of such additional amotmas based on mortgage purchases fuel Irom SFI and receives technical and

' 'cowrage ratios or unfmuled lxmdable property, in addi-achinory senices from Entergy Senices, Inc.

tion, the Onnpany has tin ability, subject to meeting Operating revenues include revenues from sales to i

certain conditiom, to issue lxnids against the retiiement of associated companies amounting to $218.1 million in l

lxmds without meeting an carnings test, Earnings coverage 1989, $223.2 milWn in 1988 and $252.0 million in 1987,

anounts at December 31,1989, and 1988, for the Operating expenses inchule charges from affiliates for i.

i J.mupany's Fhlit were 2.86 mal 2.76, wspectively. Based fuel cost, purchawd power, and technical and advisory upon the most restrictive test and on an assumed interest senices totaling $322.1 million in 1989, $387.8 million in l

nue of 10 percent, issuable amounts at December 31,19S9 1988 and $383.7 million in 1987.

~ wem $381 million.

The Qnnpany and SIP &l.were parties to a Unit in conjunction with thejuly,1989 issuam e of $75 Power Purchase Agreement which terminated in Decem-i million 93/ l% Fhilldisemsed alwwe,onJuly 11,1989 S25 ber,1989 for the sale to hlP&L of the Onnpan>'s 31.5 l'

million rhin,13 I /4% Series due February 1,2013 and $25 percent share of capacity and energy from ISFS 2. The million of the outstanding $75 million Fhill,133/d% Series company % before-tax income associated with the sale of due December 1,2012 wew redeemed by the Onnpany.

such capacity to hlP&L was approximately $27 million in 1989.

t

(

1 39 i

i i

l (j

a,

a

(

t 1807E8 TO FIIIAlldAL STATEmillf8 A rkansas l\\nm W Ligid Ganpany for lntiposes of the State:nents of Cash I' lows, the -

Company c onsiders all higidy liquid debt instnunents purchased with a matmity of tiu ec months or less to be cash equindents. The supplemental disclostu en requii ed by SFAS No. 95

• Statement of Cash Flows

• m e shown in 'I able 12-A.

CASN AND CASN B00fVAL8NTS Table it.A Supplemestel Disdeseres -

' F_or.,the Y._eais Ended Dec ember 31 1989 1988 i1987' tin Thssekath)

Cash Paid (Received) During the Year

$115.835.

. $120,444.

Interest..........................c.............................

$113,476.

I n t erest on ra pital icases...........................................

11.772 11.659 11,489.

Daily lease charges nuclear fuel...................................

'13,099 14.683 11,332

' I n c o m e t a x e s '............,...............................,, ;....

(3,667).

4,030 (30.24M

. l Noncash Inventing and Finanemg: -

{

Capital lease obligatians a crorded (Note 5) '..........................

$56,902

$70,778

$61,479 '

(3,780)

First mortgage bonds assumed by purchaser lii the s tle of ANG t

e P

i 00ARTERLY RESULTS (UNAUDITED) 1 l

t e

Operating iesults for the four quarters of 1989 and 1988 are shown in Table 13-A.

(

Toble 13.As Geerterly Operating Results Quarter Ended March June September

, December _

(In Thenoands) 1989:

Operating Revenue

$317.943

$319.735 S427,153

$317,010 Openiting income 47.665 38.110 80.262 37,345 l

Net income..

28,872 20.817 63,514 18.776 j.'

Operating Revenue 5300.832

$311.351 S.124.867

$319,739 1988:

Operatmg income 40.119 37.985 88,012 23,516 l

Net inrome 27,611 28.635 67.210 7.633 1

The Inisinien of tlic ('oisipatiy is sulderi to seasoiial su'ni:ies tiioritlis A<rordirigl),caiiiiiigsiiiforritarit si fos asiy thirtuations with the peak period o< rurring during i.he thice-month period shouid not be consideied as a basis for estimating the r esults for a lulh ear.

