ML033040161

Enclosure 2 - Entergy Corp 10-Ks - 1996 Annual Report

ML033040161
Person / Time
Site:	Indian Point
Issue date:	12/12/2000
From:	Groth J Consolidated Edison Co of New York, Entergy Nuclear Operations
To:	Document Control Desk, NRC/FSME
References
-RFPFR
Download: ML033040161 (270)

Text

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UNITED STATES I ' SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) t0 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 1996 OR 0 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commsioa Reghtmt, Swe ofHacorpyon. IRS Empty Pate NUMbe Addrs ofPrindoal EutIve Orrfim and Telepohne Number Tdentirs"tion No.

1-11299 ENTERGY CORPORATION 72-1229752 (a Delaware corporation) 639 Loyola Avenue New Orleans, Louisiana 70113 Telephone (504) 529-5262 1-10764 ENTERGY ARKANSAS, INC. 71-0005900 (an Arkansas corporation) 425 West Capitol Avenue, 40th Floor Little Rock, Arkansas 72201 Telephone (501) 377-4000 1-2703 ENTERGY GULF STATES, INC. 74-0662730 (a Texas corporation) 350 Pine Street Beaumont, Texas 77701 Telephone (409) 838-6631 1-8474 ENTERGY LOUISIANA, INC. 72-0245590 (a Louisiana corporation) 639 Loyola Avenue New Orleans, Louisiana 70113 Telephone (504) 529-5262 0-320 ENTERGY MISSISSIPPI, INC. 64-0205830 (a Mississippi corporation) 308 East Pearl Street Jackson, Mississippi 39201 Telephone (601) 368-5000 0-5807 ENTERGY NEW ORLEANS, INC. 72-0273040 (a Louisiana corporation) 639 Loyola Avenue New Orleans, Louisiana 70113 Telephone (504) 529-5262 1-9067 SYSTEM ENERGY RESOURCES, INC. 72-0752777 (an Arkansas corporation)

Echelon One 1340 Echelon Park-way Jackson, Mississippi 39213 Telephone (601) 368-5000 I

Securities registered pursuant to Section 12(b) of the Act:

Name of Each Exchange Registrant Title of Class on Which Reeistered Entergy Corporation Common Stock, S0.01 Par Value - 235,117,712 New York Stock Exchange, Inc.

Shares outstanding at February 28, 1997 Chicago Stock Exchange Incorporated Pacific Stock Exchange Incorporated Entergy Arkansas Capital I 8-1/2% Cumulative Quarterly Income Preferred New York Stock Exchange, Inc.

Securities, Series A Entergy Gulf States, Inc. Preferred Stock, Cumulative, $100 Par Value:

4A0 Dividend Series New York Stock Exchange, Inc.

$4.52 Dividend Series New York Stock Exchange, Inc.

$5.08 Dividend Series New York Stock Exchange, Inc.

$8.80 Dividend Series New York Stock Exchange, Inc.

Adjustable Rate Series B (Depository Receipts) New York Stock Exchange, Inc.

Preference Stock, Cumulative, without Par Value New York Stock Exchange, Inc.

$1.75 Dividend Series Entergy Gulf States Capital I 8.75% Cumulative Quarterly Income Preferred New York Stock Exchange, Inc.

Securities, Series A Entergy Louisiana, Inc. 12.64% Preferred Stock, Cumulative, $25 Par New York Stock Exchange, Inc.

Value Entergy Louisiana Capital I 9% Cumulative Quarterly Income Preferred New York Stock Exchange, Inc.

Securities, Series A Securities registered pursuant to Section 12(g) of the Act:

Registrant Title of Class Entergy Arkansas, Inc. Preferred Stock, Cumulative, $100 Par Value Preferred Stock, Cumulative, $25 Par Value Preferred Stock, Cumulative, $0.01 Par Value Entergy Gulf States, Inc. Preferred Stock, Cumulative, S100 Par Value Entergy Louisiana, Inc. Preferred Stock, Cumulative, $100 Par Value Preferred Stock, Cumulative, $25 Par Value Entergy Mississippi, Inc. Preferred Stock, Cumulative, $100 Par Value Entergy New Orleans, Inc. Preferred Stock, Cumulative, $100 Par Value

Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrants' knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ I The aggregate market value of Entergy Corporation Common Stock, S0.01 Par Value, held by non-affiliates, was $6.2 billion based on the reported last sale price of such stock on the New York Stock Exchange on February 28, 1997. Entergy Corporation is the sole holder of the common stock of Entergy Arkansas, Inc., Entergy Gulf States, Inc., Entergy Louisiana, Inc., Entergy Mississippi, Inc., Entergy New Orleans, Inc., and System Energy Resources, Inc.

DOCUMENTS INCORPORATED BY REFERENCE Portions of the Proxy Statement of Entergy Corporation to be filed in connection with its Annual Meeting of Stockholders, to be held May 9, 1997, are incorporated by reference into Part III hereof

TABLE OF CONTENTS Page Number Definitions i Part I Item I. Business I Item 2. Properties 35 Item 3. Legal Proceedings 36 Item 4. Submission of Matters to a Vote of Security Holders 36 Part II Item 5. Market for Registrants' Common Equity and Related Stockholder Matters 36 Item 6. Selected Financial Data 37 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 37 Item 8. Financial Statements and Supplementary Data 38 Item 9. Changes in and Disagreements faith Accountants on Accounting and Financial Disclosure 182 Part III Item 10. Directors and Executive Officers of the Registrants 182 Item 1. Executive Compensation 191 Item 12. Security Ownership of Certain Beneficial Owners and Management 198 Item 13. Certain Relationships and Related Transactions 202 Part IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 203 Experts 203 Signatures 204 Consents of Experts 211 Report of Independent Accountants on Financial Statement Schedules 214 Index to Financial Statement Schedules S-1 Exhibit Index E-l This combined Form 10-K is separately filed by Entergy Corporation, Entergy Arkansas, Inc., Entergy Gulf States, Inc., Entergy Louisiana, Inc., Entergy Mississippi, Inc., Entergy New Orleans, Inc., and System Energy Resources, Inc. Information contained herein relating to any individual company is filed by such company on its own behalf. Each company makes representations only as to itself and makes no other representations whatsoever as to any other company.

This report should be read in its entirety. No one section of the report deals with all aspects of the subject matter.

Investors are cautioned that forward-looking statements contained herein with respect to the revenues, earnings, competitive performance, or other prospects for the business of Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, System Energy, or their affiliated companies may be influenced by factors that could cause actual outcomes and results to be materially different than projected. Such factors include, but are not limited to, the effects of weather, the performance of generating units, fuel prices and availability, regulatory decisions and the effects of changes in law, capital spending requirements, the evolution of competition, changes in accounting standards, and other factors.

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

Abbreviation or Acronym Term AFUDC Allowance for Funds Used During Construction Algiers 15th Ward of the City of New Orleans, Louisiana ALI Administrative Law Judge ANO Arkansas Nuclear One Steam Electric Generating Station (nuclear), owned by Entergy Arkansas ANO I Unit No. 1 of ANO ANO 2 Unit No. 2 of ANO APB Accounting Principles Board APSC Arkansas Public Service Commission Availability Agreement Agreement, dated as of June 21, 1974, as amended, among System Energy and Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans, and the assignments thereof Cajun Cajun Electric Power Cooperative, Inc.

Capital Funds Agreement Agreement, dated as of June 21, 1974, as amended, between System Energy and Entergy Corporation, and the assignments thereof CitiPower CitiPower Ltd.

City of New Orleans or City New Orleans, Louisiana Council Council of the City of New Orleans, Louisiana D.C. Circuit United States Court of Appeals for the District of Columbia Circuit DOE United States Department of Energy domestic utility companies Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans, collectively EPA Environmental Protection Agency EPAct Energy Policy Act of 1992 i

DEFINITIONS (Continued)

Abbreviation or Acronym Term Entergy Entergy Corporation and its various direct and indirect subsidiaries Entergy Arkansas Entergy Arkansas, Inc., formerly Arkansas Power & Light Company Entergy Corporation Entergy Corporation, a Delaware corporation, successor to Entergy Corporation, a Florida corporation Entergy Enterprises Entergy Enterprises, Inc.

Entergy Gulf States Entergy Gulf States, Inc., formerly Gulf States Utilities Company (including wholly owned subsidiaries - Varibus Corporation, GSG&T, Inc., Prudential Oil &

Gas, Inc., and Southern Gulf Railway Company)

Entergy Louisiana Entergy Louisiana, Inc., formerly Louisiana Power & Light Company Entergy Mississippi Entergy Mississippi, Inc., formerly Mississippi Power & Light Company Entergy New Orleans Entergy New Orleans, Inc., formerly New Orleans Public Service Inc.

Entergy Operations Entergy Operations, Inc.

Entergy Power Entergy Power, Inc.

Entergy Services Entergy Services, Inc.

EPMC Entergy Power Marketing Corporation E-HC Entergy Technology Holding Company EWG Exempt Wholesale Generator FASB Financial Accounting Standards Board FERC Federal Energy Regulatory Commission FUCO Foreign Utility Company G&R General and Refunding Grand Gulf Grand Gulf Steam Electric Generating Station (nuclear), owned 90% by System Energy Grand Gulf I Unit No. 1 of Grand Gulf Grand Gulf 2 Unit No. 2 of Grand Gulf ii

DEFINITIONS (Continued)

.1i Abbreviation or Acronym Term Independence Independence Steam Electric Station (coal), owned 16% by Entergy Arkansas, 25% by Entergy Mississippi, and 1% by Entergy Power IRS Internal Revenue Service kWh kilowatt-hour(s)

London Electricity London Electricity plc LPSC Louisiana Public Service Commission MCF 1,000 cubic feet of gas Merger The combination transaction, consummated on December 31, 1993, by which Entergy Gulf States became a subsidiary of Entergy Corporation and Entergy Corporation became a Delaware corporation MPSC Mississippi Public Service Commission MW Megawatt(s)

Nelson Unit 6 Unit No. 6 (coal) of the Nelson Steam Electric Generating Station, owned 70% by Entergy Gulf States NISCO Nelson Industrial Steam Company 1991 NOPSI Settlement Agreement, retroactive to October 4, 1991, among Entergy New Orleans, the Council, and the Alliance for Affordable Energy, Inc. (local consumer advocate group), which settled certain Grand Gulf I prudence issues and certain litigation related to the resolution adopted by the Council on February 4, 1988, disallowing Entergy New Orleans' recovery of 135 million of previously deferred Grand Gulf 1-related costs 1994 NOPSI Settlement Settlement effective January 1, 1995, between Entergy New Orleans and the Council in which Entergy New Orleans agreed to implement a permanent reduction in electric and gas rates and resolve disputes with the Council in the interpretation of the 1991 NOPSI Settlement NRC Nuclear Regulatory Commission PRP Potentially Responsible Party (a person or entity that may be responsible for remediation of environmental contamination)

PUCT Public Utility Commission of Texas PUHCA Public Utility Holding Company Act of 1935, as amended iii

DEFINITIONS (Concluded)

Abbreviation or Acronym Term PURPA Public Utility Regulatory Policies Act Rate Cap The level of Entergy Gulf States' retail electric base rates in effect at December 31, 1993, for the Louisiana retail jurisdiction, and the level of such rates in effect prior to the settlement agreement with the PUCT on July 21, 1994, for the Texas retail jurisdiction, which may not be exceeded before December 31, 1998 Reallocation Agreement 1981 Agreement, superseded in part by a June 13, 1985 decision of FERC, among Entergy Arkansas, Entergy Louisiana, Entergy Mississippi Entergy New Orleans, and System Energy relating to the sale of capacity and energy from Grand Gulf Ritchie 2 Unit No. 2 of the R. E. Ritchie Steam Electric Generating Station (gas/oil)

River Bend River Bend Steam Electric Generating Station (nuclear), owned 70% by Entergy Gulf States RUS Rural Utility Services (formerly the Rural Electrification Administration or "R.EA")

SEC Securities and Exchange Commission SFAS Stterment of Financial Accounting Standards, promulgated by the Financial Accounting Standards Board SMEPA South Mississippi Electric Power Agency System Agreement Agreement, effective January 1, 1983, as modified, among the domestic utility companies relating to the sharing of generating capacity and other power resources System Energy System Energy Resources, Inc.

System Fuels System Fuels, Inc.

Unit Power Sales Agreement Agreement, dated as of June 10, 1982, as amended and approved by FERC, among Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy, relating to the sale of capacity and energy from System Energy's share of Grand Gulf 1 Waterford 3 Unit No. 3 (nuclear) of the Waterford Steam Electric Generating Station, owned 90.7% by Entergy Louisiana. The remaining 9.3% undivided interest is leased by Entergy Louisiana.

iv

PART I Item 1. Business BUSINESS OF ENTERGY General Entergy Corporation is a Delaware corporation which, through its direct and indirect subsidiaries, engages in the domestic and foreign electric utility business, other domestic energy-related enterprises, and telecommunications-

'based businesses. It has no significant assets other than the stock of its subsidiaries. Entergy Corporation is registered as a public utility holding company under PUHCA. As such, Entergy Corporation and its various direct and indirect subsidiaries (with the exception of its EWG, FUCO, and ETHC subsidiaries) are subject to the broad regulatory provisions of PUHCA. PUHCA historically has limited the operations of registered holding companies to a single, integrated public utility system and functionally related activities.

Domestic Operations and Investments Entergy Corporation has five wholly-owned'domestic retail electric utility subsidiaries: Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi; and Entergy New Orleans. As of December 31, 1996, these utility companies provided retail electric service to approximately 2.4 million customers in portions of the states of Arkansas, Louisiana, Mississippi, Tennessee, and Texas. In addition, Entergy Gulf States furnishes natural gas utility service in and around Baton' Rouge, Louisiana, and Entergy New Orleans furnishes natural gas utility service in New Orleans, Louisiana. The business of these domestic utility companies is subject to seasonal fluctuations, with the peak period occurring during the third quarter'of each year. During 1996, these domestic utility companies' combined electric sales as a percentage of total electric sales were: residential - 26.5%; commercial - 19.9%; and industrial - 41.5%. Electric revenues from these sectors as a percentage of total electric revenues were: residential -

35.3%; commercial - 24.4%; and industrial - 30.8%. Sales to governmental and municipal sectors and to nonaffiliated utilities accounted for the balance of energy sales. ne major industrial customers of these companies are in the chemical processing, petroleum refining, paper products, and food products industries. The retail rates and services of Entergy's domestic retail utility subsidiaries are regulated by state and/or local utility regulatory bodies.

Entergy Corporation owns directly all of the common stock of Entergy Power, a Delaware corporation and domestic power producer that owns 725 MW of fossil-fueled generating assets located in' Arkansas. Entergy Power markets electric capacity and energy in the wholesale market. Entergy Corporation also owns 100% of the voting stock of System Energy, an Arkansas corporation that owns and leases an aggregate 90% undivided interest in the Grand Gulf 'nuclear plant. System Energy sells the capacity and energy from its interest in Grand Gulf 1 at wholesale to its only customers,'Entergy 'Arkansas, Entergy Louisiana,' Entergy Mississippi, and Entergy New Orleans (see "CAPITAL REQUIREMENTS AND FUTURE FINANCING - Certain System Financial and Support Aereements - Unit Power Sales Agreement," below). Both Entergy Power's and System Energy's wholesale power sales are subject to the jurisdiction of FERC.

Entergy Services, Inc., a Delaware corporation wholly-owned by Entergy Corporation, provides general executive, advisory, administrative, accounting, legal, engineering, and other services primarily to the domestic utility companies of Entergy Corporation, but also to Entergy Enterprises. Entergy Operations, a Delaware corporation, is also wholly-owned by Entergy Corporation and provides nuclear management, operations and maintenance services under contract for ANO, River Bend, Waterford 3, and Grand Gulf 1, subject to the owner oversight of Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy, respectively. Entergy Services and Entergy Operations provide their services to Entergy's domestic retail electric utility subsidiaries, generally 'at cost, pursuant to service agreements approved by the SEC under PUHCA.

Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans own 35 /a, 33%, 19%,

and 13%, respectively, of the common stock of System Fuels, a subsidiary incorporated in Louisiana that implements and/or maintains certain programs to procure, deliver, and store fuel supplies for those companies and for Entergy Gulf States.

Entergy Gulf States has wholly-owned subsidiaries that (i) operate intrastate gas pipelines in Louisiana used primarily to transport fuel to two of Entergy Gulf States' generating stations; (ii) own the Lewis Creek Station, a gas-fired generating plant, which is leased to and operated by Entergy Gulf States; and (iii) own several miles of railroad track constructed in Lcuisiana for the purpose of transporting coal for use as boiler fuel at Entergy Gulf States' Nelson Unit 6 generating facility.

Entergy Enterprises is a wholly-owned nonutility subsidiary of Entergy Corporation incorporated under Louisiana law, which invests in and develops energy-related projects and businesses. Entergy Enterprises, directly or through subsidiaries, markets energy-related expertise, products, and services to third parties and provides services to certain nonutility companies owned by Entergy. Services provided to third-parties include (i) energy rnanagement; (ii) management, operations and maintenance services for fossil and nuclear generating plants; and (iii) energy efficient lighting, heating, and cooling systems.

Entergy Power Marketing Corporation, a Delaware corporation, is a wholly-owned subsidiary of Entergy Corporation that is in the business of marketing electricity and generating fuels to third parties. It has applied to the SEC for authority to deal in a wide range of energy commodities and related financial products.

During 1996, Entergy entered into several telecommunications-based businesses, including primarily security monitoring finns operating in North and South Carolina, Alabama, and Florida. These businesses are owned through Entergy Technology Holding Company, a wholly-owned Delaware subsidiary of-Entergy Corporation. Entergy Technology Holding Company intends to engage in a variety of telecommunications based enterprises that are exempt from regulation under PUHCA.

Foreign Orerations and Investments Since 1993, Entergy Corporation has directly or indirectly acquired interests in a. number of foreign utility businesses. Entergy Corporation's indirect wholly-owned Australian subsidiary, CitiPower, was acquired in 1996.

CitiPower is principally engaged in the electric distribution business in Melboume, Australia, where it serves approximately 238,000 retail customers. Entergy Corporation also indirectly owns a. 5% interest in Edesur, S.A.,

which is-the retail electric distribution company for about 1.9 million customers in Buenos Aires, Argentina. In addition, on February 7, 1997, Ent;^rgy Corporation acquired a controlling stock interest in London Electricity plc, a regional electric company that is principally engaged in the distribution of electricity for approximately 2 million customers in and around London, England. London Electricity also engages in other business activities, including ownership of an interest in a ,00 MW gas-fired combined cycle generating station and several private electric distribution systems.

Other foreign electric generation and transmission assets in which Entergy Corporation owns an interest are set forth below:

Investment Percent Ownership Argentina - Costanera, 1,260 MW 6%

Argentina - Costanera, expansion, 220 MW 10%

Pakistan - Hub River, 1,292 MW 7%

Peru - Edegel - 793 MW 21%

Argentina - Transener 10%

(transmission 5,000 miles)

As of December 31, 1996, Entergy Corporation had a net investment of $812 million in equity capital in businesses other than its domestic retail utility businesses. Entergy Corporation continues to seek opportunities to expand its domestic and foreign businesses that are not regulated by domestic state and local utility regulatory authorities. Entergy Corporation's continued acquisition of and investments in certain foreign and domestic businesses is subject to regulation (including the effect of exemptive provisions) under PUHCA.

International operations are subject to the risks inherent in conducting business abroad, including possible nationalization or expropriation, price and currency exchange controls, limitations on foreign participation in local energy-related enterprises, and other restrictions. Changes in the relative value of currencies occur from time to time and their effects may be favorable or unfavorable on the results of operations and statement of cash flows. In addition, there are exchange control restrictions in certain countries related to the repatriation of earnings.

Selected Data Selected domestic customer and sales data for 1996 are summarized in the following tables:

Customers as of December 31, 1996 Area Served Electric Gas Entergy Arkansas Portions of Arkansas and Tennessee 614,748 Entergy Gulf States Portions of Texas and Louisiana 629,583 87,384 Entergy Louisiana Portions of Louisiana 617,378 Entergy Mississippi Portions of Mississippi 375,456 Entergy New Orleans City of New Orleans, except Algiers, which is provided electric service by Entergy Louisiana 188,913 151,528 Total 2,426,078 238,912 1996 - Selected Electric Energy Sales Data Entergy Entergy Entergy Entergy Entergy System Arkansas Gulf States Louisiana Mississippi New Orlears Energy Total (a)

(Millions of kWh)

Electric Depaint:

Sales to retail customs 17,134 31,551 30,843 11,272 5,526 -  %,326 Sales for resale:

- Affiliates 10,471 656 143 1,368 66 8,302-

- Others 6,720 2,148 982 521 212 - 10,583 Total 34,325 34,355 31,968 13,161 5,804 8,302 106,909 Steam Departmnt.

- Sales to steam products customer - 1,826 - 1,826 TOTAL 34,325 36,181 31,968 13,161 5,804 8,302 108,735 Average use per residential customr (kwh) 11,497 14,673

= ~ ~ x ~ 14,579 13,613 11,696 - 13,455 (a) Includes the effect of intercompany eliminations.

Entergy New Orleans sold 18,192,798 MCF of natural gas to retail customers in 1996. Revenues from natural gas operations for each of the three years in the period ended December 31, 1996, were material for Entergy New Orleans, but not material for Entergy (see INDUSTRY SEGMENTS' below for a description of Entergy New Orleans' business segments).

Entergy Gulf States sold 7,325,289 MCF of natural gas to retail customers in 1996. Revenues from natural gas operations for each of the three years in the period ended December 31, 1996, were not material for Entergy Gulf States.

See "ENTERGY CORPORATION AND SUBSIDIARIES SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON," and SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON OF ENTERGY ARKANSAS, ENTERGY GULF STATES, ENTERGY LOUISIANA, ENTERGY MISSISSIPPI, ENTERGY NEW ORLEANS, and SYSTEM ENERGY," which follow each company's financial statements in this report, for further information with respect to operating statistics.

Emplovees As of December 31, 1996, Entergy had 13,363 employees as follows:

Full-time:

Entergy Corporation Entergy Arlcmsas 1,455 Entergy Gulf States 1,566 Entergy Louisiana 756 Entergy Mississippi 742 Entergy New Orleans 328.

System Energy Entergy Operations 3,728 Entergy Services 2,940 Other subsidiaries 1,713 Total Full-time 13,228 Part-time 135 Total Entergy 13,363 Competition Refer to "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS" for a detailed discussion of competitive challenges Entergy faces in the utility industry, including the recent filings of the domestic utility companies with their respective state and local regulatory authorities addressing transition to competition.

CAPITAL REQUIREMENTS AND FUTURE FINANCING Construction expenditures for the domestic utility companies and System Energy (including environmental expenditures, which are immaterial,' and AFUDC, bdt'excluding nuclear fuel) for the period 1997-1999 are estimated as follows:

1997 1998 1999 Total (In Millions)

Entergy Arkansas $159 $186 $196 S541 Entergy Gulf States 140 147 150 437 Entergy Louisiana 102 99 99 300 Entergy Mississippi 63 66 68 197 Entergy New Orleans 27 28 29 84 System Energy 19 21 23 63 With the exception of Entergy Arkansas, no significant construction costs are expected in connection with the domestic utility companies' generating facilities. Projected construction expenditures for the replacement of ANO 2's steam generators are included in Entergy'Arkansas' estimated figures above. See Note 9 for additional information. Actual construction costs may vary from' these estimates because of a number of factors, including changes in load growth estimates, changes in environmental regulations, modifications to nuclear units to meet regulatory requirements, increasing costs of labor, equipment and materials, and cost of capital. In addition to construction expenditure requirements, Entergy must meet scheduled long-term debt and preferred stock maturities and cash sinking fund requirements. See Notes 4, 5, 6, and 7 for further capital requirements and financing information.

Entergy Corporation's primary capital requirements are to invest periodically in, or make loans to, its subsidiaries and to invest in new enterprises. See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - LIQUIDITY AND CAPITAL RESOURCES," for additional discussion of Entergy Corporation's current and future planned investments in its subsidiaries and financial sources for such investments. le principal source of funds for Entergy Corporation is dividend distributions from its subsidiaries. Certain events, such as the River Bend issues discussed in Notes 2 and 9, could limit the amount of these distributions. Substantial write-offs or charges resulting from adverse rulings in this matter could adversely affect Entergy Gulf States' ability to pay dividends.

Certain System Financial and Support Agreements Unit Power Sales Agreement (Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)

The Unit Power Sales Agreement allocates capacity and energy from System Energy's 90% ownership and leasehold interests in Grand Gulf 1 (and the related costs) to Entergy Arkansas (36%), Entergy Louisiana (14%),

Entergy Mississippi (33%), and Entergy New Orleans (17%). Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans make payments to System Energy for their respective entitlements of capacity ghd energy on a full cost-of-service basis regardless of the quantity of energy delivered, so long as Grand Gulf I remains in commercial operation. ' Payments under the Unit Power Sales Agreement are System Energy's only source of operating revenues. The firiancial condition of System Energy depends upon the continued commercial operation of Grand Gulf I and the receipt of payments from Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans. Payments made by Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans under the Unit Power Sales Agreement are generally recovered through rates. In the case of Entergy Arkansas and Entergy Louisiana, payments are also'recovered'through sales of electricity from their respective retained shares of Grand Gulf 1. See Note 2 for further information regarding retained shares.

Availability Agreement (Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)

The Availability Agreement among System Energy and Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans was entered into in 1974 in connection with the financing by System Energy of Grand Gulf. The Availability Agreement provided that System Energy would join in the System Agreement on or before the date on which Grand Gulf I was placed in commercial operation. It also provided that System Energy would make available to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans all capacity and energy available from System Energy's share of Grand Gulf.

Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans also agreed severally to pay System Energy monthly for the right to receive capacity and energy available from Grand Gulf in amounts that (when added to any amounts received by System Energy under the Unit Power Sales Agreement, or otherwise) would at least equal System Energy's total operating expenses for Grand Gulf (including depreciation at a specified rate) and interest charges.

Under the Availability Agreement, as amended to date:

- the obligations of Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans for payments for Grand Gulf I became effective upon commercial operation of Grand Gulf I on July 1, 1985;

- the sale of capacity and energy generated by Grand Gulf is governed by the Unit Power Sales Agreement;

- the September 1989 write-off of System Energy's investment in Grand Gulf 2, amounting to approximately S900 million, is being amortized for Availability Agreement purposes over 27 years rather than in the month the write-off was recognized on System Energy's books; and

- the allocation percentages under the Availability Agreement are fixed as follows: Entergy Arkansas -

17.1%; Entergy Louisiana - 26.9%; Entergy Mississippi - 31.3%; and Entergy New Orleans - 24.7%.

As noted above, the Unit Power Sales Agreement provides for different allocation percentages for sales of capacity and energy from Grand Gulf 1. However, the allocation percentages under the Availability Agreement remain in effect and would govern payments made under such agreement in the event of a shortfall of funds available to System Energy from other sources, including payments by Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans to System Energy under the Unit Power Sales Agreement.

System Energy has assigned its rights to payments and advances from Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans under the Availability Agreement as security for its first mortgage bonds and reimbursement obligations to certain banks providing the letters of credit in connection with the equity funding of the sale and leaseback transactions described in Note 10 under "Sale and Leaseback Transactions -

Grand Gulf 1 Lease Obligations (System Energy)." In these assignments, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergr New Orleans further agreed that, in the event they were prohibited by governmental action from making payments under.the Availability Agreement (if, for example, FERC reduced or disallowed such payments as constituting excessive rates), they would then make subordinated advances to System Energy in the same amounts and at the same times as the prohibited payments. System Energy would not be allowed to repay these subordinated advances so long as it remained in default under the related indebtedness or in other similar circumstances.

Each of the assignment agreements relating to the Availability Agreement provides that Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans shall make payments directly to System Energy.

However, if there is an event of default, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans must make those payments directly to the holders of indebtedness that are the beneticianes or sucn assignment agreements. The payments must be made pro rata according to the amount of the respective obligations secured.

Ihe obligations of Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans to make payments under the Availability Agreement'*e subject to.4he'receipt and continued effectiveness of all necessary regulatory approvals. Sales of capacity and energy under the Availability Agreement would require that the Availability Agreement be submitted to FERC for approval with respect to the terms of such sale. No such filing with FERC has been made because sales of capacity and energy from Grand Gulf are being made pursuant to the Unit Power Sales Agreement. Other aspects of the Availability Agreement, including the obligations 'of Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans to make subordinated advances, are subject to the jurisdiction of the SEC under PUHCA, whose approval has been obtained. If, for any reason, sales of capacity and energy are made in the future pursuant to the Availability Agreement, the jurisdictional portions of the Availability Agreement would be submitted to FERC for approval.

Since commercial operation of Grand Gulf I began, payments under the Unit Power Sales Agreement to System Energy have exceeded the amounts payable under the Availability Agreement. Accordingly, no payments under the Availability Agreement by Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans have ever been required. In the event such payments were required, the ability of Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans to recover from their customers amounts paid under the Availability Agreement, or under the assignments thereof, would depend upon the outcome of rate proceedings before state and local regulatory authorities. In view of the controversies that arose over the allocation of capacity and energy from Grand Gulf pursuant to the Unit Power Sales Agreement, opposition to full recovery would be likely and the outcome of such proceedings, should they occur, is not predictable.

The Availability Agreement may be terminated, amended, or modified by mutual agreement of the parties thereto, upon obtaining the consent, if required, of those holders of System Energy's indebtedness then outstanding who have received the assignments of the Availability Agreement.

Capital Funds Agreement (Entergy Corporation and System Energy)

System Energy and Entergy Corporation have entered into the Capital Funds Agreement whereby Entergy Corporation has agreed to supply System Energy with sufficient capital to (i) maintain System Energy's equity capital at an amount equal to a minimum of 35% of its total capitalization (excluding short-term debt) and (ii) permit the continued commercial operation of Grand Gulf 1 and pay in full all indebtedness for borrowed money of System Energy when due under any circumstances.

Entergy Corporation has entered into various supplements to the Capital Funds Agreement, and System Energy has assigned its rights under such supplements as security for its first mortgage bonds and for reimbursement obligations to certain banks providing letters of credit in connection with the equity funding of the sale and leaseback transactions described in Note 10 under "Sale and Leaseback Transactions - Grand Gulf 1' Lease Obligations (Systetn Energy)."- Each such supplement provides that permitted indebtedness for borrowed money incurred by System Energy in connection with the financing of Grand Gulf may be secured by System Energy's rights under the Capital Funds Agreement on a pro rata basis (except for the Specific Payments, as defined below). In addition, in the supplements to the Capital Funds Agreemfent relating to the specific indebtedness being secured, Entergy Corporation has agreed to make cash capital contributions directly to System Energy sufficient to enable System Energy to make payments when due on such indebtedness (Specific Payments). --However, if there is an event of default, Entergy Corporation must make those payments directly to the holders of indebtedness benefiting .from the supplemental agreements. he payments (other than the Specific Payments) must be made pro rata according to the amount of the respective obligations benefiting from the supplemental agreements. -

The Capital Funds Agreement may be terminated, amended, or modified by mutual agreement of the parties thereto, upon obtaining the consent, if required, of those holders of System Energy's indebtedness then outstanding who have received the assignments of the Capital Funds Agreement.

RATE MATTERS AND REGULATION Rate Matters The domestic utility companies' retail rates are regulated by state and/or local regulatory authorities, as described below. FERC regulates their wholesale rates (including intrasystem sales pursuant to the System Agreement) and interstate transmission of- electricity, as well as rates for System Energy's sales of capacity and energy from Grand Gulf 1 to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans pursuant to the Unit Power Sales Agreement.

Wholesale Rate Matters System Energy As described above under "CAPITAL REQUIREMENTS AND FUTURE FINANCING - Certain System Financial and Support Aereements " System Energy recovers costs related to its interest in Grand Gulf 1 through rates charged to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans for capacity and energy under the Unit Power Sales Agreement.

On December 12, 1995, System Energy implemented a $65.5 million rate increase, subject to refind. Refer to Note 2 for a discussion of the rate increase request filed by System Energy with FERC.

System Areement (Energy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)

The domestic utility companies engage in the coordinated planning, construction, and operation of generation and transmission facilities pursuant to the terms of the System Agreement as described under "PROPERTY -

Generatine Stations." below.

In connection with the Merger, FERC approved certain rate schedule changes to integrate Entergy Gulf States into the System Agreement. Certain commitments were also adopted to assure that the ratepayers of Entergy Arkansas, Entergy Louisiana, Ertergy Mississippi, and Entergy New Orleans will not be allocated higher costs.

Such commitments included- (i) a tracking mechanism to protect these companies from certain unexpected increases in fuel costs; (ii) the exclusion of Entergy Gulf States from the distribution of profits from power sales contracts entered into prior to the Merger, (iii) a methodology to estimate the cost of capital in future FERC proceedings; and (iv) a stipulation that these companies be insulated from certain direct effects on capacity equalization payments if Entergy Gulf States should acquire Cajun's 30% share in River Bend. See "Regulation -Other Regulation and Litigation," for information on appeals of FERC Merger orders and related pending rate schedule changes.

- In the December 15, 1993, order approving the Merger, FERC also initiated a new proceeding to consider whether the System Agreement pernts certain out-of-service generating units to be included in reserve equalization calculations under Service Schedule MSS-1 of that agreement. In connection with this proceeding, the LPSC and the MPSC submitted testimony seeking retroactive refunds for Entergy Louisiana and Entergy Mississippi (estimated at

$22.6 million and $13.2 million, respectively). The FERC staff subsequently submitted testimony concluding that Entergy's treatment was reasonable. However, because it concluded that Entergy's treatment violated the tariff, FERC staff maintained that refunds of approximately S7.2 million should be ordered. Entergy submitted testimony on September 23, 1994, describing the potential impacts (not including interest) on Service Schedule MSS-I calculations if extended reserve shutdown units were not included in the MSS-1 calc ilations during the period 1987 through 1993. Under such a theory, Entergy Louisiana and Entergy Mississippi would have been overbilled by S10.6 and $8.8 million respectively, and Entergy Arkansas and Entergy New Orleans would have been underbilled by $6.3 and S13.1 million respectively. The amounts potentially subject to refund will continue to accrue while the case is pending. ', - '*,

On March 3, 1995, a FERC ALT issued an opinion holding that the practice of including the out-of-service units in the reserve equalization calculations during the period 1987 through 1993 was not permitted by Service Schedule MSS-1 and, therefore, constituted a violation of the System Agreement. However, the ALJ found that the violation was in good faith and had benefited the customers of Entergy as a whole. Accordingly, the ALW recommended that no retroactive refunds should be ordered. The ALJ also held that the System Agreement should be amended to allow out-of-service units to be included in reserve equalization as proposed in an offer of settlement filed by Entergy on February 16, 1994. The ALJ's opinion is subject to review by FERC. If FERC concurs with the finding that the System Agreement was violated, it would have the discretion to order that refunds be made. If that were to occur, certain domestic utility companies may be required to refund some or all of the amount by which they were underbilled pursuant to the System Agreement. The domestic utility companies cannot determine at this time whether they would be authorized to recover through retail rates any amounts associated with refunds that might be ordered by FERC in this proceeding. The matter remains pending before FERC.

- On March 14, 1995, the LPSC filed a complaint with FERC alleging that the System Agreement results in unjust and unreasonable rates and requested that FERC order a hearing on this matter. The LPSC contended that the failure of the System Agreement to exclude curtailable load from the determination of a domestic utility company's responsibility for reserve equalization and transmission equalization costs results in an unjust and unreasonable cost allocation to the domestic utility companies that does not cause these costs to be incurred, and also results in cross-subsidization among the domestic utility companies. Further, the LPSC alleged that the mechanism by which the domestic utility companies purchase energy under the System Agreement results in unjust and unreasonable rates because it does not permit domestic utility companies that engage in real time pricing to be charged the marginal cost of the energy generated for the real time pricing customer. In May 1995, the LPSC amended its original complaint, asserting that the System Agreement should be revised to exclude curtailable load from the cost allocation determination due to conflicts with federal policies under PURPA and with Entergy's system planning philosophy.

On August 5, 1996, FERC dismissed the LPSC's complaint and amended complaint. On September 30, 1996, FERC granted the LPSC's request for rehearing, solely for the purpose of affording FERC additional time for consideration of the matters raised on rehearing.

In June 1995, the APSC filed a complaint with FERC alleging that, because of changed circumstances, FERC's allocation of nuclear decommissioning costs is no longer just and reasonable. The APSC proposed that the System Agreement be amended to provide a new schedule that would equalize nuclear decommissioning costs according to load responsibility among the pre-Merger domestic utility companies. On December 17, 1996, the APSC notified FERC that it was withdrawing its complaint. The withdrawal became effective when FERC issued an order accepting the withdrawal on January 29, 1997.

Open Access Transmission (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans)

On August 2, 1991, Entergy Services, as agent for Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Power, submitted to FERC, (i) proposed tariffs that, subject to certain conditions, would provide to electric utilities "open access" to Entergy's integrated transmission system, and (ii) rate schedules providing for sales of wholesale power at market-based rates. FERC approved the fling in August 1992, and various parties filed appeals with the D.C. Circuit. The case was remanded to FERC in July 1994 for further proceedings. On October 31, 1994, Entergy Services, as agent for Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans, filed revised transmission tariffs. On January 6, 1995, FERC issued an order accepting the tariffs for filing and made them effective, subject to refund. These tariffs provide both point-to-point and network transmission service, and are intended to provide "comparability of service" over the Entergy transmission network. In that order, FERC also ordered that Entergy Power's market pricing authority be investigated, thereby making Entergy Power's market price rate schedules subject to refund. An order in the market price rate investigation is expected to be issued in 1997. Entergy expects that no refunds relating to market base rates will be required.

On March 29, 1995, ERC issued a supplemental notice of proposed rulemaking (Mega-NOPR) which would require public utilities to provide non-discriminatory open access transmission service to wholesale customers, and which would also provide guidance on the recovery of wholesale and retail stranded costs. Under the proposal, public utilities would be required to file transmission tariffs for both point-to-point and network service. Model transmission tariffs were included in the proposal. With regard to pending proceedings, including Entergy's tariff proceeding, FERC directed the parties to proceed with their cases while taking into account FERC's views expressed in the proposed rule. Hearings relating to Entergy Services' open access tariffs concluded on February 22, 1996, and an initial decision was issued by the ALJ on May 21, 1996. The initial decision and offers of partial settlement discussed below are now pending before FERC awaiting a final decision.

In September 1995 and January 1996, Entergy Services filed offers of partial settlement accepting certain provisions of the transmission tariffs contained in the Mega-NOPR and resolving certain rate issues. The remaining rate and tariff issues will be resolved as part of FERC's rulemaking in the Mega-NOPR, or after scheduled hearings.

In August 1995, EPMC filed an application for permission to make market-based sales, but subsequently asked that action not be taken on that request until the open access transmission service proceeding discussed above is resolved.

On December 13, 1995, Entergy Services filed revised transmission tariffs in a separate proceeding proposing terms and conditions for open access transmission service that are substantially identical to the terms and conditions contained in the Mega-NOPR transmission tariffs with rates to be the same as those determined in the pending proceeding. On February 14, 1996, FERC accepted for filing the revised transmission tariffs subject to the outcome of the pending proceeding and conditionally accepted EPMC's application for market-based sales. Subsequently, FERC accepted EPMC's application without condition.

In an April 1996 FERC order (Order No. 888), FERC issued its final rule on open access, nondiscriminatory transmission, and stranded costs. In July 1996, in response to this FERC order, Entergy Services filed, on behalf of the domestic utility companies, its open access pro forma tariff. This tariff, which supersedes the tariffs previously filed, is currently pending before FERC with respect to the rates for transmission service. Me rates set forth in the July 1996 tariff are subject to the outcome of FERC action on the May 21, 1996 initial decision and the offers of partial settlement. On January 29, 1997, FERC accepted the non-rate terms and conditions of the July 1996 tariff, subject to limited modifications.

Retail Rate Matters General (Entergy Arkansas, Enlergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans)

Certain costs related to Grand Gulf 1, Waterford 3, and River Bend were phased into retail rates over a period of years in order to avoid the "rate shock" associated with increasing rates to reflect all such costs at once.

The deferral period in which costs are incurred but not currently recovered has expired for all of these programs, and Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans are now recovering those costs that were previously deferred.

Entergy Gulf States is involved in several rate proceedings involving, among other things, recovery of costs associated with River Bend. Some rate relief has been received, but Entergy Gulf States has been unable to obtain recognition in rates for a substantial portion of its River Bend investment. Recovery of certain costs was disallowed while other costs were deferred for future recovery, held in abeyance pending further regulatory action, or treated as investments in deregulated assets. Rate proceedings and appeals relating to these issues are ongoing as discussed in "Entergy Gulf States" below.

As a means of minirnizing the need for retail rate increases, Entergy is committed to containing costs to the greatest degree practicable. In accordance with this retail rate policy, some domestic utility companies have agreed to retail rate caps and/or rate freezes foi specified periods of time.

The retail regulatory philosophy is shifting in some jurisdictions from traditional cost-of-service regulation to incentive-rate regulation. Management believes incentive and performance-based rate plans encourage efficiencies and productivity while permitting utilities and their customers to share in the resulting benefits. Entergy Mississippi and Entergy Louisiana have implemented incentive rate plans. Recognizing that many industrial customers have energy alternatives, Entergy continues to work with these customers to address their needs. In certain cases, competitive prices are negotiated using variable-rate designs.

Entergy has initiated proceedings with its state and local regulators regarding an orderly transition to a more competitive market for electricity. See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS -

SIGNIFICANT FACTORS AND KNOWN TRENDS," for a discussion of the transition to competition filings made by Entergy Mississippi, Entergy Gulf States, Entergy Louisiana, and Entergy Arkansas with their state and local regulators.

Least Cost Integrated Resource Planning (Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans)

Entergy continues to utilize integrated resource planning, also known as least cost planning, in order to compete more effectively in both retail and wholesale markets. Integrated resource planning is the development of integrated supply and demand side strategies to meet future electricity demands reliably, at the lowest possible cost, and in a more competitive manner.

In the fourth quarter of 1995, the domestic utility companies provided to their retail regulators (the APSC, the Council, the LPSC, the MPSC, and the PUCI) a new integrated resource plan, ("IRP'), for informational purposes only. The new IRP provides for a flexible resource strategy to meet Entergy's additional resource requirements over the next ten years. The integrated resource planning provides for the utilization of capacity currently in extended reserve shutdown to meet additional load growth, but also provides the flexibility to rely on short-term power purchases, upgrades to existing nuclear capacity, or cogeneration when these resources are more economical.

Enterm Arkansas Rate Freeze In connection with the settlement of various issues related to the Merger, Entergy Arkansas agreed that it will not request any general retail rate increase that would take effect before November 3, 1998, except for certain instances. See Note 2 for a discussion of the rate freeze as well as other aspects of the settlement agreement between Entergy Arkansas and the APSC.

Recovery of Grand Gulf 1 Costs Under the settlement agreement entered into with the APSC in 1985 and amended in 1988,Entergy Arkansas agreed to retain a portion of its Grand Gulf -related costs, recover a portion of such costs currently, and defer a portion of such costs for future recovery. In 1996 and subsequent years, Entergy Arkansas retains 22% of its 36%

interest in Grand Gulf 1 costs and recovers the riemaining 78%. Deferrals ceased in 1990, and Entergy Arkansas is recovering a portion of the previously deferred costs each year through'1998. As of December 31,1996, the balance of deferred costs was S228 million. Entergy Arkansas is permitted to recover on a current basis the incremental costs of financing the unrecovered deferrals.

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Entergy Arkansas has the right to sell capacity and energy from its retained share of Grand Gulf 1 to third parties and to sell such energy t its retail customers at a price equal to Entergy Arkansas' avoided energy cost.

Proceeds of sales to third parties of Entergy Arkansas' retained share of Grand Gulf I capacity and energy accrue to the benefit of Entergy Arkansas' tockholder.

Fuel Adjustment Clause Entergy Arkansas' retail rate schedules include a fuel adjustment clause to recover the excess cost of fuel and purchased power incurred in the second prior month. The fuel adjustment clause also contains a nuclear reserve fund provision designed to cover the cost of replacement energy during refueling outages at ANO, and an incentive provision that rewards or penalizes Entergy Arkansas depending on the performance of ANO.

EnterWv Gulf States Rate Cap and Other Merger-Related Rate Agreements In 1993, the LPSC and the PUCT approved separate regulatory proposals, which included the implementation of a five-year Rate Cap on Entergy Gulf States' retail electric base rates in the respective states, and provisions for passing fuel and nonfuel savings created by the Merger to the customers. See Note 2 for a discussion of the Rate Cap as well as other aspects of the settlement agreement between Entergy Gulf States and the LPSC and the PUCT.

Recovery of River Bend Costs Entergy Gulf States deferred approximately S369 million of River Bend operating and purchased power costs, depreciation, and accrued carrying charges, pursuant to a 1986 PUCT accounting order.. Approximately S182 million of these costs are being amortized over a 20-year period, and the remaining S187 million was written off in the first quarter of 1996 in accordance with SFAS 121, as discussed below. As of December 31, 1996, the unamortized balance of the remaining costs was $117. illion. Entergy Gulf States deferred approximately S400.4 million of similar costs pursuant to a 1986 LPSC accounting order, of which approximately $40 million was unamortized as of Decermber 31, 1996, and are being amortized over a 10-year period ending in February 1998.

In accordance with a phase-in plan approved by the LPSC, Entergy Gulf States deferred S294 million of its River Bend costs related to the period February 1988 through February 1991. Entergy Gulf States has amortized

$225 million through December 31, 1996. The remainder of $69 million will be recovered in 1997 and early 1998.

Texas Jurisdiction - River Bend In 1988, the PUCT granted Entergy Gulf States a permanent increase in annual revenues of S59.9 million resulting from the inclusion in rate base of approximately S1.6 billion of company-wide River Bend plant investment and approximately $182 million of related Texas retail jurisdiction deferred River Bend costs (Allowed Deferrals).

At the same time, the PUCT disallowed as imprudent $63.5 million of company-wide River Bend plant costs and placed in abeyance, with no finding as to prudence, approximately $1.4 billion of company-wide River Bend plant investment and approximately $157 million of Texas retail jurisdiction deferred River Bend operating and carrying costs (Abeyed Deferrals).

The PUCT's order has been the subject of several appellate proceedings, culminating in an appeal to the Texas Supreme Court (Supreme Court). On January 31, 1997, the Supreme Court issued an opinion reversing the PUCT's order and remanding the case to the PUCT for further proceedings. The Supreme Court found that the PUCT had prejudiced Gulf States' rights by attempting to defer a ruling on the abeyed plant costs and incorrectly determined the amount of federal income tax expense that should have been allowed in rates. The Supreme Court ruled that the PUCT could chcose either to conduct hearings and take further evidence or to decide the case on the original evidence. On February 18, 1997, the Texas Office of Public Utility Counsel filed a motion for rehearing of the Supreme Court's decision, arguing that the Supreme Court's remand should have instructed the PUCT as to how the case should be dealt with on remand. Entergy Gulf States filed a brief in opposition to the motion for rehearing on February 25, 1997. Entergy Gulf States believes that it is unlikely that the Supreme Court vwill grant the motion for rehearing. No procedural schedule has yet been issued by"the PUCT concerning the case on remand.

As of December 31, 1996,'the River Bend plant costs disallowed for retail ratemaking purposes in Texas and the River Bend plant costs held in abeyance totaled (net of taxes and depreciation) approximately $12 million and

$266 million, respectively. The Allowed Deferrals were approximately $77 million, net of taxes and amortization, as of December 31, 1996. Entergy Gulf States estimates it has collected approximately $204 nillion of revenues as of December 31, 1996, as a result of the originally ordered rate treatment by the PUCT of these deferred costs. If recovery of the Allowed Deferrals is not upheld, future refunds could be required and future revenues based upon the Allowed Deferrals could also be lost. However, management believes that it is probable that the Allowed Deferrals will continue to be recovered in rates.

As a result of the application of SFAS 121, Entergy Gulf States wrote off Abeyed Deferrals of $169 million, net of tax, effective January 1, 1996. In light of the continuing-proceedings before the PUCT and the courts (including the January 31, 1997 decision of the Texas Supreme Court), Entergy Gulf States has made no write-offs or reserves for the River Bend plant-related costs. At this time, management and legal counsel are unable to predict the amount of the abeyed and previously disallowed River Bend plant costs that may ultimately be allowed in Entergy Gulf States' Texas retail rates.

In prior proceedings involving other utilities, the PUCT has held that the original cost of nuclear power plants will be recoverable in electric rates to the extent those costs were prudently incurred. Entergy Gulf States has previously filed with the PUCT a cost reconciliation study prepared by Sandlin Associates, management consultants with expertise in the cost anilysis of nuclear power plants, which supports the reasonableness of the River Bend costs held in abeyance by the PUCT. This reconciliation study determined that approximately 82% of the River Bend cost increase above the amount included by the PUCT in rate base was a result of changes in federal nuclear safety requirements, and provided other support for the remainder of the abeyed amounts. In particular, there have been four other rate proceedings in Texas involving nuclear power plants. Disallowed investment in the plants ranged from 0% to 15%. Each case was unique, and the disallowances in each were made for different reasons. Appeals of two of these PUCT decisions are currently pending. Based upon the PUCT's prior decisions, management believes that River Bend construction costs were prudently incurred and that it is reasonably possible that it will recover through rates, or otherwise through means such as a deregulated asset plan, all or substantially all of the abeyed River Bend plant costs. In the event of an adverse ruling in this case, an after-tax'write off, as of December 31, 1996, of up to $278 million could be required.

NISCO Unrecovered Costs In 1986, the PUCT ordered that the purchased power costs from NISCO in excess of Entergy Gulf States' avoided costs be disallowed. The PUCT disallowance resulted in approximately S12 million to 15 million of unrecovered purchased power costs on an annual basis, which Entergy Gulf States continued to expense as the costs were incurred. 'In April 1991, the -Texas Supreme Court, on the appeal of such order, ordered the PUCT to allow Entergy Gulf States to recover purchased power payments in excess of its avoided cost in future proceedings if Entergy Gulf States-established-'to the PUCT's satisfaction that the payments were reasonable and necessary expenses..

In January 1992, Entergy Gulf States applied to the PUCT for a new fixed fuel factor and requested a final reconciliation of fuel and purchased power costs incurred between December 1, 1986 and September 30, 1991.

Entergy Gulf States proposed to recover net under-recoveries and interest (including under-recoveries related to NISCO) over a twelve-month period. In June 1993, the PUCT concluded that the purchased power payments made to NISCO in excess of Entergy Gulf States' avoided cost were not reasonably incurred. In October 1993, Entergy Gulf States appealed the PUCT's order to the Travis County District Court where the matter is still pending. As of December 31, 1996, Entergy Gulf States has expensed $140.8 million of unrecovered purchased power costs and deferred revenue pending the appeal to the District Court. No assurance can be given as to the timing or outcome of the appeal.