1 1

40 l

1

\\

l l \\

IND8MND80lf ADDif0R$' REPORT M w as n,s m W 4eht a.uq arn i,.

h 111 Center Street, Suite 1800 Uttle Flock, Arkansas 722014420 F

To the Stwkhoklera and Dit retors of Arkansas Power

, assessing the arrounting principles used and significant estimates made by management, as well as evaluating the -

& l.ight Gunpany:,

l overall financial statement guchentation.We twlieve that We have audited the accompanying halance sheets of L AikansasPower&IJghtGunpanyasof December 31,1989 our audits gnovide a reaumable basis for our oplulon.

r and 1988, and the i elated statements ofincome. n etained '

in our opinion, such financial statements present earnings, and cash flows for each of the three years in the liiirly,in allinaterial respects, the financi.d gmsition of the period cuded December 31,1989.These financial state.

Onnpany at December 31,1989 and 1988. and the results ments me the sesiumsibility of the Qnnpany's manage '

ofits operations and its cash flows for each of the three ment. Our ies]xnnihility is to express an opinion on thesc.

years in the period ended December 31.1989. in confor-financial statements bawd on our audits.

mity with generally accepted accounting prinnples.

We ronducted our audits in accordance with genendly acte p's l auditing standardv Those standardsiequire that we pu sud perform the audit to obtain reaumable "7""

/

murance about whether the financial statements are fa ce 4 / pgg,,,#lg,,,

ot a u r.J nisstatement. An audit includes examining,on a test haus, evidence supporting the tunounts and disclo-sures in the financial statements.'An audit also inchules February 14,1990 8

1 k

41 c

\\

r i

OtfVgli YEAR $ Of PRetRES$40llAllGAL' Arkansas 1%urr & l.rght Company 1989 1988 (In *Inousando Selected Financial Data:

Operating reven ues..................................

$1,381,871

$1.356,789 Netincome.........................................

131,979 131,149 Total assets' 4,052,607 3,928.082 temg.tenn debt 1,264.049 1.235,440 Preferr ed stoc k, iiith sinking fund......................

127,554 137,379.

Capitalisation (end of period):

Prefen ed stoc k and premium / expense, net..............

$ 254,444 $ 264.269 Common stock and paid-in capital......................

695,851 695.804 Retained earninha 314,602 303,105 Total 1,264.897 1,26's,178 lemg. term debt:

First morty ge bonds...............................

954,842-912,079 '

5 a

D Installmen ; pm chase contracts'................... -..

246,814, 247,628' t emptenn obligations. DOE........................

82,393 75.733 g

Total 1.., _264.,049 1,235,440 -

I Total capitalization -

$2,528,946 $P 498,618 a-x w.

n,-

n

' Annual Payment Requirements:

Interest on:

c First mortgage bonds...............................

. $. 89,251

$. 88,667 ' '

.goggg Installment purchase contracts.......................

24,400 24,486.

Dividends on preferred stock.....'.....................

22,336 23,454

1. On]anuary 1.19NI.

Utility Plant (end of period):

AlWI. aatuival Adania,.

Plan t com ple t ed'...................................

$4,006,899 $3.895.517 Miswuri /buer company Construction work in progress.........................

90,125.

75.387 induding in wludly-owned Nuclear fuel' 168,1.15 162 942,_,.

1 suhiidiary ANG. onjuni1 Total utility plant 4,265,139 4,133,846 193#. AlWI, as mluierd by Irss accumulated depreciation.................

1,218,703 1,115.595 the A/;C, diiposed ofits internt en sts uMir owned subsidiary Net utility plant

$3,046,436 $3,018.251 ANG. TheJinandaldata in

__,_w.-

this reportfor theyrars 1981 thru 1987 are conwhdatal and Ineome Statements haw smt brrn restated siru, Operating revenues.........................

$1,381,871

$1.356,789 neither the effert of aaluisition

~0periit\\Gg expenses:

nor disposition is material.

Fuel and fuel related....................

297,795 282,051

2. Infannary 19N7. AlW1.

Purchased power 379,095 435.811 m#italimf its tenici n'd Deferred purchased power....

(81.122)

(128,897)

, r.tated 19361 therrfort, years Taxes - deferred purchased power......

30.769 48,891 afe r I%$ i,ul de utility plant ga,pu7cyagedfor7c,a}c,,,,,,,,

under rapitallrases.

Paroll opemtion and maintenance 120,100 119,241

3. ladada cunently matunng Olher operation and maintenance..

275,404 276,690-l e anunri 1987. AlWI,

'y e p r ec ia tio n................................

123,493 120,030 I"*'*

02 I N'U' U 1,178,'Ubb rapitahwl nudrarfurtirairs.

llourcer, only 1936 has Inn Total 489 1,160,n27 rntatalfor siuh frairs. /wr to

_ Operating income 203J82 189,962' 1937 nudiarfurl rrported on Other income and deductions - net (excluding' AFDC) 39,890 51.112 the l#daner shirt was only the -

Interest and other charges:

areount of nudrarfuelnn I"I"C"t on long-term debt...,.........

120,I64 117,873 c.uns ofjurt lenin 1 Noir I to thr Financial

- Other m. terest net of debt premium......

(3,910) 3,114 Total (excluding AFDC) 116,254 120,987 Aintements " Summary ofsie

__ Income from r even ues...........................

127,018 discuurs the romponents of Income from AFDC5 4,961~

120,087 ni/irant Arrountingibhars*

11.062

'l AIDC and its im/wt on the

' Net income

$ 131,979 $ 131.149 FinancialStatements.

i

)

42 i

e g.

o, I

1987' 1986 1985-1981 1983-1982 1981

'1980 1979

' ~

(in h mdiJ

$1,404,856 $1,389,494

$1,364,786 $1,307,083

$ 1,200,145 $1,046,143 $1,015,561

$ 750,497 $ 582,610 141,100 124,821 110,068 143,3(17 126,896 107,372' 96,140

. 65,230 82,404-1 3,889,453-3,737,693 E,307,882 3,060,817 2,859,517 2,069,417 L 2,474,249 -

2,147,983' 1,940,643' l.236,223. 1,313,00l 1,334,994-1,28(i,507 1,195,738 1,127,540 993,163

-848,667 819,716 151,255 165,009 120,812 124,170' 133,931 141,138 144,120 147,065 100,518' s

$. 278,l'45' S 291,899 $ 247,702 $ 251,060

$ 260,821

$ 268,028 $ 271,010 $ 273,955 ' $' 227.408 695,108 691,848 691,764 091,305 693,297 627,709 547,185' 458,569 427,960 244,025 151,063.

49,417 26.101.

28,158 33,365 43,134.

54,700 86,333

[2T7,578 IJ37,8101 DUf,583 97 [i66 tiSDYG 95971ii2

~~Ni5i329 757,224, 74i',7(ii

~

f 916,778 997,887 1,019,342 1,093,065 1,014,797 1,000,255 849,585 765,430 763,549 248,339 248,988 252,971 135,534 131,541 127,285 143,578 83,237 56,167 71,106 66,729 62,681 57 908 49,400 7-[D!ld,2'J3 T,Mlh,Mi I,354,991

[HSiQi07~

I,19?i,738 1,127,540 993,163 848,6Ti7 Hili,~71Ti

$2,453,501

$2.451,414

$2,326,877 $2,257,973

$2,178,014 $2,056,612 $1,854,492 $1,635,891 $1,561,417

.a=wm===m

..===u=

-~

m

$ 88,756 $ 102,031

$ 121772 $ 122,494

$ 108,727 $ 105,568 $ 82,986 $ 73,551 $ 62,436 24,565 24,610 21,70l i1,595 11,688 10,386 14,016 6,593 4,980 25,039 20,665 22,864 23,222 24,366 25,131 25,456 25,778 19,548