Retail Rate Proceedings Refer to Note 2 for a discussion of additional retail rate proceedings which have been resolved during the current year and/or are currently outstanding in the regulatory jurisdictions in which Entergy Gulf States operates.

Fuel Recovery Entergy Gulf States' Texas rate schedules include a fixed fuel factor to recover fuel and purchased power costs not recovered in base rates. The fixed factor may be revised every six months in accordance with a schedule set by the PUCT for each utility. To the extent actual costs vary from the fixed factor, refunds or surcharges are required or permitted, respectively. Fuel costs are also subject to reconciliation proceedings every three years.

Entergy Gulf States' Louisiana electric'rate schedules include a fuel adjustment clause to recover the cost of fuel and purchased power costs in the second prior month, adjusted by a surcharge for deferred fuel expense arising from the monthly reconciliation of actual fuel cost incurred with fuel revenues billed to customers. See Note 2 for a discussion of the LPSC fuel cost reviews.

Entergy Gulf States' Louisiana gas rates include a purchased gas adjustment to recover the cost of purchased gas.

Steam Customer Contract In August 1996, Entergy Gulf States entered into agreements with its only steam customer whereby a generating facility will be leased to such customer beginning in August 1997, the expiration date of the previous contract. As a result of these arrangements, Entergy Gulf States' annualized revenues are expected to decrease by approximately $33 million, and its net income is expected to be reduced by approximately S15 million annually. See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS," for a further discussion.

Entermv Louisiana Recovery of Grand Gulf 1 Costs In a series of LPSC orders, court decisions, and agreements from late 1985 to mid-1988, Entergy Louisiana was granted rate relief with respect to costs associated with Waterford 3 and Entergy Louisiana's share of capacity and energy from Grand Gulf , subject to certain terms and conditions. With respect to Waterford 3, Entergy Louisiana was granted an increase aggregating $170.9 million over the period 1985-1988, and Entergy Louisiana agreed to permanently absorb, and not recover from retail ratepayers, $284 million of its investment in the unit and to defer $266 million of its costs related to the years 1985-1988 to be recovered from April 1988 through June 1997.

As of December 31, 1996, Entergy Louisiana's unrecovered deferral balance was $5.7 million.

With respect to Grand Gulf 1, Entergy Louisiana agreed to retain, and not recover from retail ratepayers, 18% of its 14% share, or approximately 2.52%, of the costs of Grand Gulf l's capacity and energy. Non-fuel operation and maintenance costs for Grand Gulf 1 are recovered through Entergy Louisiana's base rates.

Additionally, Entergy Louisiana is allowed to recover, through the fuel adjustment clause, 4.6 cents per kWh for the energy related to its retained portion of these costs. Alternatively, Entergy Louisiana may sell such energy to nonaffiliated parties at prices above the fuel adjustment clause recovery amount, subject to the LPSC's approval.

Performancc-Based Formula Rate Plan In June 1995, in conjunction with the LPSC's rate review, a performance-based formula rate plan previously proposed by Entergy Louisiana was approved with certain modifications. See Note 2 for a discussion of Entergy Louisiana's performance-based firnula rate plan. '.*'

Fuel Adjustment Clause Entergy Louisiana's rate schedules include a fuel adjustment clause to recover the cost of fuel and purchased power in the second prior month. The fuel adjustment also includes a surcharge for deferred fuel expense arising from the monthly reconciliation of actual fuel cost incurred with fuel revenues billed to customers.

Entergy Mississippi Retail Rate Proceedings Refer to Note 2 for a discussion of the retail rate proceedings which have been resolved during the current year and/or are currently outstanding in the regulatory jurisdictions in which Entergy Mississippi operates.

Rate Freeze In connection with the settlement of various issues related to the Merger, Entergy Mississippi agreed that it will not request any general retail rate increase to take effect before November 3, 1998, except for certain instances.

See Note 2 for a discussion of the rate freeze as well as other aspects of the settlement agreement between Entergy Mississippi and the MPSC.

Recovery of Grand Gulf 1 Costs The MPSC granted Entergy Mississippi an annual base rate increase of approximately. $326.5 million in connection with its allocated share of Grand Gulf 1 costs. The MPSC also provided for the deferral of a portion of such costs that were incurred each year through 1992, and recovery of these deferrals over a period of six years ending in 1998. As of December 31, 1996, the uncollected balance of Entergy Mississippi's deferred costs was approximately $247 milion. Entergy Mississippi is permitted to recover the carrying charges on all deferred amounts on a current basis.

Formula Rate Plan Under a fornulazy incentive-rate plan (Formula Rate Plan) effective March 25, 1994, Entergy Mississippi's earned rate of return is calculated automatically every 12 months and compared to and adjusted against a benchmark rate of return (calculated under a separate formula within the Formula Rate Plan); The Formula Rate Plan allows for periodic small adjustments in rates based on a comparison of actual earned returns to benchmark returns and upon certain performance factors. Refer to Note 2 for a discussion of the formula rate plan filing for the 1995 test year.

The formula rate plan filing for the 1996 test year will be filed in March 1997.

Fuel Adjustment Clause Entergy Mississippi's rate schedules include a fuel adjustment clause that recovers changes in the cost of fuel and purchased power. The monthly fuel adjustment rate is based on projected sales and costs for the month, adjusted for differences between actual and estimated costs and kWh sales for the second prior month.

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Enterv New Orleans Earnings Analysis Filings Refer to Note 2 for a discussion of the earnings analysis filings which have been resolved during the current year andlor are currently outstanding in the regulatory jurisdiction in which Entergy New Orleans operates.

Recovery of Grand Gulf I Costs Under Entergy New Orleans' various rate settlements with the Council in 1986, 1988, and 1991, Entergy New Orleans agreed to absorb and not recover from ratepayers a total of S96.2 million of its Grand Gulf 1 costs.

Entergy New Orleans was permitted to implement annual rate increases in decreasing amounts each year through 1995, and to defer certain costs and related carrying charges, for recovery on a schedule extending from 1991 through 2001. As of December 31, 1996, the uncollected balance of Entergy New Orleans' deferred costs was S136 million. The 1994 NOPSI Settlement did not affect the scheduled Grand Gulf 1 phase-in rate increases.

Fuel Adjustment Clause Entergy New Orleans' electric rate schedules include a fuel adjustment clause to recover the cost of fuel in the second prior month, adjusted by a surcharge for deferred fuel expense arising from the monthly reconciliation of actual fuel incurred with fuel cost revenues billed to customers. The adjustment, on a monthly basis, also includes the difference between nonfuel Grand Gulf I costs paid by Entergy New Orleans and the estimate of such costs provided in Entergy New Orleans' Grand Gulf 1 rate settlements. Entergy New Orleans' gas rate schedules include an adjustment to reflect gas costs in excess of those collected in base rates, adjusted by a surcharge similar to that included in the electric fuel adjustment clause.

Regulation Federal Regulation (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)

PUHCA As a public utility holding company registered under PUHCA, Entergy Corporation and its various direct and indirect subsidiaries (with the exception of its EWG, FUCO, and ETHC subsidiaries) are subject to the broad regulatory provisions of PUHCA. Except with respect to investments in certain domestic power projects, foreign utility company projects, and telecommunication projects, PUHCA limits the operations of a registered holding company system to a single, integrated public utility system, plus additional systems and businesses.

Entergy Corporation and other electric utility holding companies have supported legislation in the United States- Congress which would repeal PUHCA and transfer certain aspects of the oversight of public utility holding companies from the SEC to FERC. Entergy believes that PUHCA inhibits its ability to compete in the evolving electric energy marketplace and largely duplicates the oversight activities already performed by FERC and state and local regulators. In June 1995, the SEC adopted a report proposing options for the repeal or significant modification of PUHCA and proposed rule changes that would reduce the regulations governing utility holding companies. One rle change adopted as a result of such proposals eliminated the requirement to receive prior authorization for capital contributions made by a parent company to its nonutility subsidiary companies and for financing its nonutility subsidiary companies. Such rule was appealed to the D.C. Circuit by the City of New Orleans, and the appeal was subsequently denied in January 1996.

Federal Power Act '

The domestic utility companies, System Energy, Entergy Power, and EPMC are subject to the Federal Power Act as administered by FERC ana 'the DOE. The Federal Power Act' provides for regulatory jurisdiction over the licensing of certain hydroelectric projects, the transmission and wholesale sale of electric energy in interstate commerce, and certain othcr.'activities, including accounting policies'and practices.' Such regulation includes jurisdiction over the rates charged by System Energy for capacity and energy provided to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans from Grand Gulf 1.

Entergy Arkansas holds a license for two hydroelectric projects (70 MW) that was renewed on July 2, 1980.

This license, granted by FERC, expires in February 2003.

Regulation of the Nuclear Power Industry (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy)

Regulation of Nuclear Power Under the Atomic Energy Act of 1954 and the Energy Reorganization Act of 1974, operation of nuclear plants is intensively regulated by the NRC, which has broad power to impose licensing and safety-related' requirements. In the event of non-compliance, the NRC has the authority to impose fines or shut down a unit, or both, depending upon its assessment of the severity of the situation, until compliance is achieved. Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy, as owners of all or a portion of ANO, River Bend, Waterford 3, and Grand Gulf 1, respectively, and Entergy Operations, as the licensee and operator of these units, are subject to the jurisdiction of the NRC. Revised safety requirements promulgated by the NRC have, in the past, necessitated substantial capital expenditures at these nuclear plants, and additional such expenditures could be required in the future.

The nuclear power industry faces uncertainties with respect to the cost and long-term availability of sites for disposal of spent nuclear fuel and other radioactive waste, nuclear plant operations, the technological and financial aspects of decommissioning plants at the end of their licensed lives, and requirements relating to nuclear insurance.

These matters are briefly discussed below.

Regulation of Spent Fuel and Other High-Level Radioactive Waste Under the Nuclear Waste Policy Act of 1982, the DOE is required, for-a specified fee, to construct storage facilities for, and to dispose of, all spent nuclear fuel and other high-level radioactive waste generated by domestic nuclear power reactors. However, the DOE has not yet identified a permanent storage repository and, as a result, future expenditures may be required to increase spent fuel storage capacity at the plant sites. For further information concerning spent fuel disposal contracts with the DOE, schedules for initial shipments of spent nuclear fuel, current on-site storage capacity, and costs of providing additional on-site storage, see Note 9.

Regulation of Low-Level Radioactive Waste The availability and cost of disposal facilities for low-level radioactive waste 'resulting from normal nuclear plant operations are subject to a number of uncertainties. Under the Lowv-Level Radioactive Waste Policy Act of 1980, as amended, each state is responsible for disposal of its own waste, and states may participate in regional compacts to fulfill their responsibilities jointly. The States of Arkaiisas and Louisiana participate in the Central Interstate Low Level Radioactive Waste Compact (Central States Compact), and the State'of Mississippi participates in the Southeast Low Level Radioactive Waste Compact (Southeast Compact). Two disposal sites are currently operating in the United States, but only one site, the Barnwell Disposal Facility (Barnwell), located in South Carolina and operated by the Southeast Compact, is open to out-of-region generators. The availability of Barnwell provides only temporary relief from low-level radioactive waste storage and does not alleviate the need to develop new disposal capacity.

I Both the Central States Compact and the Southeast Compact are working to establish additional disposal sites. 'Entergy, along with other waste generators, funds the development costs for new disposal facilities. To date, Entergy's' expenditures for the development of new disposal facilities total approximately $50 million. Future levels of expenditures are difficult to predict. 'The currcnt'schdule for the site development in both the Central States Compact and the Southeast Compact projects that the new' facilities will not be operational before 2000. Due to the political and emotional nature of siting low-level radioactive waste disposal facilities, future delays can be anticipated. Until long-term disposal facilities are' established, Entergy will seek continued access to existing facilities. If such access is unavailable, Entergy will store low-level waste at its nuclear plant sites.

Regulation of Nuclear Plant Decommissioning Entergy Arkansas, Entergy Gulf States,' Entergy Louisiana, and System Energy are recovering from ratepayers portions of their estimated decommissioning costs for ANO, River Bend, Waterford 3, and Grand Gulf 1, respectively. These amounts are deposited in trust funds that, together with the related earnings, can only be used for future decommissioning costs. Estimated decommissioning costs are periodically reviewed and updated to- reflect inflation and changes in regulatory requirements and technology, and applications are periodically made to appropriate regulatory authorities to reflect in rates any future changes in projected decommissioning costs. For additional information with respect to decommissioning costs for ANO, River Bend, Waterford 3, and Grand Gulf 1, see Note 9.

The EPAct requires all electric utilities (including Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy) that purchased uranium enrichment services from the DOE to contribute up to a total of $150 million annually, adjusted for inflation, up to a total of S2.25 billion over approximately 15 years, for decontamination and decommissioning of enrichment facilities. In accordance with the EPAct, contributions to decontamination and decomnuissioning funds are recovered through rates in the same manner as other fuel costs. See Note 9 for the estimated annual contributions by Entergy for decontamination and decommissioning fees.

Nuclear Insurance The Price-Anderson Act limits public liability for a single nuclear incident to approximately $8.92 billion.

Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy have protection with respect to this liability through a combination of private insurance and an industry assessment program, and also have insurance for property damage, costs of replacement power, and other risks relating to nuclear generating units. For a discussion of insurance applicable to the nuclear programs of Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy, see Note 9.

Nuclear Operations General (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy)

Entergy Operations operates ANO, River Bend, Waterford 3, and Grand Gulf 1, subject to the owner oversight of Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy, respectively. Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy, and the other Grand Gulf I and River Bend co-owners, have retained their ownership interests in their respective nuclear generating units. Entergy Arkansas, Entergy. Gulf States, Entergy Louisiana, and System Energy have also retained their associated capacity and energy entitlements, and pay directly or reimburse Entergy Operations at cost for its operation of the units.

ANO Matters (Entergy Corporation and Entergy Arkansas)

Entergy Operations has mde periodic inspections and repairs on ANO 2's steam generators. In October 1996, Entergy' Corporation's Board of Directors authorized Entergy Operations to negotiate a contract, with appropriate cancellation provisions, for the fabrication and replacement of the steam generators at ANO 2. Entergy Opcrations estimates the cost of fabrication a ;d lent of the steam generators to be approximately 150 million. A lettcr of intent for the fabrication has been signed by Entcrgy Operations, which includes a commitment for not more than $3.2 million, and a contract ix`5`e'd to be entered into in 1997. If the contract to purchase the stcam generators is not canceled;: the steam generators will be'installed during a plannd refueling outage in 2000.

See Note 9 for additional information.

River Bend (Entergy Corporation and Entergy Gulf States)

In connection with the Merger, Entergy Gulf States filed two applications with the NRC in January 1993 to amend the River Bend operating license. The applications sought the NRC's consent to the Merger and to a change in the licensed operator of the facility from Entergy Gulf States to Entergy Operations. The NRC Staff issued the two license amendments for River Bend, which were effective immediately upon consummation of the Merger. On February 14, 1994, Cajun filed with the D.C. Circuit petitions for review of the two license amendments for River Bend. In March 1995, the D.C. Circuit ordered that the original NRC order and license amendments be set aside, and remanded the case to the NRC for further consideration. Subsequently, the NRC affirmed its original findings and reissued the two license amendments. Cajun and the Arkansas Cities and Cooperative filed petitions for review of those NRC orders with the D. C. Circuit. Pursuant to the Cajun Settlement, on an unopposed motion of the parties to the proceedings before the D.C.' Circuit,- the D.C. Circuit ordered that the cases be removed from the calendar for oral argument and held in abeyance pending a further order of the court. The two license amendments are in full force and effect.

State Regulation (Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans)

General Entergy Arkansas is subject to regulation by the APSC and the Tennessee Public Service Commission (TPSC). APSC regulation includes the authority to set rates, determine reasonable and adequate service, fix the value of property used and useful, require proper accounting, control leasing, control the acquisition or sale of any public utility plant or property constituting an operating unit or system, set rates of depreciation, issue certificates of convenience and necessity and certificates of environmental compatibility and public need, and control the issuance and sale of securities.' Regulation by the TPSC includes the authority to set standards of service and rates for service to customers in the state, require proper accounting, control the issuance and sale of securities, and issue certificates of convenience and necessity.

Entergy Gulf States is subject to the jurisdiction of the municipal authorities of incorporated cities in Texas as to retail rates and services within their boundaries, with appellate jurisdiction over such matters residing in the PUCT. Entergy Gulf States is also subject to regulation by the PUCT as to retail rates and services in rural areas, certification of new generating plants, and extensions, of service into new areas. Entergy Gulf States is subject to regulation by the LPSC as to electric and gas service, rates and charges, certification of generating facilities and power or capacity purchase'contracts, depreciation, accounting, and other matters.

Entergy Louisiana is subject to regulation by the LPSC as to electric service, rates and charges, certification of generating facilities and power or capacity purchase contracts, depreciation, accounting, and other matters.

Entergy Louisiana is also subject to the jurisdiction of the Council with respect to such matters within Algiers.

Entergy Mississippi is subject to regulation as to service, service areas, facilities, and retail rates by the MPSC. Entergy Mississippi is also subject to regulation by the APSC as to the certificate of environmental compatibility and public need for the Independence Station.

Entergy New Orleans is subject to regulation by the Council as to electric and gas service, rates and charges, standards of service, depreciation, accounting, issuance of certain securities, and other matters.

Franchises Entergy Arkansas holds exclusive franchises to provide electric service in approximately 300 incorporated cities and towns in Arkansas. 'These franchises are unlimited in duration and continue until such a time when the municipalities purchase the utility property. In Arkansas, franchises ae'considered to be contracts and, therefore, are terminable upon breach of the contract.

Entergy Gulf States holds non-exclusive franchises, permits, or certificates of convenience and necessity to provide electric and gas service in approximately 55 incorporated villages, cities, and towns in Louisiana and approximately 63 incorporated cities and towns in Texas. Entergy Gulf States ordinarily holds S0-year fianchises in Texas and 60-year franchises in Louisiana. Entergy Gulf States' current electric franchises will expire during 2007 -

2036 in Texas and during 2015 - 2046 in Louisiana. The natural gas franchise in the City of Baton Rouge will expire in 2015. In addition, Entergy Gulf States has received from the PUCT a certificate of convenience and necessity to provide electric service to areas within 21 counties in eastern Texas.

Entergy Louisiana holds non-exclusive franchises to provide electric service in approximately 116 incorporated villages, cities, and towns. Most of these municipal franchises have 25-year terms, although six municipalities have granted Entcrgy Louisiana 60-year franchises. Entergy Louisiana also supplies electric service in approximately 353 unincorporated communities, all of which are located in parishes in which Entergy Louisiana holds non-exclusive franchises.

Entergy Mississippi has received from the MPSC certificates of public convenience and necessity to provide electric service to areas within 45 counties in western Mississippi, which include a number of municipalities. Under Mississippi statutory law, such certificates are exclusive. Entergy Mississippi may continue to serve in such municipalities upon payment of a statutory franchise fee, regardless of whether an original municipal franchise is still in existence.

Entergy New Orleans provides electric and gas service in the City of New Orleans pursuant to city ordinances, which state, among other things, that the City has a continuing option to purchase Entergy New Orleans' electric and gas utility properties.

System Energy has no distribution franchises. Its business is currently limited to wholesale power sales.

Environmental Regulation General In the areas of air quality, water quality, control of toxic substances and hazardous and solid wastes, and other environmental matters, the facilities and operations of Entergy are subject to regulation by various federal, state, and local' authorities. Entergy believes that its affected, subsidiaries are in substantial compliance with environmental regulations currently applicable to their respective facilities and operations. Because environmental regulations are subject to change, the ultimate compliance costs to Entergy cannot be precisely estimated. However, management currently estimates that ultimate capital expenditures for environmental compliance purposes, including those discussed in "Clean Air Leisiation "below, will not be material for Entergy as a whole.

Clean Air Leiislation The Clean Air Act Amendments of 1990 (the Act) set up three programs that affect Entergy: an acid rain program for control of sulfur dioxide (SO2 ) and nitrogen oxides (NOx), an ozone nonattairnent area program fbr control of NOx and volatile organic compounds, and an operating permits program for administration and enforcement of these and other Clean Air Act programs.

Under the acid rain program, no additionailcontrol ;eNipmcnt is expected to be required by Entergy to control SO2 . The Act provides "allowances' to mst of the affected Entergy gcnerating units for emissions based upon past emission levels and operating characteristics. 'Each allowance is an entitlement to enit one ton of S02 per year. Under the Act, utilities will'be required to possess allowances -for SO2 emissions from affected generating units. All Entergy generating units are classified as "Phase 11" units under the Act and are subject to SO2'allowance requirements beginning in the year.2000. Based on operating history, the domestic utility companies have been allocated more allowances than are currently necessary for normal operations. Management believes that it will be able to operate its units efficiently without installing scrubbers or purchasing allowances from outside sources, and that one or more of the domestic utility companies may have excess allowances.

Control equipment may eventually be required for NOx reductions due to the ozone nonattainment status of the areas served by Entergy Gulf States in and around Beaumont and Houston, Texas. Texas environmental authorities are studying the causes of ozone pollution and have deferred NOx controls on'power plants until at least 1999. If Texas decides to regulate NOx, the cost of such control equipment for the affected Entergy Gulf States plants is estimated at S10.4 million through the year 2000.

Other Environmental Matters The provisions of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (CERCLA), authorize the EPA and, indirectly, the states to require generators and certain transporters of certain hazardous substances released from or at a site, and the owners or operators of any such site, to clean-up the site or reimburse such clean-up costs. CERCLA has been interpreted to impose joint and several liability on responsible parties. Entergy sent waste materials to various disposal sites over the years. Also, certain operating procedures and maintenance' practices, which historically were not subject to regulation, are now regulated by environmental laws. Some of these sites have been the subject of governmental action under CERCLA, as a result of which the domestic utility companies have become involved with site clean-up activities. These companies have participated to various degrees in accordance with their respective potential liabilities in such site clean-ups and have developed experience with clean-up costs. The domestic utility companies have established reserves for such environmental clean-up/restoration activities. In the aggregate, the cost of such remediation is not considered material to these companies or to Entergy.

Entergy Arkansas Entergy Arkansas has received noticesfrom time to time from the EPA the Arkansas Department of Pollution Control and Ecology (ADPC&E), and others'alleging that it, along with others, may be a PRP for clean-up costs associated with various sites in Arkansas.' Most of these sites are neither owned nor operated by any Entergy company. Contaminants at the sites include polychlorinated biphenyls (PCBs), lead, and other hazardous substances.

At the EPA's request, Entergy Arkansas'voluntarily performed stabilization activities at the Benton Salvage site in Saline County, Arkansas. While the EPA has not named PRPs for this site, Entergy Arkansas has attempted to negotiate an agreement-with the EPA. Entergy Arkansas 'and the EPA were unable to reach an agreement satisfactory to both parties.- Region 6 EPA initiated'its ownclean-up of the site in October 1996. Entergy Arkansas does not believe that its potential liability with respect to this site will be material.'

Reynolds Metals Company (Reynolds)'and Entergy Arkansas notified the EPA in 1989 of possible PCB contamination at two former Reynolds plant sites (Jones Mill and Patterson) in Arkansas to which Entergy Arkansas had supplied power. Subsequently, Entergy Arkansas completed remediation at the substations serving the plant sites at a cost of $1.7 illion. Additional PCB contamination was found in a portion of a drainage ditch that flows from the Patterson facility to' the Ouachita River. Reynolds demanded that Entergy Arkansas participate in remediation efforts with respect to the ditch. Entergy Arkansas and independent contractors engaged by Entergy Arkansas conducted an investigation of the ditch contamiination and the possible migration of PCBs from the electrical equipment that Entergy Arkansas maintained at the plant. The investigation concluded that none of the contamination was caused by Entergy Arkansas. Entergy Arkansas has thus far expended approximately $150,000 on investigation of the ditch.. In May 1995, Entergy Arkansas was named as a defendant in a suit by Reynolds scking to recover a share of its costs associated with the clean-up of hazardous substances at the Patterson site.

Reynolds alleges that it has spent $11.2 milliontt6 cleanup the site, and that Entergy Arkansas bears some responsibility for PCB contamination at the site. Entergy Arkansas believes that it has no liability for contamination at the Patterson site and is contesting the lawsuit. An August 1997 trial date has been tentatively scheduled.

Entergy Arkansas enten d into a Consent Administrative Order, dated February 21, 1991, with the ADPC&E that named Entergy Arkansas as a PRP for the initial stabilization associated with contamination at the Utilities Services, Inc. state Superfund site located near Rison, Arkansas. This site was found to have soil contaminated by PCBs and pentachlorophenol (a wood preservative). Containers and drums that contained PCBs and other hazardous substances were found at the site. Ehtergy Arkansas' share of total remediation costs is estimated not to exceed $5.0 million. Entergy Arkansas is attempting to identify and notify other PRPs with respect to this site. Entergy Arkansas has received assurances that the ADPC&E will use its enforcement authority to allocate remediation expenses among Entergy Arkansas and any other PRPs that can be identified. Approximately 20 PRPs have been identified to date.

Entergy Arkansas has performed the activities necessary to stabilize the site, at a cost of approximately S400,000.

Entergy Arkansas believes that its potential liability for this site will not be material.

Entergy Gulf States Entergy Gulf States has been designated by the EPA as. a PRP for the clean-up of certain hazardous waste disposal sites. Entergy Gulf States is currently negotiating with the EPA and state authorities regarding the clean-up of these sites. Several class action and other suits have been filed in state and federal courts seeking relief from Entergy Gulf States and others for damages caused by the disposal of hazardous waste and for asbestos-related disease allegedly resulting from exposure on Entergy Gulf States premises (see "Other Regulation and Litigation" below). While the amounts at issue maybe substantial, Entergy Gulf States believes that its results of operations and financial condition will not be materially adversely affected by the outcome of the suits. As of December 31, 1996, a remaining recorded liability of $21.4 million existed relating to the clean-up of seven sites at which Entergy Gulf States has been designated a PRP.

In 1971, Entergy Gulf States purchased property near its Sabine generating station, known as the Bailey site, for possible expansion of cooling water facilities. Entergy Gulf States sold the property in 1984. In October 1984, an abandoned waste site on the property was included on the Superfund National Priorities List (NPL) by the EPA.

Entergy Gulf States has pursued negotiations with the EPA and is a member of a task force with other PRPs for the voluntary clean-up of the waste site. A consent decree has been signed by all PRPs for the voluntary clean-up of the Bailey site. Rmediation costs are currently expected to be approximately S33 million, however, federal and state agencies are still examining potential liabilities associated with natural resource damage. Entergy Gulf States is expected to be responsible for 2.26% of the estimated clean-up cost. This matter is currently under negotiation with the other PRPs and the agencies. Entergy Gulf States does not believe that its remaining responsibility with respect to this site will be material after allowance for the existing provision for clean-up in the amount of $629,000.

Entergy Gulf States is currently involved in a multi-phased remedial investigation of an abandoned manufactured gas plant (MGP) site, known as the Lake Charles Service Center, located in Lake Charles, Louisiana.

The property was the site of an MGP that is believed to have operated from approximately 1916 to 1931. Coal tar, a by-product of the dislation process employed at MGPs, was apparently routed to a portion of the property for disposal. The same area has also been used as a landfill. Under an order issued by the Louisiana Department of Environmental Quality (LDEQ), which is currently stayed, Entergy Gulf States was required to investigate and, if necessary, take remedial action at the site. Preliminary estimates of rerediation costs are approximately $20 million.

On February 13, 1995, the EPA published a proposed rule adding the Lake Charles Service Center to the NPL.

Another PRP has been identified and is believed to have had a role in the ownership and operation of the MGP.

Negotiations with that company for joint participation and possible remedial action have been held and are expected to continue. Entergy Gulf States has agreed to the terms of the Administrative Order on Consent (AOC) negotiated between Entergy and the EPA. 'The AOC is expected to be signed by both parties in 1997. Entergy Gulf States does not presently believe that its ultimate responsibilitS viZirspect to this site will be material after allowance for the existing provision for clean-up of $19.8 nillio. ' .

Entergy Gulf States is currently in ovbWd'in an initial investigation of an MGP site, known as the Old Jennings Ice Plant, located in Jertniis, Louisiana. The MGP site istbelieved to have operated from approximately 1909-1926. In July 1996, a petroleum-like substance was discovered on the surface soil, a notification was made to the LDEQ. The LDEQ was aware of this site based upon a survey performed by an environmental consultant for the EPA. Entergy Gulf States obtained the services of an environmental consultant to collect core samples and to perform a search of historical iecirds to determine the type of operati6 that occurred at Jennings. Results of the core sampling are not final, but limited amounts of contamination wiere found on-site. Entergy Gulf States does not presently believe that its ultimate responsibility with respect to this site will be material. The amount of the existing provision for clean-up is S500,000.

Entergy Gulf States along with Entergy Louisiana has been named as a PRP for an abandoned waste oil recycling plant site in Livingston Parish, Louisiana, known as Combustion, Inc., which is included on the NPL.

Although most surface remediation has been completed, additional studies related to residual groundwater contamination are expected to continue in 1997. Entergy Gulf States and Entergy Louisiana have been named as defendants in a class action lawsuit lodged against a group of PRPs associated with the site. (For information regarding litigation in connection with the Combustion, Inc. site, see "Other Regulation and Litigation" below.)

Entergy Gulf States does not presently believe that its ultimate responsibility with respect to this site will be material.

Entergy Gulf States received notification in 1992 from the EPA of potential liability with respect to a site in Iota, Louisiana. This site was the depository of a variety of wastes, including medical and chemical wastes. During 1996, Entergy Gulf States paid approximately $45,000 to the EPA to settle its liability for this site.

Entergy Gulf States, along with Entergy Arkansas and Entergy Louisiana, has been notified of its potential liability with respect to the Benton Salvage site located in Saline County, Arkansas. Although Entergy Gulf States and Entergy Louisiana have had minor involvement in the Benton Salvage site, no remediation is expected to be required by these companies. See "Entergy Arkansas" above for a discussion of the Benton Salvage site.

Entergy Louisiana, Entergy New Orleans, and System Energy Entergy Louisiana, Entergy New Orleans, and System Energy have received notices from the EPA and/or the states of Louisiana and Mississippi that one or more of them may be a PRP for disposal sites that are neither owned nor operated by any Entergy subsidiary. In response to such notices, the sites discussed below have been remediated:

• Entergy Louisiana, along with Entergy Arkansas and Entergy Gulf States, was notified in 1990 of its potential liability relating to the Benton Salvage site located in Saline County, Arkansas. Although Entergy Gulf States and Entergy Louisiana have been involved in the Benton Salvage site, their contributions are considered minor. Therefore, no rmediation action is required by these companies. See '"Entergy Arkansas" above for a discussion of the Benton Salvage site.

• The EPA named Entergy Louisiana and System Energy as two of the 44 PRPs for the Disposal Systems, Inc. site in Mississippi. The State of Mississippi has indicated that it intends to have the PRPs conduct a clean-up of the Disposal Systems, Inc. site but has not yet taken formal action. Entergy Louisiana has settled its involvement in this matter with the EPA. The State of Mississippi is continuing to evaluate whether additional remediation measures are necessary. However, further remediation costs at the site are not expected to be material.

• From 1992 to 1994, Entergy Louisiana performed site assessments and remedial activities at three retired power plants, known as the Homer, Jonesboro, and Thibodaux municipal sites, previously owned and operated by Louisiana municipalities. Entergy Louisiana purchased the power plants as part of the acquisition of municipal electric systems after operating them for the last few years of their useful lives.

The site assessments indicated some subsurface contamination from fuel oil. In December 1994, Entergy Louisiana completed all remediation work at Homer tothe LDEQ's satisfaction and the LDEQ granted "No Further Action" status in February 1995. All remediation activities at the Jonesboro Plant were completed in May 1996. Remediation of the Thibodaux site is expected to be completed in 1998. The costs incurred through December 31, 1996 for the Homer, Jonesboro, and Thibodaux sites are $22,000, $156,000, and

$125,000, respectively. Remaining costs for both Homer and Jonesboro sites are considered immaterial.

Significant remedial activities are ongoing at the Thibodaux site.

There are certain disposal sites for which Efitergy Louisiana and Entergy New Orleans have been named by the EPA as PRPs for associated clean-up costs, but management believes no liability exists in connection with these sites for Entergy Louisiana and Entergy New Orleans. Such Louisiana sites include Combustion Inc., an abandoned waste oil recycling plant site located in Livingston Parish (involving at least 70 PRPs, including Entergy Gulf States),

and the Dutchtown site (also included on the NPL and involving 57 PRPs). Entergy Louisiana has found no evidence of its involvement in the Combustion Inc. site; (For information regarding litigation in connection with the Livingston Parish site, see "Other Regulation and Litigation," below). With respect to the Dutchtown site, Entergy New Orleans believes it has no liability because the material it sent to this site was not a hazardous substance.

During 1993, the LDEQ issued new rules for solid waste regulation, including regulation of waste water impoundments. Entergy Louisiana has determined that certain of its power plant waste water impoundments were affected by these regulations and has chosen to upgrade or close them. As a result, a remaining recorded liability in the amount of S6.7 million existed at December 31, 1996, for waste water upgrades and closures to be completed by the end of 1997. Cumulative expenditures relating to the upgrades and closures of waste water impoundments were

$7.1 million as of December 31, 1996.

Other Regulation and Litigation Merger (Entergy Corporation and Entergy Gulf States)

In July and August 1992, applications were filed with FERC, the LPSC, the PUCT, and the SEC under PUHCA, seeking authorization of various aspects of the Merger. In January 1993, Entergy Gulf States filed two applications with the NRC seeking approval of the change in ownership of Entergy Gulf States and an amendment to the operating license for River Bend to reflect its operation by Entergy Operations. All regulatory approvals were obtained in 1993 and the Merger was consummated on December 31 1993.

FERC's orders approving the Merger were appealed to the D.C. Circuit by Entergy Services, the City, the Arkansas Electric Energy Consumers (AEEC), the APSC, Cajun, the MPSC, the American Forest and Paper Association; the State of Mississippi, the City of Binton and other cities, and Occidental Chemical Corporation (Occidental). Entergy Services sought review of FERC's deletion of a 40% cap on the amount of fuel savings Entergy Gulf States may be required t transfer to other Entergy domestic utility companies under a tracking mechanism designed to protect the other companies from certain unexpected increases in fuel costs. The other parties sought to overturn FERC's decisions on various grounds, including the issues of whether FERC appropriately conditioned the Merger to protect various interested parties from alleged harm and FERC's reliance on Entergy's transmission tariff to mitigate any potential anticompetitive impacts of the Merger.

On November 18, 1994; the D; C. Circuit denied-motions filed by Cajun, Occidental, and AEEC for a remand to FERC and a partial summary grant of the petitions for review. At the same time, the D.C. Circuit ordered that the cases be held in abeyance pending FERC's issuance of (i) a final order on remand in the proceedings on Entergy's transmission tariff (see discussion of tariff case in "RATE MATTERS AND REGULATION - Rate Matters - Wholesale Rate Matters - Open Access Transmission" above), and (ii) a final order on competition issues in the proceedings on the Merger.

On December 30, 1993, Entergy Services submitted to FERC tariff revisions to comply with FERC's order dated December 15, 1993, approving the Merger. On February 4, 1994, the APSC and AEEC filed with FERC a joint protest to the compliance'filing, alleging thtEntegy should be required to insulate the ratepayers of Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans.from all litigation liabilities related to Entergy Gulf States' River Bend nuclear .facility.- n'its May 17, 1994, order on rehearng, FERC addressed Entergy's commitment to insulate the customers of Eritergy Akansas,' Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans against liability resulting from certain litigation involving River Bend. In response to FERC's clarification of Entergy's commitment, Entergy Services filed a new compliance filing on June 16,-1994. APSC and AEEC subsequently filed protests questioning the adequacy of Entergy's June 16, 1994, compliance filing. FERC has not yet acted on the compliance filings. '

Requests for rehearing of the SEC order approving 'the Merger were filed with the SEC by Houston Industries Incorporated and its subsidiary Houston Lighting & Power Company on December 28, 1993, and petitions for review seeking to set aside the SEC order were filed with the D.C. Circuit by these parties and by Cajun in February 1994. The matter was subsequently remanded by the D.C. Circuit to the SEC for further consideration in light of developments at FERC relating to Entergy's transmission tarifs. On December 6, 1996, pursuant to a settlement with Entergy Gulf States, Houston Industries Incorporated and Houston Lighting & Power Company withdrew their petitions for review of the SEC order.

Employment Litigation Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and Entergy New Orleans are defendants in numerous lawsuits described below that have been filed by former ernployees' asserting that they were wrongfully terminated and/or discriminated against due to age, race, and/or sex. Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and Entergy New Orleans are vigorously defending these suits and deny any liability to the plaintiffs. However, no assurance can be given as to the outcome of these cases.

(Entergy Corporation and Entergy Arkansas)

Entergy Corporation and Entergy Arkansas are defendants in five suits filed in federal court on behalf of a total of approximately 62 plaintiffs who claim they were illegally terminated from their jobs due to discrimination on the basis of age or race.. One of these suits seeks class certification. A trial date is scheduled in March 1997 for one suit comprised of 29 plaintiffs, and a trial date is scheduled in May 1997 for another suit comprised of 18 plaintiffs.

Trial dates have not been set in the other suits.

(Entergy Corporation and Entergy Gulf States)

Entergy Corporation and Entergy Gulf States are defendants in lawsuits involving approximately 176 plaintiffs filed in state court in Texas by former employees who claim that they lost their jobs as a result of the Merger. The plaintiffs in these cases have asserted various claims, including discrimination on the basis of age, race, and/or sex. The court has preliminarily ruled that each plaintiff's claim should be tried separately. The first case is scheduled for trial in June 1997.

(Entergy Corporation, Entergy Gulf States, and Entergy Louisiana)

Entergy Corporation, Entergy Gulf States and Entergy Louisiana are defendants in a suit filed in federal court in Louisiana by approximately 39 plaintiffs who claim, among other things, they were wrongfully discharged from their employment on the basis of their age. No trial date has been set for this case.

(Entergy Louisiana and Entergy New Orleans)

Entergy Louisiana and Entergy New Orleans are defendants in a suit filed in state court in Louisiana by 110 plaintiffs who seek to certify a class on behalf of all employees who allegedly were terminated or'required to resign on the basis of age. The court has set a hearing for certification of the class for March 13, 1997; no trial date has I

been set. Entergy Louisiana and/or Entergy New Orleans also are defendants in approximately 27 other suits filed in federal or state court by plaintiffs who claim they were wrongflully discharged on the basis of age, race, or sex.

Asbestos and Hazardous Waste Suits (Entergy Gulf States and Entergy Louisiana)

A number of plaintiffs who allegedly suffered damage or injury, or are survivors of persons who died, allegedly as a result of exposure to 'hazardous toxic waste" that emanated from a site in Livingston Parish, sued Entergy.Gulf States and approximately 70 other defendants, including Entergy Louisiana, in 17 suits filed in the Livingston Parish, Louisiana District Court (State District Court): The plaintiffs alleged' that the defendants generated, transported, or participated in the storage of such wastes at the facility, which was previously operated as a waste oil recycling facility. These State District Court suits, which seek damages in total amounts ranging from S1 million to SI0 billion and are now consolidated in a class action, and three federal suits in three states other than Louisiana involving issues arising from the same facility, have been removed and- transferred, respectively, to the U.S. District Court for the Middle District of Louisiana. Entergy Gulf States settled all claims against it in the suits and the settlements were approved by court order on February 7, 1996. Entergy Louisiana received preliminary approval of a settlement of all claims against it in the suits for approximately $2.3 million. A court date for the fairness hearing to approve the settlement has not been set.

(Entergy Gulf States)

A total of 23 suits have been filed on behalf of approximately 4,255 plaintiffs in state and federal courts in Jefferson County, Texas. Ihese suits seek relief from Entergy Gulf States as well as numerous other defendants for damages caused to the plaintiffs or others by the alleged exposure to hazardous'waste and asbestos on the defendants' premises. All of the plaintiffs in such suits are also suing Entergy Gulf States and all other defendants on a conspiracy count. It is not yet known how many of the plaintiffs in the suits discussed above worked on Entergy

• Gulf States' premises. There have been numerous asbestos-related law suits filed in the District Court of Calcasieu Parish in Lake Charles, Louisiana, on behalf of approximately 200 plaintiffs naming numerous defendants including Entergy Gulf States. The suits allege that each plaintiff contracted 'an asbestos-related disease from exposure to asbestos insulation products ol the premises of such defendants. 'Settlements of the Jefferson County suits involving approximately 1,800 plaintiffs and Calcasieu Parish suits involving approximately 91 plaintiffs are in the process of being consummated. In May 1996, the majority of remaining cases in Calcasieu Parish involving approximately 70 plaintiffs were settled for an immaterial amount; there are approximately 40 cases still pending. Entergy Gulf States' share of the settlements of these cases was not material to its financial position or results of operations.

Caiun - River Bend Litigation (Entergy Corporation and Entergy Gulf States)

- Entergy Gulf States and Cajun, respectively, own 70% and 30% undivided interests in River Bend (operated by Entergy Gulf States), and 42% and 58% undivided interests in Big Cajun 2, Unit 3 (operated by Cajun).. These relationships have spawned a number of long-standing disputes and claims between the parties. An agreement setting forth terms for the resolution of all such disputes was reached by Entergy Gulf States, the Cajun bankruptcy trustee, and the RUS, and was approved by the United States District Court for the Middle District of Louisiana (District Court) on August 26, 1996 (Cajun Settlement). The terms include, but are not limited to, the following: (i) Cajun's interest in River Bend will be turned over to the RUS, which will have the option to retain the interest, sell it to a third party, or transfer it to Entergy Gulf States at no cost; (ii) Cajun will set aside a total of $125 million for its share of the decommissioning costs of River Bend; (iii) Cajun' will transfer certain transmission assets- to Entergy Gulf States; (iv) Cajun will settle transmission disputes and be released from claims for payment under transmission arrangements with Entergy Gulf States as discussed under "Caiun -' Transmission Service" below-, (v) all funds paid by Entergy Gulf States into the registry of the District Court will be returned to Entergy Gulf States; (vi) Cajun will be released from its unpaid past, present, and future liability for River Bend costs and expenses; and (vii) all litigation between Cajun and Entergy Gulf States will be dismissed. On September 6, 1996, the Committee of Unsecured Creditors in'the Cajun' bankiiuptcy proceeding filed a Notice 'of Appeal to the United States Court of Appeals for the Fifth Circuit (Fifth Circuit), objecting that the order approving the Cajun Settlement was separate from the approval of a plan of reorganization and, therefore, improper. The Cajun Settlement is subject to this appeal and approvals by the appropriate regulatory agencies. Entergy Gulf States expects to make filings with FERC and the SEC seeking approval for the transfer of certain Cajun transmission assets to Entergy Gulf States.

Management believes that it is probable that the Cajun Settlement will iltimately be approved and consummated.

The Cajun Settlement resolved Cajun's civil action instituted in June 1989 against Entergy Gulf States, in which Cajun sought to rescind or terminate the Joint Ownership Participation and Operating Agreement (Operating Agreement) entered into on August 28, 1979, relating to River Bend. In that suit, Cajun also sought to'recover its alleged $1.6 billion investment in the unit plus attorneys' fees, interest, and costs. The Cajun Settlement resolves both the portion of the suit by Cajun to rescind the Operating Agreement and the breach of contract claims.

In 1992, two member cooperatives of Cajun brought an additional independent action to declare the Operating Agreement null and void, based upon Entergy Gulf States' failure to get prior LPSC approval which was alleged to be necessary. Prior to its bankruptcy proceedings, Cajun intervened as a plaintiff in this action. Entergy Gulf States believes the suits are without merit and believes Cajun's claim is mooted by the Cajun Settlement.

On December 21, 1994, Cajun filed a petition in the United States Bankruptcy Court for the Middle District of Louisiana seeking relief under Chapter 11 of the Bankruptcy Code. Proponents of all of the plans of reorganization submitted to the Bankruptcy Court have incorporated the Cajun Settlement as an integral condition to the effectiveness of their plan. The timing and completion of a reorganization plan depends on Bankruptcy Court approval and any required regulatory approvals. The Bankruptcy Court has approved proposals by three groups seeking to acquire the non-nuclear assets of Cajun and has signed an order that establishes rules for how Cajun's creditors will vote on the three plans. On December 16, 1996, the Bankruptcy Court began hearings on the balloting and the plan that will be adopted. The matter remains before the Bankruptcy Court.

See Note 9 for additional information regarding the Cajun litigation, Cajun's bankruptcy proceedings, and related filings.

Caiun - Transmission Service (Entergy Corporation and Entergy Gulf States)

Entergy Gulf States and Cajun are parties to FERC proceedings relating to transmission service charge disputes. See Note 9 for additional information regarding these FERC proceedings, FERC orders issued as a result of such proceedings, and the potential effects of these proceedings upon Entergy Gulf States.

On December 7, 1993, Cajun filed a complaint in the Middle District of Louisiana alleging that Entergy Gulf States failed to provide Cajun an opportunity to construct certain facilities that allegedly would have reduced its rates under Service Schedule CTOC, and is seeking an order compelling the conveyance of certain facilities and awarding unspecified damages. Entergy Gulf States has moved to dismiss the complaint on the basis, among others, that FERC has already addressed the matter in the proceedings described in Note 9.

Service Area Dispute (Entergy Corporation and Entergy Gulf States)

Entergy Gulf States was requested-by Cajun and Jefferson Davis Electric Cooperative, Inc. (Jefferson Davis), to provide the transmission of power over Entergy Gulf States' system for delivery to an area near Lake Charles, Louisiana., Cajun and Jefferson Davis filed a suit in federal court in the Western District of Louisiana alleging that Entergy Gulf States breached its obligations under the parties' contract and violated the antitrust laws by refusing to provide the transmission service. Cajun and Jefferson Davis seek an injunction requiring Entergy Gulf States to provide the requested service and unspecified treble damages for Entergy Gulf States' refusal to provide the service. In November 1989, the federal court denied Cajun's and Jefferson Davis' motion for a preliminary injunction. Entergy Gulf States believes this proceeding is resolved by the Cajun Settlement.

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(Entergy Corporation and Entergy Mississippi)

On October 11, 1994, twelve Mississippi cities filed a complaint in state court against Entergy Mississippi and eight electric power associations seeking a judgment from the court declaring unconstitutional certain Mississippi statutes that establish the procedure that must be followed before a municipality can acquire the facilities and

'certificate rights of a utility srving in the municipality. Specifically, the suit requests that the court declare unconstitutional certain 1987 amendments to the Mississippi Public Utilities Act that require that the MPSC cancel a utility's certificate to serve in the municipality before a municipality may acquire a utility's facilities located in the municipality. he suit also requests that the court find that Mississippi municipalities can serve any consumer in the boundaries of the municipality ;nd within one mile thereof. On January 6, 1995, Entergy Mississippi and the other defendants filed motions to dismiss. In October 1995, the state court dismissed the complaint. The plaintiffs have appealed the dismissal to the Mississippi Supreme Court, where it is currently pending.

Taxes Paid Under Protest (Entergy Corporation and Entergy Louisiana)

Since the mid-1980's, Entergy Louisiana and the tax authorities of St. Charles Parish, Louisiana (Parish),

the parish in which Waterford 3 is located, have disputed use taxes paid on nuclear fuel (S6.5 million through 1996) under protest by Entergy Louisiana. Entergy Louisiana has been successful in lawsuits in the Parish with regard to recovering these taxes, plus interest, and also with regard to Parish lease tax issues pertaining to fuel financing arrangements. In June 1995, Entergy Louisiana received a favorable decision from the Louisiana Fifth Circuit Court of Appeals that confirmed that no such use taxes are due. The Parish and Entergy Louisiana are currently discussing

'a possible settlement of all peuding tax-related litigation including the likely return of the amounts previously paid under protest. The suits by Entergy Louisiana with regard to state use tax paid under protest on nuclear fuel are still pending.

Federal Income Tax Audit (Entergy Corporation, Entrgy Louisiana, and System Energy)

In August 1994, Entergy received an IRS report covering the federal income tax audit of Entergy Corporation and subsidiaries for the years 1988 - 1990. The report asserts an $80 million tax deficiency for the 1990 consolidated federal income tax returns related primarily to the utilization of accelerated investment tax credits associated with Waterford 3 and Grand Gulf nuclear plants. Changes to the initial report, made in the IRS appeal process, have reduced the assessment related to the issue by $22 million to S58 million. Entergy and the Appeals Officer agreed to pursue a "technical advice" ruling from the IRS National Office to-address the remainder of the issue. Entergy Corporation believes there is no material tax deficiency and is confident that a satisfactory resolution of the matterwill be achieved.

Panda Enerv Corporation Complaint (Entergy Corporation)

Panda Energy Corporation (Panda) has commenced litigation in the Dallas District Court naming Entergy Corporation, Energy Enterprises, Entergy Power, Entergy Power Asia, Ltd., and Entergy Power Development Corporation as defendants. The allegations against the defendants include, among others, tortious interference with contractual relations, conspiracy, misappropriation of corporate opportunity, unfair competition and fraud, and constructive trust issues. Panda seeks damages of approximately 4.8 billion, of which $3.6 billion is claimed in punitive damages. Entergy believes that this litigation is unfounded, but entered into arrangements on April 30, 1996, to settle the matter for $350,000, subject to revocation by Entergy if the court ruled on the case.

Thereafter, the Dallas District Court entered an order of dismissal because the plaintiff was unable to show any damages and thefacts did not support a cause of action against the defendants. As a result, Entergy revoked the

$350,000 settlement agreement. In Mayof 1996, Panda filed an appeal of the court's order for dismissal. Appeal briefs have been submitted by both parties, but no date has yet been designated for oral argument.

Catalyst Technologi es. Inc. (Ent ergy Co rporat d~h)' :~

In June 1993, Catalyst Technolog lin'c(CTI) filed a petition against Electec, Inc. (Electec), the predecessor to Entergy Enterprises. Prior to the filing of the petition, CTI and Electec entered into an agreement whereby CTI was required to raise a specified amount of funding in exchange for the right to acquire Electec's computer software technology marketing rights. CTI alleges that due to actions of Electec, it was unable to secure the necessary funding, and, therefoii, was not able to meet the terms of the agreement. The petition alleges breach of contract, breach of the obligation of good-faith and fair dealing, and bad-faith breach of contract against Electec. It was originally believed CT! was claiming damages of approximately $36 million from Entergy Enterprises. It now appears that CTI will allege damages ranging from S231 million to .S258 million. Entergy Enterprises' position is that CTI is not entitled to any damages, and that even if damages were sustained, they would not exceed $600,000.

The case is scheduled for a jury trial beginning on July 14, 1997, in Civil District Court for the Parish of Orleans, Louisiana. Entergy Enterprises is vigorously contesting these claims.