$3,803,454 $3,659,128 $3,478,274 $3,307,908

$2,910,470 $2,623,319 $2,546,016 $2,133,701 $1,231,832 103,416 127,337 92,563 105,762 306,398 364,252 255,468 2S2,376 980,054 l

109,974 162clol__ 35,68'l__ 27,321 24,979 16p69 10,21_4 7,151 4,076,814 3,P48,869 3,606,520 3.440,991 3,241,847 3,004,440 2,811,728 _ 2,423,231 2,211,886 1,068,407 961.615 860,226 766,537 679,232 605,401 532,261 417,435 364,447

$3,008,437 $2,987,251

$2,746,291 $2,674,454

$2,562,615 $2,399,036 $2,279,467 $2,005,796 $1,847,43 m-i

$1,404,856 $1,389,494 $1,364,786 $1,307,683

$1,206,145 $1,046,143 $1,015,561

$ 750,497 $ 582,610 350,059 324,920 314,096 361,109 339,371 244.595 310',673

' 253,418 159,907/

431,716 454,558 317,821 133,964 160,126-178,841 141,316 154,126 171,425-(167,956)

.(210,334)

(76,016)

^.

'.73,170' 103,527 37,415 20,000

-31,592 35,816 44,894 44,150

.40,986.

30,637 a

p 115,765 x

'i10,955 102,832 97,659 87,210 77,566 67,897 49,774 -

40,607 K'.

219,331 222.597 210,201' 169,145 133,746 127,509' 129,402 84,628 65,754 '

i p,0 119,101.

1i4,742 109,686 97,451 92,621 84,194 77,923 59,574 -

39,708 28 782 19,059 96,'143 161,275 131,644 101.,,146 90,530 54,033 34,948 u

1,195,971 1,171,616 1,147.,997 1,065,497_

994,868 854,837 848,378 655,553 512,349 j

,j.

208,885 217,878_

216,789 242,186 211,277, 191,306 167,183 94,941 70,261.

J 55,202 48,214 28,871 11,204 14,457 12,687 17,497 17,468 23,627

-l 119,287 140,566 138,752 126,974 119,466 108,557 90,755 67,036 67,091 13,410

'10,853 7,310 7,376 7,152 11,272 21,038 17,619 10,296

]

132,697

.151,419 I46,062 134,350 126,618 119,829 111,703 81,085 77,387 131,r90 114,673 99,598 119,040 99,116 84,164 72,887 27,727 16,501 9,770 10,148 10,470 24,327 27,780 23,208 23,253 37,503 65,903

,,, $_.141,160 $ 124,821

$ 110,068 $ 143,367

$ 126,896 $ 107,372 $ 96,140 $ 65,230 $ 82,444 n.u. _ _ _ _ _ _ _

=

P i-

's

F ILIVIN YEAR $ Of PR00ttss-OPERAfill6' Arkanw,l\\nm oI.igla Ct.mpany 1989 1988 Electric Operating Revenues (thousamis of dollais):

Resid e n tial...................................

$ 425,568 $ 416,646 Onnmer cial.........................

254,636 239,740 Industrial. nluminunt processiiig' I n d u s t ri al.................'........................

307,853 287.558 G<werntuen t and mu. nicipal....,.....................

20,990 19.563

. l

~r Total irom retail customers.........................

1,009,047 963.507.

1 e

Public u tili ties',.....................................

345,377 365.560

(

Miscellaneous rnynues..............................

27.,447-27 722-

'l 2

Total electric operating revenues >

$1,381,871

$1,356,789 m._ m m.-. -

Electric' Sales (millio' s of kilowatt-1 ou'rs):

n Residen tial. '.........................'....._..........

5,098 5.149 Co m m erci al ~... '......................'...........'...

3,644 3,566 -

, ' Industrial; aluminu'm processing' '.... 4...............

~

I nd u st rial........................................

5,513 5.325.

Govermnent and municipal.........................