EARNINGS RATIOS OF DOMESTIC UTILITY COMPANIES AND SYSTEM ENERGY The domestic utility companies' and System Energy's ratios of earnings to fixed charges and ratios of earnings to combined fixed charges and preferred dividends pursuant to Item 503 of SEC Regulation S-K are as follows:

Ratios of Earnings to Fixed Charges Years Ended December 31, 1992 1993 1994 1995 1996 Entergy Arkansas 2.28 3.11(b) 2.32 2.56 2.93 Entergy Gulf States 1.72 1.54 .36(c) 1.86 1.47 Entergy Louisiana 2.79 3.06 2.91 3.18 3.16 Entergy Mississippi 2.37 3.79(b) 2.12 2.92 3.54 Entergy New Orleans 2.66 4.68(b) 1.91 3.93 3.51 System Energy 2.04 1.87 1.23 2.07 2.21 Ratios of Earnings to Combined Fixed Charges and Preferred Dividends Years Ended December 31.

1992 1993 1994 1995 1996 Entergy Arkansas 1.86 2.54(b) 1.97 2.12 2.44 Entergy Gulf States(a) 1.37 1.21 .29(c) 1.54 1.19 Entergy Louisiana 2:18 2.39 2.43 2.60 2.64 Entergy Mississippi 1.97. 3.08(b) 1.81 2.51 3.07 EntergyNew Orleans. 2.36 4.12(b) 1.73 3.56 3.22 (a) "Preferred Dividends" in the case of Entergy Gulf States also include dividends on preference stock.

(b) Earnings for the year ended December 31, 1993, include approximately $81 million, S52 million, and S18 million br Entergy Arkansas, Entergy Mississippi, and Entergy New Orleans, respectively, related to the change in accounting principle to provide for the accrual of estimated unbilled revenues.

(c) Earnings for the year ended December 31, 1994, for Entergy Gulf States were not adequate to cover fixed charges and combined fixed charges and preferred dividends by S144.8 million and S197.1 million, respectively.

INDUSTRY SEGMENTS Entergy New Orleans Narrative Description of Enterey New Orleans Industry Sepments Electric Service Entergy New Orleans supplied retail electric service to 188,912 customers as of December31, 1996. During 1996, 40% of electric operating revenues was derived from residential sales, 39% from commercial sales, 6% from industrial sales, and 15% from sales to governmental and municipal customers.

Natural Gas Service Entergy New Orleans supplied retail natural gas service to 151,528 customers as of December 31, 1996.

During 1996, 56% of gas operating revenues was derived from residential sales, 19% from commercial sales, 9%

from industrial sales, and 16% from sales to governmental and municipal customers. (See "FUEL SUPPLY -

Natural Gas Purchased for Resale.")

Selected Financial Information Relatin! to Industry Segments For selected financial information relating to Entergy New Orleans' industry segments, see Entergy New Orleans' financial statements and Note 15.

Employees by Senment Entergy New Orleans' full-time employees by industry segment as of December 31, 1996, were as follows:

Electric 219 Natural Gas 109 Total 328 (For further information with respect to Entergy New Orleans' segments, see "PROPERTY.")

Entergy Gulf States For the year ended December 31, 1996, 95% of Entergy Gulf States' operating revenues was derived from the electric utility business. Of the remaining operating revenues 3% was derived from the steam business and 2%

from the natural gas business.

PROPERTY Generating Stations

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The total capability of Entergy's owned and eased generating stations as of December31, 1996, by company and by fuel type, is indicated below:

Owned and Leased Capability MW(1)

Gas Turbine and Internal Company Total Fossil Nuclear Combustion Hydro Entergy Arkans 4,373 (2) 2,379 1,694 230 (4) 70 Entergy Gulf States 6,558 (2) 5,828 655 75 Entergy Louisiana 5,423 (2) 4,329 1,075 19 Entergy Mississippi 3,063 (2) 3,052 - 11 Entergy New Orleans 934 (2) 918 - 16 System Energy 1,061 - 1,061 _ _

Total 21,412 (3) 16,506 (3) 4,485 351 70 (1) "Owned and Leased Capability" is the dependable load carrying capability as demonstrated under actual operating conditions based on the primary fuel (assuming no curtailments) that each station was designed to utilize. .

(2) Excludes the capacity of fossil-fueled generating stations placed on extended reserve as follows: Entergy Arkansas - 506 MW; Entergy Gulf States - 405 MW; Entergy Louisiana - 157 MW; Entergy Mississippi -

73 MW; and Entergy New Orleans - 143 MW. Generating stations that are not expected to be utilized in the near-term to meet load requirements are placed in extended reserve shutdown in order to minimize operating expenses.

(3) Excludes net capability of generating facilities owned by Entergy Power, which owns 725 MW of fossil-fueled capacity.

(4) Includes 188 MW of capacity leased by Entergy Arkansas through 1999.

Load and capacity projections are regularly reviewed in order to coordinate and recommend the location and time of installation of additional generating capacity and of interconnections in light of the availability of power, the location of new loads, and maximum economy to Entergy. Based on load and capability projections and bulk power availability, Entergy has no current plans to install additional generating capacity. When new generation resources are needed, Entergy expects to meet this need by means other than construction of new base load generating capacity.

In the meantime, Entergy will meet capacity needs by, among other things, purchasing power in the wholesale power market and/or removing generating stations from extended reserve shutdown.

Under the terms of the System Agreement, certain generating capacity and other power resources are shared among the domestic utility companies. Among other things, the System Agreement provides that parties having generating reserves greater than their load requirements (long companies) shall receive payments from those parties having deficiencies in generating reserves (short companies) and an amount sufficient to cover certain of the long companies' costs, including operating expenses, fixed charges on debt, dividend requirements on preferred and preference stock, and a fair rate of return on common equity investment. Under the System Agreement, these charges are based on costs associated with the long companies' steam electric generating units fueled by oil or gas. In addition, for all energy exchanged among the domestic utility companies under the System Agreement, the short companies are required to pay the cost of fuel consumed in generating such energy plus a charge to cover other associated costs (see "RATE MATTERS AND REGULATION - Rate Matters - Wholesale Rate Matters -

Systern Agt.N " above, for a discussion of FERC proceedings relating to the System Agreement).

Entergy's business is subject to seasonal fluctuations, with the peak period occurring in the summer months.

The 1996 peal demand of 19,444 MW occurred on July 22, 1996. The net capability at the time of peak was 21,127 MW, net of off-systen firn sales of 285 MW. The capacity margin at the time of the peak was approximately 8.0%

excluding units placed on extended reserve and capacity owned by Entergy Power.

Interconnections The electric power supply facilities of Entergy consist principally of steam-electric production facilities strategically located with reference to availability of fuel, protection of local loads, and other controlling economic factors. These are interconnected by a transmission system operating at various voltages up to 500 kilovolts.

Generally, with the exception of Grand Gulf 1, Entergy Power's capacity and a small portion of Entergy Mississippi's capacity, operating facilities or interests therein are owned by the domestic utility company serving the area in which the facilities are located. However, all of Entergy's generating facilities are centrally dispatched and operated in order to obtain the lowest cost sources of energy with a minimum of investment and the most efficient use of plant.

In addition to the many neighboring utilities with which the domestic utility companies interconnect, the domestic utility companies are members of the Southwest Power Pool, the primary purpose of which is to ensure the reliability and adequacy of the electric bulk power supply in the southwest region of the United States. The Southwest Power Pool is a number of the North American Electric Reliability Council. The domestic utility companies are also members of the Western Systems Power Pool.

Gas Property As of December 31, 1996, Entergy New Orleans distributed and transported natural gas for distribution solely within the limits of the City of New Orleans through a total of 1,439 miles of gas distribution mains and 40 miles of gas transmission pipelines. Koch Gateway Pipeline Company is a principal supplier of natural gas to Entergy New Orleans, delivering to six of Entergy New Orleans' 14 delivery points.

As of December 31, 1996, the gas properties of Entergy Gulf States were not material to Entergy Gulf States.

Titles Entergy's generating stations are generally located on properties owned in fee simple. The greater portion of the transmission and distribution lines of the domestic utility companies has been constructed over property of private owners pursuant to easements or on public highways and streets pursuant to appropriate franchises. The rights of each domrestic utility company in the realty on which its facilities are located are considered by it to be adequate for its use in the conduct of its business. Minor defects and irregularities customarily found in properties of like size and character exist, but such defects and irregularities do not materially impair the use of the properties affected thereby.

The domestic utility companies generally have the right of eminent domain, whereby they may, if necessary, perfect or secure titles to, or easernents or servitudes on, privately-held lands used or to be used in their utility operations.

Substantially all the physical properties owned by each domestic utility company and System Energy, respectively, are subject to the lien of a mortgage and deed of trust securing the first mortgage bonds of such company. The Lewis Creek generating station is owned by GSG&T, Inc., a subsidiary of Entergy Gulf States, and is not subject to the lien of the Entergy Gulf States mortgage securing the first mortgage bonds of Entergy Gulf States, but is leased to and operated by Entergy Gulf States. In the case of Entergy Louisiana, certain properties are also subject to the liens of second mortgages securing other obligations of Entergy Louisiana. In the case of Entergy Mississippi and Entergy New Orleans, substantially all of their properties and assets are also subject to the second mortgage lien of their respective general and refunding mortgage bond.iantures.

FUEL SUPPLY The sources of generation and average fuel cost per kWh for the domestic utility companies and System Energy for the years 1994-1996 were:

Natural Gas Fuel Oil Nuclear Fuel Coal

% Cents  % Cents  % Cents ./ .* Cents of per of per of Per of Per Year Gen kWh Gen kWh Gen kWh Gen kWh 1996 42 2.99 1 3.03 41 .56 16 1.73 1995 50 1.99 35 .60 15 1.73

.1994 44 2.24 1 3.99 39 .60 16 1.82 Actual 1996 and projected 1997 sources of generation for the domestic utility companies and System Energy are:

Natural Gas Fuel Oil Nuclear Coa 1996 1997 1996 1997 1996 1997 1996 1997 Entergy Arkansas 7% 7% 57% 51% 36% 42%

Entergy Gulf States 69% 66% - 20% 19% 11% - 15%

Entergy Louisiana 56% 48% 44% 52%

Entergy Mississippi 54% 71% 13% 33% 29%

Entergy New Orleans 99% 100% 1%

System Energy - 100%(a) 1000/o(a)

Total 42% 39% 1% 41% 41% 16% 20%

(a) Capacity and energy from System Energy's interest in Grand Gulf 1 is allocated as follows: Entergy Arkansas -

36%; Entergy Louisiana - 14%; Entergy Mississippi - 33%; and Entergy New Orleans - 17%.

The balance of generation, which was immaterial, was provided by hydroelectric power.

Natural Gas The domestic utility companies have long-term firm and short-term interruptible gas contracts. Long-term firm contracts comprise less than 30% of the domestic ,utility companies' total requirements but can be called upon, if necessary, to satisfy a significant percentage of the domestic utility companies' needs. Additional gas requirements are satisfied by short-term contracts and spot-market purchases. Entergy Gulf States has a transportation service agreement with a gas supplier that provides flexible natural gas service to certain generating stations by using such supplier's pipeline and gas storage facility.

Many factors, including wellhead deliverability, storage and pipeline capacity, and demand requirements of end users, influence the availability and price of natural gas supplies for power plants. 'Demand is tied to regional weather conditions as well as to the prices of other energy sources. Supplies of natural gas are expected to be adequate in 1997. However, pursuant to federal and state regulations, gas supplies to power plants may be interrupted during periods of shortage. To the extent natural gas supplies may be alsrup-, uti, UOI ..

companies will use alternate fuels, such as oil, or rely on coal and nuclear generation.

Coal Entergy Arkansas has long-term contracts with mines in the State of Wyoming for the supply of low-sulfur coal for the White Bluff Steam Electric Generating Station and Independence. These contracts, which expire in 2002 and 2011, provide for approxinately 85% of Entergy Arkansas' expected annual coal requirements. Additional requirements are satisfied by annual spot market purchases. Entergy Gulf States has a contract for a supply of low-sulfur Wyoming coal for Nelson Unit 6, which should be sufficient to satisfy the fuel requirements at Nelson Unit 6 through 2010. Cajun has advised Entergy Gulf States that Cajun has contracts that should provide an adequate supply of coal until 1999 for the operation of Big Cajun 2, Unit 3.

Nuclear Fuel The nuclear fuel cycle involves the mining and milling of uranium ore to produce a concentrate, the conversion of uranium concentrate to uranium hexafluoride gas, enrichment of that gas, fabrication of nuclear fuel assemblies for use in fueling nuclear reactors, and disposal of the spent fuel.

System Fuels is responsible for contracts to acquire nuclear material to be used in fueling Entergy Arkansas',

Entergy Louisiana's, and System Energy's nuclear units and maintaining inventories of such materials during the various stages of processing. Each of these companies contracts for the fabrication of its own nuclear fuel and purchases the required enriched uranium hexafluoride from System Fuels. The requirements for Entergy Gulf States' River Bend plant are covered by contracts made by Entergy Gulf States. Entergy Operations acts as agent for System Fuels and Entergy Gulf States in negotiating and/or administering nuclear fuel contracts.

In October 1989, Syste=n Fuels entered into a revolving credit agreement with a bank that provides up to $45 million in borrowings to finance its nuclear materials and services inventory. Should System Fuels default on its obligations under its credit agreeet, Entergy Arkansas, Entergy Louisiana, and System Energy have agreed to purchase nuclear materials and services under the agreement.

Based upon the planned fuel cycles for Entergy's nuclear units, the following tabulation shows the years through which existing contracts and inventory will provide materials and services:

Acquisition of or Conversion Spent Uranium to Uranium Fuel Concentrate Hexafluoride Enrichment Fabrication Disposal ANO 1 (1) (1) (2) 2000 (3)

ANO 2 (1) (1) (2) 1999 (3)

RiverBend (1) (1) (2) 2001 (3)

Waterford 3 (1) (1) (2) 1999 (3)

Grand Gulf (1) (1) (2) 2000 (3)

(1) Current contracts will provide a significant percentage of these materials and services through termination dates ranging from 1997-2001. Additional materials and services required beyond these dates are estimated to be available for the foreseeable future.

(2) Current contracts will provide a significant percentage of these materials and services through approximately 2000.

(3) The Nuclear Waste Policy Act of 1982 provides for the disposal of spent nuclear fuel or high level waste by the DOE.

Entergy will enter into additioial arrangements to acquire nuclear fuel beyond the dates shown above.

Except as noted above, Entergy cannot predict the ultimate availability or cost of such arrangements at this time.

Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy currently have arrangements to lease nuclear fuel and related equipment and services in aggregate amounts up to $125 million, $70 million,

$80 million, and $ 10 million, respectively. As of December 31, 1996, the unrecovered cost base of Entergy Arkansas', Entergy Gulf States', Entergy Louisiana's, and System Energy's nuclear fuel leases amounted to approximately $79.1 million, $49.8 million, $38.2 million, and $83.6 million, respectively. The lessors finance the acquisition and ownership of nuclear fuel through credit agreements and the issuance of notes. These agreements are subject to annual renewal with, in Entergy Louisiana's and Entergy Gulf States' case, the consent of the lenders. The credit agreements for Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy have been extended and now have termination dates of December 1999, December 1999, January 2000, and February 2000, respectively. The debt securities issued pursuant to these fuel lease arrangements have varying maturities through January 31, 1999. It is expected that the credit agreements will be extended or alternative financing will be secured by each lessor upon the maturity of the current arrangements. If extensions or alternative financing cannot be arranged, the lessee in each case must purchase sufficient nuclear fuel to allow the lessor to retire such borrowings.

Natural Gas Purchased for Resale Entergy New Orleans has several suppliers of natural gas for resale. Its system is interconnected with three interstate and three intrastate pipelines. Presently, Entergy New Orleans' primary suppliers are Koch Gas Services Company (KGS), an interstate gas marketer, and Bridgeline and Pontchartrain, intrastate pipelines. Entergy New Orleans has a firm gas purchase contract with KGS. The KGS gas supply is transported to Entergy New Orleans pursuant to a transportation service agreement with Koch Gateway Pipeline Company (KGPC). This service is subject to FERC-approved rates. Entergy New Orleans has firm contracts with its two intrastate suppliers and also makes interruptible spot market purchases. In recent years, natural gas deliveries have been subject primarily to weather-related curtailments. However, Entergy New Orleans has experienced no such curtailments.

After the implementation of FERC-mandated interstate pipeline restructuring in 1993, curtailments of interstate gas supply could occur if Entergy New Orleans' suppliers failed to perform their obligations to deliver gas under their supply agreements. KGPC could curtail transportation capacity only in the event of pipeline system constraints. Based on the current supply of natural gas, and absent extreme weather-related curtailments, Entergy New Orleans does not anticipate any interruptions in natural gas deliveries to its customers.

Entergy Gulf States purchases natural gas for resale under a 'No-Notice" type of agreement from Mid Louisiana Gas Company. Abandonment of service by the present supplier would be subject to abandonment proceedings by FERC.

-Research Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans are members of the Electric Power Research Institute (EPRI). EPRI conducts a broad range of research in major technical fields related to the electric utility industry. Entergy participates in various EPRI projects based on Entergy's needs and available resources. During 1996, 1995, and 1994, Entergy contributed approximately S9 million, $9 million, and $18 million, respectively, for EPRI and other research programs in which Entergy was involved.

Item 2. Properties Refer to Item 1. "Business - PROPERTY," for information regarding the properties of the registrants.

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Item 3. Legal Proceedings Refer to Item 1. "Business - RATE MATTERS AND REGULATION," for details of the registrants' material rate proceedings and other regulatory proceedings and litigation that are pending or that terminated in the fourth quarter of 1996.

Item 4. Submission of Matters to a Vote of Security Holders During the fourth quarter of 1996, no matters were submitted to a vote of the security holders of Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, or System Energy.

PART II Item S. Market for Registrants' Common Equity and Related Stockholder Matters Entergy Corporation The shares of Entergy Corporation's common stock are listed on the New York, Chicago, and Pacific Stock Exchanges.

The high and low prices of Entergy Corporation's common stock for each quarterly period in 1996 and 1995 were as follows:

1996 1995 Hieh Low High Low (In Dollars)

First 30 3/8 26 3/8 24 3/4 20 Second 28 1/2 25 1/4 25 1/2 20 7/8 Third 28 5/8 24 7/8 26 1/8 23 5/8 Fourth 29 26 3/4 29 1/4 26 Dividends of 45 cents per share were paid on Entergy Corporation's common stock in each of the quarters of 1996 and 1995.

As of February 28, 1997, there were 92,267 stockholders of record of Entergy Corporation.

For information with respect to Entergy Corporation's future ability to pay dividends, refer to Note 8, "DIVIDEND RESTRICTIONS." In addition to the restrictions described in Note 8, PUHCA provides that, without approval of the SEC, the unrestricted, undistributed retained earnings of any Entergy Corporation subsidiary are not available for distribution to Entergy Corporation's common stockholders until such earnings are made available to Entergy Corporation through the declaration of dividends by such subsidiaries.

Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy There is no market for the common stock of Entergy Corporation's wholly owned subsidiaries. Cash dividends on common stock paid by the subsidiaries to Entergy Corporation during 1996 and 1995, were as follows:

1996 1995 (In Millions)

Entergy Arkansas S 142.8 S 153.4 Entergy Gulf States - -

EntergyLouisiana S 179.2 S221.5 Entergy Mississippi S 79.9 S 61.7 Entergy New Orleans $ 34.0 S 30.6 System Energy S 112.5 S 92.8 Entergy S.A. S 0.7 S 3.5 Entergy Transener S.A. S 1.7 $ 2.1 Entergy Argentina S.A. S 0.3 Entergy Argentina S.A. Ltd. S 3.1 In February 1997, Entergy Corporation received common stock dividend payments from its subsidiaries totaling $66.9 million. For information with respect to restrictions that limit the ability of System Energy and the domestic utility companies to pay dividends, see Note 8. In order to improve its capital structure, Entergy Gulf States has not paid common stock dividends since the third quarter of 1994. See Management's Financial Discussion and Analysis - Liquidity and Capital Resources".

Item 6. Selected Financial Data Entergy Corporation.. Refer to information under the heading ENTERGY CORPORATION AND SUBSIDIARIES SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON."

Entergy Arkansas. Refer to information under the heading ."ENTERGY ARKANSAS, INC.

SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON."

Entergy Gulf States. Refer to information under the heading ENTERGY GULF STATES, INC.

SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON."

Entergy Louisiana. Refer to information under the heading "ENTERGY LOUISIANA, INC.

SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON."

Entergy Mississippi. Refer to information under the heading "ENTERGY MISSISSIPPI, INC.

SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON."

Entergy New Orleans. Refer to information under the heading ENTERGY NEW ORLEANS, INC.

SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON."

System Energy. -Refer to information under the heading "SYSTEM ENERGY RESOURCES, INC.

SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON."

Item 7. Manaiement's Discussion and Analysis of Financial Condition and Results of Operations Entergy Corporation and Subsidiaries. Refer to information under the heading "ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS

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- LIQUIDITY AND CAPITAL RESOURCES," " - SIGNIFICANT FACTORS AND KNOWN TRENDS,"

and "- RESULTS OF OPERATIONS."

Entergy Arkansas. Refer to information under the eading "ENTERGY ARKANSAS, INC.

MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - RESULTS OF OPERATIONS."

Entergy Gulf States. Refer to information under the heading ENTERGY GULF STATES, INC.

MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - RESULTS OF OPERATIONS."

Entergy Louisiana. Refer to information under the heading ENTERGY LOUISIANA, INC.

MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - RESULTS OF OPERATIONS."

Entergy Mississippi. Refer to information under the heading "ENTERGY MISSISSIPPI, INC.

MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - RESULTS OF OPERATIONS."

Entergy New Orleans. Refer to information under the heading ENTERGY NEW ORLEANS, INC.

MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - RESULTS OF OPERATIONS."

System Energy. Ref.er to information under the heading "SYSTEM ENERGY RESOURCES, INC.

MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - RESULTS OF OPERATIONS."

Item 8. Financial Statements and Supplementary Data.

INDEX TO FINANCIAL STATEMENTS Entergy Corporation and Subsicliaries:

Report of Management 40 Audit Committee Chairperson's Letter 41 Management's Financial Discussion and Analysis for Entergy Corporation and Subsidiaries 42 Report of Independent Accountants for Entergy Corporation and Subsidiaries 53 Management's Financial Discussion and Analysis for Entergy Corporation and Subsidiaries 54 Statements of Consolidated income For the Years Ended December 31, 1996, 1995, and 1994 for 57 Entergy Corporation and Subsidiaries Statements of Consolidated Cash Flows For the Years Ended December 31, 1996, 1995, and 1994 58 for Entergy Corporation and Subsidiaries Balance Sheets, December 31, 1996 and 1995 for Entergy Corporation and Subsidiaries 60 Statements of Consolidated Retained Earnings and Paid-In Capital for the Years Ended 62 December 31, 1996, 1995, and 1994 for Entergy Corporation and Subsidiaries Selected Financial Data - Five-Year Comparison for Entergy Corporation and Subsidiaries 63 Report of Independent Accountants for Entergy Arkansas, Inc. 65 Management's Financial Discussion and Analysis for Entergy Arkansas, Inc. 66 Statements of Income For theYears Ended December 31, 1996, 1995, and 1994 for Entergy 68 Arkansas, Inc.

Statements of Cash Flows For the Years Ended December 31, 1996, 1995, and 1994 for Entergy 69 Arkansas, Inc.

Balance Sheets, December 31, 1996 and 1995 for Entergy Arkansas, Inc. 70 Statements of Retained Earnings for the Years Ended December 31, 1996, 1995, and 1994 for 72 Entergy Arkansas, Inc.

Selected Financial Data - Five-Year Comparison for Entergy Arkansas, Inc. 73 Report of Independent Accountants for Entergy Gulf States, Inc. 75 Management's Financial Discussion and Analysis for Entergy Gulf States, Inc. 76 Statements of Income (loss) For the Years Ended Decembcr 31, 1996, 1995, and 1994 for Entergy 78 Gulf States, Inc.

Statements of Cash Flows For the Years Ended December 31, 1996, 1995, and 1994 for Entergy 79 Gulf States, Inc.

Balance Sheets, December 31, 1996 and 1995 for Entergy Gulf Siates, Inc. 80 Statements of Retained Earnings for the Years Ended December 31, 1996, 1995, and 1994 for 82 Entergy Gulf States, InC.t Selected Financial Data - Five-Year Comparison for Entergy Gulf States, Inc. 83 Report of Independent Accountants for Entergy Louisiana, Inc. 85 Management's Financial Discussion and Analysis for Entergy Louisiana, Inc. 86 Statements of Income For the Years Ended December 31, 1996, 1995, and 1994 for Entergy 88 Louisiana, Inc.

Statements of Cash Flows For the Years Ended December 31, 1996, 1995, and 1994 for Entergy 89 Louisiana, Inc.

Balance Sheets, December 31, 1996 and 1995 for Entergy Louisiana, Inc. 90 Statements of Retained Earnings for the Years Ended December 31, 1996, 1995, and 1994 for 92 Entergy Louisiana, Inc.

Selected Financial Data - Five-Year Comparison for Entergy Louisiana, Inc. 93 Report of Independent Accountants for Entergy Mississippi, Inc. 95 Management's Financial Discussion and Analysis for Entergy Mississippi, Inc. 96 Statements of Income For the Years Ended December 31, 1996, 1995, and 1994 for Entergy 98 Mississippi, Inc:

Statements of Cash Flows For the Years Ended Decemb& 31, 1996, 1995, and 1994 for Entergy 99 Mississippi, Inc.

Balance Sheets, December 31, 1996 and 1995 for Entergy Mississippi, Inc. 100 Statements of Retained Earnings for the Years Ended December 31, 1996, 1995, and 1994 for 102 Entergy Mississippi, Inc.

Selected Financial Data - Five-Year Comparison for Entergy Mississippi, Inc. 103 Report of Independent Accountants for EntergyNew Orleans, Inc. 105 Management's Financial Discussion and Analysis for Entergy New Orleans, Inc. 106 Statements of Income For the Years Ended December 31, 1996, 1995, and 1994 for EntergyNew 108 Orleans, Inc.

Statements of Cash Flows For the Years Ended December 31, 1996, 1995, and 1994 for Entergy 109 New Orleans, Inc.

Balance Sheets, December 31, 1996 and 1995 for Entergy New Orleans, Inc. 110 Statements of Retained Earnings for the Years Ended December 31, 1996, 1995, and 1994 for 112 Entergy New Orleans, Inc.

Selected Financial Data - Five-Year Comparison for Entergy New Orleans, Inc. 113 Report of Independent Accountants for System Energy Resources, Inc. 115 Management's Financial Discussion and Analysis for System Energy Resources, Inc. 116 Statements of Income For the Years Ended December 31, 1996, 1995, and 1994 for System Energy -118 Resources, Inc.

Statements of Cash Flows For the Years Ended December 31, 1996, 1995, and 1994 for System 119 Energy Resources, Inc.

Balance Sheets, December 31, 1996 and 1995 for System Energy Resources, Inc. 120 Statements of Retained Earnings forthe Years Ended December 31, 1996, 1995, and 1994 for 122 System Energy Resources, Inc.

Selected Financial Data - Five-Year Comparison for System Energy Resources, Inc.. 123 Notes to Financial Statements for Entergy Corporation and Subsidiaries 124

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ENTERGY CORPORATION AND SUBSIDIARIES REPORT OF MANAGEMENT The management of Entergy Corporation and subsidiaries has prepared and is responsible for the financial statements and related financial information included herein. The financial statements are based on generally accepted accounting principles. Financial information included elsewhere in this report is consistent with the financial statements.

To meet its responsibilities with respect to financial information, management maintains and enforces a system of internal accounting controls that is designed to provide reasonable assurance, on a cost-effective basis, as to the integrity, objectivity, and reliability of the financial records, and as to the protection of assets. This system includes communication through written policies and procedures, an employee Code of Conduct, and an organizational structure that provides for appropriate division of responsibility and the training of personnel. This system is also tested by a comprehensive internal audit program.

The independent public accountants provide an objective assessment of the degree to which management meets its responsibility for fairness of financial reporting.. They regularly evaluate the system of internal accounting controls and perform such tests and other procedures as they deem necessary to reach and express an opinion on the fairness of the financial statements.

Management believes that these policies and procedures provide reasonable assurance that its operations are carried out with a high standard of business conduct.

ED LUPBERGER GERALD D. MCINVALE Chairman, President, and Chief Executive Officer Executive Vice President and of Entergy Corporation, Entergy Arkansas, Chief Financial Officer Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans DONALD C. HINTZ President and Chief Executive Officer of System Energy ENTERGY CORPORATION AND SUBSIDIARIES AUDIT COMMITTEE CHAIRPERSON'S LETTER The Entergy Corporation Board of Directors' Audit Committee is comprised of five directors who are not officers of Entergy Corporation: Lucie J. Fjeldstad, Chairperson, Admiral Kinnaird McKee, Eugene H. Owens, Robert D. Pugh, and H. Duke Shackelford. The comnttee held five meetings during 1996.

The Audit Committee oversees Entergy Corporation's financial reporting process on behalf of the Board of Directors and provides reasonable assurance to the Board that sufficient operating, accounting, and financial controls are in existence and are adequately revieved by programs of internal and external audits.

The Audit Committee discussed with Entergy's internal auditors and the independent public accountants (Coopers & Lybrand L.L.P.) the overall scope and specific plans for their respective audits, as well as Entergy Corporation's financial statements and the adequacy of Entergy Corporation's internal controls. The committee met, together and separately, with Entergy's internal auditors and independent public accountants, without management present, to discuss the results of their audits, their evaluation of Entergy Corporation's internal controls, and the overall quality of Entergy Corporation's financial reporting. The meetings also were designed to facilitate and encourage private communication between the comnuittee and the internal auditors and independent public accountants.

LUCIE J. FJELDSTAD Chairperson, Audit Committee ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES Cash Flow Net cash flow from operations for Entergy, the domestic utility companies, and System Energy for the years ended December 31, 1996, 1995, and 1994, was as follows:

1996 1995 1994 (In Millions)

Entergy S1,458 S1,426 S1,558 EntergyArkansas S 377 S 338 S 356 Entergy Gulf States $ 322 S 401 S 326 Entergy Louisiana S 352 S 385 S 368 Entergy Mississippi S 182 S 185 S 195 Entergy New Orleans S 44 S 99 S 39.

SystemEnergy S 287 $ 96 S 337 The positive cash flow from operations for the domestic utility companies results from continued efforts to streamline operations and to reduce costs, as well as from collections under rate phase-in plans that exceed current cash requirements for the related costs. (In the income statement, these revenue collections are offset by the amortization of previously deferred costs so that there is no effect on net income.) These phase-in plans will continue to contribute to Entergy's cash position over the next several years. Specifically, the Grand Gulf I phase-in plans will expire in 1998 for Entergy Arkansas and Entergy Mississippi, and in 2001 for Entergy New Orleans. Entergy Gulf States' phase-in plan for River Bend will expire in 1998, and Entergy Louisiana's phase-in plan for Waterford 3 will expire in June 1997.

Financing Sources Cash from operations, supplemented by cash on hand, was sufficient to meet substantially all investing and financing requirements of the domestic utility companies, other than early refinancings of existing debt, including capital expenditures, dividends, and debt/preferred stock maturities during 1996. System Energy issued two series of first mortgage bonds in August 1996 totaling $235 million, of Which $210 million was used to meet a scheduled September 1, 1996, System Energy debt maturity. Entergy's investments in nonregulated businesses in 1996 were funded with debt and equity capital.

Entergy has been able to fund the capital requirements for its domestic utility businesses with cash from operations resulting from the items discussed above in Cash Flow. Should additional cash be needed to find investments or retire debt, the domestic utility companies and System Energy have the ability, subject to regulatory approval and compliance with issuance tests, to issue debt or preferred securities to meet such requirements. In addition, to the extent market conditions and interest and dividend rates allow, the domestic utility companies and System Energy will continue to refinance andfor redeem higher cost debt and preferred stock prior to maturity. The domestic utility companies may continue to establish special purpose trusts as financing subsidiaries for the purpose of issuing preferred trust securities, such as those issued in 1996 by Entergy Louisiana Capital I and Entergy Arkansas Capital I, and those issued in January 1997 by Entergy Gulf States Capital I. Entergy Corporation, the domestic utility companies, and System Energy also have SEC authorization to effect short-term borrowings. See Notes 4, 5, 6, 7, and 9 for additional information on Entergy's capital and refinancing requirements in 1997-2001.

ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS

>LIQUIDITY AND CAPITAL RESOURCES In May 1996, Entergy Corporation registered 10 million additional shares of common stock pursuant to a new dividend reinvestment and stock purchase plan, which became effective in July 1996. See Note 5 for further discussion.

Financing Uses Productive investment by Entergy Corporation is integral to enhancing the long-term value of its common stock. Entergy Corporation has been expanding its investments in business opportunities overseas as well as in the United States. Through the end of 1996, Entergy Corporation had acquired or participated in foreign electric ventures in Australia, Argentina, Chile, Palcistan, and Peru, and had acquired several telecommunications-based businesses in the United States. As of December 31, 1996, Entergy Corporation had a net investment of $812 million in equity capital in businesses other than its domestic retail utility business. See Note 13 for a discussion of Entergy Corporation's acquisition of CitiPower on January 5, 1996, and Note 16 for Entergy Corporation's acquisition of London Electricity plc on February 7,1997.

To make capital investments, fund its subsidiaries, and pay dividends, Entergy Corporation will utilize internally generated funds, cash on hand, funds available under its S300 million credit facility, funds received from its dividend reinvestment and stock purchase plan, and other bank financings if required. See Note 9 for a discussion of capital requirements. Entergy Corporation receives funds through dividend payments from its subsidiaries. During 1996, such dividend payments from subsidiaries totaled S554.2 million. In order to improve its capital structure, Entergy Gulf States has not paid common stock dividends since the third quarter of 1994. In 1996, Entergy Corporation paid S405 million of common stock dividends. Declarations of dividends on common stock are made at the discretion of Entergy Corporation's Board of Directors. Management will not recommend future dividend increases to the Board unless such increases are justified by adequate earnings growth of Entergy Corporation and its subsidiaries. See Note 8 for information on dividend restrictions.

Enterev Corporation and EnterEy Gulf States See Notes 2 and 9 regarding River Bend and Cajun issues, including recent developments. An adverse ruling regarding River Bend could result in up to approximately S278 million of potential write-offs (net of tax) and up to

$204 million in refunds of previously collected revenue. Such write-offs and charges could result in substantial net losses being reported in the future by Entergy Gulf States, with resulting adverse adjustments to the common equity of Entergy Corporation and Entergy Gulf States. Adverse resolution of these matters could negatively affect Entergy Gulf States' ability to obtain financing, which could in turn affect Entergy Gulf States' liquidity and ability to resume paying dividends.

Enterev Corporation and System Ener=

Under the Capital Funds Agreement, Entergy Corporation has agreed to supply to System Energy sufficient capital to maintain System Energy's equity capital at a minimum of 35% of its total capitalization (excluding short-term debt), to permit the continued commercial operation of Grand Gulf 1, and to pay in full all indebtedness for borrowed money of System Energy when due under any circumstances. In addition, under supplements to the Capital Funds Agreement assigning System Energy's rights as security for specific debt of System Energy, Entergy Corporation has agreed to make cash capital contributions, if required, to enable System Energy to make payments on such debt when due. The Capital Funds Agreement can be terminated by the parties thereto, subject to consent of certain creditors.

ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS Competition and Industry Challenies The electric utility industry traditionally has operated as a regulated monopoly in which there was little opportunity for direct competition in the provision of electric service. The industry is now undergoing a transition to an environment of increased retail and wholesale competition. The causes of the movement toward competition are numerous and complex. They include' legislative and regulatory changes, technological advances, consumer demands, greater availability of natural gas, environmental needs, and other factors. The increasingly competitive environment presents opportunities to compete for new customers, as well as the risk of loss of existing customners.

The following issues have been identified by Entergy as its major competitive challenges.

Open Access Transmission The EPAct addressed a wide range of energy issues and is being implemented by both FERC and state regulators. The EPAct is designed to promote wholesale competition among utility and nonutility generators by amending PUHCA to exempt from regulation a class of EWGs, among others, consisting of utility affiliates and nonutilities that own and operate facilities for the generation and transmission of power for sale at wholesale. The EPAct also gave FERC the authority to order investor-owned utilities to transmit wholesale' power and energy to or for wholesale purchasers and sellers. This creates potential for electric utilities and other power producers to gain increased access to the transmission systems of other utilities to facilitate wholesale sales.

In response to the EPAct, FERC commenced a rulemaking on the subject of "stranded costs" i 1994. This rulemaldng concerns a regulatory framework for dealing with recovery of costs that were prudently incurred by electric utilities to serve customers under the traditional regulatory framework. These costs may become "stranded" as a result of increased competition. The risk of exposure to stranded costs that may result from competition in the industry will depend on the extent and timing of retail competition, the resolution of jurisdictional issues concerning stranded cost recovery, and the extent to which such costs are recovered from departing or remaining customers.

FERC issued Order No. 888 as the final order in this rulemaking in April 1996 requiring that all public utilities subject to its jurisdiction provide comparable wholesale' transmission access through the filing 'of a single open access tariff. In addition, FERC ruled that public'utilities are entitled to full recovery of prudently incurred costs associated with wholesale requirements signed before July 11,' 1994. If the costs are stranded by retail wheeling, public utilities should first seek recovery of these costs from the appropriate state or local regulators.

FERC indicated that it would be the primary forum for recovery in cases where retail customers become wholesale purchasers.

FERC also issued Order No. 889, which prescribes the requirements and procedures for the implementation and maintenance of an open access same-time information system by each public utility. In addition, FERC issued a notice of proposed rulenialdng concerning' capacity reservation tariffs as the next phase of its efforts to promote wholesale competition. In July 1996, Entergy Services filed, on behalf of the domestic utility companies, an open access proforma tariff.

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ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS In September 1996, FERC issued an order revising the original requirement that open access same-time information service sites and standards of conduct be in place for all transmission providers by Novernber 1, 1996.

FERC scheduled a two-step compliance procedure in' which the operation of open access same-ime information service sites was to begin on a test basis beginning in-December 1996,' with'full commercial operations and compliance with the standards of conduct beginning in January 1997. In January 1997, Entergy Services filed its standards of conduct with FERC, and an open access same-time information site was established.

In response to Order No. 888, Entergy Services filed a request for clarification and rehearing regarding the following four issues: (i) the.special nature and treatment of stranded nuclear decommissioning costs; (ii) the reciprocity rules applicable to rural electric cooperatives, (iii) the functional unbundling requirerments for registered holding companies; and (iv) the nature of network service. The request for rehearing is currently pending.

Transition to Competition Filings Entergy has initiated discussions with its state and local regulators regarding an orderly transition to a more competitive market for electricity. As discussed in more detail in Note 2, Entergy Arkansas, Entergy Gulf States, and Entergy Louisiana have made filings with their respective 'state regulators concerning the transition to competition. These filings call for the accelerated recovery of the companies' nuclear investment and nuclear-related purchase obligations over a seven-year period and for the protection of certain classes' of ratepayers from possibly unfairly bearing the burden of cost shifting which may result from competition.' The majority of the domestic utilities' current net investment in nuclear generation shown in Note 1 is included in the' proposals for accelerated recovery filed with state regulators. See'Note 2 for a discussion of Entergy Mississippi's August 1996 transition to competition filing with the MPSC.

Retail and Wholesale Rate Issues The retail regulatory philosophy is shifting in some jurisdictions from traditional cost-of-service regulation to incentive-rate regulation. Incentive and performance-based rate plans encourage efficiencies and productivity while permitting 'utilities and their customers to share in the results. 'Entergy Mississippi and Entergy Louisiana have implemented incentive-rate plans.

Several of the domestic utility companies have recently been ordered to grant base rate reductions and have refunded or credited customers for previous overcollections of rates. 'The continuing pattern of rate reductions is a characteristic of the competitive environment in which the domestic utilities operate. 'See Note 2 for additional discussion of rate reductions and incentive-rate regulation, as well as a System Energy proposed rate increase.

Legislative Activity Retail wheeling is the transmission and/or distribution' by an electric utility of energy produced by another entity over the utility's transmission and distribution system to a retail customer in the electric utility's area of service. California, Rhode Island, New Hampshire, Massachusetts, and Pennsylvania have already initiated the restructuring of the utility industry within their respective states. Most other states have initiated studies of industry restructuring. Included in the majority of the more developed proposals are plans for utilities to have a reasonable opportunity to recover investments in utility plant that have previously been determined to be prudently incurred.

Within the areas served by the domestic utility companies, formal proceedings to study retail competitionrmdustry restructuring are being conducted by the LPSC, the MPSC, and the PUCT.

I ENTERGY CORPORATION AND SUBSIDIARIES MANA(GEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS In January 1996, the Council voted to investigate retail utility service competition. Although no date has been set, the investigation will focus on the impact of competition, service unbundling, and utility restructuring on consumers of retail electric and gas utility service in New Orleans.

The PUCT has developed rules that permit greater wholesale electric competition in Texas, as mandated by the Texas legislature in its 1995 session. In January 1997, the PUCT submitted reports to the Texas legislature concerning broader competitive issues such as the unbundling of electric utility operations, market-based pricing, performance-based raternaking, and the identification and recovery of potential stranded costs as part of the transition to a more competitive electric industry environment. Currently it is uncertain what action, if any, the legislature may take with respect to these issues.

See Note 2 for information related to the LPSC and MPSC generic proceedings on competition.

A number of bills were introduced in Congress during 1996 that called for future deregulation of the electric power industry. Included in these proposals are some that would amend or repeal PUHCA and/or PURPA. Other provisions in some of the bills would give consumers the ability to choose their own electricity service.

On February 20, 1997, the SEC issued new Rule 58 under PUHCA, which will permit registered public utility holding companies to enter into an array of energy-related businesses for which specific approval had previously been required. These businesses include, among other things, managemient, operations and maintenance contracting for energy-related facilities, energy efficiency contracting, and the sale and servicing of a range of electric appliances and equipment. The rule, which will become effective on March' 22, 1997, will permit broader diversification by Entergy into these businesses.

Municipalization In some areas of the ccuntry, municipalities (or comparable entities) whose residents are served at retail by an investor-owned utility pursuant to a franchise,'. are exploring the possibility of establishing new electric distribution systems, or extending existing ones. In some cases, municipalities are also seeking new delivery points in order to serve retail customers, especially large industrial customers, which currently receive service'from an investor-owned utility. Where successful, the establishment of a municipal system or the acquisition by a municipal system of a utility's customers could result in the utility's inability to recover costs that it has incurred for the purpose of serving those customers.

Industry Consolidation Another factor in making the transition to competition nationwide is the continuing and accelerating trend of utility mergers. A significant trend developing among the more recent merger announcements is the proposed combination of electric utilities and gas pipeline and/or distribution companies.

Functional Unbundling An additional trend which has recently emerged is the unbundling of traditional utility functions. In some areas of the country, utilities are attempting to sell either all or a substantial portion of their generation assets and will become, in large part, suppliers of transmission and distribution services only.

ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS Effects of Alternate Energy Sources on Retail Electric Sales to Industrial and Large Commercial Customers Many industrial and large commercial customers of the donestic utility companies have dost'structures that are energy sensitive. For this reason, these customers are-currently exploring, or in the future may explore, available energy alternatives such as fuel switching, cogeneration, self-generation, production 'shifting, and efficiency measures. To the extent that these customers avail themselves of such options, the domestic utility companies may suffer a loss of load. Accordingly, in an effort to retain such load, certain of the domestic utility companies, Entergy Gulf States and Entergy Louisiana in particular, have negotiated electric service contracts with large industrial and commercial customers with the specific aim of retaining the load represented by these customers. Electric service under such agreements may be provided at tariffed rates lower than would otherwise be applicable.

The results of operations of the domestic utility companies have not thus far been materially adversely affected as a result of the negotiation of retail electric service agreements with.industrial and large commercial customers. This is due in large measure to the utilities' success in reducing costs, overall load growth, increasing sales to all customer classes, and the regulatory treatment accorded to negotiated electric' service agreements.

However, in view of the likelihood of increased competition in the electric utility business in the future, there can be no assurance that the effect of negotiated electric prices for industrial and large commercial customers will not eventually have a negative effect on the results of operations of the domestic utility companies.

During 1995, the Council approved a resolution requiring prior approval of the regulatory treatment of any lost contribution to fixed costs as a result of incentive-rate agreements with large industrial or commercial customers entered into for the purposes of retaining those customers. The Council's resolution also requires prior approval of the regulatory treatment of stranded costs resulting from the loss of large customers.

During 1995, Entergy Louisiana received separate notices from two large industrial customers that will proceed with proposed cogeneration projects for the purpose of fulfilling their future electric energy needs. These customers will continue to purchase their energy requirements from'Entergy Louisiana until their cogeneration facilities are completed and operational, which is expected to occur in 1997 and 1998. After that time, these customers will continue to purchase energy from Entergy Louisiana, but at a reduced level. During 1996, these two customers represented an aggregate of approximately 17% of total Entergy Louisiana industrial sales, and provided 12% of total industrial base revenues.

During 1996, Entergy Gulf States entered into agreements concerning a steamgenerating station that historically has been contractually dedicated to providing steam and cogenerated electricity for a large industrial customer. Under these agreements, the generating'facility was leased to the customer, but Entergy Gulf States will continue to operate the facility.' The customer has announced that it will spend S190 million to make major improvements to the facility, including a new 10 MW gas turbine generator. 'As a result of these agreements, which were entered into with the expectation that the customer otherwise would terminate its contracts with Entergy Gulf States and construct its own generating facilities, Entergy Gulf States' revenues from this customer are estimated to be reduced by approximately $33 million annually beginning in August 1997, and Entergy Gulf States' net income is expected to be reduced by approximately S15 mmllion annually. '

I ENITERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS In November 1996, another, industrial customer of Entergy Gulf States with an electrical load of approximately 31 MW ceased purchasing electricity from Entergy Gulf States due to the commencement of operations of a cogeneration facility. This is expected to result in an annual revenue loss to Entergy Gulf States of approximately $5.5 million, and an annual reduction in net income of approximately $3.3 million.

Domestic and Foreign nvestments Entergy Corporation seeks opportunities to expand its domestic and foreign businesses that are not regulated by domnestic state and local regulatory authorities. Such business ventures currently include power development and operations and retail services related to the utility business. Refer to "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - LIQUIDITY AND CAPITAL RESOURCES" for a discussion of Entergy Corporation's 1996 investments in domestic and foreign nonregulated businesses. These investments may involve a greater risk than domestically regulated utility enterprises. In 1996, Ente'gy Corporation's investments in domestic and foreign nonregulated investments reduced consolidated net income by approximately $25.4 million. While such investments did not have a positive effect on 1996 earnings, management believes they will show profits in the near term.

In an effort to expand into new energy-related businesses, Entergy plans to commercialize the fiber optic telecommunications network that connects system facilities and supports its internal business needs. Entergy will provide long-haul fiber optic capacity to major telecommunications carriers which, in turn, will market that service to third parties. The Telecommunications Act of 1996 permits a company such as Entergy to market such a service, subject to state and local regulatory approval. This law contains an exemption from PUHCA that will permit registered utility holding companies to form and capitalize subsidiaries to engage in telephone, telecommunications, and information service businesses without SEC approval. However, the law requires that such telecommunications subsidiaries file for exemption with the Federal Communications Commission, and that they not engage in transactions with utility affiliates within their holding company systems or acquire. utility affiliates' rate-based property without state or local regulatory approval.

During 1996, Entergy Corporation's wholly-owned subsidiary, Entergy Technology Holding Company, entered the electronic security monitoring business through the acquisition of six full-service security monitoring companies. These companies serve an aggregate of approximately 80,000 customers within the states of North Carolina, South Carolina, Alabama, and Florida. These acquisitions represent an investment by Entergy Corporation of approximately $83 million in the security monitoring industry, substantially all of which was financed by debt.

In October 1995, FERC issued an order. granting EWG status to EPMC, which was created in 1995 to become a buyer and seller of electric energy and generating fuels. In February 1996, FERC approved market-based rate sales of electricity by EPIC. Such approval allows EPMC to begin providing wholesale customers with a variety of services, including physical trading. An application currently is pending before the SEC seeking additional authority for EPMC to purchase and sell derivative contracts relating to electricity, gas, and fuels.

In January 1997, Entergy Corporation announced that a preliminary agreement had been reached with Maine Yankee Atomic Power Company (Maine Yankee) for a new nonutility subsidiary of &atergyEnterprises to provide management and operations services for the Maine Yankee nuclear plant. Subsequently, Entergy Nuclear, Inc.

(Entergy Nuclear), a Delaware corporation, was organized for this purpose. On February 13, 1997, an agreement to provide such services for an initial period of up to one year was executed by Entergy Nuclear and Maine Yankee.

The creation of Entergy Nuclear and its undertaking with Maine Yankee are authorized by existing SEC orders previously granted to Entergy Enterprises. Entergy Corporation has an application pending at the SEC to create a different structure under which Entergy Nuclear would engage in this business.

ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS On January 5, 1996, Entergy Corporation finalized its acquisition of CitiPower, an electric distribution company serving Melbourne, Australia, and surrounding suburbs. The purchase price of CitiPower was approximately S1.2 billion, of which $294 million represented an equity investment by Entergy Corporation, and the remainder represented debt that is non-recourse to Entergy Corporation. Entergy Corporation funded the majority of the equity portion of the investment by using $230 million of its $300 million line of credit. CitiPower serves approximately 238,000 customers, the majority of which are commercial customers. At the time of the acquisition, CitiPower had 846 employees.

On December 18, 1996, Entergy made a formal cash offer to acquire London Electricity for S2.1 billion.

London Electricity is a regional electric company serving approximately two million customers in the metropolitan area of Loridon, England. The offer was approved by authorities in the United Kingdom and as of February 7, 1997, the offer was made unconditional and Entergy, through an English subsidiary, controlled over 90% of the cornmon shares of London Electricity. Through procedures available under applicable law, Entergy expects to gain control of 100% of the common shares of London Electricity. The acquisition was financed with $1.7 billion of debt that is non-recourse to Entergy Corporation, and S392 million of equity provided by Entergy Corporation from available cash and borrowings under its S300 million line of credit.

In 1996, Entergy made a proposal to develop, finance and construct'the Saltend Project, a proposed 1,100 MW gas fired, combined cycle cogeneration plant to be located adjacent to the British Petroleum Company chemical facility in northeast England. The development of the Saltend Project is subject to the negotiation' of definitive agreements and obtaining all necessary governmental approvals, which is expected to be accomplished in 1997. The total cost of this project, which would be developed over a period of about two years, currently is estimated to be approximately $650 million.

On December 20, 1996, Entergy exercised an option to acquire, through a subsidiary, a 25% equity interest in San Isidro S.A., a Chilean company which is developing a 370 MW gas fired, combined cycle generating facility

-incentral Chile. Entergy's interest, which is expected to be acquired during the first quarter of 1997, will require an estimated S20 million cash investment as well as a guaranty of up to $30 million relating to the payment of the turnkey contractor for the San Isidro project. The other owner of the project, who is also the developer, is Empresa Nacional de Electricidad, S.A. (ENDESA).

ANO Matters Entergy Operations has made periodic inspections and repairs on the tubes in ANO 2's steam generators, which have experienced cracldng. In October 1996, Entergy Corporation's Board of Directors' authorized Entergy Operations to negotiate a contract, with appropriate cancellation provisions, for the fabrication and replacement of the steam generators at ANO. See Note 9 for additional information.

Dereaulated Utility Operations Entergy Gulf States discontinued regulatory accounting principles for its wholesale jurisdiction and steam department and the Louisiana deregulated portion of River Bend during 1989 and 1991, respectively. The operating income (loss) from these operations was $13.9 million in 1996, $1.2 million in 1995, and ($5.2) million in 1994.

f ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS The increases in 1996 and 1995 net income from deregulated operations were principally due to increased revenues, partially offset by increased depreciation. The future impact of the deregulated utility operations on Entergy and Entergy Gulf States' results of operations and financial position will depend on future operating costs, the efficiency and availability of generating units, and the future market for energy over the remaining life of the assets. The deregulated operations will be subject to the requirements of SFAS 121, as discussed in Note 1, in determining the recognition of any asset impairment.

Property Tax Exemptions Waterford 3's local property tax exemptions expired in December 1995. In a March 1996 LPSC order, Entergy Louisiana was permitted to defer recovery of the estimated Waterford 3 property tax from January 1996 through June 1996. The order allows for the recovery of the property tax beginning in July 1996 and also for the recovery, from July 1996 through June 1997, of the related deferral. In April 1996, Louisiana authorities assessed 1996 property taxes of $19.3 million on Waterford 3.

River Bend's local property tax exemptions expired in December 1996. The 1997 property tax is estimated to be approximately $13.2 million. The tax related to the Texas jurisdiction was included in the rate proceeding filed with the PUCT in November 1996. Entergy Gulf States expects that the LPSC will address the accounting treatment and recovery of River Bend's property taxes related to the Louisiana jurisdiction in conjunction with the fourth required Merger-related earnings review to be filed in May 1997.

Accountine Issues New Accounting Standard - Entergy adopted SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of' (SFAS 121), effective January 1, 1996. This standard describes circumstances that may result in assets being impaired and provides criteria for recognition and measurement of asset impairment. See Notes I and 2 for information regarding the write-off recorded in 1996 and potential additional impacts of the new accounting standard on Entergy.

Continued Application of SFAS 71 - As a result of the EPAct, the actions of regulators, and other factors, the electric utility industry is moving toward a combination of competition and a modified regulatory environment.

The domestic utility companies' and System Energy's financial statements currently reflect, for the most part, assets and costs based on existing cost-based ratemaking regulations in accordance with SFAS 71, Accounting for the Effects of Certain Types of Regulation" (SFAS 71). Continued applicability of SFAS 71 to the domestic utility companies' and System Energy's financial statements requires that rates set by an independent regulator on a cost-of-service basis be charged to and collected from customers.

In the event that all or a portion of a utility's operations cease to meet those criteria for various reasons, including deregulation, a change in the method of regulation, or a continued change in the competitive environment for the utility's regulated services, the utility should discontinue application of SFAS 71 for the relevant portion.

That discontinuation should be eported by elimination from the balance sheet of the effects of any actions of regulators recorded as regulatory assets and liabilities. The effect of discontinuing application of SFAS 71. would have a material impact on Entergy's financial statements.

I  ? I' -

ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS The domestic utility companies' and System Energy's financial statements continue to apply SFAS 71 for their regulated operations, except for those portions of Entergy Gulf States' business described in "Deregulated Utility Operations" above. Although discussions with regulatory authorities regarding retail competition have occurred and are expected to continue, management does not expect any definitive outcomes in the foreseeable future, and therefore, the regulated operations continue to apply SFAS 71. See Note 1 for additional discussion of Entergy's application of SFAS 71.

Accounting for Decommissioning Costs - In February 1996, the FASB issued an exposure draft of a proposed SFAS addressing the accounting for decommissioning costs of nuclear generating units as well as liabilities related to the closure and removal of all long-lived assets. See Note 9 for a discussion of proposed changes in the accounting for decomnmissioning/closure costs and the potential impact of these changes on Entergy.

Financial Instruments Derivative instnnents have been used by Entergy on a limited basis. Entergy has a policy that financial derivatives are to be used only to mitigate business risks and not for speculative purposes. See Notes 7 and 9 for additional information concerning Entergy's derivative instruments outstanding as of Decernber 31, 1996.

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REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders of Entergy Corporation We have audited the accompanying consolidated balance sheets of Entergy Corporation and Subsidiaries as of December 31, 1996 and 1995, and the related statements of consolidated income, retained earnings and paid-in-capital and cash flows for each of the three years in the period ended December 31, 1996.. These financial statements are the responsibility of the Corporation's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are fee of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Entergy Corporation and Subsidiaries as of December 31, 1996 and 1995, and the results of their operations and their cash flows for each of the three years in the period ended Decenber 31, 1996 in conformity with generally accepted accounting principles.

As discussed in Note 2 to the consolidated financial statements, the net amount of capitalized costs for River Bend exceed those costs currently being recovered through rates. At December 31, 1996, approximately $467 million is not currently being recovered through rates. Based upon the regulatory decision on this matter, a write-off of all or a portion of such costs may be required.

As discussed in Note 1 to the consolidated financial statements, at January 1, 1996 the Company adopted Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of'. Also, as discussed in Note 1 to the consolidated financial statements, in 1996 and 1995, certain of the Corporation's subsidiaries changed their methods of accounting for incremental nuclear plant outage maintenance costs.

COOPERS & LYBRAND L.L.P.

New Orleans, Louisiana February 13, 1997 ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS On January , 1996, Entergy Corporation finalized its acquisition of CitiPower. In accordance with the purchase method of accounting, the results of operations for 1995 and 1994 of Entergy Corporation and subsidiaries reported in its Statements of Consolidated Income and Cash Flows do not include CitiPower's results of operations.

See Note 13 for additional information regarding CitiPower.

Net Income Consolidated net income decreased in 1996 primarily due to the S174 million net of tax write-off of River Bend rate deferrals pursuant to SFAS 121 'and the onetme recording in 1995 of the cumulative effect of the change in accounting method for incremental nuclear refueling outage maintenance costs at Entergy Arkansas. The effect of these items was partially offset by the reversal of a Cajun-River Bend litigation accrual at Entergy Gulf States.

Excluding these items, net income would have increased 17% due to decreased other operation and maintenance expenses for domestic regulated operations as a result of restructuring programs, as discussed in Note 12, and ongoing efficiency improvement programs throughout Entergy.

Consolidated net income increased in 1995 due primarily to increased electric operating revenues, decreased other operation and maintenance expenses, the onetime recording of the cumulative effect of the change in accounting method for incremental nuclear refueling outage maintenance costs at Entergy Arkansas, and decreased interest expense, partially offset by increased income taxes and decreased miscellaneous income - net.

Significant factors affecting the results of operations and causing variances between the years 1996 and 1995, and between the years .1995 and 1994, are discussed under "Revenues and Sales." "Expenses." and "Other" below.

Revenues and Sales See "SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON," following the financial statements, for information on operating revenues by source and kWh sales.

The changes in electric operating revenues for the twelve months ended December 31, 1996 and 1995, are as follows:

Increase/

(Decrease)

Description 1996 1995 (In Millions)

Change in base revenues (S117.5) $6.6 Rate riders 1.8 15.3 Fuel cost recovery 382.3 (28.0)

Sales volume/weather 108.0 141.3 Other revenue (including unbilled) (49.3) 4.3 Sales for resale 37.6 35.6 System Energy-FERC Settlement - 120.5 Total S362.9 $295.6 4~~~~~~~~~~~~~~~

ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Electric operating revenues increased in 1996 as a result of higher, fuel adjustment revenues, which do not affect net income, and an increase in retail energy sales, partially offset by rate reductions at various domestic utility companies. The increase in retail sales is primarily the result of an increase in customers and customer usage.

Electric operating revenues increased in 1995 as a result of an increase in retail energy sales, the effects of the 1994 FERC Settlement, and increased wholesale revenues, partially offset by rate reductions at Entergy Gulf States, Entergy Louisiana, and Entergy New Orleans and lower fuel adjustment revenues. Warmer weather and non-weather related volume growth contributed equally to the increase in retail electric energy sales. The increase in sales for resale was primarily from increased energy sales outside of Entergy's service area. The increase in other revenues was due to the effects of the 1994 FERC Settlement and the 1994 NOPSI Settlement.

Gas operating revenues increased in 1996 due to higher unit purchase prices for gas purchased for resale and colder than nornal weather in the first quarter of 1996.

Nonregulated and foreign-energy related business revenues increased in 1996 due primarily to the acquisition of CitiPower. See Note 13 for additional information regarding CitiPower.

Expenses Operating expenses for 1996 include the operating expenses of CitiPower, which were not included in the prior year financial statements. See Note 13 for additional information regarding CitiPower. -Excluding the operating expenses of CitiPower, Entergy's operating expenses increased in 1996. The following discussion excludes the impact of the acquisition of CitiPower.

In 1996, fuel and purchased power expenses increased as a result of higher fuel costs and an increase in energy sales. Other operation and maintenance expenses decreased in 1996 due to lower payroll-related expenses, resulting from restructuring programs as discussed in Note 12, in addition to ongoing operating efficiency improvement programs throughout Entergy. Rate deferrals charged against operating expenses in 1996 represent the deferral of Waterford 3 local property taxes and the deferral of a portion of the proposed System Energy rate increase at Entergy Mississippi and Entergy New Orleans. Nuclear refueling outage expenses decreased primarily due to the effect of deferring the nuclear refueling outage expenses at Grand Gulf 1 in the fourth quarter of 1996 rather than recognizing those expenses as incurred. The majority of the increase in decommissioning costs and depreciation rates is reflected in the 1995 System Energy FERC rate increase filing, subject to refund. See Note 2 for a discussion of the proposed rate increase.

Operating expenses decreased in 1995 primarily due to reduced other operation and maintenance expenses.

Other operation and maintenance expenses decreased because of lower payroll-related expenses resulting from the restructuring program discussed in Note 12 and 1994 Merger-related costs. The decrease in operating expenses was partially offset by an increase in nuclear refueling outage expenses due to a 1995 refueling outage at Grand Gulf I and the adoption of the change in accounting method at Entergy Arkansas.

Excluding CitiPower, interest on long-term debt decreased for 1996, due primarily to ongoing retirement and refinancing of higher cost debt at the domestic utility companies and System Energy. Borrowings by Entergy Corporation from a $300 million line of credit related to CitiPower investment contributed to the increase in other interest-net in 1996.

I ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Interest charges decreased in 1995 as a result of the retirement and refinancing of higher cost long-term debt.

Preferred dividend requirernts decreased in 1996 and 1995 due to stock redemption activities.

Other Miscellaneous other income - net decreased in 1996 as a result of the write-off of River Bend rate deferrals pursuant to SFAS 121; as discussed in Note 2, and a decrease in Grand Gulf 1 canying charges at Entergy Arkansas due to a decline in the deferral balance, partially offset by the Entergy Gulf States' reversal of a Cajun-River Bend litigation accrual. Income tax expens: increased due to higher pretax income excluding the River Bend rate deferral write-off and the prior year change in accounting method.

Miscellaneous other income - net decreased in 1995 due primarily to expansion activities in nonregulated businesses. Inecome tax expense increased in 1995 due to higher pretax income and the effects of the 1994 FERC Settlement.

ENTERGY CORPORATION AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED INCOME For the Years Ended December 31, 1996 1995 1994 (In Thousands, Except Share Data)

Operating Revenues:

Electric S6,450,940 $6,088,018 S5,792,410 Natural gas 134,456 103,992 118,962 Steam products 59,143 49,295 46,559 Nonregulated and foreign energy-related businessess 518,987 45,901 23,889 Total 7,163,526 6,287,206 5,981,820 Operating Expenses:

Operation and maintenance:

Fuel, fuel-related expenses, and gas purchased for resale 1,635,885 1,395,889 1,450,598 Purchased power 704,744 356,596 - 340,067 Nuclear refueling outage expenses 55,148 84,972 63,979 Other operation and maintenance 1,577,383 1,528,351 . 1,613,313 Depreciation, amortization, and decommissioning 790,948 695,865 659.142 Taxes other han income taxes 353,270 300,120 284,349 Rate deferrals (33,874)

Amortization of rate deferrals 401,301 408,087 399,121 Total 5,484,805 4,769,880 4,810,569 Operating Income 1,678,721 - 1,517,326 _ 1,171,251 Other Income Deductions):

Allowance for equity funds used during construction 9,951 9,629 -11,903 Write-off of River Bend rate deferrals (194,498)

Miscellaneous - net 137,583 30,993 50,086 Total (46,964) 40,622 61,989 Interest Charges:

Interest on long-term debt 674,532 633,851 665,541 Other interest - net 49,053 33,749 22,354 Distributions on preferred securities of subsidiary 4,797 Allowance for borrowed funds used during construction (8,347) (8,368) (9,938)

Preferred and preference dividend requirements of subsidiaries and other 70,536 77,969 81,718 Total 790,571 737,201 759,675 Income Before Income Taxes 841,186 820,747 473,565 Income Taxes 421,159 336,182 131,724 Income before the Cumulative Effect of Accounting Changes 420,027 484,565 341,841 Cumulative Effect of Accounting Changes (net of income taxes) 35,415 Net Income $420,027 S519,980 $341,841 Earnings per average common share before cumulative effect of accounting changes $1.83 $2.13 S1.49 Earnings per average common share S1.83 S2.28 $1.49 Dividends declared per common share S1.80 S1.80 S1.80 Average number of common shares outstanding 229,084,241 227,669,970 228,734,843 See Notes to Financial Statements.

ENTERGY CORPORATION AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED CASH FLOWS For the Years Ended December 31, 1996 199S 1994 (In Thousands)

Operating Activities:

Net income $420,027 $519,980 S341,841 Noncash items included in net income:

Write-off of River Bend rate deferrals 194,498 Cumulative cffect of a change in accounting principle (35,415)

Change in rate deferrals/excess capacity-net 423,036 390,177 394,344 Depreciation, amortization, and decommissioning 790,948 695,865 659,142 Deferred income taxes and inveslment tax credits 76,920 (31,006) (151,731)

Allowance for equity funds used during construction (9,951) (9,629) (11,903)

Amortization of deferred revenues - . (14,632)

Changes in working capital:

Receivables (30,322) (30,550) (382)

Fuel inventory (17,220) (28,956) 16,993 Accounts payable 4,011 (19,124) 65,776 Taxes accrued (27,488) 115,250 (25,689)

Interest accrued 7,176 (194) (15,255)

Other working capital accounts (121,692) (85,454) 126,058 Change in other regulatory assets (85,051) (3,876) (33,032)

Decommissioning trust contributions (52,204) (37,756) (24,755)

Provision for estimated losses and reserves 31,063 (37,752) 79,494 Other (146,238) 24,153 151,649 Net cash flow provided by operating activities 1,457,513 1,425,713 1,557,918 Investing Activities:

Construction/capital expenditures (571,890) (618,436) (676,180)

Allowance for equity funds used during construction 9,951 9,629 11,903 Nuclear fuel purchases (123,929) (207,501) (179,932)

Proceeds from sale/leaseback of nuclear fuel 109,980. 226,607 128,675 Acquisition of CitiPower (1,156,112)

Investment in nonregulated/honutility properties (76,091) (172,814) (49,859)

Proceeds from sale of Hub River stock 26,955 Proceeds from sale of Indepcndence 2 39,398 Proceeds from sale of nonutility property - 26,000 Other (32,619) (28,982) (20,151)

Net cash flow used in investing activities (1,774,357) (791,497) (759,544)

ENTERGY CORPORATION AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED CASI FLOWS For the Years Ended December 31, 1996 1995 1994 (In Thousands)

Financing Activities:

Proceeds from the issuance of:

General and refunding mortgage bonds 39,608 109,285 24,534 First mortgage bonds 431,906 59,410 Bank notes and other long-term debt 1,066,858 273,542 164,699 Common Stock . 118,087 Preferred securities of subsidiaries' trusts 125,963 Retirement of:

First mortgage bonds (821,575) (225,800) (303,800)

General and refunding mortgage bonds (56,000) (69,200) (45,000)

Other long-term debt (145,110) (221,043) (148,962)

Premium and expense on refinancing saleleaseback bonds - - (48,497)

Repurchase of common stock - - (119,486)

Redemption of preferred stock (157,503) (46,564) (49,091)

Changes in short-term borrowings - net (24,981) (126,200) 128,200 Common stock dividends paid (405,346) (408,553) (410,223)

Net cash flow provided by (used in) financing activities 171,907 (714,533) (748,216)

Effect of exchange rates on cash and cash equivalents 50 -

Net increase (decrease) in cash and cash equivalents (144,887) (80,317) 50,158 Cash and cash equivalents at beginning of period 533,590 613,907 563,749 Cash and cash equivalents at end of period $388,703 S533,590 S613,907 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the period for:

Interest - net of amount capitalized S677,535 $626,531 $660,150 Income taxes S373,247 S285,738 S218,667 Noncash investing and financing activities:

Capital lease obligations incurred S16,358 - S88,574 Change in unrealized appreciation (depreciation) of decommissioning trust assets . S7,803 S16,614 (S2,198)

Acquisition of nuclear fuel S47,695 See Notes to Financial Statements.

Ha;;

ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS December 31, 1996 1995 (In Tousands)

Current Assets:

Cash and cash equivalents:

Cash S34,807 S42,822 Temponuy cash investments - at cost, uhich approximates market 346,782 490,768 Special deposits 7,114 Total cash and cash equivalents 388,703 533,590 Notes receivable 1,384 6,907 Accounts receivable:

Customer (less allouance for doubtful accounts of

$9.2 million in 1996 and S7.1 million in 1995) 324,687 333,343 Other 99,066 59,176 Accrued unbilled revenues 351,429 293,461 Deferred fuel 122,184 25,924 Fuel inventory 139,603 122,167 Maiterials and supplies - at average cost 339,622 345,330 Rate deferrals 444,S43 420,221 Prepayments and3 other 151,312 175,121 Total 2,362,533 2,315,240 Other Propcrty and Investments:

Decommissioning trust funds 357,962 277,716 Nonregulated investments 513,058 372,453 Other 59,053 62,166 Total 930,073 712,335 Utility Plaz+/-

Electric 22,811,164 21,698,593 Plant acquisition adjusfrnent - Entergy Gulf States 455,425 471,690 Electric plant under leases 679,991. 675,425 Property under capital leases - electric 147,277 145,146 Natural gas 168,143 166,872 Steam products 81,743 77,551 Construction YArk in progress 401,676 482,950.

Nuclear fuel unler capital leases 250,651 312,782 Nuclear fuel 112,625 49,100 Total 25,108,695 24,080,109 Less - accumulated depreciation and amortization 8,885,572 8,259,318 Utility plaat - net 16.223,123 15,820,791 Deferred Debits end Other Assets:

Regulatory asses:

Rate deferrals 399,493 1,033,282 SFAS 109 regulatory asset - net 1,196,041 1,279,495 Unamortized loss on reacquired debt 217,664 224,131 Other regulatory assets 435,652 350,601 Long-tem receivables 216,082 224,726 CitiPower license (net of $I 5.6 million of amortization) 606,214 Other 379,419 305,329 Total 3,450,565 3,417,564 TOTAL S22,966,294 S22,265,930 See Notes to Firmncial Statements.

ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS IAiiBILITIES AND SHAREHOLDERS' EQUITY December 31, 1996 1995 (In Thousands)

Current Liabilities:

Currently maturing long-term debt $345,620 . S558,650 Notes payable 20,686 45,667 Accounts payable 554,558 460,379 Customer deposits 155,534 140,054 Taxes accrued 180,340 207,828 Accumulated deferred income taxes 78,010 72,847 Interest accrued 203,425 195,445 Dividends declared 8,950 12,194 Obligations under capital leases 151,287 - . 151,140 Other 184,157 247,039 Total 1,882,567 2,091,243 Deferred Credits and Other Liabilities:

Accumulated deferred income taxes 3,770,760 3,777,644 Accumulated deferred investment tax credits 607,641 612,701 Obligations under capital leases 247,360 303,664 Other 1,298,306 1,277,419 Total 5,924,067 5,971,428 Long-term debt 7,590,804 :I6,777,124 Subsidiaries' preferred stock with sinking fund 216,986 . 253,460 Subsidiaryis preference stock 150,000 150,000 Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solelyjunior subordinated deferrable debentures 130,000 Shareholders' Equity.

Subsidiaries' preferred stock without sinking fund 430,955 550,955 Common stock, S.0I par value, authorized 500,000,000 shares; issued 234,456,457 shares in 1996 and 230,017,485 shares in 1995 2,345 2,300 Paid-in capital 4,320,591 4,201,483 Retained earnings 2,341,703 2,335,579 Cumulative foreign currency translation 21,725 Less - treasury stock (1,496,118 shares in 1996 and 2,251,318 in 1995) 45,449 67,642 Total 7,071,870 7,022,675 Commitments and Contingencies (Notes 2, 9,10. and 16)

TOTAL S22,966,294 S22,265,930 See Notes to Financial Statements.

ENTERGY CORPORATION AND SUBSIDIARIES STATEMENTS 01 CONSOLIDATED RETAINED EARNINGS AND PAID-IN CAPITAL For the Years Ended December 31, 196 1995 1994 (In Thousands)

Retained Earnings, January 1 $2,335,579 $2,223,739 $2,310,082 Add:

Net income 420,027 519,980 341,841 Total 2,755,606 2,743,719 2,651,923 Deduct:

Dividends declared cn common stock 412,250 409,801 411,806 Common stock retirements 13,940 Capital stock and other expenses 1,653 (1,661) 2,438 Total' 413,903 408,140 428,184 Retained Earnings, December 31 S2,341,703 $2,335,579 $2,223,739 Paid-in Capital, January I S4,201,483 S4,202,134 S4,223,682 Add:

Gain (loss) on reacquisition of subsidiaries' preferred stock 1,795 (26) (23)

Common stock issuances related to stock plans 117,560 (3,002)

Total 4,320,838 4,199,106 4,223,659 Deduct:

Common stock retirements 22,468 Capital stock discounts and other expenses 247 (2,377) (943)

Total 247 (2,377) 21,525 Paid-in Capital, Decemb.r 31 $4,320,591 $4,201,483 $4,202,134 See Notes to Financial Statements.

ENTERGY CORPORATION AND SUBSIDIARIES SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON 1996 1995 - 1994 1993 1992 (In Thousands, Except Per Share Amounts)

Operating revenues S 7,163,526 S 6,287,206 $ 5,981,820 S 4,475,224 S 4,098,332 Income before cumulative effect of a change in accounting principle S 420,027 S 484,565 S 341,841 S 458,089 S 437,637 Earnings per share before cumulative effect of accounting changes $ 1.83 S 2.13 S 1.49 S 2.62 S 2.48 Dividends declared per share $ 1.80 $ 1.80 $ 1.80 S 1.65 $ 1.45 Return on average common equity 6.41% 8.11% 5.31% 12.58% 10.31%

Book value per share, year-end (2) $ 28.51 $ 28.41 S 27.93 $ 28.27 S 24.35 Total assets (2) $ 22,966,294 $ 22,265,930 $ 22,621,874 $ 22,876,697 S 14,239,537 Long-term obligations (1)(2) $ 8,335,150 S 7,484,248 S 7,817,366 $ 8,177,882 S 5,630,505 (1) Includes long-term debt (excluding currently maturing debt), preferred and preference stock with sinking fund, preferred securities of subsidiary trust, and noncurrent capital lease obligations.

(2) 1993 amounts include the effects of the Merger in accordance with the purchase method of accounting for combinations.

1996 1995 1994 1993 1992 (In Thousands)

Electric Operating Revenues:

Residential $2,277,647 $2,177,348 $2,127,820 $1,594,515 $1,441,628 Commercial 1,573,251 1,491,818 1,500,462 1,071,070 1,008,474 Industrial 1,987,640 1,810,045 1,834,155 1,197,695 1,098,147 Governmental 169,287 154,032 159,840 136,471 127,880 Total retail 6,007,825 5,633,243 5,622,277 3,999,751 3,676,129 Sales for resale 376,011 334,874 293,702 280,505 243,507 Other (1) 67,104 119,901 (123,569) 88,713 96,971 Total $6,450,940 S6,088,018 $5,792,410 S4,368,969 $4,016,607 Billed Electric Energy Sales (Millions of kWh):

Residential 28,303 27,704 26,231 18,946 17,549 Commercial 21,234 20,719 20,050 13,420 12,928 Industrial 44,340 42,260 41,030 24,889 23,610 Governmental 2,449 2,311 2,233 1,887 1,839 Total retail 96,326 92,994 89,544 59,142 55,926 Sales for resale 10,583 10,471 7,908 8,291 7,979 Total 106,909 103,465 97,452 67,433 63,905 (1) 1994 includes the effects of the FERC Settlement, the 1994 NOPSI Settlement, and an Entergy Gulf States reserve for rate refund.

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REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders of Entergy Arkansas, Inc.

We have audited the accompanying balance sheets of Entergy Arkansas, Inc. (formerly Arkisas Power &

Light Company) as of December 31, 1996 and 1995, and the related statements of income, retained earnings and cash flows for each of the three years in the period ended December 31, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 1996 and 1995, and the results of its operations and its cash flows for each of the three years in the period ended December-31, 1996 in conformity with generally accepted accounting principles.

As discussed in Note 1 to the financial statements, in 1995 the Company changed its method of accounting for incremental nuclear plant outage maintenance costs.

COOPERS & LYBRAND L.L.P.

New Orleans, Louisiana February 13, 1997 I

ENTERGY ARKANSAS, INC.

MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income decreased in 1996 due primarily to the onetime recording of the cumulative effect of the change in accounting method in 1995 fr incremental nuclear refueling outage maintenance costs as discussed in Note 1.

Excluding the above mentioned item, net income would have increased $21.1 million in 1996 principally due to a decrease in other operation and inftenance expenses.

Net income increased in 1995 due primarily to the onetime recording of the cumulative effect of the change in accounting method for incremental nuclear refueling outage maintenance costs. Excluding the above mentioned item, net income for 1995 decreased clue to an increase in depreciation, amortization, and decommissioning expenses and income tax expense offset by an increase in revenues from retail energy sales and a decrease in other operation and maintenance expenses.

Significant factors affecting the results of operations and causing variances between the years 1996 and 1995, and between the years 1995 and 1994, are discussed under "Revenues and Sales," "Erpenses " and "Other" below.

Revenues and Sales See "SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON," following the financial statements, for information on operating revenues by source and kWh sales.

The changes in electric operating revenues for the twelve months ended December 31, 1996, and 1995 are as follows:

Increase/

(Decrease)

Description 1996 1995 (In Millions)

Change in base revenues ($10.1) ($3.4)

Rate riders (5.3) 15.9 Fuel cost recovery 8.0 25.1 Sales volume/weather 19.5 38.2 Other revenue (including unbilled) (7.1) 9.7 Sales for resale 90.2 (28.0)

Total $95.2 $57.5 Electric operating revenues increased for 1996 due primarily to increased sales for resale and retail energy sales. The increase in sales for resale is due to higher generation availability compared to 1995. The increase in retail energy sales resulted from increased customer usage, partially attributable to more severe weather as compared to 1995.

ENTERGY ARKANSAS, INC.

MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Electric operating revenues increased for 1995 due primarily to increased retail energy sales and fuel adjustment revenues partially offset by a decrease in sales for resale to associated companies. The increase in sales volume/weather resulted from increased customers and associated usage, while the remainder resulted from warmer weather in the summer months. The decrease in sales for resale to associated companies was caused by changes in generation availability and requirements among the domestic utility companies.

Expenses Operating expenses increased in 1996 because of an increase in fuel, and purchased power expenses, partially offset by-reduced amortization of previous rate deferrals and decreased other operation and maintenance expenses. The increase in fuel and purchased power expenses is largely due to an increase in generation and purchases related to the increase in sales for resale. The decrease in other operation and maintenance expenses resulted from lower payroll expenses. Payroll expenses decreased as a result of restructuring costs recorded in 1995 and the resulting decrease in employees.

Operating expenses increased in 1995 because of an increase in depreciation, amortization, and decommissioning expenses, offset by a decrease in other operation and maintenance expenses. Depreciation, amortization, and decommissioning expenses increased primarily due to additions and upgrades at ANO and additions to transmission lines, substations, and other equipment. Also, decommissioning expense increased due to the implementation of the decommissioning rate rider which resulted from the decommissioning study performed in 1994. The decrease in other operation and maintenance expenses is largely due to restructuring costs and storm damage costs recorded in 1994 .

Other Miscellaneous other income - net decreased in 1996 due to reduced Grand Gulf 1 carrying charges as a result of a decline in the deferral balance. Income tax expense increased in 1996 because of higher pretax income.

Income tax expense increased in 1995 primarily due to the write-off in 1994 of investment tax credits in accordance with the FERC Settlement. Income tax expense also increased due to higher pre-tax income in 1995.

ENTERGY ARKANSAS, INC STATEMENTS OF INCOME For the Years Ended December 31, 1996 1995 1994 (In Thousands)

Operating Revenues SI.743,433 S1,648,233 S1,590,742 OperatingExpenses:

Operation and maintenance:

Fuel, fuel-related expenses, and gas purchased for resale 257,008 231,619 261,932 Purchased power 432,825 363,199 328,379 Nuclear refueling outage expenses 29,365 31,754 33,107 Other operation and maintenance 358,789 375,059 390,472 Depreciation, amortization, and decommissioning 167,878 162,087 149,878 Taxes other than income taxes 37,688 38,319 33,610 Amortization of rate deferrals 149,730 174,329 166,793 Total 1,433,283 1,376,366 1,364,171 Operating Income 310,150 271,867 226,571 Other Income:

Allowance for equity funds used during construction 3,886 3,567 4,001 Miscellaneous - net 32,591 46,227 4 i8,049 Total 36,477 49,794 52,050 Interest Chargcs:

Interest on long-term debt 98,531 106,853 106,001 Other interest - net 6,257 8,485 4,811 Distributions on preferred securities of subsidiary 1,927 Allowance for borrowed funds used.

during construction (2,330) (2,424) (3,674)

Total 104,385 112,914 107,138 Income Before Income Taxes 242,242 208,747 . 171,483 Income Taxes 84,444 72,082 29,220 Income before the Cumulative Effect of Accounting Changes 157,798 136,665 142,263 Cumulative Effect of Accounting Changes (net of income taxes) ________

_ 35,415 Net Income 157,798 172,080 142,263 Preferred Stock Dividend Requirements and Other 16,110 18,093 19,275 Earnings Applicable to Common Stock S141,688 S153,987 S122,988 See Notes to Financial Stat.ments.

ENTERGY ARKANSAS, INC STATEMENTS OF CASH FLOWS For the Years Ended December 31,

' ";i 01996 1995 1994 (In Thousands)

Operating Activities:

Net income 2157,798 S172,080 S142,263 Noncash items included in net income:

Cumulative effect of a change in accounting principle (35,415) -

Change in rate defrrals/excess capacity-net 139,701 125,504 102,959 Depreciaticn. amortization, and decommissioning 167,878 162,087 149,878 Defarced income taxes and investment tax credits (46,026) (33.82) (54,080)

Allowance for equity funds used during construction (3,336) (3.567) (4,001)

Cages in working capital:

Receivables (4,292) (39.209) 10,917 Fuel inventory 137 (22,395) 17,359 Accounts payable (1,112) 55.732 (32,114)

Taxes accrued 14,035 (5.080) 2,226 Interest accrued (2,615) (324) (346)

Other working capital accounts (7,529) (2t,375) 20,324 Decommissioning trust contibutions (1,961) (16,702) (11.531)

Provision for estimated losses and reserves 4,125 2,t49 16.617 Othjer (22,675) 6.055 (4.744)

Net cash flow provided by operating activities 376,578 338,35S 355.577 Investing Activities:

Conusuction expeiditures (145,529) (165,071) (179,116)

Allowsace for equity funds used during constuction I 3,8t6 3,567 4,001 Nuclear fuel purchases (26,084) (41,219) (40,074)

Proceeds from sale/leaseback of nuclear fuel 25,451 41,332 40,074 Net cash flow used in investing activities (142,276) (160,891) (175.115)

Financing Activities:

Proceeds frn issuance of:

First mortgage bonds 34,256 -

Od long-term debt - ,113662 27.992 Prefared securities of subsidiary tust 5S,16S -

Retirement of:

First mortgage bonds (112,807) . (25,800) (300)

Otb long-tam debt (1.700) (124,025) (30,231)

Redemption of preferred stock (69,624) (9,500) (11.500)

Changes in short-tern borrowings - net (34,000) 12,605 Dividends pead:

Common stock (142,800) (153,400) (80.000)

Prefaed stock (17,736) (18,362) (19.597)

Net cash flow used in financing activities (202,243) (246.425) (101,531)

Net increase (decrease) in cash and cash equivalents 32,059 (68,958) 78,931 Cash and cash equivalents at begianing of period 11,798 80,756 1.825 Cash and cash equivalents at end of period S43.857 S11,79S SS0,756 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the period fx.

Interest - net of amount capitalized S94.662 $102,351 $98,737 Income taxes S110,211 S113.00 279,553 Noncash investing and financing activities:

Capitl lease obeligations inwred S6,353 - - S47,719 Acquisition of nuclear fuel S27,500 Change in uzrealized appreciation of decommissioning bust assets S5,%96 S9,12S Sl,361 See Notes to Financial Statements.

ENTERGY ARKANSAS, INC BALANCE SHEETS ASSETS December 31, 1996 1995 (In Thousands)

Current Assets:

Cash and cash equivalents:

Cash S5,117 ' S7,780 Temporary cash investments - at cost, which approximates market:

Associated companies 17,462 908 Other 21,278 3,110 Total cash and cash equivalents 43,857 11,798 Accounts receivable:

Customer (less allowance for doubtfl accounts of $2.3 million in 1996 and $2.1 million in 1995) 71,144 81,686 Associated companies 45,303 40,577 Other 5,862 6,962 Accrued unbilled revenues 104,764 93,556 Fuel inventory - at average cost 57,319 57.456 Materials and supplies - at average cost 72,976 75,030 Rate deferrals 153,141 .131,634 Deferred excess cpacity 9,005 11,088 Deferred nuclear refueling outage costs 24,534 32,824 Prepayments and other 7,491 8,974 Total 595,396 551,585 Other Property and Investments:

Investment in subsidiary companies - at equity 11,211 11,122 Decommissioning trust fund 203,274 166,832 Other - at cost (lees accumulated depreciation) 5,058 5,085 Total 219,543 183,039 Utility Plant Electric 4,578,728 4,438,519 Property under capital leases 57,869 ' 48,968 Construction work in progress 83,524 119,874 Nuclear fuel under capital lease 79,103 98,691 Nuclear fuel 27,500 Total 4,826,724 4,706,052 Less - accumulated depreciation and amortization 1,976,204 1,846,112 Utility plant - net 2,850,520 2,859,940 Deferred Debits anr Other Assets:

Regulatory assets:

Rate deferrals 75,249 228,390 Deferred excess capacity 5,984 SFAS 109 regulitory asset - net 244,767 219,906 Unamortized loss on reacquired debt 56,664 58,684 Other regulatory assets 80,257 68,160 Other 31,421 28,727 Total 488,358 609,851' TOTAL S4,153,817 S4,204,415 See Notes to Financial Statements.

ENTERGY ARKANSAS, INC.

BALANCE SHEETS LIABILiTIES AND SHAREHOLDER'S EQUIY December 31, 1996 1995 (In Thousands)

Current Liabilities:

Currently maturing long-term debt $32,465 $28,700 Notes payable 667 667 Accounts payable:

Associated companies 91,205 42,156 Other 97,589 120,250 Customer deposits 21,800 18,594 Taxes accrued 54,194 40,159 Accumulated deferred income taxes 70,506 48,992 Interest accrued 27,625 - 30,240 Dividends declared 2,832 4,458 Co-omuer advances 33,873 34,450 Deferred fuel cost 6,955 17,837 Obligations under capital leases 53,012 54,697 Other 15.135 26,238 Total 507,858 467,438 Deferred Credits and Other Liabilities:

Accumulated deferred income taxes 785,994 823,471 Accumulated deferred investment tax credits 108,307 112,890 Obligations under capital leases 83,940 93,574 Other 113,998 116,762 Total 1,092,239 1,146,697 Long-tenn debt 1,255,388 1,281,203 Preferred stock with sinking fund 40,027 49,027 Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solelyjunior subordinated deferrable debentures 60,000 Shareholder's Equity:

Preferred stock without sinking fund 116,350 176,350 Common stock, no par value, authorized 325,000,000 shares; issued and outstanding 46,980,196 shares in 1996 and 1995 470 470 Paid-in capital 590,169 590,844 Retained earnings 491,316 492,386 Total 1,198,305 1,260,050 Commitments and Contingencies (Note 2, 9, and 10)

TOTAL S4,153,817 S4,204,415 See Notes to Financial Statements.

ENTERGY ARKANSAS, INC.

STATEMENTS OF RETAINED EARNINGS For the Ycars Ended December 31, 1996 1995 1994 (In Thousands)

Retained Earnings, January I S492,386 S491,799 S448,811 Add:

Net income 157,798 172,080 142,263 Increase in investment in subsidiary 42 _ _ _

Total 650,226 663,879 591,074 Deduct:

Dividends declared:

Preferred stock 16,110 18,093 19,275 Common stock 142,800 153,400 80,000 Total 158,910 171,493 99,275 Retained Earnings, December 31 (Note 8) $491,316 $492,386 S491,799 See Notes to Financial Siatements.

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j ENTERGY ARKANSAS, INC.

SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON 1996 1995 1994 1993 1992 (In Thousands)

Operating revenues $1,743,433 $1,648,233 $1,590,742 $1,591,568 $1,521,129 Income before cumulative effect of accounting changes S 157,798 S 136,665 $ 142,263 $ 155,110 S 130,529 Total assets $4,153,817 $4,204,415 $4,292,215 S4,334,105 $4,038,811 Long-term obligations () $1,439,355 S1,423,804 $1,446,940 S1,478,203 $1,453,588 (1) Includes long-term debt (excluding currently maturing debt), preferred stock with sinking fund, preferred securities of subsidiary trust, and noncurrent capital lease obligations.

1996 1995 1994 1993 1992 (In Thousands)

Electric Operating Revenues:

Residential S546,100 $542,862 $506,160 S528,734 $476,090 Commercial 323,328 318,475 307,296 306,742 291,367 Industrial 364,943 362,854 338,988 336,856 325,569 Governmental 16,989 17,084 16,698 16,670 17,700 Total retail 1,251,360 1,241,275 1,169,142 1,189,002 1,110,726 Sales for resale Associated companies 248,211 178,885 212,314 175,784 203,470 Non-associated companies 207,887 195,844 182,920 203,696 181,558 Other 35,975 32,229 26,366 23,086 25,375 Total $1,743,433 $1,648,233 $1,590,742 $1,591,568 S1,521,129 Billed Electric Energy Sales (Millions of kWh):

Residential 6,023 5,868 5,522 5,680 5,102 Commercial 4,390 4,267 4,147 4,067 3,841 Industrial 6,487 6,314 5,941 5,690 5,509 Governmental 234 243 231 230 248 Total retail 17,134 16,692 15,841 15,667 14,700 Sales for resale Associated companies 10,471 8,386 10,591 8,307 10,357 Non-associated companies 6,720 5,066 4,906 5,643 5,056 Total 34,325 30,144 31,338 29,617 - 30,113

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REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders of Entergy Gulf States, Inc.

We have audited the accompanying balance sheets of Entergy Gulf States, Inc. (formerly Gulf States Utilities Company) as of December 31, 1996 and 1995 and the related statements of income (loss), retained earnings and cash flows for each of the three years in the period ended December 31, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we 'plan and perform the audit to obtain Teasonable assurance about whether the financial statements are flee of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant cstimates made by ranagement, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 1996 and 1995, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1996 in conformity with generally accepted accounting principles.

As discussed in Note 2 to the consolidated financial statements, the'net amount of capitalized costs for River Bend exceed those costs currently being recovered through rates. At December 31, 1996, approximately $467 million is not currently being recovered through rates. Based upon the regulatory decision on this matter, a write-off of all or a portion of such costs may be required.

As discussed in Note I to the consolidated financial statements, at January 1, 1996 the Company adopted Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of'.

COOPERS & LYBRAND L.L.P.

New Orleans, Louisiana February 13, 1997

-- l~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

ENTERGY GULF STATES, INC.

MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income decreased in 1996 principally due to the $174 million net of tax write-off of River Bend rate deferrals required by the adoption of SFAS 121. This write-off was partially offset by the third quarter reversal of the Cajun-River Bend litigation accrual. Excluding the River Bend rate deferrals and the Cajun-River Bend litigation accrual, net income for 1996 would have increased slightly due to an increase in electric operating revenue and a decrease in other operation and maintenance expenses.

Net income increased in 1995 principally as the result of an increase in electric operating revenues, a decrease in other operation and maintenance expenses, and an increase in other income. These changes were partially offset by higher income taxes.

Significant factors affecting the results of operations and causing variances between the years 1996 and 1995, and between the years 1995 and 1994, are discussed under "Revenues and Sales." "Expenses." and "Other" below.

Revenues and Sales See "SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON," following the financial statements, for information on operating revenues by source and kWh sales.

The changes in electric operating revenues for the twelve months ended December 31, 1996 and 1995, are as follows:

Increasel (Decrease)

Description 1996 1995 (In Millions)

Change in base revenues (S60.3) $32.0 Fuel cost recovery 152.0 (29.6)

Sales volume/weather 65.1 35.0 Other revenue (including unbilled) 12.8 1.1 Sales fi)r resale (32.6) 31.3 Total $137.0 $69.8 Electric operating revenues increased in 1996 primarily due to increased fuel adjustment revenues, which do not affect net income, increased customers, and increased customer usage. These increases were partially offset by rate reductions in effect for both Texas and Louisiana retail customers and increased base revenues for 1995, as discussed below. Sales for resale to associated companies decreased as a result of changes in generation availability and requirements among the domestic utility companies.

ENTERGY GULF STATES, INC.

MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Electric operating revenues increased in 1995 primarily due to increased sales volume/weather and higher sales for resale. These increases were partially offset by lower fuel adjustment revenues, which do not affect net income. Base revenues also increased in 1995 as a result of rate refund reserves established in 1994, which were subsequently reduced as a result of an amended PUCT order. The increase in base revenues was partially offset by rate reductions in effect for Texas and Louisiana. Sales volume/weather increased because of wanner than normal summer weather and an increase in usage by all customer classes. Sales for resale increased as a result of changes in generation availability and requirements among the domestic utility companies.

Gas operating revenues and steam operating revenues increased for 1996 primarily due to higher fuel prices and increased usage.

Elpenses Operating expenses increased in 1996 as a result of higher fuel expenses, including purchased power, partially offset by lower other operation and maintenance expenses. Fuel and purchase power expenses, taken together, increased because of higher gas prices and increased energy requirements resulting from higher energy sales. Other operation and mainte expenses decreased primarily due to lower payroll-related expenses associated with restructuring programs accrued for in 1995.

Operating expenses decreased in 1995 as a result of lower other operation and maintenance expenses and purchased power expenses. Other operation and maintenance expenses decreased primarily due to changes made in 1994 for Merger-related costs, restructuring costs, and certain pre-acquisition contingencies including unfunded Cajun-River Bend cost and environmental clean-up cost. Purchased power expenses decreased because of the availability of iess expensive gas and nuclear fuel for use in electric generation as well as changes in the generation requirements among the domestic utility companies. Another reason for the decrease in purchased power expenses in 1995 was the recording of a provision for refund of disallowed purchase power expenses in 1994.

Other Other income decreased in 1996 due to the write-off of River Bend rate deferrals pursuant to the adoption of SFAS 121 (see Note 2 for additional information). This decrease was partially offset by the Cajun-River Bend litigation accrual reversal. Income taxes increased primarily due to higher taxable income, which excludes the net effect of the write-off of River Bend rate deferrals and the Cajun-River Bend accrual reversal .

Other miscellaneous income increased in 1995 as the result of certain adjustments made in 1994 related to pre-acquisition contingencies including Cajun-River Bend litigation (see Note 9 for additional information), the write-off of previously disallowed rate deferrals, and plant held for future use. As a result of these charges, income taxes on other income were significantly higher in 1995 compared to 1994.

I ENTERGY GULF STATES, INC STATEMENTS OF INCOME (LOSS)

For the Yean Ended December 31, 1996 1995 1994 (In Thousands)

Operating Revenues:

Electric S1,925,988 $1,788,964 S1,719,201 Natural gas 34,050 23,715 31,605 Steam products 59,143 49,295 46,559 Total 2,019,181 1,861,974 1,797,365 Operating Expenses:

Operation and maintenance:

Fuel, fuel-related expenses, and gas purchased for resale 520,065 516,812 517,177 Purchased power 295,960 169,767 192,937 Nuclear refueling outage expenses 8,660 10,607 12,684 Other operation and nuintenance 402,719 432,647 505,701 Depreciation, amortization, and decommissioning 206,070 202,224 197,151 Taxes other than income taxes 102,170 102,228 98,096 Amortization of rate deferrals 71,639 66,025 - 66,416 Total 1.607,283 ..1,500,310 1,590,162 Operating Tncome 411,898 361,664 207,203 Other ncome (Deductions):

Allowance for equity fimis used during construction' 2,618 1,125 1,334 Write-offof plant held for future use - (85,476)

Write-off of River Bend rnte deferrals (194,498)

Miscellaneous - net 69,841 22,573 (64,843)

Total (122,039) 23,698 (148,985)

Interest Charges:

Interest on long-term debt 181,071 191,341 195,414 Othet interest - net 12,819 8,884

• 8,720 Allowance for borrowed funds used during construction (2,235) (1,026) (1,075)

Total 191,655 199,199 203,059 Income (Loss) Before Inconie Taxes 98,204 186,163 (144,841)

Income Taxes 102.091 63,244 (62,086)

Net Income (Loss) (3,887) 122,919 (82,755)

Preferred Stock Dividend Requirements and Other 28,505 29,643 29,919 Eanings (Loss) Applicable to Common Stock ($32,392) S93,276 (S112,674)

See Notes to Financial Statements.

ENTERGY GULF STATES, [NC STATEMENTS OF CAST! FLOWS

. , .II For the Years Ended December 31, 1996 1995 1994 (In Thouunds)

Operating Activities:

Net incorne (lass) (S3,887) S122,919 ($82,755)

Noncah items included in net income (loss):

Write-off of River Bed rate deferrals 194,498 Change in rate deferrals 72,597 66,025 96.979 Deprciaion, amortization, and decommissioning 206.070 202,224 197,151 Defenred income txes nd investment tax credits 101,3S0 63.231 (62,171)

Allowance for equity nds used during constuction (2,618) (1,125) (1.334)

Writ-off of plant held for future Use - 85,476 Changes inworking capital:

Receivabes 3,691 40.193 (72,341)

Fuel inventry (12,868) (6,357) (2,336)

Accounts paybe (26,706) (4,S20) 60.112 Taces accued (1,266). 24,935 (10,373)

Inet accrued (7.1S6) 1,510 (4,189)

Reserve for rate refund (56,972) 56.972 Deferred fuel (69,349) (24.840) (431)

Other working capital accounts (70.775) (16,079) 34,212 Change in ohr regulatory assets (17,303) 7,332 5,522 Decommissioning bust contributions -(5,922). (8.147) (3,202)

Provision for estimated losses and reserves (1,885) 10.119 4,1S1 Other (37.116) (19,394) 24,891 Net ctsh fow provided by operating activities 322,355 400,754 326,359 Investing Activities:

Construction expenditures (154.993) (185.944) (155,989)

Allowance for equity funds used during construction 2,618 1,125 1.334 Nuclear fuel purchases (25.124) (1,425) (31,178)

Proceeds from salefleaseback of nuclear fuel 26,523 542 29.386 Net cash flow used in investing activities (150.976) (185,702) (156.447)

Financing Activities:

Proceeds from the issuance of long-term debt 780 2,277 101.109 Retiremil of First mortgage bonds (195.417)

Oter long-term debt (50,425) (50,425) (102,425)

Redemption of preferred and preference stock (10,179) (7,283) (6,070)

Dividends paid:

Common stock _ .. (289,100)

Preferred and preference stock (28,336) (29,61) (30,131)

Net cas flow used in finaKing activities (283,577) (85,092) (326,617)

Net increase (decrease) in cash and cash equivalents (112,198) 129,960 (156,705)

Cash and cah equivalents at beginning of period _ 234,604 104.644 261.349 Ca and cash equivalents at end of period S122.406 S234,604 $104,644 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the period for Interest -net of amount cipitalized S189,962 S187,918 S191.850 Income taxes $285 $208 . $251 NoncAsh investing and financing activities:'

Capital lease obligations incurred S31,178 Change in unrealized appreciation (depreciation) of decommissioriing trust assets Sl,604 $2,121 (S915)

See Notes to Financial Statements.

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ENTERGY GULF STATES, INC BALANCE SHEETS ASSETS December 31, 1996 199S (In Thousands)

Current Assets:

Cash and cash equivalents:

Cash $6,573 S13,751 Temporary cash investments - at cost, which approxinutes market:

Associated companies 45,234 46,336 Other 70,599 174,517 Total cash and cash equivalents 122,406 234,604 Accounts receivable:

Customer (less allowance for doubtful acconts of $2.0 million in 1996 and Sl.6 million in 1995) 87,883 110,187 Associated companies 2,777 1,395 Other 30,758 15,497 Accrued unbillkd revenues 75,351 73,381 Deferred fuel costs 99,503 31,154 Accumulated deferred income taxes 56,714 43,465 Fuel inventory - at average cost 45,009 32,141

• Materials and supplies - at average cost 86,157 91,288 Rate deferrals 105,456 97,164 Prepayments and other 16,321 15,566 Total 728,335 745,842 Other Property and Investments:

Decommissioning irust fund 41,983 32,943 Other - at cost (less accumulated depreciation) 38,358 28,626 Total 80,341 61,569 Utility Plant:

Electric 7,112,021 6,942,983 Natural Gas 45,443 45,789 Steam products 81,743 77,551 Property under capital leases 72,800 77,918 Construction wuk in progress 112,137 148,043 Nuclear fuel under capital lease 49,833 69,853 Total 7,473,977 7,362,137 Less - accumulated depreciation and amortization 2,846,083 2,664,943 Utility plant - net 4,627,894 4,697,194 Deferred Debits and Other Assets:

Regulatory assets:

Rate deferrals 120,158 419,904 SFAS 109 regulatr.y asset - net 372,817 453,628 Unamortized loss on reacquired debt 54,761 61,233 Other regulatory assets 45,139 27,836 Long-term receivables 216,082 224,727 Other 185,921 169,125 Total 994,878 1,356,453 TOTAL $6,431,448 $6,861,058 See Notes to Financial Statements.