320 305

=

Total to retail customers..........., '..............

14.575 14.315~

Public utilitics' 12,128 13.144 26,703 27.489 Total energy =old

" ~'

Il0H$

N

^ ~ -

^ ~~

Number of Customers (end of year):

l. lileven rean oflWro-Residen tial.......................................

512,826 508.151 U/< rating irlates to the Gm u mercial..............................

63,849 62,918 Company's elettrir v/<mtions Industrial ahuninum processing'.....................

and d,<s not ondude data I8,165 17.550

. I H d tI IIdI * * * * * * ' * ' ' * * * '...' ' * *.*.*.* * * * * * '.'.'.*..

rrlatal to ANCfor the fedm!

853 1.287 Government asnl inunicipal' 19#1 thevugh 198#. Ser Not,

/ to thel'innnrinIStatements-Total retail customers............................

595,693 589,906 i

" Summary of Signifiennt Public utilities

• 15 15

)

.u ~...,u Accounung1%hrin *for anlor, l

Total custmners 595,708 589,921-

]

mation on the disjuilion of ANG.

2. lleynol.h Aletah Com/mny.

Electric Energy (millions of kiknvatt. hours):

4 legan phasing out its Source and disposition '

aluminum smelting operations Generated m t station output

in drharuus in 1983. Once in

1. w'

. Coal.......,......'..'..........,...........

t 9,W.

p,W8 -

g

'wntract expirn!(lktraler 31.

i2s12S' 2.0G4 '

}

1986), ite naount mertal tu a -

Gan.

U' Oil:........'*...............'.'..................

94

• 107

. stantiardindustrialratrand L wen rrd<nsi/ial as on ;

. N u c lea r........ '. o..............................

' 8,844 8.895 -

l ij;d ro..........................................

.199 #

'-178 I

d, industdal rustomer,:

~

3. Indudn sales to nuoriatal wmpanws.,.

. I'otal gen erated...............................

21,264-21,542 n

.?

? ' / '

.t. nepr 1931indudes.5311

Pu rc hased..................>..............'.......

6,773 7,322 J L

mrginaun to suppiy Arknesasr i Net i n t e rc h a n ge..........

1......................

. 96l '

73" j

- 28,133-28.937 1i 4 I:latrit Cmpantiw Cor/wrn-Total o

U W p' L ion (At:CC)Ioad which a

. Less: Con 0iany uses, loues and unaccounted for 1,430

'1,448 :

t Dnolying suppfini />y thest

<rnen tapal#Lty. I'rars pdor to

. Total energy sold 26.703 27,489 '

.l

[(;$N.

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$ 400130 $ 391,014

$ 356,492 $ 334,693 $ 315,960

$282,201

$257,801

$212,833

$I60,992 230,842 223,597 202,856 187,MI5 169,367 153,393 148,938 128,477 100,741 25,226 56,930 94,067 56,629 50,175 69,527 69,171 65,861 270,575 250,401 242,247 224,392 200,296 183.975 179,331 140,422 112,515 17,901 17,403 19,213 23,288 20,989 19,081 14,787 12,824 11,447 92555l 907,671 877,738 864',035 763,241 688,828 670,384 56h3,76 7'il",556 409,317 405,882 405,767 361,581 379,598 299.724 298,781 181,650 125,980 30,282 31,862 33.292.

18,981 6.052 5,572 5,569 5,120 _ _ _ 5,074

$ 1,365,080

$ 1,315.415 $1.316,797 $ 1.247,597 $ 1.148,891

$994,124

$974,734

$750,497

$582,610

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5.091 4,903 4,7 12 4,664 4,612 4,514 4,418 4,480 3,884 3,5(0 3,363 3,269 3,079 2,927 2,870 2.819 2,682 2,444 101 1,676 3,060 2,57) 2,081 3.064 3,411 3,349 5,017 4,560 4.548 4,511 4,251 4.246 4,311 3,675 3,681 281 281 328 405 391 410 312 292 326 l l,540 is,h8'4 i