ENTERGY GULF STATES, INC BALANCE SHEETS fLIKBILITIES AND SHAREHOLDER'S EQUITY i'.~~~~~~~~~~~~~~~~~~1 ,'^;'.'"

December 31, 1996 1995 (In Thousands)

Current Liabilities:

Currently maturing long-term debt S160,865 S145,425 Accounts payable:

Associated companies 55,630 31,349 Other 85,541 136,528 Custor deposits 25,572 21,983 Taxes accrued 36,147 37,413 Interest accrued 49,651 56,837 Nuclear refueling reserve 12,354 22,627 Obligations under capital leases 39,110 37,773 Other 18,186 86,653 Total 483,056 576,588 Deferred Credits and Other Liabilities:

Accumulated deferred income taxes 1,200,935 1,177,144 Accumulated deferred investment tax credits 219,188 208,618 Obligations under capital leases 83,524 108,078 Deferred River Bend fiance charges 33,688 58,047 Other 539,752 558,750 Total 2,077,087 2,110,637 Long-term debt 1,915,346 2,175,471 Preferred stock with sinking fund 77,459 87,654 Preference stock 150,000 150,000 Shareholder's Equity Preferred stock without sinking fund 136,444 136,444 Common stock, no par value, suthorized 200,000,000 shares; issued and outstanding 100 shares in 1996 and 1995 114,055 114,055 Paid-in capital 1,152,689 1,152,505 Retained earnings 325,312 357,704 Total 1,728,500 1,760,708 Commitments and Contingencies (Note 2,9, and 10)

TOTAL $6,431,448 S6,861,058 See Notes to Financial Statements.

ENTERGY GULF STATES, INC STATEMENTS OF RETAINED EARNINGS For the Years Ended December 31, 1996 1995 1994 (In Thousands)

Retained Earnings, Januar y 1 $357,704 $264,626 $666,401 Add:

Net income (oss) (3,887) i22,919 (82,755)

Total 353,817 387,545 583,646 Deduct Dividends declared:

Preferred and preference stock 28,336 29,482 29,831 Common stock 289,100 Preferred and preference stock redemption and other 169 359 89 Total 28,505 29,841 319,020 Retained Earnings, December 31 (Note 8) $325,312 $357,704 $264,626 See Notes to Financial Statements.

ENTERGY GULF STATES, INC.

SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON 1996 1995 1994 1993 1992 (In Thousands)

Operating revenues $2,019,181 S 1,861,974 $1,797,365 $1,827,620 S1,773,374 Income Qoss) before extraordinary items and the cumulative effect of accounting changes S (3,887) S 122,919 S (82,755) S 69,461 $ 139,413 Total assets $6,431,448 S 6,861,058 S6,843,461 $7,137,351 S7,164,447 Long-term obligations (1) $2,226,329 $ 2,521,203 $2,689,042 $2,772,002 S2,798,768 (1) Includes long-term debt (excluding currently maturing debt), preferred and preference stock with sinking fund, and noncurrent capital lease obligations.

1996 1995 1994 1993 1992 (In Thousands)

Electric Operating Revenues:

Residential $612,398 $573,566 $569,997 $585,799 $560,552 Commercial 444,133 412,601 414,929 415,267 400,803 Industrial 685,178 604,688 626,047 650,230 642,298 Governmental 31,023 25,042 25,242 26,118 26,195 Total retail 1,772,732 1,615,897 1,636,215 1,677,414 1,629,848 Sales for resale Associated companies 20,783 62,431 45,263 Non-associated companies 76,173 67,103 52,967 31,898 24,485 Other (1) 56,300 43,533 (15,244) 38,649 40,203 Total $1,925,988 $1,788,964 $1,719,201 S1,747,961 S1,694,536 Billed Electric Energy Sales (Millions of kWh):

Residential 8,035 7,699 7,351 7,192 6,825 Commercial 6,417 6,219 6,089 5,711 5,474 Industrial 16,661 15,393 15,026 14,294 14,413 Governmental 438 311 297 296 302 Total retail 31,551 29,622 28,763 27,493 27,014 Saes for resale Associated companies 656 2,935 1,866 Non-associated companies 2,148 2,212 1,650 666 540 Total Electric Department 34,355 34,769 32,279 28,159 27,554 Steam Department 1,826 1,742 1,659 1,597 1,722 Total 36,181 36,511 33,938 29,756 29,276 (1) 1994 includes the effects of an Entergy Gulf States reserve for rate refund.

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REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders of Entergy Louisiana, Inc.

We have audited the accompanying balance sheets of Entergy Louisiana, Inc. (formerly Louisiana Power &

Light Company) as of December 31, 1996 and 1995, and the related statements of income, retained earnings and cash flows for each of the three years in the period ended December 31, 1996;- These-financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examni on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 1996 and 1995, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1996 in conformity with generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

New Orleans, Louisiana February 13, 1997

- l~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

ENTERGY LOUISIANA, INC.

MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income decreased in 1996 due principally to a decrease in base rate revenues, partially offset by decreases in other operation and maintenance expense and lower interest on long-term debt.

Net income decreased in 1995 due to an April 1995 rate reduction and higher income taxes, partially offset by lower other operation and maintenance expenses.

Significant &ctors affecting the results of operations and causing variances between the years 1996 and 1995, and between the years 1995 and 1994, are discussed under "Revenues and Sales" and "genes" and

'Other" below.

Revenues and Sales See "SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON," following the financial statements, for information on operating revenues by source and kWh sales.

The changes in operating revenues for the twelve months ended December 31, 1996 and 1995 are as follows:

Increase/

(Decrease)

Description 1996 1995 (In Millions)

Change in base revenues ($36.4) ($29.9)

Fuel cost recovery 160.2 (35.9)

Sales volume/weather 19.7 40.7 Other revenue (including unbilled) 3.9 (23.3)

Sales for resale 6.6 12.9 Total S154.0 (S35.S)

Operating revenues were higher in 1996 due primarily to higher fuel adjustment revenues, which do not affect net income, and to increased sales of energy, principally caused by modest growth in the number of customers.

These increases were partially offset by the impact of base rate reductions ordered in the second quarters of 1995 and 1996, and by a settlement of related rate issues during the fourth quarter of 1995.

Operating revenues were lower in 1995, due primarily to the base rate reduction mentioned above and to lower fuel adjustment revenues, which do not affect net income. This decrease was partially offset by increased customer usage, principally caused by warmer than usual summer weather. The completion of the amortization of proceeds from litigation with a gas supplier in the second quarter of 1994 also contributed to the decrease in other revenue, partially offset by higher sales to non-associated utilities.

ENTERGY LOUISIANA, INC.

MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Expenses Operating expenses increased in 1996 due primarily to increases in fuel and purchased power expenses, higher depreciation, and higher taxes other than income taxes. These increases were partially offset by a decrease in other operation and maintenance expense as a result of restructuring charges recorded in 1995 and by the recording of rate deferrals in 1996, as discussed below. The increase in fuel and purchased power expenses is due to both higher gas costs and increased energy sales. Depreciation expense increased due to capital improvennts to transmission lines and substations and due to an increase in the depreciation rate associated with Waterford 3. Taxes other than income taxes increased largely as a result of the expiration of Waterford 3's local property tax exemption in December 1995. This increase was offset for the first six months of 1996 by the recording of the LPSC-approved rate deferral for these taxes as discussed in Note 2.

Operating expenses decreased in 1995 due to decreases in fuel and purchased power expenses, and other operation and maintenance expenses, partially offset by an increase in depreciation. The decrease in fuel expenses is due to lower fuel prices partially offset by an increase in generation. Other operation and maintenance expenses decreased because of lower payroll-related expenses as a result of the restructuring program discussed in Note 12, power plant waste water site closures in 1994, and a court settlement reducing legal expense. Depreciation expense increased due to capital improvements to distribution lines and substations and to an increase in the depreciation rate associated with Waterford 3.

Other Interest charges on long-term debt decreased for 1996, due to the retirement and refinancing of higher-cost long-term debt.

For 1995, income taxes increased due to the write-off in 1994 of deferred investment tax credits in accordance with the 1994 FERC Settlement, a decrease in tax depreciation associated with Waterford 3, and higher pre-tax income.

ENTERGY LOUISIANA, INC STATEMENTS OF INCOME For the Years Ended December 31, 1996 1995 1994 (In Thousands)

Operating Revenues S1,828,867 1S,674,875 SI ,710,415 Operating Expenses:

Operation and maintenance:

Fuel, fuel-related expenses, and gas purchased for resale 419,331 300,015 331,422 Purchased power 403,322 *351,583 366,564 Nuclear refueling outage expenses 15,885 17,675 18.187 Other operation and maintenance 297,667 311,535 350,854 Depreciation, amortization, ind decommissioning 167,779 161,023 151,994 Taxes other than income taxes 72,329 55,867 56,101 Rate deferrals (10,767)

Amortization of rate deferrals 26,875 28,422 28,422 Total 1,392,421 1,226,120 1,303,544 Operating Income 436,446 448,755 406,871 Other Income:

Allowance for equity funds used during constniction 862 1,950 3,486 Miscellaneous - net 2,933 2,831 747 Total 3,795 4,781 4,233 Interest Charges:

Interest on long-term debt 122,604 129,691 129,952 Other interest - net 6,938 7,210 6,494 Distributions on preferred smurities of subsidiary 2,870 Allowance for borrowed funds used during construction (1,493) (2,016) (2,469)

Total 130,919 134,885 133,977 Income Before Income Taxes 309,322 318,651 277,127 Income Taxes 118,560 117,114 63,288 Net Income 190,762 201,537 213,839 Preferred Stock Dividend Requirements and Other 19,947 21,307 23,319 Earnings Applicable to Common Stock S170,815 S180,230 S190,520 See Notes to Financial Statenents ENTE tGY LOUISIANA, INC.

STATENI ENTS OF CASH FLOWS For the Years Ended December 31, 1996 1995 1994 (In Thousands)

Operating Activities:

Net income S190,762 S201,537 $213,839 Nocah items included in net income:

Change in rate deferrals 19,860 28,422 28.422 Depreciatio. amortization, and dccanmissioning 167,779 161.023 151,994 Deferred income taxes and investnent tx credits 18.809 2,450 (15.972)

Allowance for equity funds used during construction (t62) (1,950) (3,486)

Amortization of deferred revenues - (14,632)

Changes in waking capital:

Receivables (4,889) (8,069) 1.094 Accounts payable 22,83t 4,420 (6.811)

Taxes accrued (11,222) 20,472 (16.970)

Interest accrued 5,047 1,215 846 Other Wking capital nts (26,31) (16.993) 31,064 Decommissioaing ust contributions (8.790) (7,493) (4,815) change in other regulatory assets (6,385) 1.801 1,101 Provision for estimated losses and reserves 3,240 (1,996) 26,780 Other (17,6t5) (182) (24,833)

Net cash flow provided by operating activities 351.671 384,657 367,621 Investing Activities:

Construction expenditues (103,187) (120,244) (140,669)

Allowance for equity funds used during costruction 862 1,950 3,486 Nuclear fuel purchases (44.707)

Proceeds fiom salelcasebac ofnuclear fuel - 47,293 Net cash flow used in investing activities (102,325) (115,70S) (137,183)

- Financing Activities Proceeds from te issuance of First mortgage bonds 113,.994 Oh long-term debt 113.994 16,577 19,946 Preferred securities of subsidiasy tust 67,795 Retirement of First mortgage bonds (130,000) (75,000) (25.000)

Oder long-term debt (270) (303) (322)

Redemption of preferred stock (67,824) (11,256) (15,038)

Changes in short-term borrowings - net (45,393) 49.305 (24,SS7)

Divideds pid:

Common dock (179,200) (221,500) (167,100)

Prefened stock (19,072) (21,115) (22,808)

Net cash flow used in financing activities - (259,970) (263,297) (235,209)

Net incrase (decrease) in cash and cash equivalents (10,624) 5,652 (4.771)

Cash and cash equivalents at begimiing of period 34,370 2S,713 33,439 Cash and cah equivalents at end of period S23,746 S34,370 $28,71 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during fe period fr:

Interest - net of amount cpitalized SI18,007 S123,435 S12S,000 Income txes $125,924 $96,066 S96,422 Noncash investing and financing activities:

Capital lease obligations incu -32,685 $9,677 Acquisition of nuclear fuel S32,685 .

Change in unrealized appreciation (depreciation) of deconinissioning tust assets S301 S2,304 (Sl,129)

See Notes to Fiancial Statements.

ENTERGY LOUISLANA, INC.

BALANCE SHEETS ASSETS December 31, 1996 1995 (In Thousands)

Current Assets:

Cash and cash equivalents:

Cash SI,804 S3,952 Temporary cash investments - at cost, which approximates market 21,942 30,418 Total cash and cash equivalents 23,746 34,370 Accounts receivable:

Customer (less allowance for doubtful accounts of SI4 million in 1996 and 1995) 73,823 72,328 Associated companies 11,606 8,033 Other 7,053 8,979 Accrued unbilld revenues 63,879 62,132 Deferred fuel costs 18,347 10,200 Accumulated deferred income taxes 1,465 Materials and supplies - at average cost 78,449 79,799 Rate deferrals 5,749 25,609 Deferred nuclear refueling outage costs 5,300 21,344 Prepaid income tax 24,651 Prepayments and other 10,234 9,118 Total 324,302 331,912 Other Property ani Investments:

Nonutility property 20,060 20,060 Decommissioning trust fund 50,481 38,560 Investment in subsidiary companies - at equity 14.230 14,230 Other - at cost (less accumulated depreciation) 2,465 1.113 Total 87,236 73,963 Utility Plant:

Electric 4,997,456 4,886,898 Property under capital leases 232,582 231,121 Construction work in progress 56,180 87,567 Nuclear fuel under capital lease 38,157 72,864 Nuclear fuel 34,191 1,506 Total 5,358,566 5,279,956 Less - accumulated depreciation and amortization 1,881,847 1,742,306 Utility plant - net 3,476,719 3,537,650 Deferred Debits and Other Assets:

Regulatory assets:

SFAS 109 regulatory asset - net 295,836 301,520 Unamortized loss on reacquired debt 37,552 39,474 Other regulatory assets 30,320 23,935 Other 27,313 23,069 Total 391,021 387,998 TOTAL $4,279,278 S4,331,523 See Notes to Financial Statements.

ENTERGY LOUISIANA, INC.

BALANCE SHEETS LIABILITIES AND SHAREHOLDER'S EQUITY December 31, 1996. 1995 (In Thousands)

Current Liabilities:

Currently maturing long-term debt $34,275 S35,260 Notes payable:

Associated companies 31,066 61,459 Other 15,000 Accounts payable:

Associated companies 73,389 37,494 Other 89,550 . 69,922 Customer deposits 59,070 56,924 Taxes accrued 7,390 18,612 Accumulated defcrred income taxes 3,366 Interest accrued 49,249 44,202 Dividends declared 3,489 5,149 Obligations under capital leases 28,000 28,000 Other 4,940 17,397 Total 380,418 392,785 Deferred Credits and Other Liabilities:

Accumulated deferred income taxes 831,093 807,278 Accumulated deferred investment tax credits 139,899 145,561 Obligations under capital leases 10,156 43,362 Deferred interest - Waterford 3 lease obligation 16,809 23,947 Other 114,665 116,696 Total 1,112,622 1,136,844 Long-term debt 1,373,233 1,385,171 Preferred stock with sinking fund 92,500 100,009 Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely junior subordinated deferrable debentures 70,000 Shareholders Equity:

Preferred stock without sinking fund 100,500 160,500 Common stock, S0.01 par value, authorized 250,000,000 shares; issued and outstanding 165,173,180 shares in 1996 and 1995 1,088,900 1,088,900 Capital stock expense and other (2,659) (4,836)

Retained earnings 63,764 72,150 Total 1,250,505 1,316,714 Commitments and Contingencies (Note 2,9, and 10)

TOTAL S4,279,278 S4,331,523 See Notes to Financial Statements.

ENTERGY LOUISIANA, INC.

STATEMENTS OF RETAINED EARNINGS For the Years Ended December 31, 1996 199s 1994 (In Thousands)

Retained Earnings, January 1 $72,150 $113,420 $89,849 Add:

Net income 190,762 201,537 213,839 Total 262,912 314,957 303,688 Deduct:

Dividends declared:

Preferred stock 17,412 20,775 22,339 Common stock 179,200 221,500 167,100 Capital stock expenses 2,536 532 809 Total 199,148 242,807 190,268 Retained Earnings, December 31 (Note 8) $63,764 $72,150 $113,420 See Notes to Financial Statements.

ENTERGY LOUISIANA, INC.

SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON 1996 1995 1994 1993 1992 (In Thousands)

Operating revenues $1,828,867 $1,674,875 $1,710,415 S1,731,541 S1,553,745 Net income S 190,762 S 201,537 S 213,839 $ 188,808 S 182,989 Total assets $ 4,279,278 $4,331,523 S4,435,439 S4,463,998 $4,109,148 Long-term obligations (1) $1,545,889 $1,528,542 S1,530,558 S1,611,436 S1,622,909 (1) Includes long-term debt (excluding currently maturing debt), preferred stock with sinking fund, preferred securities of subsidiary trust, and noncurrent capital lease obligations.

1996 1995 1994 1993 1992 (In Thousands)

Electric Operating Revenues:

Residential S609,308 $583,373 $577,084 $572,738 $518,255 Commercial 374,515 353,582 358,672 345,254 320,688 Industrial 727,505 641,196 659,061 652,574 578,741 Governmental 33,621 31,616 31,679 29,723 27,780 Total retail 1,744,949 1,609,767 1,626,496 1,600,289 1,445,464 Sales for resale Associated companies 5,065 1,178 352 4,849 5,454 Non-associated companies 58,685 48,987 36,928 46,414 33,178 Other 20,168 14,943 46,639 79,989 69,649 Total $1,828,867 $1,674,875 $1,710,415 $1,731,541 S1,553,745 Billed Electric Energy Sales (Millions of kWh):

Residential 7,893 7,855 1 7,449 7,368 6,996 Commercial 4,846 4,786 4,631 4,435 4,307 Industrial 17,647 16,971 16,561 15,914 15,013 Governmental 457 439 423 398 385 Total retail 30,843 30,051 29,064 28,115 26,701 Sales for resale Associated companies 143 44 10 112 204 Non-associated companies 982 1,293 776 1,213 1,101 Total 31,968 31,388 29,850 29,440 28,006

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REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders of Entergy Mississippi, Inc.

We have audited the accompanying balance sheets of Entergy Mississippi, Inc. (formerly Mississippi Power

& Light Company) as of December 31, 1996 and 1995, and the related statements of income, retained earnings and cash flows for each of the three years in the period ended December 31, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 1996 and 1995, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1996 in conformity with generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

New Orleans, Louisiana February 13, 1997

ENTERGY MISSISSIPPI, INC.

MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net incone increased in 1996 primarily due to reduced other operation and maintenance expenses, partially offset by an increase in income tax expense.

Net income increased in 1995 primarily due to increased revenues and a decrease in other operation and maintenance expenses partially offset by an increase in income tax expense.

Significant factors affecting the results of operations and causing variances between the years 1996 and 1995, and between the years 1995 and 1994, are discussed under "Revenues and Sales." "Expenses " and "Other" below.

Revenues and Sales See "SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON," following the financial statements, for information on operating revenues by source and kWh sales.

The changes in electric operating revenues for the twelve months ended December 31, 1996 and 1995, are as follows:

Increase/

(Decrease)

Description 1996 1995 (In Millions)

Change in base revenues ($2.2) (S6.1)

Grand Gulf Rate Rider 7.1 (0.6)

Fuel cost recovery 33.6 12.8 Sales volume/weather 8.5 14.9 Other nrvenue (including unbilled) (2.1) 5.6 Sales for resale 23.7 3.4 Total S68.6 $30.0 Electric operating revenues increased in 1996 primarily due to increases in fuel adjustment revenues, the Grand Gulf I rate rider, sales for resale, and retail energy sales. Fuel adjustment revenues increased in response to higher fuel costs. In connection with an annual MPSC review, in October 1995, Entergy Mississippi's Grand Gulf 1 rate rider was adjusted upward as a result of its undercollection of Grand Gulf 1 costs. The fuel adjustment clause and the Grand Gulf 1 rate rider do not affect net income. Sales for resale, specifically sales to associated companies, increased primarily due to changes in the generation requirements and availability among the domestic utility companies. The increase in retail sales volume is primarily due to increased customer usage.

Electric operating revenues increased in 1995 primarily due to an increase in retail and wholesale energy sales and higher fuel adjustment revenues, partially offset by rate reductions. Retail energy sales increased primarily due to the impact of weather and increased customer usage. Fuel adjustment revenues increased in response to higher fuel costs and do not impact net income.

ENTERGY MISSISSIPPI, INC.

MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Expenses Operating expenses increased in 1996 due to an increase in fuel, and purchased power expenses, partially offset by a decrease in other operation and maintenance expenses. Fuel and purchased power expenses increased as a result of higher fuel costs and an increase in energy sales. Other operation and maintenance expenses decreased as a result of lower payroll, contract work, and materials and supplies expenses. Payroll expenses decreased due to restructuring costs recorded in 1995 and the resulting decrease in employees. Contract work and materials and supplies expenses decreased because of the turbine repairs at some of Entergy Mississippi's generating plants in 1995.

Operating expenses decreased in 1995 due primarily to a decrease in other operation and maintenance expenses. Other operation and maintenance expense decreased in 1995 due to 1994 Merger-related costs allocated to Entergy Mississippi and payroll expenses. No significant Merger-related costs were allocated to Entergy Mississippi during 1995. Payroll expenses decreased as a result of the restructuring program announced and accrued for during 1994. In addition, maintenance expenses decreased at various power plants.

Other Income tax expense increased in 1996 as a result of higher pretax income. Income tax expense increased in 1995 due primarily to the 1994 write-off of unamortized deferred investment tax credits and higher pretax income in 1995.

I I ENTERGY MISSISSIPPI, INC STATEMENTS OF INCOME For the Years Ended December 31, 1996 1995 1994 (In Thousands)

Operating Revenues $958,430 $889,843 S859,845 Operating Expenses:

Operation and mainteanice:

Fuel, fuel-related expenses, and gas purchased for resile 207,116 163,198 164,428 Purchased power 272,812 240,519 235,019 Other operation and maintenance 122,628 144,183 156,954 Depreciation. amortization, and decommissioning 40,313 38,197 36,592 Taxes other than income taxes 43,389 46,019 43,963 Amortization of rate def:rrals 10i,576 107,339 110,481 Total 793,834 739,455 747,437 Operating Income 164,596 150,388 112,408 Other Incom (Deductions):

Allowance for equity funds used during constuction 1,143 950 1.660 Miscellaneous - net 1,662 3,036 (1,117)

Total 2,805 3,986 543 Interest Charges:

Interest on long-term debt 44,137 46,998 47,835 Other interest - net 3,870 4,638 4,929 Allowance for borowed fimds used during constuction (923) (806) (1.067)

Total 47,084 S0,830 51,697 Income Before Income Taxes 120,317 103,544 61,254 Income Taxes 41,106 34,877 12,475 Net Income 79,211 68,667 48,779 Preferred Stock Dividend Requirements and Other 5,010 7,515 7,624 Earnings Applicable to Common Stock S74,201 S61,152 $41,155 See Notes to Financial Statements.

ENTERGY MISSISSIPPI, IhC STATEMENTS OF CASH FLOWS For the Years Ended December 31, 1996 1995 1994 (in Thouands)

Operating Activities:

Net income S79,211 S6S,667 S48,779 Noncash items included in net income:

Change in rate deferrals 130.602 114,304 109,105 Depreciation and amortization 40,313 3S,197 36,592 Deferod income txes and investment tax credits (3ZS7) (36.774) (34.409)

Allowanoe for equity funds used during consbuction (1,143) (950) (1,660)

Changes in working capital:

Receables (4,123) (5.277) 33,154 Fuel inventosy 20 (1.901) 3,872 Accounts payable 8s 15,553 (3,7S3)

Taeos accrued (2.157) 7.813 (3,431)

Interest accrued (925) 1,457 (2.794)

Of er working capital ccounts 4,074 (21,103) 13,4S0 Change in oter regulatory assets (28,573) 1.075 (7,219)

Other (2.534) 3,882 S.428 Net cash flow rovided by operating activities 11.966 14,943 195,114 Investing Activities:

Construction expenditres (S5.01S) (79,146) (121,336)

Allowance for equity funds used during construction 1,143 950 1,660 Net cash flow used in investing activities (93.875) (78,196) (119,726)

Financing Activities:

Proceeds fom The isuance of:

General and refunding mortgage bonds _ 79,4S0 24,534 Other long-term debt 15.652 Retirement of General and refunding mortgage bonds (26,000) (45,000) (30,000)

First mortgage bonds (35.000) (20.000) (1,000)

Oer lng-term debt (15) (965) (16,045)

Redemption of preferred stock (9,876) (15,000) (15,000)

Changes in short-term borrowings - net 50,253 (30,000) 13,432 Dividends paid:

Common stock (79,900) (61,700) (45,600)

Preferred stock (5,000) (6,215) (7,762)

Net cash flow used in financing activities (105,538) (99,400) (73,789)

Net increase (decrease) in cash and cash equivalents (7,447) 7,347 1,599 Cash and cash equivalents at beginning of period 16,945 9,598 . 7,999 Cash and cash equivalents at end of period S9,49S £16,945 S9,59S SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the period for..

Interest - net of amount capitalized $46,769 S48,617 S52.737

$,637 £67,746 S39,000 See Notes to Financial Statements.

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I ENTERGY MISSISSIPPI, INC BALANCE SHEETS ASSETS December 31, 1996 1995 (In Thousands)

Current Assets:

Cash and cash equivalents:

Cash S2,384 $2,574 Temporary cash investments - at cost, which approximates market:

Associated companies 3,248 Other 11,123 Special deposits 7,114 Total cash and cash equivalents 9,498 16,945 Accounts receivable:

Customer (less allowance for doubtful accounts of S1.4 million in 1996 and S1.6 million in 1995) 44,809 46,214 Associated companies 4,382 1,134 Other 2,014 1,967 Accrued unbilled revenues 49,383 47,150 Fuel inventory - at verage cost 6,661 6,681 Materials and supplies - at average cost 17,567. 19,233 Rate deferrals 142,504- 130,622 Prepayments and other 7,434 11,536 Total 284,252 281,482 Other Property and Evestments:

Investment in subsidiary companies - at equity 5,531 5,531 Other- at cost (less accumulated depreciation) 7,923 5,615 Total 13.454 11,146 Utility Plant:

Electric 1,633,484 1,559,955 Constuction work in progress 47,373 55,443 Total 1,680,857 1,615,398 Less - accumulated depreciation and amortization 635,754 613,712 Utility plant - net 1,045,103 1,001,686 Deferred Debits and Other Assets:

Regulatory assets:

Rate deferrals 104,588 247,072 SFAS 109 regulatory asset - net 11,813 6,445 Unamortized loss on reacquired debt 9,254 10,105 Other regulatory assets 46,309 17,736 Other 6,693 6,311 Total 178,657 287,669 TOTAL S1,521,466 S1,581,983 See Notes to Financial Statements.

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ENTERGY MISSISSIPPI, INC I,) - - BALANCE SHEETS , .

IBILiTIES AND SHAREHOLDER'S EQUITY December 31, 1996 1995 (In Thousands)

Current Liabilities:

Currently maturing long-tenn debt $96,015 S61,015 Notes payable - associated companies 50,253 Accounts payable:

Associated companies 32,878 24,391 Other 23,701 32,100 Customer deposits 26,258 24,339 Taxes accrued 26,482 . 28,639 Accumulated deferred income taxes 58,634 . 54,090 Interest accrued 20,909 21,834 other 3,065 6,875 Total 338,195 253,283 Deferred Credits and Other Liabilities:

Accumulated deferred income taxes 249,522 278,581 Accumulated deferred investment tax credits 25,422 27,978 Other 19,445 22,515 Total 294,389 -329,074 Long-term debt 399,054 494,404 Preferred stock with sinking fund 7,000 16,770 Shareholder's Equity:

Preferred stock without sinking fund 57,881 57,881 Common stock, no par value, authorized I 5,000,000 shares; issued and outstanding 8,666,357 shares in 1996 and 1995 199,326 199,326 Capital stock expense and other (143) (218)

Retained earnings 225,764 231,463 Total 482,828 488,452 Commitments and Contingencies (Note 2 and 9)

TOTAL Sl,521,466 $1,581,983 See Notes to Financial Statements.

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j ENTERGY MISSISSIPPI, INC.

STATEMENTS OF RETAINED EARNINGS For the Years Ended December 31, 1996 1995 1994 (In Thousands)

Retained Earnings, January 1 $231,463 S232,011 $236,337 Add:

Net income 79,21 68,667 48,779 Total 310,674 300,678 285,116 Deduct:

Dividends declared:

Preferred stock 4,803 5,971 7,404 Common stock 79,900 61,700 45,600 Preferred stock expenses 207 1,544 101 Total 84,910 69,215 53,105 Retained Earnings, December 31 (Note 8) $225,764 $231,463 $232,011 See Notes to Financial Statements.

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ENTERGY MISSISSIPPI, INC SELECTED FINANCIAL DATA - FIVEYEAR COMPARISON 1996 1995 1994 1993 1992 (In Thousands)

Operating revenues $ 958,430 $ 889,843 $ 859,845 $ 883,818 $ 799,483 Net Income $ 79,211 S 68,667 S 48,779 $ 69,037 $ 65,036 Total assets S1,521,466 S1,581,983 S1,637,828 $1,681,992 $1,665,480 Long-term obligations (1) $ 406,421 S 511,613 S 507,555 S 563,612 S 576,787 (1) Includes long-term debt (excluding currently maturing debt), and preferred stock with sinking fund, and noncurrent capital lease obligations.

1996 1995 1994 1993 1992 (In Thousands)

Electric Operating Revenues:

Residential $358,264 $336,194 $332,567 S341,620 $309,614 Commercial 281,626 262,786 257,154 251,285 236,191 Industrial 185,351 178,466 184,637 182,060 169,977 Governmental 29,093 27,410 27,495 28,530 26,377 Total retail 854,334 804,856 801,853 803,495 742,159 Sales for resale Associated companies 58,749 35,928 37,747 34,640 17,988 Non-associated companies 22,814 21,906 16,728 21,100 19,995 Other 22,533 27,153 3,517 24,583 19,341 Total $958,430 $889,843 $859,845 $883,818 $799,483 Billed Electric Energy Sales (Millions of kWh):

Residential 4,355 4,233 4,014 3,983 3,644 Commercial 3,508 3,368 3,151 2,928 2,804 Industrial 3,063 3,044 2,985 2,787 2,631 Governmental 346 336 330 336 318 Total retail 11,272 10,981 10,480 10,034 9,397 Sales for resale Associated companies 1,368 959 1,079 758 253 Non-associated companies 521 692 512 670 937 Total 13,161 12,632 12,071 11,462 10,587

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REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders of Entergy New Orleans, Inc.

We have audited the accompanying balance sheets of Entergy New Orleans, Inc. (formerly New Orleans Public Service Inc.) as of December 31, 1996 and 1995, and the related statements of income, retained earnings and cash flows for each of the three years in the period ended December 31, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 1996 and 1995, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1996 in conformity with generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

New Orleans, Louisiana February 13, 1997

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I ENTERGY NEW ORLEANS, INC.

MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income decreased in 1996 primarily due to the rate refund recorded in December 1996, based on the Council's review of Entergy Nlew Orleans' 1996 earnings. The decrease in net income was partially offset by reduced other operating and maintenance expenses.

Net income increased in 1995 principally due to 1994 refunds associated with the 1994 NOPSI Settlement and a decrease in other operation and maintenance expense, partially offset by a permanent rate reduction that took place January 1, 1995.

Significant fctors affecting the results of operations and causing variances between the years 1996 and 1995, and between the years 1995 and 1994, are discussed under Revenues and Sales', Expens", and "Other" below.

Revenues and Sales See "SELECTED FINANCIAL DATA-FIVE-YEAR COMPARISON," following the financial statements, for information on electric operating revenues by source and kWh sales.

The changes in electric operating revenues for the twelve months ended December 31, 1996 and 1995 are as follows:

Increase/

(Decrease)

Description 1996 1995 (In Millions)

Change in base revenues ($8.5) $7.8 Fuel cost recovery 28.5 (0.3)

Sales volume/weather (4.8) 12.5 Other revenue (including unbilled) (1.4) 6.1 Sales for resale (0.5) 3.5 Total $13.3 S29.6 In 1996, electric operating revenues increased primarily due to higher fuel adjustment revenues, caused by elevated fuel prices, which do not affect net income. The increase was offset by a rate refund recorded in 1996, as discussed in "Net Income" above, and lower industrial sales attributable to a significant reduction in electricity usage by a large customer. Electric operating revenues increased in 1995 as a result of refunds in 1994 associated with the 1994 NOPSI Settlenwnt and an increase in energy sales. The increase in energy sales in 1995 was primarily due to weather effects on retail sales and an increase in sales for resale.

Gas operating revenues in 1996 increased primarily due to higher gas prices. This increase was offset by the rate refund recorded in 1996, as discussed in "Net Income" above. Gas operating revenues decreased in 1995 primarily due to the rate reduction agreed to in the NOPSI Settlement effective January 1, 1995, and a lower unit purchase price for gas purchased for resale.

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'ENTERGY NEW ORLEANS,-INC.

MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Expenses In 1996, operating expenses increased due to higher fuel expenses, including purchased power, and gas purchased for resale. This increase was offset by reduced amortization of previous rate deferrals, the recording of rate deferrals, and lower other operation and maintenance expenses. Fuel expenses, including gas purchased for resale, increased as a result of significantly higher unit prices. Purchased power increased due to changes in generation availability and requirerents among the domestic utility companies. Rate deferrals increased due to the deferral of a portion of the System Energy rate increase being billed to Entergy New Orleans, as discussed in Note

2. Other operation and maintenance expenses decreased primarily due to lower payroll expenses due to restructuring and reduced regulatory commission expenses.

Operating expenses increased in 1995 due primarily to increased amortization of rate deferrals, partially offiet by a decrease in fuel and other operation and maintenance expenses. Fuel expenses decreased in 1995 primarily due to a decrease in fuel prices. Other operation and maintenance expenses decreased primarily due to a decrease in maintenance activity and lower payroll expenses. In 1995, the increase in the amortization of rate deferrals is primarily a result of the collection of larger amounts of previously deferred costs under the 1991 NOPSI Settlement, which allowed Entergy New Orleans to record an additional $90 million of previously incurred Grand Gulf 1-related costs.

Other Income taxes decreased in 1996 due to lower pretax income. Income taxes increased in 1995 as a result of lower pretax income in 1994 due to the 1994 NOPSI Settlement and the write-off of the unamortized balances of deferred investnent tax credits pursuant to the FERC Settlement in 1994.

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I ENTERGY NEW ORLEANS, INC STATEMENTS OF INCOME For the Years Ended December 31, 1996 1995 1994 (In Tbousands)

Operating Revenues:

Electric $403,254 $390,002 S360,430 Natural gas 101,023 80,276 87,357 Total 504,277 470,278 447,787 Operating Expenses:

Operation and maintenance:

Fuel, fuel-related expenses, and gas purchased for resale 129,059 102,314 113,735 Purchased power 176,450 145,920 145,935 Other operation and maintenance 71,421 76,510 80,656 Depreciation, amortization, and decommissioning 20,007 19,420 19,275 Taxes other than income taxes 27,388 27,805 27,814 Rate deferrals (4,866) (4,392)

Amortization of rate deferrtds 27,240, 31.971 27,009 Total 446,699 399,548 414,424 Operating Income 57,578 70,730 33,363 Other hxcome:

Allowance for equity funds used during construction 321 158 331 Miscellaneous - net 1,146 1,639 2,141 Total 1,467 1,797 2,472 Interest Charges:

Interest on long-term debt 15,268 15,948 17,092 Other interest - net 1,036 1,853 1,179 Allowance for borrowed funds used during construction (252) (127) (247)

Total 16,052 17,674 18,024 Income Before Income Taxes 42,993 54,853 17,811 Income Taxes 16,217 20,467 4,600 Net income 26,776 34,386 13,211 Preferred Stock Dividend Requirements and Other 965 1,411 1,581 Earnings Applicable to Common Stock S25,811 S32,975 S11,630 See Notes to Financial Statements.

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ENTERGY NEW ORLEANS, INC STATEMENTS OF CASH FLOWS For the Years Ended December 31, 1996 199f 1994 (In Thousands)

Operating Activities:

Net income S26,776 S34,3S6 S13.211 Noncash items included in net income:

Change in rate deferrals 35,917 31,564 24,106 Depreciation and rnortizAtion 20,007 19,420 19.275 Defered income tUxes and investment tax credits (12,274) (1,998) (1,006)

Allowance for equity funds used during consruction (321) (158) (331)

Canges in working capital:

Receivables 832 (5,468) 15,362 Accounts payable. (5,63S) 12,566 (19,132)

Taxs accrued (4,350) 3.225 (2,332)

Intrest acued 214 (131) (230) bnc tax refund -. 20,172 (20,172)

O e worcing capital accounts (5,216) (4,503) 1S,454 Other (11,941) (9.500) 8,851 Net cash flow provided by operating activities 44,006 99,275 3S,556 Investing Activities:

Contruction expenditures (27,956) (27,336) (22,777)

Allowance for equity funds used during constuction 321 158 331 Net cah flow used in investing acivities (27,635) (27,67S) (22,446)

Financing Activities:

Proceeds fim tfe issuance of general and refimding mortgage bonds 39,608 29,805 Retiremcnt of:

Fnst mortgage boods (23,250)

General and refunding mtsgage bonds (30,000) (24,200) (15,000)

Redanption of preferred stock - (3,525) (1.500)

Dividends paid:

CoMmon StDock (34,000) (30,600) (33,300)

Preferred stock (965) (1,362) (1,596)

Net cash flow used in financing activities * .(48,607) (29,882) (51,396)

Net increase (decrease) in cash and cash equivalents (32.236) 41,715 (35,286)

Cash and cash equivalents at beginning of period 49,746 8.031 43,317 Cash and cash equivalents at end of period S17,510 S49,746 S8,031 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the period for.

Interest -net of amount capitalized S15,357 S17,187 517,707 Incme taxs (refund) - net S31,870 (S941) S45,984 See Notes to Financial Staments.

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ENTERGY NEW ORLEANS, INC.

BALANCE SHEETS ASSETS December31, 1996 1995 (In Thousands)

Current Assets:

Cash and cash equivalents:

Cash $1,015 Sl,693 Temporary cash investments - at cost, w4hich approximates market Associated companies 7,435 10,860 Other 9,060 37,193 Total cza and cash equivalents 17,510 49,745 Accounts receivable:

Customer (less allowance for doubtful accounts of $0.7 million in 1996 and S0.5 million in 1995) 27,430 29,168 Associated companies 714 551 Other 1,764 843 Accrued unbilled revenues 17,064 17,242 Defesd electric fuel and resale gas costs 7,290 2,647 Materials andl supplies - at average cost 9,904 8,950 Rate deferrals 37,692 35,191 Prepayments and other 7,157 4,529 Total 126,525 148,867 Other Property and Instments:

Investment in subsidiary companies - at equity 3,259 3,259 Utility Plant:

Electric 503,061 483,581 Natural gas 122,700 121,083 Constuction work in progress 18,247 17,525 Total 644,008 622,189 Less - accumulated depreciation and amortization 347,790 335,021 Utility plant - net 296,218 287.168 Deferred Debits and Other Assets:

Regulatory itassets:

Rate deferrals 99,498 137,916 SFAS 109 regulatory asset - net 6,051 6,813 Unamortized loss on reacquired debt 1,647 1,932 Other regulatory assets 15,908 9,204 Other 890 1,047 Total 123,994 156,912 TOTAL S549,996 S596,206 See Notes to Financial Statements.

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ENTERGY NEW ORLEANS, INC BALANCE SHEETS LUIBILITIES AND SHAREHOLDER'S EQUITY December 31, 1996 1995 (In Thousands)

Current Liabilities:

Currently maturing long-term debt S12,000 S38,250 Accounts payable:

Associated companies 18,757 13,851 Other 14,130 24,674 Customer deposits 18,974 18,214 Taxes accrued 1,204 5,554 Atcumulated deferred income taxes 5,584 9,174 Interest accrued 5,325 5,111 Provision for rate refid 19,465 11,870 Other 1,521 6,867 Total 96,960 133,565 Deferred Credits and Other Liabilities:

Accumulated deferred income taxes 72,895 81,654 Accumulated deferred investment tax credits 7,984 8,618 Accunulated provision for property insurance 15,666 15,666 Other 24,713 29,654 Total 121,258 135,592 Long-term debt 168,888 155,958 Shareholders' Equity:

Preferred stock without sinking find 19,780 19,780 Common Shareholdes Equity:

Common stock, $0.01 par value, authorized 10,000,000 shares; issued and outstanding 8,435,900 shares in 1996 and 1995 33,744 33,744 Paid-in capital 36,294 36,306 Retained earnings subsequent to the elimination of the accumulated deficit on November 30, 1988 73,072 81,261 Total 162,890 171,091 Commitments and Contingencies (Note 2 and 9)

TOTAL $549,996 S596,206 See Notes to Financial Statements.

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ENTERGY NEW ORLEANS STATEMENTS OF RETAINED EARNINGS For the Years Ended December 31, 1996 1995 1994 (In Thousands)

Retained Earnings, January 1 $81,261 S78,886 S100,556 Add:

Net income 26,776 34,386 13,211 Total 108,037 113,272 113,767 Deduct Dividends declared:

Prefixed stock 965 1,231 1,536 Common stock 34,000 30,600 33,300 Capital stock expanses 180 45 Total 34,965 32,011 34,881 Retained Earnings, December 31 (Note 8) $73,072 S81,261 S78,886 See Notes to Financial Statements.

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ENTERGY NEW ORLEANS, INC.

SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON 1996 1995 . 1994 1993 1992 (In Tousands)

Operating revenues S 504,277 S 470,278 S 447,787 S 514,822 S 464,879 Net Income S 26,776 S 34,386 S 13,211 $ 36,761 S 26,424 Total assets S 549,996 $ 596,206 S 592,894 S 647,605 S 621,691 Lng-term obligations (1) S 168,888 $ 155,958 S 167,610 S 193,262 S 165,917 (1) Includes long-term debt (excluding currently maturing debt).

1996 1995 1994 1993 1992 (In Thousands)

Electric Operating Revenues:

Residential SIS1,577 $141,353 $142,013 $151,423 S137,668 Commercial 149,649 144,374 162,410 167,788 160,229 Industrial 24,663 22,842 25,422 26,205 23,860 Governmental 58,561 52,880 58,726 61,548 56,023 Total retail 384,450 361,449 388,571 406,964 377,780 Sales for resale Associated companies 2,649 3,217 2,061 2,487 3,086 Non-associated companies 9,882 9,864 7,512 9,291 7,234 Other (1) 6,273 15,472 (37,714) 5,088 3,836 Total S403,254 $390,002 S360,430 $423,830 $391,936 Billed Electric Energy Sales (Millions of kWh):

Residential 1,998 2,049 1,896 1,914 1,806 Commercial 2,073 2,079 2,031 1,989 1,977 Industrial 481 537 518 499 457 Governmental 974 983 951 924 888 Total retail 5,526 5,648 5,396 5,326 5,128 Sales for resale Associated companies 66 149 92 89 155 Non-associated companies 212 297 202 262 250 Total 5,804 6,094 5,690 5,677 5,533 (1) 1994 includes the effects of the 1994 NOPSI Settlement.

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REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholder of System Energy Resources, Inc.

We have audited the accompanying balance sheets of System Energy Resources, Inc. as of December 31, 1996 and 1995, and the related statements of income, retained earnings and cash flows for each of the three years in the period ended December 31, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are fee of material misstatment. An audit includes examiing, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 1996 and 1995, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1996 in conformity with generally accepted accounting principles.

As discussed in Note 1 to the financial statements, in 1996 the Company changed its method of accounting for incremental nuclear plant outage maintenance costs.

COOPERS & LYBRAND L.L.P.

New Orleans, Louisiana February 13, 1997

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SYSTEM ENERGY RESOURCES, INC.

MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income increased slightly in 1996 primarily due to lower interest charges attributed to the refinancing of higher-cost debt.

Net income increased in 1995 primarily due to the effect of the FERC Settlement which reduced 1994 net income by $80.2 million (see Note 2). This was partially offset by revenues being adversely impacted by a lower return on System Energy's decreasbTg investment in Grand Gulf 1.

Significant factors affecting the results of operations and causing variances between the years 1996 and 1995, and between the years 1995 and 1994, are discussed under "Revenues," "Expenses It and "Other" below.

Revenues Operating revenues recover operating expenses, depreciation, and capital costs. attributable to Grand Gulf 1. Capital costs are computed by allowing a return on System Energy's common equity funds allocable to its net investment in Grand Gulf 1 and adding to such amount System Energy's effective interest cost for its debt allocable to its investment in Grand Gulf 1.

Operating revenues increased in 1996 due to an increase in other operation and maintenance expenses, and increased depreciation, amortization, and decommissioning expenses offset by a decrease in nuclear refueling outage expenses as discussed in "Iftnses'"below.

Operating revenues increased in 1995 due primarily to the effect of the FERC Settdement on 1994 revenues as discussed in "Net Income" above and the recovery of increased expenses in connection with a Grand Gulf 1 refueling outage offset by a lower return on System Energy's decreasing investment in Grand Gulf 1. Revenues attributable to the return on investment are expected to continue to decline each year as a result of the depreciation of System Energy's investment in Grand Gulf 1.

Expenses Operating expenses increased in 1996 due primarily to increases in other operation and maintenance expenses, and depreciation, amortization, and decommissioning expenses. Other operation and maintenance expenses increased primarily because of higher waste disposal costs and medical benefit charges for the year. The increase in decommissioning costs and depreciation rates is reflected in the 1995 System Energy FERC rate increase filing, subject to refund (see Note 2). These increases were partially offset by a decrease in nuclear refueling outage expenses. The decrease in nuclear outage expenses was primarily due to the effect of deferring the nuclear refueling outage expenses in the fourth quarter of 1996 rather than recognizing those expenses as incurred (see Note 1). Grand Gulf I was on-line for 322 days in 1996 as compared with 285 days in 1995. The increase in the on-line days was primarily due to the unit's shorter eighth refueling outage that lasted from October 19, 1996 to November 30, 1996 (41 days), compared to a 68-day outage in 1995, and to a lesser extent, unplanned outages in 1996 totaling 3 days, compared to 12 days for 1995.

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SYSTEM ENERGY RESOURCES, INC.

MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Operating expenses increased in 1995 due to higher nuclear refueling outage expenses and higher depreciation, amortization, and decommissioning costs, partially offset by lower fuel expenses as a result of the refueling outage. Grand Gulf I was on-line for 285 days in 1995 as compared with 345 days in 1994. The difference in the on-line days was primarily due to the unit's seventh refueling outage that lasted from April 15, 1995, to June 21, 1995 (68 days), and, to a lesser extent, unplanned outages in 1995 totaling 12 days, compared to 20 days in 1994. Depreciation, amortization, and decommissioning costs increased due to a $4 million increase in amortization (as a result of the reclassification of 81 million of Grand Gulf I costs and the accelerated amortization of the reclassified costs over a ten-year period in accordance with the 1994 FERC Settlement) and $1 million in decommissioning.

Other Interest expenses decreased in both 1996 and in 1995 due primarily to the retirement and refinancing of higher-cost long-term debt. In 1995, the decrease in interest expense was partially offset by interest associated with the FERC Settlements refunds (See Note 2). Income taxes increased in both 1996 and 1995 due to higher pretax income.

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SYSTEM ENERGY RESOURCES, INC STATEMENTS OF INCOME For the Years Ended December 31, 1996 1995 1994 (In Tousands)

Operating Revenues $623,620 S605,639 $474,963 Operating Expenses:

Operation and maintenance:

Fuel, fuel-related expeosa, and gas purchased for resJe .43,761 40,262 48,107 Nuclear refueling outage expenses 1.239 24.93S Other ceration and m sine 105,453 98,441 96,504 Depreciation, amortization, and decommissioning 128,474 100,747 93,861 Taxes other than income taxes 27,654 27,549 26,637 Total 306,581 291,934 265,109 Operating Income 317,039 313,705 209,854 Other Inoe:

Allowance for equity funds used during constiuction 1,122 1,878 1,090 Miscellaneous - net 5,234 2,492 6.402 Total 6,356 4,370 7,492 Interest Charges:

Interet on long-term debt 135,376 143,020 169,248 Other interest - net 8,344 8,491 7,257 Allowance for borrowed finds used during constuction (1,114) (1,968) (1,403)

Total 142,606 149,543 175,102 Incom Before Income Taxes 180,789 168,532 42,244 Income Taxes 82,121 75,493 36,837 Net Income $98,668 S93,039 S5,407 See Notes to Financial Statements.

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SYSTEM ENERGY RESOURCES, INC STATEMENTS OF CASH FLOWS

-,? -,N -

For the Ytars Ended December 31, 1996 1995 194 (In 7 uands)

Operating Activities:

Net income S98,66S S93,039 S5,407 Noncash items inchded in net income:

Depreciation, amotzation, and decommissioning 128,474 100.747 93,S61 Deferrd incane taxes and investnent tax credits 48,975 (45,337) (30,640)

Allowance for equity funds used during constuction (1,122) (1,878) (1,090)

Changes in working capital:

3.436 (66.433) 4S.411 Accounts payable 560 (l3,955) 35,469 Taxes acred (4,325) 37,266 14,430 Inkeret md (2.54S) (4,053) (8,133) 01wr woring captl accounts (13,430) (21,374) 14,024 Recoveable income taxs 92,6S9 Decommissionmg ust contritions (18S531) (5,414) (5,157)

FERC Settlement - refund obligation (4,009) (3,540) 60,333 Provision for estinated losses and reserves 46,919 3,167 (2,371) 0w 4.290 - 29,725 19,699 Net cash flow provided by operating activities 2S6.857 96,460 336,987 Investing Activities:

Construction expenditures (29,469) (21.747) (20,766)

Allowance for equity funds used during construction 1,122 1,373 1,090 Nuclear fuel purchases (44,704) (51,455) (26,414)

Proceeds fr. saeleaseback of nuclear fuel 43,971 52.133 Net cash flow used in investing activities (29,080) (19,136) (46,090)

Fmacing Actmties Procee fn Ie issane of.