13,892 13.208 14.563 15,719 14,755 14,121 14,924 15,509 I4.398 11.999 8,918 8,965 7,388 8,358 5,445 4,204 29,401 27,606 26,562 24,637 2.L,720 21,509 23,282 19,985 17,888 197,878 193,569 487.275 480,133 47I.508 162,753 458,941 405,717 400,290 61,125 60,224 59,516 58,080 57,141 56,709 57,133 49,444 49,009 1

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1 16,915 16,623 16.465 14,811 14,161 13,528 13,529 12,284 12,151 1.212 1,1 12 1,137 2,652 2,481 2,372 2,332 1,518 1,617 577,160 571,559 561,421 555.677 515.292 535,363 5? ' 'i'16 468,994 4650Fi8 15 17 17 17 17 l_8 23 19 19 577,175 571 576 561,111 555,694 515,309 535,381 531,9;9 469,013 46'4,087 10,299 11.515 10,853 7,191 7,237 5,22I l.293 601 3,132 2,75" 427 2.111 2,978 2,660 4.727 4,741 2,468 10 6

3 35 72 389 1,653 4,050 11.369 8.879 9.889 10,770 7,583 7,163 9,173 7,831 4,1 O 1 116 150 207 235 201 176 140 103 251 24,9I6 23.306 21,882 20,310 18,034 15,595 18,722 14,929 10,875 5,986 5,974 6.247 5,4 10 7,402 7,2 11 5,980 6,459 7,740 (47)

(4) 91 165 100 82 12 (209) 296 30,855 29,276 28.223 25,915 25.536 22,918 24,714 21,179 18,906 1,451 1,670 1,661 1,278 1,816 1,409 1 132 1,191 1,018 29.-101 27.606 26,562 21,637 23.720 21.509 23,282 19,985 17,888 3.860 3.804 3.68i 3.650

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BOARD Of MREGOR5 ArkarmnI w r W I.od,t G mpuun I

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u, excruthe sk e picsident aml < hici mu leat ollit er of AP&l.amt 1.P&l Ile is president and < hief excrutive

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oliit es of System Energy Resomres Inc., (Spiem I:nce gy) and senior vic e picsident and spiem escrutive-nm lear of Entergy Goiporation and 1:ntergy Servi < es Inc. Ile is a divertor of 1.P&l.and Spiem Energy, aho, tiom, the Amriitan Nuclear Energy Cmmril and the

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he lie is diicctm of the Institute of Nuclear Prmer Opera-J'*

i Nurican hianagement and Remun es Colmtil.

I Cathy Cunningham, Ilelena, Aik., is a real estaic amt mdusttial dncloper, plannn and histoiic luesenution-ist. Chairman of the Delta Cultural Center Polic v Achi-

.l d '"""M" N*#F wry thiaid, she is a hoant member of Fir st National ILmL ofl'hillips County and a politica' amt rivir leades.

JohnJ, I' luke. l.ittle Rock, Ark., is < hainnan of the Gas & Electait, Enteigs Cosporation,l.P&l./NOPSI amt board of Flake & Co., a ronuncerial ical estate develop-AP&l.. Ile is active in senice to youth and ruhural ment finn. lie has sened as chainnan of the Girater affairs.

1.ittle Rock Chamhei of Commen e and picsident of the Edwin 1.upherger, New Odeam, La., is < hainnan, Dov ntown Paituriship, lie is a member of the 1.iitle president and c hief excrutive ollicer of Enteigy Corpora-Rock $1unicipal Airpm: Conunission and provides board tion. lie has 26 yean' experience in the ciertiir utility senice to a variet) of health tme imtitutions indmiry with emphasis on finance. Ile has piovided Richard P. IIerget.Jr., l.ittle Rm L, At L., is a manag-national leadn ship in education and emnomic dnelop-ing diiertor of Starsh & Slot.cnnan,Inc., the world's ment, sening on the hoaid of dhertors of the Electric largest imutance brokerage finn. Ile is a dis ector of Power Rescan h Imtitute, Edhon Electric Imtitute, Union National liant of 1.ittle Ro< L. Ile is arthe in Tulane Unhenity at New Orleans the NCAA Fonnda-politics and higher education, including lonner r hair.

tion and the National Alliance ofIlminess, Wmhington, man of the Aikamas Staic Unhenits lloard of Tiustees.

D.C. lie became an Enteigy Corporation dis ertor in I

Tommy II, Ilillman. Cmlisle, Aik.. is president of 198T>.

Winn ock Fm ms, Inc., and vice chainnan of Riteland Jerry 1 Maulden, l.ittle RotL, ail.,is chairman of Foods,Inc., produrets of pmebied and commeirial the board and chief executhe ollicer of AP&L and rattle, rice, soybeam and a heat. Ile is active in banking, NIP &l.and senior sire picsident and splem excrutive for agrihminess and his conmmnity.

the Aikamas/Miwiwippi/ Aliwouri Division of Enteigs IGmenster llodges,Jr., Newport Ai L., is an attorney, Corporation. lie herame an.\\lP&I. dis ertor in 1988. Ile fonner U.S. Senatoi (1977-79) and Methodist lay miniv holds national leadenhip positiom on NAACP and Ikiys ten, lie is a leader in the state's wildlife < omervation Clubs of America boaids of directon.

I movement and a member and lonner chainnan of the Raymond P. Miller, Sr., AI.D., l.ittle Rock, Aik., is a University of Aikansas (U of A) 11oard of Trmtecs. lie paitner in the 1.iule Rock Inte nal Medicine Clinic and became an Enicagy Corporation disenoi in 1981.

an awktant clin: cal protewor at U of A School of Medi-Ital F. Ilunter Jr., New Madrid, Mo., is an attornet cine.1Ic is a member of the U of A Foundation and a and senini paitner ofIlunter & Ilunter, as well as New lonner member of the U of A Ikiant of Trmtees.

Madrid rit) auorney and pimeruting attm net foi New Roy L. Murphy, llot Springs, Aik., is chainnan and Madiid County. Ile is r, chic and political leades.

president of Mid-South 1:ngineering Co., a consulting R. Drake Keith, Einic Rock, Ark.,is president and engineering and mnstructor gioup specializing in chief ope ating officer of AP&E. IIc has 2f> scars' senic es for industry. Ile is active in cronomic dnelop-expciiente in the electiir utility industry at Oklahoma ment, higher edm ation and youth and social senices.

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s OPPICOR8, sf0CK90LDIR liitetthAfl000 Manoas nur W !.ight Con +an.s f

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PPICIRI TOCENOLDER 180f0RMAflell 3-y L Madden

,,e.s,e,.,e.,s,e,,,e.e.,ed Chairman of the lloard and Chief F.wecuthe Olb.rer Union Nationalllank ofIJttle Roc L R. Drake Keith 1 Union National Plaza Picsident and Chief Operating Ollicer 1.ittle Roc L, Aikansas 72201 William Cavanaugh 111 Fint Conumi;d llank Executive Vice Preudent and Chiel Nuclear 00icer Post Olucellox 1471 F.lTectnejanuary 1,1990 1.ittle Rock, Arkansas 72203 Kenneth R. Breeden Senior Vice President-Customer Scivices & MaiLeting Registrer of Preferred Stock Fitst Commercialllank Donald C. llints Pow OHice lim 1471 Semor \\ ice Pren. dent-Nuclear 1.ith Rock, A Lansas 72203 EffectiveJanuair 1,1990 Lee W. Randall Certified Pebik Assoomtoets Senior Vice President-Finance & Administration, Chief Deloitte & Touche Financial Olucer, Secretary and Assistant Ticamter 111 Center Sucet "C '^ ""'"'