Fit mortgage bonds 233,656 59.410 Odxr longcm debt 133,933 73,343 Retirement of First mrlgage bs (325,101) (105,000) (260,000)

O1hw long-tsm debt (92,700) (45,320)

Premiun and expenses peid on refinancing sale/leaseback bonds - (48,436)

Changes in sho-term bcrrowings - net (2.990) 2,990 Common stock dividends paid (112500) (92,300) (14S,300)

Net cah flow used in financing activities (165,702) (166,787) (397,326)

Net incrase (decrase) in cash and ceash equivalents 92,075 (89,463) (106,429)

Cash and cash equivalents at begiming of period 240 89,703 196,132 Cash and cash equivalents at end of period S92,315 S240 S9,703 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cashpid duing tepeod for Interest, net of amount capitalized S13S,4S3 S147,492 S176,503 Income taes (refund) S36,397 S87,016 (S39,5S6)

Noncash investing and financing activities:

Change in unrealized appreciation (depreciation) of dcommissiorug rust assets (S70) S3,061 (S1,515)

See Notes o Fnancial Statements.

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SYSTEM ENERGY RESOURCES, INC.

BALANCE SHEETS ASSETS December 31, 1996 1995 (Ln Thousands)

Current Assets:

Cash and cash equivalents:

Cash S26 S240 Temporary cash investments - at cost, which approxdmates market:

Associated companies 41,600 Other 50,689 Total cash and cash eqwivalents 92,315 240 Accounts receivable:

Associated companies 71,337 72,458 Other 2,522 4,837 Materials and supplies - at average cost 66,302 67,661 Deferred nuclear refueling outage costs 24,005 Prepayments and other 4,929 16,050 Total 261,410 161,246 Oa=;e Property and Investwents:

Decommissioning trust find 62,223 40,927 Utility Plant Electric 2,994,445 2,977,303 Electric plant under leases 447,409 444,305 Constmuction vAork in progress 41,362 35,946 Nuclear fuel under capital lease 83,558 71,374 Total 3,566,774 3,528,928 Less - acumulated depreciation and amortization 974,472 861,752 Utility plant - net 2,592,302 2,667,176 Defared Debits nd Other Assets:

Regulatory assets:

SFAS 109 regulatory asset - net 264,758 291,181 Unamortized loss on reacquired debt 57,785 52,702 Other regulatorj assets 207,214 203,731 Other 15,601 14,049 Total 545,358 561,663 TOTAL $3,461,293 S3,431,012 See Notes to Financial Statements.

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SYSTEM ENERGY RESOURCES, INC.

BALANCE SHEETS LIABILITIES AND SHAREHOLDER'S EQUIY December 31, 1996 1995 (In Thousands)

Current Liabilities:

Currently maturing long-term debt S 10,000 S250,000 Notes payable - associated companies 2,990 Accounts payable:

Associated companies 18,245 17,458 Other 18,836 19,063 Taxes accrued 67,823 72,648 Interest accrued 34,195 36,743 Obligations under capital leases 28,000 28,000 Other 2,306 4,211 Total 179,405 431,113 Deferred Credits and Other Liabilities:

Accumulated deferred income taxes 624,020 602,182 Accumulated deferred investment tax credits 103,647 107,119 Obligations under capital leases 55,558 44,107 FERC Settlement - refund obligation 52,839 56,848 Other 165,517 94,449 Total 1,001,581 904,705 Long-term debt 1,418,869 1,219,917 Common Shareholder's Equity:

Common stock, no par value, authorized 1,000,000 shares; issued and outstanding 789,350 shares in 1996 and 1995 789,350 789,350 Paid-in capital 7 Retained earnings 72,088 85,920 Total 861,438 875,277 Commitments and Contingencies (Note 2,9, and 10)

TOTAL S3,461.293 S3,431,012 See Notes to Financial Statements.

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SYSTEM ENERGY RESOURCES, INC.

STATEMENTS'OF RETAINED EARNINGS For the Years Ended December 31, 1996 1995 1994 (In Thousands)

Retained Earnings, January 1 $85,920 S85,681 $228,574 Add:

Net income 98,668 93,039 5,407 Total 184,588 178,720 233,981 Deduct Qividends declared 112,500 92,800 148,300 Retained Earnings, Deumber 31 (Note 8) S72,088 $85,920 S85,681 See Notes to Financial Statements.

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SYSTEM ENERGY RESOURCES, INC.

SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON 1996 1995 1994 1993 1992 (In Thousands)

Operating revenues $ 623,620 S 605,639 $ 474,963 S 650,768 S 723,410 Net income $ 98,668 S 93,039 S 5,407 $ 93,927 S 130,141 Total assets S3,461,293 $3,431,012 $3,613,359 $3,891,066 S3,672,441 Long-term obligations (1) $1,474,427 $1,264,024 $1,456,993 $1,536,593 S1,768,299 Electric energy sales (Millions of kWh) 8,302 7,212 8,653 7,113 7,354 (1) Includes long-term debt (excluding current maturities) and noncurrent capital lease obligations.

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ENTERGY CORPORATION AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS NOTE 1.

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)

The accompanying comsolidated financial statements include the accounts of Entergy Corporation and its direct subsidiaries: Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, System Energy, Entergy Services, Entergy Operations, Entergy Power, Entergy Enterprises, Entergy Power Operations Corporation, Entergy SA, Entergy Power Marketing Corporation, Entergy Power Development Corporation, Entergy Technology Holding Company, Entergy Power Edesur Holding LTD, Entergy Transener S.A.,

and Entergy Power Developmont International Corporation. A number of these subsidiaries have additional subsidiaries. CitiPower is a subsidiary of Entergy Power Development International Corporation.

AU significant intercompany transactions have been eliminated. Entergy Corporation's utility subsidiaries maintain accounts in accordance with FERC and other regulatory guidelines. Certain previously reported amounts have been reclassified to conform to current classifications with no effect on net income or shareholders' equity.

Use of Estimates in the Preparation of Financial Statements The preparation of Entergy Corporation and its subsidiaries' financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of December 31, 1996 and 1995, and the reported amounts of revenues and expenses during fiscal years 1996, 1995, and 1994.

Adjustments to the reported amounts of assets and liabilities may be necessary in the future to the extent that future estimates or actual results are different from the estimates used in 1996 financial statements.

Revenues and Fuel Costs Entergy Arkansas, Entergy Louisiana, and Entergy Mississippi generate, transmit, and distribute electricity (primarily to retail customers) in the states of Arkansas, Louisiana, and Mississippi, respectively. Entergy Gulf States generates, transmits, and distributes electricity primarily to retail customers in the States of Texas and Louisiana; distributes gas at retail in the City of Baton Rouge, Louisiana, and vicinity; and also sells steam to a large refinery complex in Baton Rouge. Entergy New Orleans sells both electricity and gas to retail customers in the City of New Orleans (except for Algiers, where Entergy Louisiana is the electricity supplier).

System Energy's operating revenues recover operating expenses, depreciation, and capital costs attributable to Grand Gulf I fiom Entergy Arkansas, Entergy Louisiana, Entergy Mississippi and Entergy New Orleans. Capital costs are computed by allowing a return on System Energy's common equity finds allocable to its net investment in Grand Gulf 1, plus System Energy's effective interest cost for its debt allocable to its investment in Grand Gulf 1.

See Note 2 for a discussion of System Energy's proposed rate increase.

A portion of Entergy Arkansas' and Entergy Louisiana's purchase of power from Grand Gulf has not been included in the determination of the cost of service to retail customers by the APSC and LPSC, respectively, as described in Note 2.

The domestic utility companies accrue estimated revenues for energy delivered since the latest billings.

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The domestic utility companies?- rate schedules"(exept Entergy Gulf States' Texas retail rate schedules) include fuel adjustment clauses ,that allow either current recovery,,or. deferrals of fuel costs until such costs are reflected in the related revenues"" Entergy Gulf States' Texas retil' rate schedules include a fixed fuel factor approved by the PUCT, which remains in effect until changed as part of a general rate case, fuel reconciliation, or fixed fuel factor filing.

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Utility Plant Utility plant is stated at original cost. The-original cost of utility plant retired or removed, plus the applicable removal costs,' less salvage, is charged to accumulated depreciation. Maintenance, repairs, and minor replacement costs are charged to operating expenses. Substantially all of the utility plant is subject to liens of the subsidiaries' mortgage bond indentures.

Utility plant includes the portions of Grand Gulf 1 and Waterford 3 that were sold and currently are leased back. For financial reporting purposes, these sale and leaseback transactions are reflected as financing transactions.

Net electric utility plant in service, by company and functional category, as of December 31, 1996 (excluding owned and leased nuclear fuel, the accumulated provision for decommissioning, and the plant acquisition adjustment related to the Merger), is shown below:

Production Nuclear Other Transmission Distribution . Other Total (In Millions)

Entergy Arkansas S 987 S 390 S 454 $ 909 S 121 S 2,861 Entergy Gulf States - 2,357 678 449 764

• 224 4,472 Entergy Louisiana 2,048 239 331 717 ' 62 3,397 Entergy Mississippi 221 289 427 61 998 Entergy New Orleans 17 18 '161 18 ' 214 System Energy 2,438 16 ' 14 2,468 Entergy 7,830 1,632 1,703 3,440 ' 611 15,216 Depreciation is computed on the straight-line basis at rates based on the estimated service lives and costs of removal of the various classes of property. Depreciation rates on average depreciable property are shown below:

Entergy Entergy Entergy

• Enterg .. Entergy System EntereRy Arkansas Gulf States Louisiana MississiDi New Orleans Energy

. I 1996 3.0% 3.2% 2.7% 3.0% 2.4% 3.1% 3.3%

1995 . 2.9% 3.3% -2.7% . 3.0% 2.4% 3.1% 2.9%

,: 1994 .3.0% 3.4% 2.7% 3.0% 2.4% 3.1% . 3.0%

AFUDC represents the approximate net composite interest cost of borrowed funds and a reasonable return on the equity funds used for construction. Although AFUDC increases both utility plant and earnings, it is only realized in cash through depreciation provisions included in rates.

Jointly-Owned Generatine Stations Certain Entergy Corporation subsidiaries own undivided interests in several jointly-owned electric generating facilities and record the investments and expenses associated with these generating stations to the extent of their

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I reSective ownership interests. As of December 31, 1996, the subsidiaries' investment and accumulated depreciation in each of these generating stations were as follows:

Total Megawatt Accumulated Generatine Stations Fuel Twie Capability Ownershfi Investment Depreciation (In Tbousands)

Entergy Arkansas Independence Unit I Coal 836 31.50% S 117,515 S 43,646 Common Facilities Coal 15.75% 29,568 9,921 White Bluff Units 1and 2 Coal 1,660 57.00% 396,403 166,809 Entergy Gulf States River Bend Unit Nuclear 936 70.00e 3,103,974 746,440 Roy S. Nelson Unit 6 Coal 550 70.00% 400,221 166,820

.Big Cajun 2 Unit 3 Coal 540 42.00% 222,957 86,699 Entergy Mississippi -

Independence Units and 2 Coal 1,678 25.00%9 224,814 79,934 System Energy -

Grand Gulf Unit I Nuclear 1,179 90.00V(l) 3,429,562 974,472 Entergy Power -

Independence Unit 2 Coal 842 21.50%/6 121.666 40,585 (1) Includes an 11.5% leasehold interest - See Note 10 Income Taxes Entergy Corporation and its subsidiaries file a consolidated federal income tax return. Income taxes are allocated to the subsidiaries in proportion to their contribution to consolidated taxable income. SEC regulations require that no Entergy Corporation subsidiary pay more taxes than it would have paid if a separate income tax return had been filed. In accordance with SFAS 109, "Accounting for Income Taxes", deferred income taxes are recorded for all temporary differences between the book and tax basis of assets and liabilities, and for certain credits available for carryforward.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Investment tax credits are deferred and amortized based upon the average useful life of the related property in accordance with rate treatment.

Acquisition Adiustment Entergy Corporation, upon completion of the Merger in December 1993, recorded an acquisition adjustment in utility plant in the amount of $380 million, representing the excess of the purchase price over the historical cost of the Entergy Gulf States net assets acquired. During 1994, Entergy recorded an additional $124 million of acquisition adjustment related to the resolution of certain preacquisition contingencies and appropriate allocation of purchase price.

The acquisition adjustment is being amortized on a straight-line basis over a 31-year period beginning January 1, 1994, which approximates the remaining average book life of the plant acquired as a result of the Merger.

As of December 31, 1996, the unamortized balance of the acquisition adjustment was $455 million.

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Entergy's future net cash flows are expected to be sufficient to recover the amortization of both the Merger acquisition adjustment and the cost of the CitiPower license discussed in Note 13.

Reacquired Debt The premiums and costs associated with reacquired debt are being amortized over the life of the related new issuances, in accordance with ratemaking treatment.

Cash and Cash Equivalents Entergy considers all unrestricted highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.

Stock ODtions - SFAS 123 The FASB issued SFAS 123, "Accounting for Stock-Based Compensation," in October 1995, to be effective for 1996 financial statements. The provisions of this statement require either (a) adoption for financial reporting purposes; or (b) disclosure of the impact the provisions would have had on financial statenats had they been adopted. Entergy has elected the disclosure option. See Note 5 for the disclosures required by SFAS 123.

Continued Application of SFAS 71 The domestic utility companies and System Energy currently account for the effects of regulation pursuant to SFAS 71, "Accounting for the Effects of Certain Types of Regulation." This statement applies to the financial statements of a rate-regulated enterprise that meets three criteria. The enterprise must have rates that (i) are approved by the regulator, (ii) are cost-based; and (iii) can be charged to and collected from customers. These criteria may also be applied to separable portions of a utility's business, such as the generation or transnission functions, or to specific classes of customers. If an enterprise meets these criteria, it may capitalize costs that would otherwise be charged to expense if the rate actions of its regulator make it probable that those costs will be recovered in future revenue. The amount capitalized is a "regulatory asset." SFAS 71 requires that rate-regulated enterprises assess the probability of recovering their regulatory assets at each balance sheet date. When an enterprise concludes tat recovery of a regulatory asset is no longer probable, the regulatory asset must be removed from the entity's balance sheet.

SFAS 101, "Accounting for the Discontinuation of Application of FASB Statement No. 71", specifies how an enterprise that ceases to meet the criteria for application of SFAS 71 for all or part of its operations should report that event in its financial statements. In general, SFAS 101 requires that the enterprise report the discontinuation of SFAS.71 by eliminain from its balance sheet all regulatory assets and liabilities related to the applicable segment.

Additionally, if it is determined that a regulated enterprise is no longer recovering all of its costs and therefore no longer qualifies for SFAS 71 accounting, it is possible that a SFAS 121 impairment (see further discussion below) may exist which could require further write-offs of plant assets.

As of December 31, 1996, the majority of the domestic utility companies' and System Energy's operations continue to meet each of the criteria required for the use of SFAS 71 and the companies have recorded significant regulatory assets.

As descnied in Note 2, during 1996, FERC issued Orders No. 888 and 889 which require utilities to provide open access to their transmission system to promote a more competitive market for wholesale power sales. As also described in Note 2, Entergy Arkansas, Entergy Gulf States, and Entergy Mississippi have filed transition to competition proposals with their regulators which provide, among other things, for accelerated recovery of certain capitalized costs to provide for an orderly transition to a competitive retail power market. In response to these 127 -

I filings, certain regulatory commissions have begun general proceedings to consider retail competition in their jurisdictions.

As the plans have only recently been filed with the regulators, and those regulators have generally deferred action on the plans in lieu of their general proceedings on competition, Entergy cannot, at this time, predict the ultimate outcome of these proceedings. Accordingly, the domestic utility companies and System Energy anticipate that they will continue to meet the criteria for the application of SFAS 71 for the foreseeable future.

Deregulated Operations Entergy Gulf States discontinued regulatory accounting principles for its wholesale jurisdiction and its steam department during 1989 and for the Louisiana retail deregulated portion of River Bend in 1991. The results of these deregulated operations (before interest charges) for the years ended December 31, 1996, 1995, and 1994 are as follows:

1996 1995 1994 (InThousands)

Operating Revenues $174,751 $141,171 $138,822 Operating Expenses:

Fuel, operating, and maintenance 119,784 115,799 116,386 Depreciation 31,455 31,129 27,890 Total Operating Expenses 151,239 146,928 144,276 Income taxes 9,598 (6,979) (249)

Net Income (Loss) From Deregulated Utility Operations $13,914 $1,222 ($5,205)

SFAS 121 In March 1995, the FASB issued SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of' (SFAS 121), which became effective January 1, 1996. This statement describes circumstances that may result in assets (including goodwill such as the Merger acquisition adjustment, discussed above) being impaired. The statement also provides criteria for recognition and measurement of asset impairment Note 2 describes regulatory assets of $169 million (net of tax) related to Texas retail deferred River Bend operating and carrying costs which were written off upon the adoption of SFAS 121 in the first quarter of 1996.

Assets which are regulated under traditional cost-of-service ratemaldng, and thereby subject to SFAS 71 accounting, are generally not subject to impairment pursuant to SFAS 121, as this form of regulation assures that all allowed costs are subject to recovery. However, certain deregulated assets and other operations of the domestic utility companies totaling approrimately S1.6 billion (pre-tax) could be affected by SFAS 121 in the future. Those assets include Entergy Arkansas' and Entergy Louisiana's retained shares of Grand Gulf 1, Entergy Gulf States' Louisiana deregulated asset plan, the Texas jurisdiction abeyed portion of the River Bend plant and wholesale jurisdiction and steam department operations. Additionally, all of Etergy's investment in other nonregulated businesses is subject to possible impairment pursuant to SFAS 121.

Entergy periodically reviews these assets and operations whenever events or changes in circumstances indicate that recoverability ofthese assets is uncertain. Generally, the detmination of recoverability is based on the net cash flows expected to result from such operations and assets. Projected net cash flows depeid o the future 6perating costs associated with the assets, the efficiency and availability of the assets and generating units, and the future market and price for energy over the remaining life of the assets. Based on current estimates of future cash

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it i flows as prescribed under SFAS 121, management anticipates that future revenues from such assets and operations of Entergy will fully recover all related costs.

Chanee in Accounting for Nuclear Refueling Outaae Costs (Entergy Corporation, Entergy Arkansas, and System Energy)

In December 1995, at the recommendation of FERC, Entergy Arkansas changed its method of accounting for nuclear refueling outage costs. The change, effective January 1, 1995, results in Entergy Arkansas deferring incremental maintenance costs incurred during an outage and amortizing those costs over the operating period immediately following the nuclear refueling outage, which is the period that the charges are billed to customers.

Previously, estimated costs of refueling outages were accrued over the period (generally 18 months) preceding each scheduled outage. The effect of the change for the year ended December.31, 1995, was to decrease net income by

$5.1 million (net of income taxes of S3.3 million) or S.02 per share. The cumulative effect of the change was to increase net income S35.4 million (net of income taxes of S22.9 million) or S.15 per share. The pro forma effects of the change in accounting for nuclear refueling outages in 1994, assuming the new method was applied retroactively to that year, would have been to decrease net income $3.2 million (net of income taxes of $2.1 million), or S.01 per share.

System Energy filed a rate increase request with FERC in May 1995 (see Note 2), which, among other things, proposed a change in the accounting recognition of nuclear refueling outage costs from that of expensing those costs as incurred to the deferral and amortization method described above with respect to Entergy Arkansas.

As described in Note 2, the FERC ALJ issued an initial decision in this proceeding in July 1996, agreeing to the change in recognition of outage costs proposed by System Energy. Accordingly, System Energy deferred the refueling outage costs incurred in the fourth quarter of 1996, As of December 31, 1996, System Energy's current assets included $24.0 million in deferred nuclear refueling outage costs which will be amortized over the next fuel cycle (approximately 18 months). Amortization of these costs in the fourth quarter of 1996 amounted to $1.2 million.

This change will have no impact on the net income of either Entergy or System Energy since System Energy will recover the refueling outage costs from Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans, and these companies will, in turn, recover these costs from their ratepayers.

Financial Instruments Derivative instruments have been used by Entergy on a limited basis. Entergy has a policy that financial derivatives are to be used only to mitigate business risks and not for speculative purposes. See Notes 7 and 9 for additional information concerning Entergy's derivative instruments outstanding as of December 31, 1996.

Fair Value Disclosures The estimated fair value of financial instruments was determined using bid prices reported by dealer markets and by nationally recognized investment banking firms. Considerable judgment is required in developing the estimates of fair value. Therefore, estimates are not necessarily indicative of the amounts that Entergy could realize in a current market exchange. In addition, gains or losses realized on financial instruments may be reflected in future rates and not accrue to the benefit of stockholders.

Entergy considers the carrying amounts of financial instruments classified as current assets and liabilities to be a reasonable estimate of their fair value because of the short maturity of these instruments. In addition, Entergy does not expect that performance of its obligations will be required in connection with certain off-balance sheet commitments and guarantees considered financial instruments. Due to this factor, and because of the related-party nature of these commitments and guarantees, determination of fair value is not considered practicable. See Notes 5, 7, and 9 for additional disclosure concerning fair value methodologies.

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NOTE 2. RATE AND REGULATORY MATTERS Merzer-Related Rate Agreements (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans) in November 1993, Entergy Corporation, Entergy Arkansas, Entergy Mississippi, and Entergy New Orleans entered into separate settlement agreements whereby the APSC, MPSC, and Council agreed to withdraw from the SEC proceeding related to the Merger. n return, Entergy Arkansas, Entergy Mississippi, and Entergy New Orleans agreed, among other things, that their retail ratepayers would be protected from (i) increases in the cost of capital resulting from risks associated with the Merger, () recovery of any portion of the acquisition premium or transactional costs associated with te Merger, (iii) certain direct allocations of costs associated with Entergy Gulf States' River Bend nuclear unit, and (iv) any losses of Entergy Gulf States resulting from resolution of litigation in connection with its ownership of River Bend. Entergy Arkansas and Entergy Mississippi agreed not to request any general retail rate increase that would take effeit before November 1998, except for, among other things, increases associated with the recovery of certain Grand Gulf 1-related costs, recovery of certain taxes, and catastrophic events, and in the case of Entergy Arkansas, excess capacity costs and costs related to the adoption of SFAS 106 that were previously deferred. Entergy Mississippi agreed that retail base rates under the formula rate plan would not be increased above November 1, 1993 levels for a period of five years beginning November 9, 1993.

In 1993, the LPSC and the PUCT approved separate regulatory proposals for Entergy Gulf States that include the following elements: (i) a five-year Rate Cap on Entergy Gulf States' retail electric base rates in the respective states, except for foe majeure (defined to include, among other things, war, natural catastrophes, and high inflation); (ii) a provision for passing through to retail customers the jurisdictional portion of the fuel savings created by the Merger, and (iii) a mechanism for tracking nonfuel operation and maintenance savings created by the Merger. The LPSC regulatory plan provides that such nonfuiel savings will be shared 60% by shareholders and 40%

by ratepayers during the eight years following the Merger. The LPSC plan requires annual regulatory filings by the end of each May through the year 2001. e PUCT regulatory plan provides that such savings will be shared equally by shareholders and ratepayers, except that the shareholders' portion will be reduced by $2.6 million per year on a total company basis in years four through eight. The PUCT plan also requires a series of regulatory filings to ensure that the ratepayers' shan: of such savings be reflected in rates on a timely basis, the first of which was made in November 1996, as discussed below in Filings with the PUCT and Texas Cities. Subsequent filings are required in November 1998 and in November 2001. In addition, the plan requires Entergy Corporation to hold Entergy Gulf States' Texas retail customers armless from the effects of the removal by FERC of a 40% cap on the amount of fuel savings Entergy Gulf States may be required to transfer to other domestic utility companies under the FERC tracking mechanism (see below). On January 14, 1994, Entergy Corporation filed a petition for review before the D.C.

Circuit seeking review of FERC's deletion of the 40% cap provision in the fuel cost protection mechanism. The matter is currently being held in abeyance.

FERC approved Enteniy Gulf States' inclusion in the System Agreement. Commitments were adopted to provide reasonable assurance that the ratepayers of Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans will not be allocated higher costs.

River Bend (Entergy Corporation and Entergy Gulf States)

In 1988, the PUCT granted Entergy Gulf States a permanent increase in annual revenues of $59.9 million resulting from the inclusion in rate base of approximately S1.6 billion of company-wide River Bend plant investment and approximately 182 million of related Texas retail jurisdiction deferred River Bend costs (Allowed Deferrals).

At the same time, the PUCT disallowed as imprudent $63.5 million of company-wide River Bend plant costs and placed in abeyance, with no finding as to prudence, approximately Sl.4billion of company-wide River Bend plant

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investment and approximately S157 million of Texas retail jurisdiction deferred River Bend operating and carrying costs (Abeyed Deferrals).

The PUCT's order has been, the subject of several appellate proceedings, culminating in an appeal to the Texas Supreme Court (Supreme Court). On January 31, 1997, the,Supreme Court issued an opinion reversing the PUCT's order and remanding the case to the PUCT for further proceedings. The Supreme Court found that the PUCT had prejudiced Gulf States'-rights by attempting to defer a rulingwon the abeyed plant costs and incorrectly determined the amount of federal income tax expense that should have been allowed in rates. The Supreme Court ruled that the PUCT could choose either to conduct hearings and take further evidence or to decide the case on the original evidence. On February 18, 1997, the Texas Office of Public Utility Counsel filed a motion for rehearing of the Supreme Court's decision, arguing that the Supreme Court's reanad should have instructed the PUCT as to how the case should be dealt with on remand. Entergy Gulf States filed a brief in opposition to the motion for rehearing on February 25, 1997. Entergy Gulf States believes that it is unlikely that the Supreme Court will grant.the motion for rehearing. No procedural schedule has yet been issued by the PUCT concerning the case on remand.

As of December 31, 1996, the River Bend plant costs disallowed for retail ratemaling purposes in Texas and the River Bend plant costs held in abeyance totaled (net of taxes and depreciation) approximately $12 million and S266 million, respectively. The Allowed Deferrals were approximately $77 million, net of taxes and amortization, as of December 31, 1996. Entergy Gulf States estimates it has collected approximately $204 million of revenues as of December 31, 1996, as a result of the originally ordered rate treatment by the PUCT of these deferred costs. If recovery of the Allowed Deferrals is not upheld, future refunds could be required and future revenues based upon the Allowed Deferrals could also be lost. However, management believes that it is probable that the Allowed Deferrals will continue to be recovered in rates.

As a result of the application of SFAS 121, Entergy Gulf States wrote off Abeyed Deferrals of $169 million, net of tax, effective January 1, 1996. In light of the continuing proceedings before the PUCT, and the courts (including the January 31, 1997 decision of the Texas Supreme Court), Entergy Gulf States has made no write-offs or reserves for the River.Bend plant-related costs. At this time, management and legal counsel are unable to predict the amount of the abeyed and previously disallowed River Bend plant costs that may ultimately be allowed in Entergy Gulf States' Texas retail rates.

In prior proceedings involving other utilities, the PUCT has held thatthe original cost of nuclear power plants will be recoverable in electric rates to the extent those costs were prudently incurred. Entergy Gulf States has previously filed with the PUCT a cost reconciliation study prepared by Sandlin Associates, management consultants with expertise in 'the cost analysis of nuclear power plants, which supports the reasonableness of the River Bend costs held in abeyance by the PUCT. This reconciliation study determined that approximately 82% of the River Bend cost increase above the amount included by the PUCT in ate base was a result'of changes in federal nuclear safety requirements, and provided other support for the' remainder of the abeyed amounts. In' particular, there have been four other rate proceedings in Texas involving nuclear power plants. Disallowed investment in the plants ranged from 0% to 15%. Each case was unique, and the disallowances in each were made for different reasons; Appeals of two of these PUCT decisions are currently pending. Based upon the PUCT's prior decisions, management believes that River Bend construction costs' were prudently incurred and that it is reasonably possible that it will recover through rates, or.6therwise through means such'as a deregulated asset plan, all or substantially all of the abeyed River Bend plant costs. 'In the event of an adverse ruling in this case, a net of tax write-off, as of December 31, 1996, of up to S278 million could be required.-'

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I Retail Rate Proceedings Filings with the APSC (Entergy Corporation and Entergy Arkansas)

In October 1996, Entergy Arkansas filed a proposal with the APSC designed to achieve an orderly transition to retail electric competition in Arkansas. The proposal includes a rate decrease totaling S123 million over a three year period beginning in mid-1997 and provides for a universal service charge for customers that remain connected to Entergy Arkansas' electric facilities but choose to purchase their electricity from another source. Although these proposals allow for the complete recovery of the remaining plant investment associated with ANO 1, ANO 2, and Entergy Arkansas' portion of Grand Gulf 1 (excluding the portion retained - see below) as of Deember 31, 1996, over a seven year period, the NRC operating licenses for these plants permit continued operation until the years 2014, 2018, and 2022, rmsptively.

Filings with the PUCT and Texas Cities (Entergy Corporation and Entergy Gulf States)

Tn March 1994, the Texas Office of Public Utility Counsel and certain cities served by Entergy Gulf States instituted an investigation of the reasonableness of Entergy Gulf States' rates.' On March 20, 1995, the PUCT ordered a retroactive rate reduction, which was amended, reducing the S52.9 million annual base rate reduction to an annual level of $36.5 million. The PUCT's action was based, in part, upon a Texas Supreme Court decision not to require a utility to use the prospective tax benefits generated by disallowed expenses to reduce rates. The May 26, 1995 amended order no longer required Entergy Gulf States to pass such prospective tax benefits on to its customers.

The rate refid ordered by ihe PUCT in its March 20, 1995 order; retroactive to March 31, 1994, was approximately 61.8 million (including interest) and was refunded to customers in September, October, and November 1995. Entergy Gulf States and other parties have appealed the PUCT order, but no assurance can be given as to the timing or outcome of the appeal.

In Dedemberi 1995,' Entergy Gulf States filed a petition with the PUCT for reconciliation of fuel and purchased power expenses for ithe period January 1, 1994, through June 30, 1995. Entergy Gulf States believes that there was an under-recovered fuel balance, including interest, of $22.4 million as of June 1995. Hearings were concluded in October 1996, and on December 18, 1996, the ALJ issued his recommendation which included recovery of approximately S20 million of the under-recovered fuel balance. A final decision by the PUCT is expected in March 1997.

In accordance with the Merger-agreement,.Entergy Gulf States filed arate proceeding with the PUCT in November' 1996. In April 1996, certain cities served by Entergy Gulf States (Cities) instituted investigations of the reasonableness of Entergy Gulf States' rates.- In May' 1996, the Cities agreed to forego their investigation based on th6 assurance that any rate decrease ordered in the November 1996 filing will be retroactive to June 1, 1996, and will accrue interest until refunded. The agreenent further provides that no base rate increase will. be retroactive.

Included in the November 1996 filing was a proposal to achieve an orderly transition to retail electric competition in Texas, similar to the filing described below that Entergy Gulf States made with the LPSC. This filing with the PUCT will be litigated in four phases as follows: (i) fuel factor/fuel reconciliation phase, of which Entergy Gulf States believes there was an under-recovered fuel balance of $41.4 million, including interest, for the period July 1,

.1995 through June 30, 1996; (ii) revenue requirement phase; (iii) cost allocation/rate design phase; and (iv) competitive issues phase. Hearings on these matters are scheduled to begin in April 1997. No assurance can be given as to the outcome of these hearings.

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Filings with the LPSC (Entergy Corporation and Entergy Gulf States)

Annual Earnings Reviews In May 1994, Entergy Gulf States filed a required earnings analysis with the LPSC for the test year preceding the Merger (1993). On December 14, 1994, the LPSC ordered a $12.7 million annual rate reduction for Entergy Gulf States, effective January 1995. Entergy Gulf States received a preliminary injunction from the District Court regarding $8.3 million of the reduction relating to the earnings effect of a 1994 change in accounting for unbilled revenues. On January 1, 1995, Entergy Gulf States reduced rates by S4.4 million. Entergy Gulf States filed an appeal of the entire $12.7 million rate reduction with the District Court, which denied the appeal in July. 1995.

Entergy Gulf States appealed the order to the Louisiana Supreme Court. The preliminary injunction relating to $8.3 million of the reduction remained in effect during the appeal. On July 2, 1996, the Louisiana Supreme Court ruled on the appeal. The Court found that the LPSC ruled incorrectly on the treatment of the initial balance of unbilled revenues and the revenue annualization adjustment. As a result, Entergy Gulf States will not be required to refund the $8.3 million. The case was remanded to the LPSC for further proceedings related to the revenue annualization adjustment, but as a result of a subsequent rate adjustment pursuant to the third required post-Merger earnings analysis discussed below, the remand was moot.

On May 31, 1995, Entergy Gulf States filed its second required post-Merger earnings analysis with the LPSC. Hearings on this review were held in December 1995. On October 4, 1996, the LPSC issued an order requiring a $33.3 million annual base rate reduction and a $9.6 million refund. One component of the rate reduction removes from base rates approximately $13.4 million annually of costs that will be recovered in the future through the fuel adjustment clause. On October 23, 1996, Entergy Gulf States appealed and obtained an injunction to stay this order, except insofar as the order requiresthe $13.4 million reduction, wich Entergy Gulf States implemented in November 1996. In addition, the LPSC order provides for the recovery of S6.8 million annually related to certain gas transportation and storage facilities costs. Pursuant to the October 1996 LPSC Settlement, this amount was brought fo'rward to $8.1 million (see LPSC Fuel Cost Review" below). This amount will be applied as an offset against whatever refund,' if any, may be required by a final judgment in Entergy Gulf States' appeal of the second post-Merger earnings review order.

On May 31, 1996, Entergy Gulf States filed its third required post-Merger earnings analysis with the LPSC.

Based on this earnings filing, on June 1, 1996, Entergy Gulf States implemented a $5.3 million annual rate reduction.

Hearings on this filing concluded in February 1997. An additional rate reduction may be required upon the issuance by the LPSC of a final rate order.

LPSC Fuel Cost Review In November 1993, the LPSC ordered a review of Entergy Gulf States' fuel costs for the period October 1988 through September 1991 (Phase 1) based on the number of outages at River Bend and the findings in the June 1993 PUCT fuel reconciliation case. In July 1994, the LPSC ruled in the Phase 1 fuel review case and ordered Entergy Gulf States to refund approximately $27.5 million to its customers. Under the order, a refund of

$13.1 million was made through a billing credit on August 1994 bills. In August 1994, Entergy Gulf States appealed the remaining $14.4 million of the LPSC-ordei'ed refund to the District Court and obtained an injunction with respect to that portion of the refund. On April 15, 1996, the appropriate state District Court affirmed the LPSC decision.

Entergy Gulf States has appealed this decision to the Louisiana Supreme Court. In October 1996, Entergy Gulf States reached a settlement with the LPSC 'on one of the issues presented in this appeal, resulting in a refund to ratepayers 'of $5.7 million plus interest. See "October 1996 LPSC Settlement" below. In February 1997, the Louisiana Supreme Court rendered a decision on the remaining $8.7 million, affirming the LPSC's order insofar as it requires a refund of $8.2 million plus interest, which Entergy Gulf States will record in 1997, and reversing the LPSC's order insofar as it would have required an additional $0.5 million refund.

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In September 1996, the LPSC completed the second phase of its review of Entergy Gulf States' fuel costs, which covered the period October 1991 through December 1994 (Phase II). On October 7, 1996, the LPSC issued an order requiring a $34.2 million refund. The ordered refund includes a disallowance of $14.3 million of capital costs (including interest) related to certain gas transportation and storage facilities, which were recovered through the fuel clause, and which have been refunded pursuant to the October 1996 LPSC Settlement. Entergy Gulf States will be permitted to recover these costs in the future through base rates. On October 23, 1996, Entergy Gulf States appealed and received an injunction to stay this order, except insofar as the order requires the S14.3 million refund.

See "October 1996 LPSC Settlement" below.

October 1996 LPSC Settlement In October 1996, Entergy Gulf States and the LPSC reached an agreement whereby Entergy Gulf States agreed to (i) refund certain capital costs related to gas transportation and storage facilities that were at issue in the Phase I and Phase-II fuel cost reviews and (ii) refund similar costs recovered subsequent to the Phase II fuel cost review. This resulted in a total rcfund to customers of approximately $32.1 million, including interest. In the future, Entergy Gulf States will be prmitted to recover through base rates the capital costs related to such gas transportation and storage facilities. As a part of the settlement, which covered post-Phase II costs of such facilities in addition to the costs addressed by the LPSC's order for the second post-Merger earnings analysis, Entergy Gulf States will be permitted to recover through base rates S1.3 million annually in addition to the S6.8 million annual recovery provided in the order, for a total annual base rate recovery of $8.1 million. The settlement provides that this amount will be applied as an offiet against whatever refund, if any, may be required by a final judgment in Entergy Gulf States' appeal of the second post-Merger earnings review order.

(Entergy Corporation, Entergy Gulf States, and Entergy Louisiana)

In October 1996, EnterIy Gulf States and Entergy Louisiana filed proposals with the LPSC designed to achieve an orderly transition to retail electric competition in Louisiana, while protecting certain classes of ratepayers from possibly unairly bearing the burden of cost shifting. The proposals do not increase rates for any customer class. However, these proposal do provide for a universal service charge for customers that remain connected to Entergy Gulf States' or Entergy Louisiana's electric facilities but choose to purchase their electricity frorn another source. In addition the proposals include a base rate freeze, which would be put into effect for seven years in the Louisiana areas serviced by Entergy Gulf States and Entergy Louisiana. Although these proposals allow for the complete recovery of the remaining plant investment associated with River Bend, Waterford 3, and Entergy Louisiana's portion of Grand Gulf 1 (excluding the portion retained - see below) as of December 31, 1996, over a seven year period, the NRC operating licenses for these plants permit continued operation until the years 2025, 2024, and 2022, respectively.

In February 1997, the LPSC identified certain issues embodied in the Entergy Gulf States and Entergy Louisiana proposals that will be included in those companies' annual rate filings expected to be made on May 31, 1997 and April 15, 1997, respectively, and other issues that now will be included in an ongoing generic regulatory proceeding examining electric industry restructuring.

(Entergy Corporation and Entergy Louisiana)

On June 2, 1995, as a result of a review of the earnings of Entergy Louisiana, a $49.4 million reduction in base rates was ordered. In the same order, the LPSC adopted for Entergy Louisiana a performance-based formula rate plai. The formula rate plm provides a financial incentive to reduce costs while maintaining high levels of customer satisfaction and system reliability. The plan allows Entergy Louisiana the opportunity to earn a higher rate of return if it improves perfonnance over time. Conversely, if performance declines, the rate of return Entergy Louisiana could earn is loweed. On June 9, 1995, Entergy Louisiana appealed the rate reduction and sought injunctive relief from implementation of $14.7 million of the reduction. The $14.7 million portion of the rate

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reduction represents revenue imputed to Entergy Louisiana as a result of the LPSC's conclusion that the rates charged to three industrial customers were unreasonably low. Subsequently, a request for a $14.7 million rate increase was filed by Entergy Louisiana. On July 13, 1995, Entergy Louisiana was granted a preliminary injunction by the District Court enjoining;S1.4.7 million of the rate reduction pending a final decision on appeal. In an order issued on January 31, 1996, the LPSC approved a settlement reducing he S14.7 million portion of the rate reduction to $12.35 rmillion. Refunds issued pursuant to this settlement had the effect of implementing the rate reduction effective April 27, 1995, and were made in the months of January and February 1996. The refunds and related interest resulting from the settlement amounted to 8.9 million. The District Court case discussed above was dismissed as part of the settlement.

On April 15, 1996, Entergy Louisiana made its first annual performance-based formula rate plan filing based on the 1995 test year. On June 19, 1996, the LPSC approved a $12 million annual reduction in base rates effective July 1, 1996. This reduction was based upon the 1995 test year results under the formula rate plan and reflected the expiration of the Waterford 3 phase-in plan discussed below, which was partially offset by the recovery of the property taxes on Waterford 3 and the related def:rral discussed below. Subsequently, additional issues were resolved by means of a settlement conference, increasing the base rate reduction fom S12 million to S16.5 million.

Hearings have been conducted to review Entergy Louisiana's allowed return on equity and to address certain other disputed issues. This may result in an additional rate reduction which would be prospective only. The LPSC's ruling is expected in the second quarter of 1997.

The property tax exemption for Waterford 3 ended in December 1995 and Entergy Louisiana was required to pay $19.3 million in property taxes to St. Charles Parish for the 1996 tax year. In a March 1996 LPSC order, Entergy Louisiana was permitted to defer the rate recovery of these taxes for the period January' 1996 through June 1996. The order allowed for the recovery of the property tax beginning in July 1996, and also for the recovery, from July 1996 through June 1997, of the related deferral. In addition, Entergy Louisiana's phase-in plan for Waterford 3 will expire in June 1997. Entergy Louisiana is recovering deferred costs annually of approximately S28.4 million.

Filings with the MPSC (Entergy Corporation and Entergy Mississippi)

On March 15, 1996, Entergy Mississippi filed its annual earnings review with the MPSC under its formula rate plan for the 1995 test year. On April 18, 1996, the MPSC issued an order approving and adopting a joint stipulation and placing the prospective rate reduction of $5.9 million into effect on May 1, 1996.

Entergy Mississippi has initiated discussions with the MPSC regarding' an orderly transition to a more competitive market for electricity. In August 1996, Entergy Mississippi filed a proposal with the MPSC for a rate rider to assure recovery of all Grand Gulf costs incurred to serve customers. The rider would maintain current rates for electric service' provided by Entergy Mississippi and would 'apply to customers within Entergy Mississippi's service area who obtain electricity in the future from a source other than Entergy Mississippi. Entergy Mississippi designed this rider to assure that commitments made under the current system of regulation are honored and that cost burdens are not unfairly transferred from departing customers to those who remain on the Entergy Mississippi system. On August 22, 1996, the MPSC'reminanded this proposal 'and established a generic docket to consider competition for retail electric service.

Filings with the Council (Entergy Corporation and Entergy New Orleans)

Pursuant to the 1991 NOPSI Settlement, Entergy New Orleans is required to make earnings filings with the Council for the 1995 and 1996 rate years. A review of Entergy New Orleans'. earnings for the test year ending September 30, 1995, required Entergy New Orleans to credit customers $6.2 million over a 12-month period which began in March 1996.

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On October 31, 1996, Entergy New Orleans filed with the Council an analysis of its earnings for the test year ended September 30, 1996. Based upon this earnings review, the Council ordered a refund of S18.4 million which is being credited to customers over a 12 month period which began in February 1997.

On December 19, 1996, the Council ordered an increase in Entergy New Orleans' franchise fee from 2.5% to 5% of gross revenues. The increase in the 1997 franchise fee is estimated to be S12 million. The franchise fee is collected by Entergy New Orleans as a separate line item on customer bills and is not a component of base rates.

In January 1997, Entergy New Orleans unilaterally proposed to the Council to reduce rates by annual amounts of S15 million. This offer was accepted by the Council and, effective February 1, 1997, Entergy New Orleans implemented this base rate reduction.

The Council issued a resolution in February 1997 indicating that it will conduct an investigation of the justness and reasonableness of Entergy New Orleans' allowed rate of return, base rates, and adjustment clauses. The Council contemplates a bifurcated review and has established hearing dates in April 1997 on the issue of rate of return. The Council also directed Entergy New Orleans to make a cost of service and revenue requirement filing on May 1, 1997. A procedural schedule has not been set with respect to these other issues.

Pursuant to a settlement reached in February 1997 with the Council as to Entergy New Orleans' deferred integrated resource planning expenses, the Council has conditionally allowed Entergy New Orleans to begin recovering $5 million, subject to a hearing to determine the prudence of such expenses. Entergy New Orleans has agreed not to seek recovery of the remaining $6.8 million of expenses incurred.

Deregulated Asset Plan (Entergy Corporation and Entergy Gulf States)

A deregulated asset plan representing an unregulated portion (approximately 25%) of River Bend (plant costs, generation, revenues, and expenses) was established pursuant to a January 1992 LPSC order. The plan allows Entergy Gulf States to sell such generation to Louisiana retail customers at 4.6 cents per kWh or off-system at higher prices, with certain provisions for sharing such incremental revenue above 4.6 cents per kWh between ratepayers and shareholders.

River Bend Cost Deferrals (Entergy Corporation and Entergy Gulf States)

Entergy Gulf States deferred approximately $369 million of River Bend operating and purchased power costs, depreciation, and accrued carrying charges, pursuant to a 1986 PUCT accounting order. Approximately $182 million of these costs are being amortized over a 20-year period, and the remaining $187 million was written off in the first quarter of 1996 in accordance with SFAS 121, as discussed above. As of December 31, 1996, the unamortized balance of the remaining costs was $117 million. Entergy Gulf States deferred approximately $400.4 million of similar costs pursuant to a 1986 LPSC accounting order, of which approximately 40 million was unamortized as of December 31, 1996, and is being amortized over a 10-year period ending in February 1998.

In accordance with a phase-in plan approved by the LPSC, Entergy Gulf States deferred $294 million of its River Bend costs related to the period February 1988 through February 1991. Entergy Gulf States has amortized S225 million through December 31, 1996. The remainder of $69 million will be recovered in 1997 and early 1998.

Grand Gulf I and Waterford 3 Deferrals (Entergy Corporation and Entergy Arkansas)

Under the settlement agreement entered into with the APSC in 1985 and amended in 1988, Entergy Arliansas agreed to retain a portion of its Grand Gulf -related costs, recover a portion of such costs currently, and defer a portion of such costs for future recovery. In 1996 and subsequent years, Entergy Arkansas retains 22% of its 36%

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interest in Grand Gulf 1 costs and recovers the remaining 78%. The deferrals ceased in 1990, and Entergy Arkansas is recovcring a portion of the previously dcferred Ecosts each year through 1998. 'As of December 31, 1996, the balance of deferred costs was S228 million. Entergy Arkanss is permitted to recover on a current basis the incremental costs of financing the unrecovered deferrals. In the event Entergy Arkansas is not able to sell its retained share to third parties, it may sell such energy to its retail customers at 'a"price'equal to its avoided energy cost, which is currently less than Entergy Arkansas' cost of energy from its retained share.

(Entergy Corporation and Entery Louisiana)

In a series of LPSC orders, court decisions, and agreements from late 1985 to mid-1988, Entergy Louisiana was granted rate relief with respect to costs associated with Waterford 3 and Entergy Louisiana's share of capacity and energy from Grand Gulf 1, subject to certain terms and conditions. With respect to Waterford 3, Entergy Louisiana was granted an increase aggregating S170.9 million over the period 1985-1988, and agreed to permanently absorb, and not recover from retail ratepayers, $284 million of its investment in the unit and to defer S266 million of its costs related to the years 1985-1988 to be recovered from April 1988 through June 1997.

With respect to Grand Gulf l, in November 1988, Entergy Louisiana agreed to retain and not recover from retail ratepayers, 18% of its 14% share (approximately 2.52%) of the costs of Grand Gulf I capacity and energy.

Entergy Louisiana is allowed to recover through the fuel adjustment clause 4.6 cents per kWh for the energy related to its retained portion of these costs. Alternatively, Entergy Louisiana may sell such energy to nonaffiliated parties at prices above the fuel adjustment clause recovery amount, subject to the LPSC's approval.

(Entergy Corporation and Entergy Mississippi)

Entergy Mississippi entered into a plan with the MPSC that provides, among other things, for the recovery by Entergy Mississippi, in equal annual installments over ten years beginning October 1, 1988, of all Grand Gulf 1-related costs deferred through September 30, 1988, pursuant to a final order by the MPSC. Additionally, the plan provides that Entergy Mississippi defer, in decreasing amounts, a portion of its Grand Gulf 1-related costs over four years beginning October 1, 1988. These deferrals are being recovered by Entergy Mississippi over a six-year period beginning in October 1992 and ending in September 1998. As of December 31, 1996, the uncollected balance of Entergy Mississippi's deferred costs was approximately S247 million. The plan also allows for the current recovery of carrying charges on all deferred amounts.

(Entergy Corporation and Entergy New Orleans)

Under Entergy New Orleans' various rate settlements with the Council in 1986, 1988, and 1991, Entergy New Orleans agreed to absorb and not recover from ratepayers a total of $96.2 million of its Grand Gulf 1 costs.

Entergy New Orleans was permitted to implement annual rate increases in decreasing amounts each year through 1995, and to defer certain costs and related carrying charges for recovery on a schedule extending from 1991 through 2001. As of Deceriber 31, 1996, the uncollected balance of EntergyNew Orleans' deferred costs was $136 million.

February 1994 Ice StonnlRate Rider (Entergy Corporation and Entergy Mississippi)

A February 1994 ice storm'left more than 80,000 Entergy Mississippi customers'witiout electric power across the service area. Damage to transmission'and distribution lines, equipment, poles, and facilities totaled approximately $77.2 zillion, with $64.6 million of these amounts'capitalized as plant-related costs. The remaining balances were recorded as a deferred debit.

-Subsequent to a request by Entergy Mississippi for rate recovery, the MPSC approved a stipulation in September 1994 with respect to the recovery of ice storm costs recorded through April .30,1994. Under the stipulation, Entergy Mississippi implemented an ice storm rate rider, which increased rates approximately S8 million for a period of five years beginning on September 29, 1994. At the end of the five-year period, the revenue

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requirement associated with the undepreciated ice storm capitalized costs will be included in Entergy Mississippi's base rates to the extent that this revenue requirement does not result in Entergy Mississippi's rate of return on rate base being above the benchmark rate of return under Entergy Mississippi's formula rate plan. The MPSC approved a second stipulation in September: 1995 which allows for a S2.5 million rate increase for a period of four years beginning September 28, 1995, to recover costs related to the ice storm that were recorded after April 30, 1994. The stipulation also allows for undepreciated ice storm capital costs recorded after April 30, 1994, to be treated as described above.

Proposed Rate Increase (System Energy)

System Energy filed an application with FERC on May 12, 1995, for a $65.5 million rate increase. The request seeks changes to Systun Energy's rate schedule, including increases in the revenue requirement associated with decommissioning costs, the depreciation rate, and the rate of return on common equity. The request also includes a proposed change in the accounting recognition of nuclear refueling outage costs from that of expensing those costs as incurred to the deferral and amortization method described in Note I with respect to Entergy Arkansas.

On December 12, 1995, System Energy implemented a $65.5 million rate increase, subject to refind. Management has decided to record a reserve for a portion of the rate increase. Hearings on System Energy's request began in January 1996 and were completed in February 1996. On July 11, 1996, the AU issued an initial decision in this proceeding that agreed with oertain of System Energy's proposals, including the change in accounting for nuclear refueling outage costs, while rejecting a proposed increase in return on common equity and recommending a slight decrease. The AU also rejected the proposed change in the decommissioning cost methodology. The decision of the AIJ is preliminary and may be modified in the final decision from FERC which is expected in the first quarter of 1997. Management is unable to predict the final outcome of the rate increase request or the amount of any refunds in excess of reserves that may be required.

(Entergy Mississippi)

Entergy Mississippi's allocation of the proposed System Energy wholesale rate increase is $21.6 million. In July 1995, Entergy Mississippi filed a schedule with the MPSC that will defer the ultimate amount of the. System Energy rate increase. The deferral plan, which was approved by the MPSC, began in December-1995, the effective date of the System Energy rate increase, and will end after the issuance of a final order by FERC. The deferred rate increase is to be amortized over 48 months beginning October 1998.

(Entergy New Orleans)

Entergy New Orleans' allocation of the proposed System Energy wholesale rate increase is S9.6 ziillion. In February 1996, Entergy New Orleans filed a plan with the City to defer 50% of the amount of the System Energy rate increase. The deferral began in February 1996 and will end after the issuance of a final order by FERC.

FERC Settlement (Entergy Corporation and System Energy)

In November 1994, FERC approved an agreement settling a long-standing dispute involving income tax allocation procedures of System Energy. In accordance with the agreement, System Energy refinded approximately

$61.7 million to Entergy. Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans, each of which in turn has made refiuxds or credits to its customers (except for those portions attributable to Entergy Arkansas' and Entergy Louisiana's retained share of Grand Gulf 1 costs). Additionally, System Energy will refund a total of approximately $62 million, plus interest, to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi and Entergy New Orleans over the period through June 2004. The settlement also required the write-off of certain related unamortized balances of defirred investment tax credits by Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans. The settlement reduced Entergy Corporation's consolidated net income for

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the year ended December 31, 1994, by approximately $68.2 million, offset by the write-off of the unamortized balances'of related deferred investment tax credits of approximately S69.4 million (S2.9 mllion for Entergy Corporation; $27.3 million for Entergy Arkansas; $31.5 million for Entergy Louisiana; 6'million for Entergy Mississippi; and S1.7 million for Entergy New Orleans). System Energy also reclassified from utility plant to other deferred debits approximately $81' million of other Grand Gulf 1 co ' Although such costs are excluded from rate base, System Energy is recovering them over a 10-year period. Interest on the $62 million refund and the loss of the return on the $81 million of other Grand Gulf 1 costs will reduce-Entergy's and System Energy's net income by approximately S10 million annually over the next 8 years.

NOTE 3. INCOME TAXES Entergy Corporation's and its subsidiaries' income tax expenses for 1996, 1995, and 1994 consist of the following (in thousands):

Enty Entergy Entr Entergy Entgy Sytem V"tPVV A.rant'" r ur5qtkt..@ I WM*4*rrWt V1w t t Fn Federal S 27Z,036 S 108,583 S 510 S 78,629 S 64,358 S 23,860 S 19,637 State 72,204 21,888 201- 21,122 9,63S 4,631 13,02 Total 344,240 130,471 711 99,751 73,993 28,491 33,145 DcTred - net 100,572 (41,261) 1I715 24,656 (29,390) (11,587) 52Z447 lnvestent taxcr t dustments - Dt (23,653) (4,766) (S,335) (5,847) (3,497) (687) (3,471)

Recorded income tax exnse S 421,159 S 4,444 S 102,091 S 118,560 S 41,106 S 16,217 S 2S,21 Entergy Entrgy Entergy Entegy Entegy System Entew Arkansas GulfStates Ixisiana ssissipp Nvew leans Energv Current Federal S 306,910 S 87,937 S 13 S 93,670 S 62,436 S 19,071 S 108,920 Ste 60,278 18,027 20,994 9,215 3.394 11,910 Tota1 367,18 105,964 13 114,664 71,6S1 - 22,465 120,830 De fered -t 13,333 (5,363) 67,703 8,148 -(35,224) (1,364) (41,871) lzvstmtt tax credit justment - net (21,478) (5,658) (4.472) (5,698) (1,550) (634) (3,46 Recorded income tax eee 359,043 S 94,943 S 63,244 S 117,114 S 34,877 S 20,467 S 75,493 Charged to cumtlative cffect S 2g861 IS 22,61 S - S - S - S - S . -

Entergy Entergy Entcrgy Entergy Entergy Sysnm Entw Arkarusas GulfStates Louisiana issisippx New Oricans Energy Crnt:

Federal S 227,046 S 64,238 S 71 S 68891 S 39,505 S 19,557 S 54,295 Se 50,300 19,062 14 10,369 7,379 3,049 13,182 Tstal Tdsl 277,346 83,300 85 79,260 46,884 22,606 67.477 Dfed - net (54,429) (17.939) (57,911) 21,580 (26,763) (15,674) (27,375) nvestmrt taxcruit adustmenti - net (24.739) (8,814) (4,260) (6,048) (1,673) (681) (3,265)

Ivestmert tax creit amortization - FERC Settlemeat (66,454) (27,327) - (31,504) (5,973) (1,651)

Rorded incone tax expee S 131,724 S 29,220 S (606) S 63,288 S 12,475 S 4,600 S 36,S37

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l~I Entergy Corporation's and its subsidiaries' total income taxes differ from the amounts computed by applying the statutory federal income tax rate to income before taxes. The reasons for the differences for the years 1996, 1995, and 1994 are (amounts in thousands):

Entergy Entergy Enteiy Entergy Entergy System 196 .

Enter -

Arkansas Gulf States Louisiana Mississippi NewOrleans Energy_

Computed at statutory rate (35%) S 319,103 S 84,785 S 34,371 S 108,262 S 42,111 S 15,048 S 63,626 Increases (reductions) in tax resulting from:

State income taxes net of federal income tax efrect 54,801 10,796 19,389 11,535 4,188 1,449 7,444 Depreciation 15,829 (2,102) (6,305) 6,722 1,604 402 15,508 Rate deferrals - net 1,973 1,115 5,537 (1,829) (3,430) 580 Amortization of investment taxeredits (20,349) (4,608) (4.380) (5,664) (1,582) (635) (3,480)

Flow-through/permanent differences 1,059 (845) 2,792 (449) (275) (164)

SAS 121 write-off 48,265 48,265 Other - net 478 (4.697) 2,422 (17) (1.510) (463) (977)

Total incorne taxes S 84,444 S 102,091 S 118,560 S 41.106 S 16,217 S 82,121 Effective Income Tax Rate 46.2% 34.4% 105.5% 37.6% 34.2%. 37.7% 45.4%

tta EntM Bitaxj Ente tir Syn nterv Am Qulf States Laii-a siss M Iw-Qis Brw C fadiat o rate (35%) S 334,944 S 93,458 S 65,157 S 111,528 S 36a40 S 19,198 S 58,986 Imess (r c) in tax teladrn fi=c Sate itxrs net f f l momi tax fect 42,599 11,551 8,375 11,532 3,344 1,971 7,036 1,670 (1,510) (13,073) 2,693 739 (661) 13,482 Ratedckals-net 1,699 975 6,240 (2,626) (3,465) 575 -

Amxtzaovsft

. taxredits (20,49 (5.658) (4,475) (5,711) (1,4 (634) (3,480)

(1,320' (3,873) I,00 (302) (433) 18 (531)

Total im= tm= S 359,043 S 94,943 S 63,244 S 117,114 S 34,877 $ 20,467 S 75,493 Eictie lirc Tac Rate 37.o 35.5% 34.C/. 36P/ 373/ 44.8%

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Aitergy uFtlaV Fxtciz a.

Arm m Gulf Sa lmixig Mmimxp bkwds _ _

B=W _

Coted at sWutay ntc (350h) S 194,448 S 60,017 S (50,694) S 96,994 S 21,438 S 6,234 S 14,795 br sms(retxtimr) in tax t, ..

reg fiUM Stac in'arm tsr io kdxw kxne tax cffe 13,766 -7,821 (6,571) 5,147 2.465 456 7,565 Dq~radabin 9,995 (921) (8,188) 3,219 1,930 (586) 14,541 Rate cdderals -n 1,435 729 6,551 (2,749) (3,810) 714 Amxiizntkc o wesftnt taxCradit (27,337, (10,220) (4,472) (6,305) (1,674) (681) (3,476)

Amx o ltian frmrt tax aeiit - FEC Sdt1crrt (66,454, (2737) (31,;04) (5,973) (1,651)

A4utnt opriocr Yarbtw= 9,425 (208) (2,460) (1,954) (423) 2,947 Ot1f-ne (3.554' (671) 3.748 (1,514) I53 537 475 Todal irn t&XM S 131,724 1 S 29220 S (62,086) S 63,288 S 12,475 t 4,600 S 36,837 Eff:Tiba=TaxRate 23.7/ 17.1% 42.9% 22.9% 20.4% 25.9% 87.2Yo

- Significant components of Entergy Corporation's and its subsidiaries' net deferred tax liabilities as of Deceber 31, 1996 and 1995, are as follows (in thousands):

1996 Entergy Entergy Entergy Entergy Entergy System Entcrgy I Arkanuas GulfStAtes Louisiana Mississippi New Orleans Energy Deferred Tax Uabilities:

Net regulatory asse(liabilities) S (1,406,921) S (287,217) S (434,320) S (349,667) S (21.537) S (9.717) S (304,403)

Plant-related basis differences (2,926,993) (476,364) (1,016,616) (716,974) (135,03S) (50,435) (512,519)

'te dferrals (322,530) (84,326) (68,282) . (2,839) (113,669) (52,914)

Other (143,792) (59,592) (9,243) (31,433) (7,604) (6,193) (24,917)

Total S (4,860,236) S (907,999) S (1,522,521) S (1,100,913) S (327,8) S (119,259) S (,39)

Deferred Tax Assets:

Accumulated deferred investment tax credit 210,279 42,450 61,563 53,831 9,724 3,666 39,645 hvstment tax credit carryforwards 13S,779 13S,779 NOL cyfow 24,990 24,990 Alternative miniman tax credit 40,658 40,658 Sale and leasebasd 233,823 10,390 125,433 Removal cost 102,26S - 27,391 61,716 2,454 10,707 Unbiled revenues 37,692 17,224 14,965 (343) 5,246 Pension-related item 30,269 11,291 2,S32 2,002 5,927 2,745 Rate refund 25,409 * - 7,077 12,332 FERC Settlement 19,079 ' ' - ' - - 19,079 Other 147,020 9,049 61,804 23,545 5,849 - ,097 12,525 TOl S 1,011,466 S 51,499 S 3S4,300 S 271,285 S 19,692 S 40,7SO S 217,319 Net deferred tax liability S (3,848,770) S- (856,500) S (1,144,221) S (S29,62S) S (32,156) S (7,479) S (624.020)

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I Entergy Entery Entczgy Enterw Entery S)Item Entergy Arkansas GulfStates- Loisiana Mississippi New Odews Eneriy Dekfred Tax WWlitic Net regulatosy asctsfoiaslities) S (1.494,000) S (264,166) S (512,281) S (357,528) S (17.147) S (10,723) S (332,154)

Plant-related b*sis diffcrncs (3.071,519) (480.465) (1,060.241) (722,680) (181,792) (50,820) (538,215)

Rate deferrals (467.691) (131,261) (104.695) (12,652) (157,168) (61,915)

Ode (117,510) (69,475) (1.814) (35,272) (9,339) (3,134) (10,365)

Total S (5,150,720 S (945,367) S (1,679,031) S (1,128.132) S (365,446) S (126,592 S (830,734 Dekrred Tax Anfts Accumlaed deferred investment tax ctedt 214,505 44.260 58,653 54008 10,702 3,910 40,973 mr~atmcot tax redit car)Ccrwards 167,713 167,713 Valuation allovwcc (44,597) . (44,597) 151,141 - 151,141 Alterntive ninnrnmn tax credit 130,760 - 39,709 27.409 - - 63,642 Sale and edaback 225,620 - 105,788 - - 119,832 Rama cost 97,184 - 25,701 59,148 2,316 10,019 Ukilled revemics 42,923 - 22,384 16,850 - 3,689 Pension-rclatwd items 21,003 - 14,472

• 2,342 4,189 Operating prvisions 6,795 ' 6795 Provision - FASB 5 comtingencies 7,250 7,250 FERC Settlement 19,978 - . 459 19,519 Oder 259.954 21,394 110,176 52,285 17,415 6703 34,586 Total 5S 1,300,229 S 72,904 S 545,352 S 317,488 S 32,775 S 35,764 S 278,552 Net defErred tax liability S (3,850,491) S (872,463) S (1,133,679) (810,644) S (332,671) S (90,828) (62,182)

As of December 31, 1996, Entergy has investment tax credit (ITC) carryforwards of $138.8 million, federal net operating loss (NOL) carryforwards of S50.8 million, and state NOL carryforwards of S105.2 million, all related to Entergy Gulf States operations. The ITC carryforwards include the 35% reduction required by the Tax Reform Act of 1986 and may be applied solely against federal income tax liability of Entergy Gulf States and, if not utilized, will expire between 1997 and 2002. At December 31, 1995, the projected amount of ITC carryforwards which would expire unutilized was estimated to be $44.6 million, which was based upon projections of estimated taxable income of Entergy Gulf States and, accordingly, a valuation reserve was recorded for this amount At December 31, 1996, management estimated that none of the remaining ITC carryforwards would expire unutilized, and the valuation reserve was eliminated. The alternative minimum tax (AMT) credit carryforwards as of December 31, 1996 were

$40.7 million, all related to Entergy Gulf States operations. This AMT credit can be carried forward indefinitely and may be applied solely against the federal income tax liability of Entergy Gulf States.

In accordance with the System Energy FERC Settlement, the domestic utility companies wrote off $66.6 million of unamortized deferred investment tax credits in 1994, including $27.3 million at Entergy Arkansas, $31.5 iillilon at Entergy Louisiana, S6.0 million at Entergy Mississippi, and S1.7 million at Entergy New Orleans.

In August 1994, Entergy received an IRS report covering the federal income tax audit of Entergy Corporation and subsidiaries for the years 1988-90. The report asserted an S80 million tax deficiency for the 1990 tax return related primarily to the utilization of accelerated investment tax credits associated with the Waterford 3 and Grand Gulf nuclear plants. Changes to the initial report, made in the IRS Appeal process, have reduced the assessment related to the issue by S22 million to $58 million. Entergy Corporation and the Appeals Officer agreed to pursue a 'Technical Advice" ruling from the IRS National Office to address the remainder of the issue. Entergy Corporation believes there is no material tax deficiency and is confident that a satisfactory resolution of the matter will be achieved.

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

In November 1996, SEC authorization was received by Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy increasing short-term borrowing limits to

$235 million, $340 million, $225 million, S103 million, $35 million, and S140 million, respectively (for a total of

$1.078 billion). These authorizations are effective through November 30, 2001. Of these companies, Entergy Louisiana and Entergy Mississippi had borrowings outstanding as of December 31, 1996. Entergy Louisiana and Entergy Mississippi had $3 1.1 million and S50.3 million, respectively, of borrowings outstanding under the money pool, an intra-system borrowing arrangement designed to reduce the domestic utility companies' dependence on external short-term borrowings. Entergy Arkansas, Entergy Louisiana, and Entergy Mississippi had undrawn lines of credit as of December 31, 1996, of $25 million, $64.2 million, and $30 million, respectively.

In July 1995, Entergy Corporation received SEC authorization for a S300 million bank credit facility.

Thereafter, a three-year credit agreement was signed with a group of banks in October 1995 to provide up to $300 million of loans to Entergy Corporation. $230 million was drawn on this facility for the acquisition of CitiPower in January 1996 and was subsequently repaid throughout the course of the year. See Note 13 for a discussion of the acquisition. As of December 31, 1996, no amounts were outstanding against the facility. In January 1997, Entergy Corporation filed an amendment with the SEC to increase the authorization from $300 million to $500 million.

On September 13, 1996, Entergy Corporation and ETHC obtained a threeyear $100 million bank line of credit that may be increased up to S300 million and can be drawn by either Entergy Corporation or ETHC (with a guarantee from Entergy Corporation). The proceeds are -to be used exclusively for exempt telecommunication investments. As of December 31, 1996, $20 million borrowed by Entergy Corporation was outstanding under this facility.

Other Entergy companies have SEC authorization to borrow through the money pool, from Entergy Corporation, and from commercial banks in the aggregate principal amounts up to $265 million, of which S88.4 million was outstanding as of December 31, 1996. Some of these borrowings are restricted as to use, and are secured by certain assets.

In total, Entergy had short-term commitments in the amount of $607.6 million as of December 31, 1996, of which S575.2 million was unused. The weighted-average interest rate on the outstanding borrowings as of December 31, 1996, and December 31, 1995, was 6.10% and 6.35%, respectively. Commiitment fees on the lines of credit for Entergy Arkansas, Entergy Louisiana, and Entergy Mississippi are 0.125% -of the undrawn amounts. he commitment fees for Entergy Corporation's $300 million credit facility and ETHC's $100 million credit facility are currently 0.170, but can fluctuate depending on the senior debt ratings of the domestic utility companies. See Note 7 for a discussion of commitments for long-term financing arrangements.

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NOTE S. PREFERREI), PREFERENCE, AND COMMON STOCK (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans)

The number of shares, authorized and outstanding, and dollar value of preferred and preference stock for Entergy, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans asofDecember31, 1996, and 1995 were:

S Cal Price Per Auhorized Total Sham as of a Odsanding . DolirVxka Deceuber31, 196 1995 1996 1995 1996 (Dolan rshaThoda)

Entet Arkwms Pr*rred Stoak wSVhow Amu" Im&

Cumlative, S100 per value:

4.32% Sries 70,000 70,000 $7,000 $7,000 S103.647 4.72% Series 93,500 93,500 9,350 9,350 S107.000 4.56% Series 75,000 75,000 7,500 7,500 $102.830 4.56% 1965 Series 75,000 75,000 7,500 7,500 S102.500 6.08%.Series 100,000 100,000 10,000 10,000 S102.830 7.32% Series 100,000 100,000 10,000 10,000 S103.170 7.80% Seies 150,000 150,000 15,000 15,000 S103.250 7.40% Series 200,000 200,000 20,000 20,000 S102.800 7.88% Series 150,000 150,000 15,000 15,000 S103.000 Cunuladve, $25 prvale 8.84% Series 400,000 10,000 Curiulative, $0.01 pr value:

$2.40 Series (a) 2,000,000 50,000 S1.96 Series (a)(b) 600,000 600,000 15,000 15,000 Total Yithmt siking iud 1,613,500 4,013,500 $116,350 $176,350 CLunlative, S00 per Nalue:

852% Series 300,000 350,000 S30,000 S35,000 S104.260 Cinnaive, $25 prvalue 9.92% Series 401,085 561,085 10,027 14,027 $26.320 TotalAbin ugfiund 701,085 911,085 $40,027 S49,027 FairV a PofPrefenrd Stockidisidng ind () $41,835 S51,476

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Ca Pie Per

' Autbori'ed Total S a of Dolar Vak Decerder3l, 1996 1995 199 1995 19%

Entem Gu States P nTd wad Pmire Stock oe (DOars h Thusan)

Perci Stodk Cumuiati,ithit pr value 7% Series (a) (1) 6,000,000 6,000,000 $150,000 $150,000 Prckfl? Stoc Auffiized 6,000,000, SI 00 par Wihubkg AImL 4.40°/a Series 51,173 51,173 S5,117 $5,117 S10&00 4.50"h Series 5,830 5,830 583 583 S105.00 4.40 0/- 1949 Series 1,655 1,655 166 166 S103.00 4.20'/o Series 9,745 9,745 975 975 S102.82 4.44/* Series 14,804 14,804 1,480 1,480 S103.75 S.0/8 Series 10,993 10,993 1,099 1,099 S104.25 5.08e Saies 26,845 26,845 2,685 2,685 S104.63 4.SN Series 10,564 10,564 1,056 1,056 S103.57 6.08o Scries 32,829 32,829 3,283 3,283 S103.34 7.56% Series 350,000 350,000 35,000 35,000 S101.80 8.5/h Saices 500,000 500,000 50,000 50,000 S10243 9.96/ Saies 350,000 350,000 35,000 35,000 S102.64 Total witho sid fir 1,364,438 1,364,438 S136,444 S136,444 WAlhi skdg Am&

8.80%/o Series 184,595 204,495 S18,459 $20,450 S100.00 9.75% Series 19,543 1,954 S100.00 8.64% Series 140,000 168,000 14,000 16,800 S101.00 A4wutable Rate - A, 7.39% (c) 180,000 192,000 18,000 - 19200 S100.00 A4ustabe Rate - B, 7.44% (c) 270,000 292,500 27,000 29,250 S100.00 Tctal with sirlh firi 774,595 876,538 $77,459 $87,654 FairVal of Preicawe Stock md Prekrmd Stodc with sk&dtg tid (d) $214,475 $219,191

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Shame Cal Prie Per Authorized Total Sham aof id Outstmudktg Dollar Value December31, 1996 1m 199C 1995 1996 Ei*emy Louisiaa Pre*rred Stock (Dollars hi Thousnd)

Without sW&Cg Rmd:

Currmlative, S100 par value:

4.96% Saies 60,000 60,000 $6,000 $6,000 S104.25 4.16% Stries 70,000 70,000 7,000 7,000 $104.21 4.44% Series 70,000 70,000 7,000 7,000 $104.06 5.16% Series 75,000 75,000 7,500 7,500 $104.18 5.40%/Saies 80,000 80,000 8,000 8,000 S103.00 6.44% Series 80,000 80,000 8,000 8,000 S102.92 7.84% Saies 100,000 100,000 10,000 10,000 S103.78 7.36% Series 100,000 100,000 10,000 10,000 S103.36 8.56% Series 100,000 10,000 Cuimative, S25 par value 8.00% Series (b) 1,480,000 1,480,000 37,000 37,000 9.68/o Series 2,000,000 50,000 Total w ut sinding fund 2,115,000 4,215,000 S 100,500 $160,500 Wih shW& lint Cuulative, S100 per value:

7.00% Series (b) 500,000 500,000 S50,000 $50,000 8.00% Series (b) 350,000 350,000 35,000 35,000 Cumijative, $25 par value:

12.64% Series 300,000 600,370 7,500 15.009 $26.58 Total with sidng fund 1,150,000 1,450,370 S92,500 S100,009 Fair Vahe of Preferred Stockwidth ihdng kind (d) S93,825 S 103,135 Entemy Missisinol Prylerred S Without X h ii 1IZt:

Cuwav $100 par value:

4.36% Series 59,920 59,920 S5,992 $5,992 $103.86 4.56% Series 43,888 43,888 4,389 4,389 S107.00 4.92/. Series 100,000 100,000 10,000 10,000 S102.88 7.44% Series 100,000 100,000 10,000 10,000 S102.81 8.36% Scries (b) 200,000 200,000 20,000 20,000 9.16% Series 75,000 75,000 7,500 7,500 $104.06 Total uitout siing fund 578,808 578,808 $57,881 S57,881 Wilh s*dig aId:

Cunmlative, $100 per value:

9.76% Series 70,000 140,000 $7,000 S14,000 $100.00 12.00/o Series - 27,700 2,770 Total vith sinking find 70,000 167,700 $7,000 S16,770 FaIr Vale ofPreermd Stodcwitl siking Smd (d) S7,000 S16,936 M -_

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j ,

Cal 1Pice Per Authorimd Total Shamas of an Outs tg Dola Vh Decemaber31, 1996 1995 1996 1995 1996 FitemNewOleam Pfe rm d Stock (DoUars inlhousimds)

Wthoit sking find:

Cuniative, S100 par i'ahe:

4.75/o Series 77,798 77,798 $7,780 $7,780 $105.00 4.36/o Series 60,000 60,000 6,000 6,000 S104.58 5.56%/ Series 60,000 60,000 6,00 S10259 S1,70 Total w t sr~xg find 197,798 197,798 Subsdiies' iPrenee Stock (a) 6,00000 6,0 $150,000 S150O0 Subsidimies' Preflnd Stock WVtout sinkin d 5,869,544 1 S430,955 $550955 Vith sinking lxd Z,695,680 3,405,693 $216,986 5253,460 FairVidue ofPaefence Stock xd Priefernd StockWth snkng fiid (d) $357,135 $390,738 (a) The total dollar value represents the involuntary liquidation value of S25 per share.

(b) These series are not redeemable as of December 31, 1996.

(c) Represents weighted-average annualized rates for 1996.

(d) Fair values were determined using bid prices reported by dealer markets and by nationally recognized investment banking firms. See Note 1 for additional disclosure of fair value of financial instrunts.

Changes in the preferred stock, ith and without sinking fund, preference stock, and common stock of Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans during the last three years were:

Number of Shares 1996 1995 _ 1994 Preferred stock retirements Entergy Arkansas

$100 par value (50,000) (25,000) (45,000)

$25 par value (560,000) (280,000) (280,000)

$0.01 par value (2,000,000)

Entergy Gulf States

$100 par value (101,943) (72,834) (60,667)

Entergy Louisiana

$100 par value (100,000)

$25 par value , (2,300,370) (450,211) (601,537)

Entergy Mississippi S100 par value (97,700) (150,000) (150,000)

Entergy New Orleans

$100 par value (34,495) (15,000)

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Cash sinking fund requirements and mandatory redemptions for the next five years for preferred and preference stock, outstanding as of December 31, 1996, are:

Entergy Entergy Entergy Entergy Enterzy Arkansas Gulf States Louisiana Mississippi (In Thousands) 1997 S21,216 S4,500 S5,966 S3,750 S7,000 1998 14,225 4,500 5,966 3,759 -

1999 60,466 4,500 5,966 50,000 -

2000 160,466 4,500 155,966 - -

2001 45,466 4,500 5,966 35,000 -

Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and Entergy Mississippi have the annual noncumulative option to redeem, at par, additional amounts of certain series of their outstanding preferred stock.

Entergy Corporation repurchased and retired (returned to authorized but unissued status) 1,230,000 shares of common stock at a cost of $30.7 million in 1994. There were no stock repurchases in 1995 or 1996.

Entergy Corporation from time to time reissues treasury shares to meet the requirements of the Stock Plan for Outside Directors (Directors' Plan), the Equity Oinership Plan of Entergy Corporation and Subsidiaries (Equity Plan), and certain other stock benefit plans. Entergy Corporation repurchased in the market 2,805,000 shares of its common stock in 1994 at a cost of S88.8 million. The Directors' Plan awards nonemployee directors a portion of their compensation in the form of a fixed number of shares of Entergy Corporation common stock. Shares awarded under the Directors' Plan were 6,750, 9,251, and 18,757 during 1996, 1995, and 1994, respectively.

During 1996, Entergy Corporation issued 755,200 shares of its previously repurchased common stock, reducing the amount held as treasury stock by $22.2 million. Entergy Corporation issued these shares to meet the requirements of its various stock plans. In addition, Entergy Corporation received proceeds of S118 million from the issuance of 4,438,972 shares of common stock under its new dividend reinvestment and stock purchase plan during 1996.

The Equity Plan grants stock options, equity awards, and incentive awards to key employees of the domestic utility companies. The costs of awards are charged to income over the period of the grant or restricted period, as appropriate. Amounts charged to compensation expense in 1996 were immaterial. Stock options, which comprise 50% of the shares targeted for distribution under the Equity Plan, are granted at exercise prices not less than market value on the date of grant. The options are generally exercisable no less than six months nor more than 10 years after the date of grant.

Entergy sponsors the Employee Stock Ownership Plan of Entergy Corporation and Subsidiaries (ESOP) and the Savings Plan of Entergy Corporation and Subsidiaries (Savings Plan). Both plans are defined contribution plans covering eligible employees of Entergy and its subsidiaries who have completed certain service requirements.

Entergy's subsidiaries' contributions to the ESOP and the Savings Plan, and any income thereon, are invested in shares of Entergy Corporation common stock. The allowed contributions to the ESOP are accrued based on the expected utilization of additional investment tax credits in the applicable Federal income tax return of Entergy and its subsidiaries, and on expected voluntary participant contributions. Entergy's subsidiaries contributed S22.8 million to the ESOP for the year ended December 31, 1995. There were no contributions in the years ended December 31, 1996 and 1994.

The Savings Plan provides that the employing Entergy subsidiary may make matching contributions to the plan in an amount equal to 50 percent of the participant's basic contribution. In 1996, 1995, and 1994, Entergy's subsidiaries contributed $13.2 million, $13.2 million, and S 1.7 million, respectively, to the Entergy Savings Plan.

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Entergy Gulf States sponsors the Gulf States Utilities Company Employee Stock Ownership Plan (GSU ESOP) and the Gulf States Utilities Company Employees' ThriftP1'nP (GSU Thrift Plan), which are both defined contribution plans. The GSU ESOP is available to all Entergy Gulf States employees, pre-Merger Entergy Gulf States employees and post-Merger employees of Entergy Operations,; whose primary work location is River Bend, upon completion of certain eligibility requirements. 'All contributions to the plan are invested in shares of Entergy Corporation common stock. Entergy Gulf States makes contributions to the GSU ESOP based on expected utilization of additional investment tax credits in the Entergy Gulf States Federal tax return and on expected participants' contributions. No additional contributions were made to the GSU ESOP during 1996, 1995, and 1994.

The GSU Thrift Plan is available to certain Entergy Operations employees whose primary work location is River Bend. Entergy Gulf States makes matching contributions to the GSU Ihrift Plan equal to 50 percent of a participant's basic contribution which may be invested, at the participant's discretion, in shares of Entergy Corporation common stock. Entergy Gulf States' contributions to the GSU Thrift Plan for the years ended December 31, 1996,1995, and 1994 were S.3 million, S1.1 million, and S3.9 million, respectively.

Entergy applies APB Opinion 25, "Accounting for Stock Issued to Employees," and related interpretations in accounting for stock options. Accordingly, no compensation cost is required to be recognized for the stock options described above until such options are exercised because the exercise prices are not less than market value on the date of grant. The impact on Entergy's net income and earnings per share would have been immaterial had compensation cost for the stock options been determined based on the fair value at the grant dates for awards under the option plans consistent with the method prescribed by SFAS 123.

In applying the disclosure provisions of SFAS 123, the fair value of each option giant is'estimated on the date of grant using the Black-Scholes option-pricing model with expected stock price volatility of 18%, 24%, and 19% in 1996, 1995, and 1994, respectively, aid additional assumptions for each of those years as follows: risk-free interest rates of 6%, expected lives of 10 years, and dividends of 1.80 per share.

Nonstatutory stock option transactions are summarized as follows:

1996 1995 1994 Average Average Average Number Option Number Option Number Option of Options Pce of Options Price of Options Price Beginiig-of-year balance 457,909 $25.98 170,409 S34.86 102,909 $33.46 Options granted 82,500 29.38 315,000 21.39 67,500 37.00 Options exercised (7,500) 23.38 (12,500) 23.38 - -

Options expiring unused (5,000) 35.88 (15,000) 32.75 -

End-of-year balance 527,909 $26.45 457, $25.98 170,409 S34.86 Optios exercisable at year-end 277,909 207,909 170,409 Weighted-average fair value of options granted S 2.67 S 5.48 S 2.45

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I The following table summarizes information about stock options outstanding as of December 31, 1996:

Options Outstanding Options Exercisable Weighted-Avg Remaining vVeighted- Weighted-Range of As of Contractual Aivg. Exercise As of Avg. Exercise Exercise Prices _ 12/31/96 Life-Yrs. Price 12/31196 Price S20 - S30 404,302 8.2 S23.51 154,302 $27.77 S30 - 40

• 123,607 6.6 S36.09 123,607 S36.09 S20 - 40 527,909 7.8 S26.45 277,909 S31.47

= =-

To meet the requirements of the Employee Stock Investment Plan (ESIP), Entergy Corporation is authorized to issue or acquire, through March 31, 1997, up to 2,000,000 shares of its common stock to be held as treasury shares.. Under the ESIP, employees may be granted the opportunity to purchase (for up to 10% of their regular annual salary, but not more than $25,000) common stock at 85% of the market value on the first or last business day of the plan year, whichever is lower. Through this program, employees purchased 247,122 and 329,863 shares for the 1995 and 1994 plan years, respectively. The 1996 plan year runs from April 1, 1996, to March 31, 1997. In February 1997, Entergy received authority from the SEC to extend the ESIP for an additional period of three years ending on March 31, 2000. Under the extended plan, Entergy Corporation may issue either treasury shares or previously authorized but unissued shares.

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NOTE 6, COMPANY-OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES (Entergy Arkansas)

Entergy Arkansas Capital I (Trust) was established as a financing subsidiary of Entergy Arkansas for the purpose of issuing common and preferred securities. On August 14, 1996, the Trust issued S60 million in aggregate liquidation preference amount of 8.5% Cumulative Quarterly Income Preferred Securities (Preferred Securities) in a public offering and $1.9 million of common securities to Entergy Arkansas. The Trust used the proceeds from the sale of the Preferred Securities and the common securities to purchase from Entergy Arkansas 8.5% junior subordinated deferrable interest debentures in the amount ofS61.9 million (Debentures). The Debentures held by the Trust are its only asset and the Trust will use interest payments received on the Debentures to make cash distributions on the Preferred Securities.

The Preferred Securities of the Trust, as well as the Debentures, mature on September 30, 2045. The Preferred Securities are redeemable, however, at the option of Entergy Arkansas beginning in 2001 at 100% of their principal amount, or earlier under certain limited circumstances, including the loss of the tax deduction arising out of the interest paid on the Debentures. Entergy Arkansas has, pursuant to certain agreements taken together, fully and unconditionally guaranteed payment of distributions on the Preferred Securities. Entergy Arkansas is the owner of all of the common securities of the Trust, which constitute 3% of the Trust's total capital.

(Entergy Louisiana)

Entergy Louisiana Capital I (Trust) was established as a financing subsidiary of Entergy Louisiana for the purpose of issuing common and preferred securities. On July 16, 1996, the Trust issued $70 million in aggregate liquidation preference amount of 9% Cumulative Quarterly Income Preferred Securities (Preferred Securities) in a public offering and $2.2 million of common securities to Entergy Louisiana. The Trust used the proceeds from the sale of the Preferred Securities and the common securities to purchase from Entergy Louisiana 9% junior subordinated deferrable interest debentures in the amount of $72.2 million (Debentures). The Debentures held by the Trust are its only asset and the Trust will use interest payments received on the Debentures to make cash distributions on the Preferred Securities.

The Preferred Securities of the Trust, as well as the Debentures, mature on September 30, 2045. The Preferred Securities are redeemable, however, at the option of Entergy Louisiana beginning in 2001 at 100% of their principal amount, or earlier under certain limited circumstances, including the loss of the tax deduction arising out of the interest paid on the Debentures. Entergy Louisiana has, pursuant to certain agreements taken together, fully and unconditionally guaranteed payment of distributions on the Preferred Securities. Entergy Louisiana is the owner of all of the common securities of the Trust, which constitute 3% of the Trust's total capital.

(Entergy Gulf States)

Entergy Gulf States Capital I (Trust) was established as a financing subsidiary of Entergy Gulf States for the purpose of issuing common and preferred securities. On January 28, 1997, the Trust issued $85 million in aggregate liquidation preference amount of 8.75% Cumulative Quarterly Income Preferred Securities (Preferred Securities) in a public offering and $2.6 million of common securities to Entergy Gulf States. The Trust used the proceeds from the sale of the Preferred Securities and the common securities to purchase from Entergy Gulf States 8.75% junior subordinated deferrable interest debentures in the amount of $87.6 million (Debentures). The Debentures held by the Trust are its only asset and the Trust will use interest payments received on the Debentures to make cash distributions on the Preferred Securities.

The Preferred Securities of the Trust, as well as the Debentures, mature on March 31, 2046. The Preferred Securities are redeemable, however, at the option of Entergy Gulf States beginning in 2002 at 100% of their principal amount, or earlier under certain limited circumstances, including the loss of the tax deduction arising out of the interest paid on the Debentures. Entergy Gulf States has, pursuant to certain agreements taken together, fully and

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unconditionally guaranteed pavmcnt of distributions on the Preferred Securities. Entergy Gulf States is the owner of all of the common securities of the Trust, which constitute 3% of the Trust's total capital.

NOTE 7. LONG - TERM DEBT (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)

The long-term debt of Entergy Corporation's subsidiaries, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy, as of December 31, 1996, was:

des fitreTMM ad' ,Sta Lju B Ncw 4 Frn To Frun TO 1- 1 BMW~ Arkm f Stm Lcsm  ?. N I~~a r (InnxT)

F-u c*MxfpvBon 1997 1999 5.375/6 11.375% S687,000 $45,000 $321,000 $69,000 S12,000 $240,000 2000 2004 6.000°/ 8250%K 1,355,270 180,000 608,750 361,520 20S,000 2005 2009 6.650% 7.500% 325,000 215,000 110.000 2010 2019 9.750%/o 75,000 75,000 2020 2026 7.000/0 10.OO/O 1,031,648 376,648 450,000 205,000 G&RB 1997 1999 6.9S0/0 11.2%/ 96,000 96,000 2000 2023 6.625% 8.807% 525,000 355,000 170,000 Gavai= WlObc (a) 1997 2008 5.9v0"/. 10.0E)0/. 108,267 49,655 45,875 11,837 900 2009 2026 5.950/ 9.875% 1,551,235 240,700 435,735 412,170 46,030 416,600 1997 2000 7.380/ 9.720% 175,000 100,000 75,000 Lcrg-Tam DOGCgm (04*9) 117,Z70 117,270 Wgatard 3 Lme Cbptim& 76% (Mae 10) 353,600 353,600 Olf Gmradas ctVipt 7.02% (Nd 10) 496,480 496,480 LbeofCQuat, v Aendf & i998 - 65,000 CitiPcrCitL avSmte&31%idke2000 921,553 83,411 9,938 Umtkdizui t -Nd (30.3101 (11.420) (5.087) (5.619) (2.861) (1.112) (4,211) 7,936,424 1,287,853 2,076,211 1,407,508 495,069 180,888 1,428,869 Lms AfWvit Due Wi OneYar 345,620 32,465 160,865 34,275 96,015 12,000 10,000 Lz Tam thxii Anm Due WA6h one Year $7,590,804 31,255,388 $1,915,346 $1,373,233 $399,054 S168,888 S,418,869

$7,087,027 $1,160,77 S2,142,389 $1,104,891 S503,461 $175,566 S982,423

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The long-term debt of Entergy Corporation's subsidiaries, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Systerm Energy, as of December 31, 1995, was:

A~-7 Mats Irtcest Rates Eitegy Fates Etery Thty Ft Systn From To From To Eitergy Arkw Gulf &te Loiam Msissippi ew Orlears Flergy (In Thmx)

FrAtMx Boin 1996 1999 5% 10.5% $1,064,410 $75,160 S445,000 S104,000 S35,000 $35,250 S370,000 2000 2004 6Y 9.75% 1282,320 180,80 670,000 361,520 70,000 2005 2009 6.25% 11.375% 355,319 215,000 120,000 20,319 2010 2014 11.375% 50,000 50,000 2015 2019 9.75%o 11.375% 95,000 75,000 20,000 2020 2024 7% 10.375% 1,008,818 373,818 450,000 185,000 G&RB 1996 1999 6.95% 11.2Yo 152,000 122,000 30,000 2000 2023 6.625% 8.8/ 485,000 355,000 130,000 Gu l Obl4ai (a) 1996 1998 5.9%Y I10% 110,868 51,495 46,300 12,158 915 2009 2023 5.95y% 12.50re 1,551,235 240,700 435,735 412,170 46,030 416,600 Drc 1996 1998 9.72% 150,000 150,000 2000 7.38% 30,000 30,000 Lr-Tarm DOE Cipficn (Note 9) 111,536 111,536 Watrford 3 Lese CEiabti 8.76% (Nkte 10) 353,600 353,600 Grwad Gulf es9e CMticatn 7.02/ (Note 10) 500,000 500,000 Line of Credit, varie rate, due 1998 65,000 Otxra Lxg-TmD* t 9,156 9,156 Unmctz Prm~ d nd Discit -Nd (38,488) (13,606) (5295) (8017) (3,526) (1,042) (7,002)

TcWLa-Thm1et 7,335,774 1,309,903 2,320,896 1,420,431 555,419 194,208 1,469,917 Less Amurut Due Whin O Year 558,650 28,700 145,425 35,260 61,015 38,250 250,000 Lag-Term Dexhixg Amit Dw Wiain O Year S6,777,124 $1,281,203 $2,175,471 Sl,385,171 $494,404 S155,958 S1,219,917 Fair Vakue of Urg-TemDebt (b) $6,666,420 $1,213,511 $2,416,932 $1,136,246 S594,365 $198,785 S1,041,581 (a) Consists of pollution control bonds, certain series of which are secured by non-interest bearing first mortgage bonds.

(b) The fair value excludes lease obligations, long-term DOE obligations, and other long-term debt and includes debt due within one year. It'is determined using bid prices reported by dealer markets and by nationally recgnized investment banking flins.- See Note I for additional information on disclosure of fair value of financial instruments.

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- - - -- l~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

The annual long-tern debt maturities (excluding lease obligations) and annual cash sinking fund requirements for debt outstanding as of December 31, 1996, for the next five years follow:

Entergy Entergy Entergy Entergy Entergy System Enterg(a) Arkansas(b) Gulf States(c) Louisiana(d) Mississippi New Orleans Energ (In Thousands) 1997 $345,620 $32,465 $160,865 $34,275 $96,015 S12,000 S10,000 1998 311,720 15,510 190,890 35,300 20 - 70,000 1999 233,198 1,025 71,915 238 20 - 160,000 2000 1,098,988 1,245 945 100,225 20 - 75,000 2001 279,210 1,535 123,725 18,925 25 - 135,000 (a) Not included are other sinking fund requirements of approximately 17.5 million annually which may be satisfied by cash or by certification of property additions at the rate of 167% of such requirements.

(b) Not included are other sinking fund requirements of approximately $0.62 million annually which may be satisfied by cash or by certification of property additions at the rate of 167% of such requirements.

(c) Not included are other sinking fund requirements of approximately $12.8 million annually which may be satisfied by cash or by certification of property additions at the rate of 167% of such requirements.

(d) Not included are other sinking fund requirements of approximately $4.15 million annually which may be satisfied by cash or by certification of property additions at the rate of 167% of such requirements.

Entergy Gulf States has two outstanding series of pollution control bonds collateralized by irrevocable letters of credit, which are scheduled to expire before the scheduled maturity of the bonds. The letter of credit collateralizing the S28.4 million variable rate series, due December 1,2015, expires in September 1999 and the letter of credit collateralizing the S20 million variable rate series, due April 1, 2016, expires in February 1999.

An Entergy subsidiary signed an agreement with several banks on January 5,.1996, to obtain a revolving credit facility in the aggregate amount of 1.2 billion Australian dollars (870 million US dollars) for the acquisition of CitiPower. The facility. was partially drawn down on the same date, bears interest at, an average annual rate of

• 8.04604 and is non-recourse to Entergy. This facility is collateralized by all of CitiPower's assets. Borrowings have maturities of 30 to 180 days, and are continuously renewable for 30 to 180 day periods at the subsidiary's option until the facility matures on June 30, 2000, unless certain events occur which would cause the maturity date to be extended to a date no later than December 31, 2000. The subsidiary intends to renew obligations incurred under the agreement for a period extending beyond one year from the balance-sheet date. As part of the CitiPower acquisition, Entergy Corporation provided credit support, in the form of a bank letter of credit and other agreements, totaling approximately $70 million, which was subsequently released in January 1997.

The subsidiary entered into several interest rate swaps to reduce the impact of interest rate changes on its debt related to the CitiPowr acquisition. The interest rate swap agreements which hedge this debt involve the exchange of fixed and floating' rate interest payments periodically over the life of the agreements without the exchange of the underlying principal amounts. Market risks arise from the. movements-in interest rates. If the counterparties to an interest rate swap agreement were to default on contractual payments, the subsidiary could be exposed to increased costs related to replacing the original agreement. However, the subsidiary does not anticipate nonperformance by any counterparty to any interest rate swap ineffect at December 31, 1996. At December 31, 1996, this subsidiary was a party to a notional amount ofS900 million Australian dollars of interest rate swaps with maturity dates ranging from February 1999 to December 2000.

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-0 i Entergy Power UK plc, an Entergy subsidiary, executed a credit facility with several banks on December 17, 1996, to obtain credit facilities in the aggregate amount of approxim"aiely 1.25 billion British Pounds (2.1 billion US dollars). Proceeds of this fac'iity',which is in three' tranches, have"n used, together with $392 million of cash provided by Entergy, to fund the acquisition of London Electricity plc and are available to replace London Electricity plc's currently outstanding short-term credit lines and to provide working capital for London Electricity plc. No borrowings were outstanding under this credit facility at December 31, 1996. -The credit facility is non-recourse to Entergy and is collateralized by the assets of Entergy Power UK plc, consisting of all shares of London Electricity plc owned by it. The maturity dates of the various tranches of the credit facility' range from December 17, 1998 to December 17, 2001. The interest rate on these facilities is the London Interbank Offered Rate plus 'up to 1.50%

depending on the capitalization ratio of Entergy Power UK plc and its subsidiaries.

Under Entergy Mississippi's G&R Mortgage, G&R Bonds are issuable based upon 70% of bondable property additions, based upon 50% of accumulated deferred Grand Gulf I related costs, based upon the retirement of certain bonds previously outstanding, or based upon the deposit of cash with the trustee. Entergy Mississippi's G&R Mortgage prohibits the issuance of additional first mortgage bonds (including for refunding purposes) under Entergy Mississippi's first mortgage indenture, except such first mortgage bonds as may hereafter be issued from time to time at Entergy Mississippi's option to the corporate trustee under the G&R Mortgage to provide additional security for Entergy Mississippi's G&R Bonds.

Under Entergy New Orleans' G&R Mortgage, G&R Bonds are issuable based upon' 70% of bondable property additions or based upon 50% of accumulated deferred Grand Gulf 1-related costs. The G&R Mortgage precludes the issuance of any additional bonds based upon property additions if the total amount of outstanding Rate Recovery Mortgage Bonds issued on the basis of the uncollected balance of deferred Grand Gulf -related costs exceeds 66 2/3% of the balance of such deferred costs. As of December 31, 1996, Entergy New Orleans had no outstanding Rate Recovery Mortgage Bonds.

NOTE 8.., DIVIDEND RESTRICTIONS - (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)

Provisions within the Articles of Incorporation or pertinent indentures and various other agreements related to the long-term debt and preferred stock of certain of Entergy Corporation's subsidiaries restrict the payment of cash dividends or other distributions on their common and preferred stock. Additionally, PUHCA prohibits Entergy Corporation's subsidiaries from making loans or advances to Entergy Corporation. Detailed below are the restricted retained earnings unavailable for distribution to Entergy Corporation by subsidiary.

Restricted Earnings

-(in millions)

EntergyArkansas S 291.3 Entergy Gulf States Entergy Louisiana Entergy Mississippi 135.7 Entergy New Orleans 4.0 System Energy 6.7 During 1996, cash dividends paid to'Entergy Corporation by its subsidiaries totaled $554.2 million. In February 1997, Entergy Corporation received common stock dividend payments from its subsidiaries totaling $66.9 million.

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NOTE 9. COMMITMENTS AND CONTINGENCIES Caiun - River Bend (Entergy Corporation and Entergy Gulf States)

Entergy Gulf States and Cajun, respectively, own 70% and 30% undivided interests in River Bend (operated by Entergy Gulf States), and 42% and 58% undivided interests in Big Cajun 2, Unit 3 (operated by Cajun). These relationships have spawned a number of long-standing disputes and claims between the parties. An agreement setting forth terms for the resolution of all such disputes has been reached by Entergy Gulf States, the Cajun bankruptcy trustee, and the RUS, and approved by the United States District Court for the Middle District of Louisiana (District Court) on August 26, 1996 (Cajun Settlement). On September 6, 1996, the Committee of Unsecured Creditors in the Cajun bankruptcy proceeding filed a Notice of Appeal to the United States Court of Appeals for the Fifth Circuit (Fiflh Circuit), objecting that the order approving the Cajun Settlement was separate from the approval of a plan of reorganization and, therefore, improper. The Cajun Settlement is subject to this appeal and approvals by the appropriate regulatory agencies. Entergy Gulf States expects to make. filings with FERC and the SEC seeldng approval for the transfer of certain Cajun transmission assets to Entergy Gulf States. Management believes that it is probable that the Cajun Settlement will ultimately be approved and consummated.

The Cajun Settlement resolves Cajun's civil action against Entergy Gulf States, in which Cajun sought to rescind or terminate the Joint Ownership Participation and Operating Agreement (Operating Agreement) entered into on August 28, 1979, relating to River Bend. In that suit, Cajun also sought to recover its alleged $1.6 billion investment in the unit plus attorniys' fees, interest, and costs. A trial on the portion of the suit by Cajun to rescind the Operating Agreement was completed in March 1995. On October 24, 1995, the District Court issued a memorandum opinion rejecting Cajun's faud claims and denying rescission. An appeal to the Fifth Circuit by the Cajun bankruptcy trustee was stayed pending the Court's trial of the breach of contract phase of the case. The Cajun Settlement resolves both the issues on appeal and the breach of contract claims, which have not been tried.

In 1992, two member cooperatives of Cajun brought an additional independent action to declare the Operating Agreement null and void, based upon Entergy Gulf States' failure to get prior LPSC approval which was alleged to be necessary. Prior to its bankruptcy proceedings, Cajun intervened as a plaintiff in this action. Entergy Gulf States believes the suits are without merit and believes Cajun's claim is mooted by the Cajun Settlement.

The Cajun Settlement, agreed to in principle on April 26, 1996, by Entergy Gulf States, the Cajun bankruptcy trustee, and the RUS, Cajun's largest creditor, was approved by the District Court on August 26, 1996.

The terms include, but are not limited to, the following: 0) Cajun's interest in River Bend will be turned over to the RUS, which will have the option to retain the interest, sell it to a third party,.or transfer it to Entergy Gulf States at no cost; (ii) Cajun will set aside a total of $125 million for its share of the decomnumssioning costs of River Bend; (iii)

Cajun will transfer certain transmission assets to Entergy Gulf States; (iv) Cajun will settle transmission disputes and be released from claims for payment under transmission arrangements with Entergy Gulf States as discussed under "Caiun - Transmission Service" below, (v) all funds paid by Entergy Gulf States into the registry of the District Court will be returned to Entergy Gulf States; (vi) Cajun will be released from its unpaid past, present, and future liability for River Bend costs and expenses; and (vii) all litigation between Cajun and Entergy Gulf States will be dismissed. Based on the District Court's approval of the Cajun Settlement; the litigation accrual established in 1994 for possible losses associated with the Cajun-River Bend litigation was reversed in September 1996.