I Cecil L Alexander Vice Piesident-Public Allairs Eseestive Offisos T. Gene Campbell Aikansas Power & l.ight Company Vice President-Nuclear 425 W. Capitol Resigned clTective February 28,1990 1.ittle Rock, Arkansas 72201 IbOI)

N. S. (Buzz) Carns Vice President-Nuclear gg Elfective March 1,1990 Tidrd %'ednesdy of W-JohnJ. Ilarton Vice President-Financial Services. Treamrer and Feren 10-R Assistani Secretay The 1989 annualieport to the SEC on Form 10-K is Charles L Kelly

"*N".I'.le to any sui iolder upon reciuest, without charge I'} """"E Vice President-Corporate Cominunications John R. Marshall Shirley A. llunter, Assistant Serietary Vice Piesident-Customer Services At Lansas Power & l.ight Company Post Ollice llox 551 Marshall L Pendergrans 1.ittle Rock, Arkansas 72203 Vice Prendent-Fomi Product. ion & Transmission M. W. (Pete) Rice Entergy Corporation AnneelReport

%ce Prendent-System PlanninM To icc[uest a copy of the 1989 Entergy Corporation llenry L Warren Annual Report, call or write to:

Vice President-Planning & Connol Entergy Corporation System Investor Relations CaryJ. Dudenhefer P.O. Ilox 6100,

Assistant S,ecretary New Orleans,l.A 70161 (800)292 9960 Shirley A. Ilunter Assistant Sect etary 48

j.. 3 J )

A Lans.n Power & l.ight Energy Reviurces, Inc. is Cennpmy (AP&l,) owns a nuclear generating elecuir iacilities in 65 of sulnidiary respmsible for Arkanus' 75 rounties and in management and ogwration 13 of hiiwiuri's i14 rounties. of the Gnmd Gulf Nuclear At Decemtwr 31,1989, the Station. Another subsidiary, C4unpiny hu nished retail Entergs Seni<es,Inc.,

electric senice in 328 pnnides utrious tech-Arkansas and hiiwiuri uiral, administnitive, and inroqxnuted municipdities.

corporate senices to The Gunpmy alvi punides Entergy Coquinuion and the g]pp{isqn D%

ty "yy ky yg gp p>wer at wholesale to seven Sptem comptniet y

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,M Ailansn and two hiiwniri The Spiem is runently municipdities and in seeking irgsdatory appnnul hi Arkanus to two rural electric to conmlidate ogwrwting conjeratives and one respinsibility for the System's awiciation of rund ek ruic fom nudcar units into a coopennives.

propmed new atdisidiary, AP&l.is a wholly Enten;y Ogwnuions Inc.

owned nuhsidiary of Enteig Alvywnding regulatory Corpuution, the ek otric appunut, a new subsidiary, mility holding company for Entergy Power, Inc.,is the kliddle South 1.lectnc plumed as a wholesale Sptem. For 41 >vars, the genenuor that would hiiddle South Ek ctric purchase AP&E's interest in System has been the leading the Independeau e 2 and ciertric energy supplier to a Ritchic 2 genenuing units, 91,(MMW;uase-mile region and then sell the capacity and along the lower reaches of energy Inim these units the Klinissippi River.

out le the hiiddle South The System's vast Ek r 'ic System.

network ofinterconnected tnunmission and distribution lines and diversalied grid of fouil fuel and nuclear geneniting plants pnnides electricity to more than 1.7 million ietail omtomen.

in A kamas,Inuisiana, hiinissippi, and hiiwiuri.

licackguarten d in New MIDDLE SOUTM ELEGRK SYSTER Orleans, Inuisiana, Entergs E Retail Vnse Aem Corpiration inchuk s f our artail ogwruting c ompanies:

ArLansas Power & l.ight Onnpany punides electric senice AP&lo Inuisiana Powei &

within the portions of Aikansas and hliwmri shown in red.

1.ight, hlississippi Powei

& l.ight, and New Orleans Public Senire Inc. Sntem L..

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