Cajun has not paid its fll share of capital costs, operating aid maintenance expenses, and other costs for repairs and improvements to River Bend since 1992. In view of Cajun's failure to fund its share of River Bend-related operating, maintenance, and capital costs, Entergy Gulf States has (i) credited Entergy Gulf States' share of expenses for Big Cajun 2, Unit 3 against amounts due from Cajun to Entergy Gulf States, and (ii) sought to market Cajun's share of power from River Bend and apply proceeds to the amounts due from Cajun to Entergy Gulf States.

As a result; on November 2, 1994, Cajun discontinued supplying Entergy Gulf States with its share of power from Big Cajun 2, Unit 3. Entergy Gulf States requested an order from the District Court requiring Cajun to supply Entergy Gulf States with this energy and allowing Entergy Gulf States to credit amounts due to Cajun for Big

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Cajun 2, Unit 3 energy against amounts Cajun owed to Entergy Gulf States for River Bend. In December 1994, by meas of a preliminary injunction, the'District Court ordered Cajun supply Entergy Gulf States with its share of energy from Big Cajun 2, Unit3' nd ordered Entergy Gulf Si o 'ixake payments for its share of Big Cajun 2, Unit 3 expenses to the registry of the District Court. In October 1995, the Fifth Circuit affirmed the District Court's preliminary injunction. As of December 31, 1996, $70.4 million had been paid by Entergy Gulf States into the registry of the District Court. Cajun's unpaid portion of River Bend operating and maintenance expenses (including nuclear fuel) and capital costs for 1996 was approximately $55 million. The cumulative cost to Entergy Gulf States resulting from Cajun's failure to pay its full share of River Bend-related costs, reduced by the proceeds from the sale by Entergy Gulf States of Cajun's share of River Bend power and payments into the registry of the District Court for Entergy Gulf States' portion of expenses for Big Cajun 2,- Unit 3, was 4.9 million as of December 31, 1996.

Cajun's unpaid portion of the River Bend-related costs is reflected in long-term receivables with an offsetting reserve in other deferred credits. As discussed above, the Cajun Settlement will conclude all disputes regarding the non-

.payment by Cajun of operating and maintenance expenses. Cajun continues to pay its share of decommissioning costs for River Bend.

On December 21, 1994, Cajun filed a petition in the United States Bankruptcy Court for the Middle District of Louisiana seeking relief under Chapter 11 of the Bankruptcy Code. In its bankruptcy proceedings, Cajun filed a motion on January 10, 1995, to reject the Operating Agreement as a burdensome executory contract. Entergy Gulf States responded on January 10, 1995, with a memorandum opposing Cajun's motion. As discussed above, this matter will be endd as a result of the Cajun Settlement. Proponents of all of the plans of reorganization submitted to the Bankruptcy Court have incorporated the Cajun Settlement as an integral condition to the effectiveness of their plan. The timing and completion of the reorganization plan depends on Bankruptcy Court approval and any required regulatory approvals. The Bankruptcy Court has approved proposals by three groups seeking to acquire the non-nuclear assets of Cajun and has signed an order that establishes rules for how Cajun's 'creditors will vote on the three plans. On December 16, 1996, the Bankruptcy Court began hearings on the balloting and the plan that will be adopted.

Calun - Transmission Service (Entergy Corporation and Entergy Gulf States)

Entergy Gulf States and Cajun are parties to FERC proceedings relating to transmission service charge disputes. In April 1992, FERC issued a final order in these disputes. In May 1992, Entergy Gulf States and Cajun filed motions for rehearings on certain portions of the order, which are still pending at FERC. In June 1992, Entergy Gulf States filed a petition for review in the United States Court of Appeals for the District of Columbia Circuit regarding certain of the other issues decided by FERC. In August 1993, the Court of Appeals rendered an opinion reversing FERC's order regarding the portion of such disputes relating to the calculations of certain credits and equalization charges under Entergy Gulf States' service schedules with Cajun. The opinion remanded the issues to FERC for fiitber proceedings consistent with its opinion. In February 1995, FERC eliminated an issue from the remand that Entergy Gulf States believes the Court of Appeals directed FERC to reconsider. In orders issued on August 3, 1995, and October 2, 1995, FERC affirmed an April 1995 ruling by an AU in the remanded portion of Entergy Gulf States' and Cajun's ongoing transmission service charge disputes before FERC. Both Entergy Gulf States and Cajun have petitioned for appeal. The Court of Appeals has stayed the appellate proceeding pending implementation of the Cajun Settlement (see Cajun - River Bend above, for a further discussion of the Cajun Settlement).

Under Entergy Gulf States' interpretation of a 1992 FERC order, as modified by FERC's orders issued on August 3, 1995, and October 2,1995, and as agreed to by the Cajun bankruptcy trustee, Cajun would owe Entergy Gulf States approximately $70.2 million as of December 31, 1996. Entergy Gulf States further estimates that if it were to prevail in its May 1992 motion for rehearing and on certain other issues decided adversely to Entergy Gulf States in the February 1995, August 1995, and October 1995 FERC orders, which Entergy Gulf States has appealed, Cajun would owe Entergy Gulf States approximately $157.3 million as of December 31, 1996. If Cajun ,we to prevail in its May 1992 motion for rehearing to FERC, and if Entergy Gulf States were not to prevail in its May 1992 motion for rehearing to FERC, and if Cajun were to prevail in appealing FERC's August and October 1995

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I orders, Entergy Gulf States estirmates it would owe Cajun approximately $I 10.9 million as of December 31, 1996.

The above amounts are exclusive of a S7.3 million payment by Cajun on December 31, 1990, which the parties agreed to apply to the disputed transmission service charges. Pending FERC's ruling on the May 1992 motions for rehearing, Entergy Gulf States has continued to bill Cajun utilizing the historical billing methodology and has recorded underpaid transmission charges, including interest, in the amount of S144 million as of December 31, 1996.

This amount is reflected in long-term receivables with an offsetting reserve in other deferred credits. FERC has determined that the collection of the pre-petition debt of Cajun is an issue properly decided in the bankruptcy proceeding. Refer to "Caiun - River Bend" above for a discussion of the Cajun Settlement.

Capital Requirements and Financing (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)

Construction expenditure (excluding nuclear fuel) for the domestic utility companies and System Entergy for the years 1997, 1998, and 1999 are estimated to total, $510 million, $547 million, and S565 million, respectively.

Entergy will also require $986 million during the period 1997-1999 to meet long-term debt and preferred stock maturities and cash sinking fini requirements. Entergy plans to meet the above requirements primarily with internally generated funds and ash. on hand, supplemented by the issuance of debt and. company-obligated mandatorily redeemable preferred securities and the use of outstanding credit facilities. Certain domestic utility companies and System Energy may also continue with the acquisition or refinancing of all or a portion of certain outstanding series of preferred stock and long-term debt. See Notes 5,6, and 7 for further information.

Grand Gulf 1-Related Apreements Capital Funds Agreement (Entergy Corporation and System Energy)

Entergy Corporation has agreed to supply System Energy with sufficient capital to (i) maintain System Energy's equity capital at an amount equal to a minimum of 35% of its total capitalization (excluding short-term debt), and (ii) permit the continued commercial operation of Grand Gulf 1 and pay in full all indebtedness for borrowed money of System Energy when due under any circumstances. In addition, under supplements to the Capital Funds Agreement assigning System Energy's rights as security for specific debt of System Energy, Entergy Corporation has agreed to make cash capital contributions to enable System Energy to make payments on such debt when due.

System Energy has entered into various agreements with Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans whereby they are obligated to purchase their respective entitlements of capacity and energy from System Energy's 90% ownership and leasehold interest in Grid Gulf 1, and to make payments that, together.,with other available funds, are adequate to cover System Energy's operating expenses.

System Energy would have to secure funds from other sources, including Entergy Corporation's obligations under the Capital Funds Agreement, to cover any shortfalls from payments received from Entergy Arkansas, Etergy Louisiana, Entergy Mississippi, and Entergy New Orleans under these agreements.

Unit Power Sales Agreement (Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)

System Energy has agred to sell all of its 90% owned and leased share of capacity and energy from Grand Gulf I to Entergy Arkansas, Entrgy Louisiana, Entergy Mississippi, and Entergy New Orleans in accordance with specified percentages (Entergy Arkansas-36%,Entrgy Louisiana-14%, Entergy Mississippi-33% and Entergy New Orleans-17%) as ordered by FERC. Charges under this agreement are paid in consideration for the purchasing companies' respective entitlement to receive capacity and energy nd are payable irrespective of the. quantity of energy delivered so long as the unit remains in commercial operation. The agreement will remain in effect unti terminated by the parties and approved by FERC, most likely upon Grand Gulf I's retirement from service. Monthly obligations for payments, including the rate increase which was placed into effect in December 1995, subject to

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refind, under the agreement are approximately $21 million, $8 million, S19 million, and $10 million for Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans, respectively.

Availability Agreement (Entergy Arkansas, Entergy Louisiana; Entergy Mississippi, Entergy New Orleans, and System Energy)

Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans are individually obligated to make payments or subordinated advances to System Energy in accordance with stated percentages (Entergy Axcansas-17.1%, Entergy Louisiana-26.9 0/o, Entergy Mississippi-31.3%, and Entergy New Orleans-24.7%)

in amounts that when added to amounts received under the Unit Power Sales Agreement or otherwise, are adequate to cover all of System Energy's operating expenses as defined, including an amount sufficient to amortize Grand Gulf 2 over 27 years. (See Reallocation Agreement terms below.) System Energy has assigned its rights to payments and advances to certain creditors as security for certain obligations. Since commercial operation of Grand Gulf 1, payments under the Unit Power Sales Agreement have exceeded the amounts payable under the Availability Agreement. Accordingly, no payments have ever been required. If Entergy Arkansas or Entergy Mississippi fails to make its Unit Power Sales Agreement payments, and System Energy is unable to obtain funds from other sources, Entergy Louisiana and Entergy New Orleans could become subject to claims or demands by System Energy or its creditors for payments or advances under the Availability Agreement (or the assignments thereof) equal to the difference between their required Unit Power Sales Agreement payments and their required Availability Agreement payments.

Reallocation Agreement (Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)

System Energy, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans entered into the Reallocation Agreement relating to the sale of capacity and energy from Grand Gulf and the related costs, in which Entergy Louisiana,'Entergy Mississippi, and Entergy New Orleans agreed to assume all of Entergy Arkansas' responsibilities and obligations with respect to Grand Gulf under the Availability Agreement. FERC's decision allocating a portion of Grand Gulf 1 capacity and energy to Entergy Arkansas 'supersedes the Reallocation Agreement as it relates to Grand Gulf 1. Responsibility for any Grand Gulf 2 amortization amounts has been individually allocated (Entergy Louisiana-26.23%, Entergy Mississippi-43.97%/o, and Entergy New Orleans-29.80%)

under the termis of the Reallocation Agreement. However, the Reallocation Agreement does not affect Entergy Arans' obligation to System Energy's lenders under the assignments referred to in the preceding paragraph.

Entergy Arkansas would be liable for its share of such amounts if Entergy Louisiana, Entergy Mississippi and Entergy New Orleans were unable to meet their contractual obligations.' No payments of any amortization amounts will be required as long as amounts paid to System Energy under the Unit Power Sales Agreement, including other funds available to System Energy, exceed amounts required under the Availability Agreement, which is expected to be the case for the foreseeable future.

Reimbursement Agreement (System Energy)

In December 1988, System Energy entered into two entirely separate,"but identical, arrangements for the sales and leasebcks of an approximate aggregate 11.5% ownership interest in Grand Gulf 1 (see Note 10). In connection with the equity funding of the sale and leaseback arrangements, letters of credit are required to be maintained to secure certain amounts payable for' the benefit of the equity investors by System Energy under the leases. The current letters'of credit are effective until January 15, 2000.

Under ie'provisions of a bank letter of credit reimbursement agreeient, System Energy has agreed to a number of covenants relating to the maintenance of certain capitalization and fixed charge coverage ratios. System Energy agreed, during the term of the reimbursement agreement, to maintain its equity at not less than 33% of its adjusted capitalization (defined in the reimbursement agreement to include certain amounts not included in capitalization for financial statement purposes). In addition, System Energy must maintain, with respect to each

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fiscal quarter during the term of the reimbursement agreement, a ratio of adjusted net income to interest expense (calculated, in each case, as specified in the reimbursement agreement) of at least 1.60 times earnings. As of

• December 31, 1996, System Energy's equity approximated 34.79% of its adjusted capitalization, and its fixed charge coverage ratio was 2.25.

Fuel Purchase Areements (Entergy Arkansas and Entergy Mississippi)

Entergy Arkansas has long-term contracts with mines in the State of Wyoming for the supply of low-sulfur coal for the White Bluff Steam Electric Generating Station and Independence (which is 25% owned by Entergy Mississippi). These contracts, which expire in 2002 and 2011, provide for approximately 85% of Entergy Arkansas' expected annual coal requirements.. Additional requirements are satisfied by annual spot market purchases.

(Entergy Gulf States)

Entergy Gulf States ha; a contract for a supply of low-sulfur Wyoming coal for Nelson Unit 6, which should be sufficient to satisfy the fuel requirements at Nelson Unit 6 through 2010. Cajun has advised Entergy Gulf States that Cajun has contracts that should provide an adequate supply of coal until 1999 for the operation of Big Cajun 2, Unit 3.

Entergy Gulf States has long-term gas contracts, which will satisfy approximately 50%. of its annual requirements. Such contracts generally require Entergy Gulf States to purchase in the range of 20% of expected total gas needs. Additional gas requirements are satisfied under less expensive short-term contracts. Entergy Gulf States has a transportation service agreenent with a gas supplier that provides flexible natural gas service to the Sabine and Lewis Creek generating stations. This service is provided by the supplier's pipeline and salt dome gas storage facility, which has a present capacity of 12.7 billion cubic feet of natural gas.

(Entergy Louisiana)

In June 1992, Entergy Louisiana agreed to a renegotiated 20-year natural gas supply contract. Entergy Louisiana agreed to purchase natural gas in annual amounts equal to approximately one-third of its projected annual fuel iequirements for certain generating units. Annual demand charges associated with this contract are estimated to be $8.6 million through 1997, and a total of $116.6 million for the years 1998 through 2012. Entergy Louisiana recovers the cost of fuel consumed during the generation of electricity through its fuel adjustment clause.

Sales ALreementsIPower Purchases (Entergy Gulf States)

In 1988, Entergy Gulf states entered into a joint venture with a primary term of 20 years with Conoco, Inc.,

Citgo Petroleum Corporation, and Vista Chemical Company (Industrial Participants) whereby Entergy Gulf States' Nelson Units 1 and 2 were sold to a partnership (NISCO) consisting of the Industrial Participants and Entergy Gulf States. The Industrial Participnts supply the fuel for the units, while Entergy Gulf States operates the units at the discretion of the ndustrial Participants and purchases the electricity produced by the units. Entergy Gulf States is continuing to sell electricity to the Industrial Participants. For the years ended December 31, 1996, 1995, and 1994, the purchases by Entcrgy Gulf States of electricity firn the joint venture totaled $62.0 million, S58.5 million, and

$59.4 million, respectively.

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(Entergy Louisiana) .  :-

Entergy Louisiana has an agreement extending through the year 2031 to purchase energy generated by a hydroelectric facility. During 1996, 1995, and 1994, Entergy Louisiana made payments under the contract of approximately S56.3 million, $55.7 million, and $56.3 million, respectively. If the maximum percentage (94%) of the energy is made available to Entergy Louisiana, current production projections would require estimated payments of approximately $54 million in 1997, and a total of $3.5 billion for the years 1998 through 2031. Entergy Louisiana recovers the costs of purchased energy through its fuel adjustment clause.

System Fuels (Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)

Entergy Arkansas, Entergy Louisiana, Entergy Mississippi and Entergy New Orleans have interests in System Fuels of 35%, 33%, 19%, and 130 respectively. The parent companies of System Fuels agreed to make loans to System Fuels to finance its fuel procurement, delivery, and storage activities. As of December 31, 1996, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans had, respectively, approximately $11 million, S14.2 million, $5.5 million, and $3.3 million in loans outstanding to System Fuels which mature in 2008.

In addition, System Fuels entered into a revolving credit agreement with a bank that provides $45 million in borrowings to finance System Fuels' nuclear materials and services inventory. Should System Fuels default on its obligations under its credit agreement, Entergy Arkansas, Entergy Louisiana, and System Energy have agreed to purchase nuclear materials and services financed under the agreement.

Nuclear Insurance (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)

The Price-Anderson Act limits public liability for a single nuclear incident to approximately $8.92 billion.

Protection for this liability is provided through a combination of private insurance (currently '$200 million each for Entergy Arkansas, -Entergy Gulf States, Entergy Louisiana, and System Energy) and an industry assessment program. Under the assessment program, the maximum payment requirement for each nuclear incident would be S79.3 million per reactor, payable at a rate of $10 million per licensed reactor per incident per year. Entergy has five licensed reactors. As a co-licensee of Grand Gulf 1 with System Energy, SMEPA would share 10% of this obligation. With respect to River Bend, any assessments pertaining to this program are allocated in accordance with the respective ownership interests of Entergy Gulf States and Cajun. In addition, each owner/licensee of Entergy's five nuclear units participates in a private insurance program which provides coverage for worker tort claims filed for bodily injury caused by radiation exposure. The program provides for a maximum assessment of approximately

$16 million for the five nuclear units in the event losses exceed accumulated reserve funds.

Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy are also members of certain insurance programs that provide coverage for property damage, including decontamination and premature decommissioning expense, to members' nuclear generating plants. As of December 31, 1996, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy each was insured against such losses up to $2.75 billion.

In addition, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi and Entergy New Orleans are members of an insurance program that covers certain replacement power and business interruption costs incurred due to prolonged nuclear unit outages. Under the property damage and replacement power/business interruption insurance programs, these Entergy subsidiaries could be subject to assessments if losses exceed the accumulated funds available to the insurers. As of December 31, 1996, the maximum amounts of such possible assessments were: Entergy Arkansas - $31.1 million; Entergy Gulf States - $ 1.5 million; Entergy Louisiana -

$24.8 million; Entergy Mississippi - $0.7 million; Entergy New Orleans - $0.4 million; and System Energy - $21.3 million. Under its agreement with System Energy, SMEPA would share in System Energy's obligation. Cajun has no share of Entergy Gulf States' obligation.

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T The amount of property insurance naintained for each Entergy nuclear unit exceeds the NRC's minimum requirement for nuclear power plant licensees of S1.06 billion per site. NRC regulations provide that the proceeds of this insurance must be used, first, to place and maintain the reactor in a safe and stable condition and, second, to complete decontamination operations. Only after proceeds are dedicated for such use and regulatory approval is secured would any remaining proceeds be made available for the benefit of plant owners or their creditors.

Snent Nuclear Fuel nd Decommissioning Costs (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy)

Entergy Arkansas, Enterly Gulf States, Entergy Louisiana, and System Energy provide for estimated future disposal costs for spent nuclear fuel in accordance with the Nuclear Waste Policy Act of 1982. The affected Entergy companies entered into contracts with the DOE, whereby the DOE will furnish disposal service at a cost of one mill per net kWh generated and sold after April 7, 1983, plus a onetime fee for generation prior to that date. Entergy Arkansas, the only Entergy company tat generated electricity with nuclear fuel prior to that date, elected to pay the onetime fee plus accrued interest, no earlier than 1998, and has recorded a liability as of December 31, 1996, of approximately S 117 million for generation subsequent to 1983. The fees payable to the DOE may be adjusted in the future to assure full recovery. Entergy considers all costs incurred or to be incurred, except accrued interest, for the disposal of spent nuclear fuel to be proper components of nuclear fuel expense, and provisions to recover such costs have been or will be made in applications to regulatory authorities.

Delays have occurred in the DOE's program for the acceptance and disposal of spent nuclear fuel at a permanent repository. In a statement released February 17, 1993, the DOE asserted that it does not have a legal obligation to accept spent nuclear fuel without an operational repository for which it has not yet arranged Entergy Operations and System Fuels joined in lawsuits against the DOE, seeking clarification of the DOE's responsibility to receive spent nuclear fuel beginning in 1998. The original suits, filed June 20, 1994, asked for a ruling stating that the Nuclear Waste Policy Act requires the DOE to begin taking title to the spent fuel and to start removing it from nuclear power plants in 1998, a mandate for the DOE's nuclear waste management program to begin accepting fuel in 1998 and court monitoring of the program, and the potential for.escrow of payments to a nuclear waste fund

• instead of directly to the DOE. Argument in the case before a three-judge panel of the U.S. Court of Appeals. was made on January 17, 1996. On July 23, 1996, the court reversed the DOE's interpretation of the 1998 obligation and unanimously ruled that the Nuclear Waste Policy Act creates an unconditional obligation to begin acceptance of spent fuel by 1998, but did not make a ruling on the remedies.

On December 17,p 1996, the DOE notified contract holders that it anticipates it will not be able to begin such acceptance until after that date. Subsequently, on January 31, 1997, Entergy Operations and a coalition of 36 electric utilities and 46 state agencies filed lawsuits to suspend payments to the Nuclear Waste Fund. The lawsuits ask the court to (i) find that the December 17, 1996 DOE letter dmonstrates breach of contract on the part of the DOE; ()

order utilities to place the Nuclear Waste Fund payments in an escrow account and not provide the funds to the DOE until it fulfills its obligation, iii) prevent the DOE from taking adverse action against utilities that withhold payments; and (iv) order the DOE to submit a plan to the court describing-how the agency intends to fulfill its obligation on an ongoing.basis.

In the meantime, all Entergy companies are responsible for their spent fuel storage. Current on-site spent fuel storage capacity at River Bend, Waterford 3, and Grand Gulf is estimated to be sufficient until 2003, 2000, and 2004, respectively. Thereafter, the affected companies will provide additional storage. Current on-site spent fuel storage capacity at ANO is estimated to be sufficient until 2000. An ANO storage facility using dry casks.began operation in 1996, This facility may be expanded further as required. The initial cost of providing the additional on-site spent fuel storage capability required at ANO, River Bend, Waterford 3, and Grand Gulf 1 is expected to be approximately $5 million to $10 million per unit. In addition, about $3 million to S5 million per unit will be required every two to three years subsequent to 2000 for ANO and every four to five years subsequent to 2003, 2000, and

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2004 for River Bend, Waterford 3, and Grand Gulf 1, respectively, until the DOE's repository or storage facility begins accepting such units' spentfuel., . .

Total decommissioning costs at December 31, 1996, for t Entergy nuclear power plants, excluding co-owner shares, have been estimated as follows:

Total Estimated Decomunissioning Costs (In Millions)

ANO 1and ANO 2 (based on a 1994 interim update to the 1992 cost study) S 806.3 River Bend (based on a 1996 cost study reflecting 1996 dollar) 293.3 Waterford 3 (based on a 1994 updated study in 1993 ddlars) 320.1 Grand Gulf (based on a 1994 cost study using 1993 dollars) 365.9

$ 1,785.6 Entergy Arkansas and Entergy Louisiana are authorized to recover in rates amounts that, when added to estimated investment income, should be sufficient to meet the above estimated decommissioning costs for ANO and Waterford 3, respectively. In the Texas retail jurisdiction, Entergy Gulf States is recovering in rates River Bend decommissioning costs (based on the 1991 cost study that totaled S267.8 nuillion) that, with adjustments, total $204.9 million. In the Louisiana retail jurisdiction, Entergy Gulf States is currently recovering in rates decommissioning costs (based on a 1985 cost study) which total $141 million. Entergy Gulf States included decommissioning costs (based on the 1991 study) in the LPSC rate review filed in May 1995. In October 1996, the LPSC approved Entergy Gulf States rates that include decommissioning costs based on the 1991 study. The October 1996 LPSC order has been appealed and the decommissioning costs based on the 1991 study have not yet been implemented. Entergy Gulf States included decommissioning costs, based on the 1996 study, in the LPSC rate review filed in May 1996 and in the PUCT rate -review filed in November 1996. Those reviews are still ongoing. System Energy was previously recovering in rates amounts sufficient to fund $198 million (in 1989 dollars) of its Grand Gulf I decommissioning costs. System Energy included decommissioning costs (based on the 1994 study) in its rate increase filing with FERC. Rates requested in this proceeding were placed into effect in December'1995, subject to refund. FERC has not yet issued an order in the System Energy rate case. Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy periodically review and update estimated decommissioning costs. Although Entergy is presently underrecovering for Grand Gulf and River Bend based on the above estimates, applications are periodically made to the appropriate regulatory authorities to reflect in rates any future change in projected decommissioning costs. The amounts recovered in rates are deposited in trust funds and reported at market value as quoted on nationally traded markets or as determined by widely used pricing services. These trust fund assets largely offset the accumulated decommissioning liability tat is recorded as accumulated depreciation for Entergy Arkaisas, Entergy Gulf States, and Entergy Louisiana, and as other deferred credits for System Energy.

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I The cumulative liabilities and actual decommissioning expenses recorded in 1996 by Entergy were as follows:

Cumulative 1996 Cumulative Liabilities as of 1996 Trust Decommissioning Liabilities as of December 31, 1995 Earnines Expenses December 31, 1996 (In Millions)

ANO I and ANO 2 S 169.0 S 11.5 S 20.1 $ 200.6 River Bend 31.7 1.5 6.0 39.2 Waterford 3 37.4 2.8 8.8 49.0 Grand Gulf 1 39.4 2.3 19.0 60.7 S 277.5 S 18.1 S 53.9 S 349.5 In 1995 and 1994, ANO's decommissioning expense was S17.7 million, and S12.2 million, respectively-,

River Bend's decommissioning expense was 8.1 million and S3.0 million, respectively; Waterford 3's decommissioning expense was S7.5 million and $4.8 million, respectively, and Grand Gulf 1's decommissioning expense was $5.4 million and S5.2 million, respectively. The actual decommissioning costs may vary from the estimates because of regulatory requirements, changes in technology, and increased costs of labor, materials, and equipment. Management believes that actual decommissioning costs are likely to be higher than the estimated amounts presented above.

The SEC has questioned certain of the financial accounting practices of the electric utility industry regarding the recognition, measurement, and classification of decommissioning costs for nuclear plants in the financial statements of electric utilities. In response to these questions, the FASB has been reviewing the accounting for decommissioning and has expanded the scope of its review to include liabilities related to the closure and removal of all long-lived assets. An exposure draft of the proposed SFAS (which proposed a 1997 effective date) was issued in February 1996. The proposed SFAS would require measurement and recognition of the liability for closure and removal of long-lived assets (including decommissioning). based on the amount of discounted future cash flows related to closure and removal oasts at the time the liability was initially incurred. Those future cash flows should be determined by estimating current costs for closure and removal and adjusting for inflation, efficiencies that may be gained from experience with similar activities, and consideration of reasonable future advances in technology.

The initial liability would be offset by an asset that should be presented with other plant costs on the financial statements because the cost of decommissioning/closing the plant would be recognized as part of the total cost of the plant asset Changes in th decommissioning/closure cost liability resulting from changes in assumptions would be recognized with a corresponding adjustment to the plant asset, and depreciation revised prospectively.

Additional increases to the liability would be recognized to reflect the increase in the discounted cash flows resulting from the passage of time. Such increases would be offset by a regulatory asset, to the extent such costs are deemed probable of future recovery.

After receiving comments on the exposure draft, the FASB has decided that the effective date for the proposed SFAS will be later than 1997, although a final effective date has not yet been announced. The FASB is expeted to issue an additional document on this issue in the secndquarter of 1997, although it has not yet ben decided if that document will be in the form of a final accounting standard or a revised exposure draft If current electric utility industry accounting practices ith respect to nuclear decommissioning and other closure costs are changed, annual provisions for such costs could increase, the estimated cost for decommissioning/closure could be recorded as a liability rather than as accumulated depreciation, and trust fund income from decommissioning trusts could be reported as investment income rather than as a reduction to decommissioning expense.

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The EPAct has a provision that assesses domestic nuclear tilities with fees for the decontamination and decommissioning of the DOE's 'pit uranium enrichment operations.' .The decontamination and decommissioning assessments are being used to set up afund into which contributions from utilities and the federal government will be placed. Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy's annual assessments, which will be adjusted annually for inflation, are approximately S3.6 million, $0.9 million, S1.4 million, and S1.5 million (in 1996 dollars), respectively, for approximately 15 years. At December 31, 1996, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy had recorded liabilities of S36.4 million, S6.3 million, $13.8 million, and S13.6 million, respectively, for decontamination and decommissioning fees in other current liabilities and other noncurrent liabilities, and these liabilities were offset in the consolidated financial statements by regulatory assets.

FERC requires that utilities treat these assessments as costs of fuel as they are amortized and are recovered through rates in the same manner as other fuel costs.

ANO Matters (Entergy Corporation and Entergy Arkansas)

Cracks in certain steam generator tubes at ANO 2 were discovered and repaired during an outage in March 1992. Further inspections and repairs were conducted at subsequent refueling and mid-cycle outages, including the most recent forced outage in November 1996. ANO 2's output has been reduced by 23 MW due to steam generator fouling and tube plugging. The unit may be approaching the current limit for the number of steam generator tubes that can be plugged with the unit in operation. If the established limit is reached during a future outage, Entergy Operations could be required to insert sleeves in steam generator tubes that were previously plugged.

On October 25, 1996, Entergy Corporation's Board of Directors authorized Entergy Operations to negotiate a contract, with appropriate cancellation provisions, for the fabrication and replacement of the steam generators at ANO 2. Entergy estimates the cost of fabrication and replacement of the steam generators to be approximately $150 million. A letter of intent for the fabrication has been signed by Entergy Operations, which includes a commitment for not more than S3.2 million, and a contract is expected to be entered into in 1997. If a formal contract to purchase the steam generators is not canceled, the steam generators will be installed during a planned refueling outage in 2000.

Entergy Operations periodically meets with the NRC to discuss the results of inspections of the steam generator tubes, as well as the timing of future inspections.

Environmental Issues (Entergy Arkansas)

In May 1995, Entergy Arkansas was named as a defendant in a suit by Reynolds Metals Company (Reynolds), seeking to recover a share of the costs associated with the clean-up of hazardous substances at a site south of Arkadelphia, Arkansas. Reynolds alleges that it has spent S11.2 million to clean-up the site, and that the site was contaminated in part with PCBs for which Entergy Arkansas bears some responsibility. Entergy Arkansas, voluntarily, at its expense, has already completed remediation at a nearby substation site and believes that it has no liability for contamination at the site that is subject to the Reynolds suit and is contesting the lawsuit. An August 1997 trial date has been tentatively scheduled. Regardless of the outcome, Entergy Arkansas does not believe this matter would have a materially adverse effect on its financial condition or results of operations.

(Entergy Gulf States)

Entergy Gulf States has beendesignated as a PRP for the clean-up of certain hazardous waste disposal sites.

Entergy Gulf States is currently nDgotiating with the EPA and state authorities regarding the clean-up of these sites.

Several class action and other suits have been filed in state and federal courts seeking relief from Entergy Gulf States and others for damages caused by the disposal of hazardous waste and for asbestos-related disease allegedly resulting from exposure on Entergy Gulf States premises. While the amounts at issue in the clean-up efforts and suits may be substantial, Entergy Gulf States believes that its results of operations and financial condition will not be materially adversely affected by the outcome of the suits. AsofDecember 31,1996, a remaining recorded liability of S21.4 nmillion existed relating to the clean-up of seven sites at which Entergy Gulf States has been designated a PRP.

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(Entergy Louisiana)

During 1993, the LDEQ issued new rules for solid waste regulation, including regulation of wastewater impoundments. Entergy Louisiana has determined that certain of its power plant wastewater impoundments were affected by these regulations and has chosen to upgrade or close them. A a result, a remaining'recorded liability in the amount of $6.7 million existed at December 31, 1996, for wastewater upgrades and closures to be completed in 1997. Cumulative expenditures relating to the upgrades and closures of wastewater impoundments were S7.1 million as of December31, 1996.

City Franchise Ordinances (Entergy New Orleans)

Entergy New Orleans provides electric and gas service in the City of New Orleans pursuant to City franchise ordinances that state, among other things, the City has a continuing option to purchase Entergy New Orleans' electric and gas utility properties.

Employment Litization (Entergy Corporation, Entergy Ariansas, Entergy Gulf States, Entergy Louisiana, and Entergy New Orleans)

Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and Entergy New Orleans are defendants in numerous lawsuits described below that have been filed by former employees asserting that they were wrongfully terminated and/or disca against due to age, race, and/or sex. Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and Entergy New Orleans are vigorously defending these suits and deny any liability to the plaintiffs. However, no assurance can be given as to the outcome of these cases.

(Entergy Corporation and Entergy Arkansas)

Entergy Corporation and Entergy Arkansas are defendants in five suits filed in federal court on behalf of approximately 62 plaintiffs who claim they were illegally terminated from their jobs due to discrimination on the basis of age or race. One of these suits seeks class certification. A trial date is scheduled in March 1997 for one suit comprised of approximately 29 plaintiffs, and a trial date is scheduled in May 1997 for another suit comprised of approximately 18 plaintiffs. Trial dates have not been set in the other suits.

(Entergy Corporation and Entergy Gulf States)

Entergy Corporation and Entergy Gulf States are defendants in a lawsuit involving approximately 176 plaintiffs filed in state court in Texas by former employees who claim that they lost their jobs as a result of the Merger. The plaintiffs in these cases have asserted various claims, including discrimination on the basis of age, race, and/or sex. The court has preliminarily ruled that each plaintiff's claim should be tried separately. The first case is scheduled for trial in June 1997.

(Entergy Corporation, Entergy Gulf States, and Entergy Louisiana)

Entergy Corporation, Entergy Gulf States and Entergy Louisiana are defendants in a suit filed in federal court in Louisiana by approximately 39 plaintiffs who claim, among other things, they were wrongfully discharged from their employment on the basis of their age. No trial date has been set for this case.

(Entergy Louisiana and Entergy New Orleans)

Entergy Louisiana and Entergy New Orleans are defendants in a suit filed in state court in Louisiana by 110 plaintiffs who seek to certify a class on behalf of all employees who allegedly were terminated or required to resign

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on the basis of age. e court has set a hearing for certification of the class for March 13, 1997; no trial date has been set. Entergy Louisiana and/or Entergy New Orleans also are defendants in approximately 27 other suits filed in federal or state court by plaintiffs who claim they were wrongfully discharged on the basis of age, race, or sex.

Financial Instruments In accordance with the debt covenants included in the financing provisions of the CitiPower acquisition, CitiPower must hedge at least 80% of its energy purchases. CitiPower's current strategy is to hedge approximately 100% of its forecasted energy purchases through contracts entered into with certain generators. These contracts mature through the year 2000.

NOTE 10. LEASES General As of December 31, 1996, Entergy had capital leases and noncancelable operating leases for equipment, buildings, veicles, and fuel storage facilities (excluding nuclear fuel leases and the sale and leaseback transactions) with minimum lease payments as follows:

Ca Leasm Entergy Enterw Year Entew Arkasas Gulf States (In Thousands)

• 1997 S 27,312 S 10,953 *S 12,475 1998 27,294 10,953 12,475 1999 27,268 10,953 12,475 2000 25,530 9,646 12,049 2001 23,400 9,646 11,623 Years theafter 99,877 52,209 47,418 NfMnimum lease payments 230,681 104,360 108,515 Less: Amount reresuting int st 83,741 45,151 36,104 Present value of net innmm le paymnts S 146,940 S 59,209 S 72,411

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Op ng Leases Year ery Azichas Gulf States Louisiana (In Thousands) 1997 S 56,232 S 23,248 S 8,040 S 5,383 1998 55,358 20,999 11,867 4,778 1999 52,060 19,104 11,865 4,382 2000 47,125 17,136 11,354 3,925 2001 43,505 17,219 11,355 504 Years thureafter 29,495 67,816 2,210 Mfinhnmlease p1Mrdts S 465,518 S 127,201 S 122,297 $ 21,182 Rental expense for Entergy's leases (excluding nuclear fuel leases and the sale and leaseback transactions) amounted to approximately S59.7 million, S61.1 million, and S64.8 million in 1996, 1995, and 1994, respectively.

These amounts include $26.0 million, $26.0 million, and S26.4 million, respectively, for Entergy Arkansas, $11.8 million, 13.0 million, and 15.3 million, respectively for Entergy Gulf States, and 13.7 million, 13.6 million, and S12.1 million, respectively, for Entergy Louisiana.

Nuclear Fuel Leases Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy each has arrangements to lease nuclear fuel in an aggregate amount up to S385 million as of December 31, 1996. The lessors finance the acquisition and ownership of nuclear fuel through credit agreements and the issuance of notes. These agreements are subject to annual renewal with, in Entergy Louisiana's and Entergy Gulf States' case, the consent of the lenders. The credit agreements for Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy have been extended and now have termination dates of Decemrber1 999, Dcember 1999, January 2000, and February 2000, respectively. The debt securities issued pursuant to these fuel lease arrangements have varying maturities through January 31, 1999. It is expected that the credit agreements will be extended or alternative financing will be secured by each lessor upon the maturity of the current arrangements. If extensions or alternative financing cannot be arranged, the lessee in each case must purchase sufficient nuclear fuel to allow the lessor to retire such borrowings.

Lease payments are based on nuclear fuel use. Nuclear fuel lease expense charged to operations by the domestic utility companies in 1996, 1995, and 1994 was S158.5 million (including interest of $21.7 million), $153.5 million (including interest of $22.1 million), and S163.4 million (including interest of $27.3 million), respectively.

Specifically, in 1996, 1995, and 1994 Entergy Arkansas' expense was $53.9 million, 46.8 millioi, and S56.2 million (including interest of $7.1 million, S6.7 million, and S7.5 million), respectively; Entergy Gulf States' expense was $27.1 million, 41.4 million, and $37.2 million (including interest of $4.2 million, $6.0 million, and $8.7 million), respectively; Entergy Louisiana's expense was $39.8 million, $30.8 million, and $32.2 million (including interest of $4.9 million, $3.7 million, and $4.3 million), respectively; System Energy's expense was $37.7 million,

$34.5 million, and S37.8 million (including interest of $5.5 million, S5.7 million, and S6.8 million), respectively.

Sale and Leaseback Transactions Waterford 3 Lease Obligations (Entergy Louisiana)

On September 28, 1989, Entergy Louisiana entered into three transactions for the sale (for an aggregate cash consideration of S353.6 million) and leaseback of three undivided portions of its 100% ownership interest in Waterford 3. The three undivided interests in Waterford 3 sold and leased back exclude certain transmission,

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pollution control, and other facilities that'are part of Waterford 3. The interests sold and leased back are equivalent on an aggregate cost basis to al5Vrjimately a 9.3% undivided interest inWaterford 3. Entergy Louisiana is leasing back the interests on a net lease basis over an approximate 28-year basic lease term. Entergy Louisiana has options to terminate the lease and to repurchase the interests in Waterford 3 at certain intervals during the basic lease term.

Further, at the end of the basic lease term, Entergy Louisiana has an option to renew the lease or to repurchase the undivided interests in Waterford 3.

Interests were acquired from Entergy Louisiana with funds obtained from the issuance and sale by the purchasers of intermediate-term and long-term secured lease obligation bonds. Tlhe lease payments to be made by Entergy Louisiana will be sufficient to service such debt..

Entergy Louisiana did not exercise its option to repurchase the undivided interests in Waterford 3 in September 1994. As a result, Entergy Louisiana was required to provide collateral for the equity portion of certain amounts payable by Entergy Louisiana under the leases. Such collateral was in the form of a new series of non-interest-bearing first mortgage bonds in the aggregate principal amount of S208.2 million issued by Entergy Louisiana in September 1994.

Upon the occurrence of certain adverse events (including lease events of default, events of loss, deemed loss events or certain adverse "Financial Events" with respect to Entergy Louisiana), Entergy Louisiana may be obligated to pay amounts sufficient to permit the termination of the lease transactions and may be required to assume the outstanding indebtedness issued to finance the acquisition of the undivided interests in Waterford 3. '¶Financial Events" include, among other things, failure by Entergy Louisiana, following the expiration of any applicable grace or cure periods, to maintain (1) as of the end of any fiscal quarter, total equity capital (including preferred stock) at least equal to 30% of adjusted capitalization, or (2) in respect of the 12-month period ending on the last day of any fiscal quarter, a fixed charge coverage ratio of at least 1.50. As of December 31, 1996, Entergy Louisiana's total equity capital (including preferred stock) was 46.9% of adjusted capitalization and its fixed charge coverage ratio was 3.18.

As of December31, 1996, Entergy Louisiana had future. minimum lease payments (reflecting an overall implicit rate of 8.76%) in connection with the Waterford 3 sale and leaseback transactions, which are recorded as long-term debt, as follows (in thousands):

1997 S 39,805 1998 41,447 1999 50,530 2000 ' 47,510 2001 -46,015 Years thereafter' 582,689 Total 807,996 Less: Amount representing interest ,' . 454,396 Present value of net minimum lease payments S 353,600 Grand Gulf 1 Lease Obligations (System Energy)

On December 28, 1988, System Energy entered into two arrangements for the sale and leaseback of an aggregate 11.5% undivided ownership interest in Grand Gulf I for an aggregate cash consideration of $500 million.

System Energy is leasing back the undivided interest on a net lease basis over a 26 1/2-year basic lease term. System Energy has options to terminate the leases and to repurchase the undivided interest in Grand Gulf 1 at certain intervals during the basic lease term. Further, at the end of the basic lease term, System Energy has an option to renew the leases or to repurchase the undivided interest in Grand Gulf 1. See Note 9 with respect to certain other terms of the transactions.

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l In accordance with SFAS 98, "Accounting for Leases," due to "continuing involvement" by System Energy, the sale and leaseback arrangements of the undivided portions of Grand Gulf 1, as described above, are required to be reflected for financial reporting purposes as financing transactions in System Energy's financial statements. The amounts charged to expense for financial reporting purposes include the interest portion of the lease obligations and depreciation of the plant. However, operating revenues include the recovery of the lease payments because the transactions are accounted for as sales and leasebacks for rate-making purposes. The total of interest and depreciation expense exceeds the corresponding revenues realized during the early part of the lease term. Consistent with a recomnindation contained in a FERC audit report, System Energy recorded as a deferred asset the difference between the recovery of the lease payments and the amounts expensed for interest and depreciation and is recording such difference as a deferred asset on an ongoing basis. The amount of this deferred asset was $93.2 million and S85.8 nillion as ofDtcmber 31, 1996, and 1995, respectively.

As of December 31, 1996, System Energy had future minimum lease payments (reflecting an implicit rate of 7.02%), which are recorded as long-term debt as follows (in thousands):

1997 S 42,753 1998 42,753 1999 42,753 2000 42,753 2001 46,803 Years thereafter 713,264 Total 931,079 Less: Amount representing interest 434,599 Present value of net minimum lease payments. S 496,480 NOTE 11. POSTRETIREMENT BENEFITS (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)

Pension Plans Entergy has two postrelirement benefit plans, "Entergy Corporation Retirement Plan for Non-Bargaining Employees" and "Entergy Corporation Retirement Plan for Bargaining Employees" covering substantially all of its employees. The pension plans are noncontributory and provide pension benefits that are based on employees' credited service and compensation during the final years before retirement Entergy Corporation and its subsidiaries fund pension costs in accordance with contribution guidelines established by the Employee Retiremet Income Security Act of 1974, as amended, and the Internal Revenue Code of 1986, as amended. The assets of the plans include common and preferred stocks, fixed income securities, interest in a money market fund, and insurance contracts. Prior to January 1, 1995, all of Entergy's non-bargaining employees were generally included in a plan sponsored by the Entergy company where they were employed. However, Entergy New Orleans was a participating employer in a plan sponsored by Entergy Louisiana. Effective January 1, 1995, these employees became participants in a new plan with provisions substantially identical to their previous plan.

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Total 1996, 1995, and 1994 pension cost of Entergy Corporation and its subsidiaries, including amounts capitalized, included the following components (in thousands):

r. C.

t1.

• 1996 Fatergy Eintag Entea Fitrgy Entergy Systen Adkansas Gu~lfI Louisiana NMssissippi New Orleans E Service cost - bnefits eamed duing the period $31,584 $7,605 $5,852 $4,684 S2,157 $1,147 S2,658 Interest cost on projcted benefit obligation 84,303 24,540 20,952 15,735 9,462 2,973 2,645 Actual return o plan assets (163,520) (41,183) (47,416) (41,219) (17,767) (1,826) (4,146)

Net anx and deferral 71,260 14,015 _ 18,732 20,313 6,382 88 526 t

Net pension cost (nurn) S23.627 $4.977 ($1.880) ($487) $234 S2.382 S1.683

=

1995 ELry Ety FiteWg Entergy . Ezte ,

. Ener Arnsas Gulf States Louisian mississpi ew Orleans Service cost - benefits earned S29,282 I $7,786 S6,686

$- $4,143 S2,152 S1,'158 S2,260

&iringtheperiod Interest cost on projected 80,794 24,372 21,098 15,111 9,240 2,680 2,230 benefit obligation Achual return on plan assets (261,864) (71,807) (82,624) (53,348) (30,443) (1,614) (8,827)

Net anrtxtion and deferral 178,345 47,766 53,921 34,902 20,081 64 5,510 Net pension cost (incone) $26,57 $8,117 (S919) $808 $1,030 $2,288 S1,173

.1994 Eiergy Entey Mer Entey Ente. . Systan Fdegl Arkansas GulfStates Loisiana Missppi New Orleans egy Service cost - benefits earned S35,712 $8,854 $9,497 $5,441 $2,484 $1,502 $2,619 rbng the period Interest cost on prqected 77,943 22,651 21,335 14,473 8,648' 2,740 2,148 benefit obligation Actual return on plan assets 10,381 365 6,785 2,024 1,507 - 498 Net amortion and deferral (96,893) (24,474) ~(39,405) (19,981) (11,843).' (970) (3,535) eOtherns'on'c't 17,963 -. 17,963 - - '

Net pension cost S45,106 $7,396 $16,175 S1,957 $796 $3,272 S1,730

. . I

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The fimded status of Entergy's various pension plans as of December31, 1996, and 1995 was (in thousands):

Ez" Ste} ErtcW M" atav S)~

A 0 Lmliu M22m I--

Aaumi proi vahr cf rtanclifi V S1,027,307 S296,181 $287,201 S193,183 SI 17.142 $34,466 S25,195 NVeed 4,775 1,345 748 697 154 29 655 1,032,082 297,526 287,949 193,880 117,296 34,495 25,850 Paznasd at farvamue 1,359,614 374,849 397,749 282,470 150,616 22,017 43,943 a*W bmeft &fia~n 1,196.925 338.307 315,781 217.711 129578 41,511 38,401 Plan as i CW Cf 162,689 36,542 81.968 64,759 21,038 (19,494) 5,542 (lem thm) SqmWe bcmit 0i Umrized pr gao 36,131 14,882 11,964 5,911 4,894 1,965 1,100

.m~opized tmi asset (39,504) (11,679) (9,5 (14,037) (6,252) (767) (5.291)

UreL~zzd net kmi (gin) (180,525) (55,536) (132.832) (61,130) (23,769) 9,897 (4,502 Amved pe~nsiliaility (21,209) (S15,791) (48450) (S4,497) (S4.Ce9) (S8399) ($3,151)

Entaer EitoW EzteW EW Ety ' Sycm Ato am ase Mifssi 1* ,

Aduial prt value cf

9. & penio V~td S989,509 S298,358 S256,173 S192,697 S116,851 $44,324' S23,692 4,555 1,342 792 705 147 29 640 ArwmmaW bnft oblp&n 994,064 299,700 256,965 193,402 116,998 44,353 24,332 Planafs~s at fa valu 1,224,594 337,929 374,010 245,521 140,513 18,658 41,951 Prjctbenft obiafi 1,156,831 341,946 289,666 218,715 129,180 51,699 36,491 Pan sin ea= cf 67,763 (4,017) 84,344 26,806 11,333 (33,041) 5,460 (I= m) VoWbwxait 35,946 15,042 12,021 6,469 4,883 '2224 1,180 ha set (46,856) (14,015) (11,9X) (16,845) (7,502) (963) (5,887)

Uwxcindet I= (gain) (94,618) (23.545) (135,303) C2806) (13,832) 22,751 (3,074)

Amxd pnin likility ($37,765) ($26535) (S50,875) (S11.630) (S5,118) (S9,029) (S2321)

The significant actuarial assumptions used in computing the information above for 1996, 1995, and 1994 were as follows: weighted-average discount rate, 7.75% for 1996, 7.5% for 1995, and 8.5% for 1994, weighted-average rate of increase in future compensation levels, 4.6% for 1996 and 1995, and 5.1% for 1994; and expected long-term rate of return on plan assets, 9.0% for 1996, and 8.5% for 1995 and 1994. Transition assets of Entergy are being amortized over the greater of the remaining service period of active participants or 15 years.

In 1994, Entergy Gulf States recorded an S18.0 million charge related to early retirement programs in connection with the Merger, of which S15.2 million was expensed.

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other.. Pnvtr.t;rammnf Tonspflfa Entergy also provides certain health care and life insurance benefits for retired employees. Substantially all employees may become eligible for these benefits if they reach retirement age while still working for Entergy.

Effective January 1, 1993, Entergy adopted SFAS 106 which required a change from a cash method to an accrual method of accounting for postretirement benefits other than pensions. Entergy Arkansas and Entergy Louisiana continue to fund these benefits on a pay-as-you-go basis. Entergy Gulf States continues to fund a portion of these benefits regulated by the LPSC and FERC on a pay-as-you-go basis. During 1994, pursuant to regulatory directives, Entergy Mississippi and Entergy New Orleans began to fund their postretirement benefit obligations. In 1996, Entergy Gulf States and System Energy began to fund their postretirement benefit obligations pursuant to 1995 regulatory directives issued by the PUCT and FERC, respectively. System Energy is funding on behalf of Entergy Operations those postretirement benefits associated with Grand Gulf 1. The assets of the various postretirement benefit plans other than pensions include common stocks, fixed income securities, and a money market fund. At January 1, 1993, the actuarially determined accumulated postrtircment benefit obligation (APBO) earned by retirees and active employees was estimated to be approximately S241.4 million and $128 million for Entergy (other than Entergy Gulf States) and for Entergy Gulf States, respectively. Such obligations are being amortized over a 20-year period beginning in 1993.

The domestic utility companies have sought approval, in their respective regulatory jurisdictions, to implement the appropriate accounting requirements related to SFAS 106 for ratemaldng purposes. Entergy Arkansas has received an order permitting deferral, as a regulatory asset, of the difference between its annual cash expenditures for postretirement benfits other than pensions and the SFAS 106 accrual, for up to a five-year period commencing January 1, 1993. Entergy Mississippi is expensing its SFAS 106 costs, which are reflected in rates pursuant to an order from the MPSC in connection with Entergy Mississippi's formulary incentive rate plan (see Note 2). The LPSC ordered Eftergy Gulf States and Entergy Louisiana to continue the use of the pay-as-you-go method for ratemaking purposes for postretirement benefits other than pensions, but the LPSC retains the flexibility to examine individual companies' accounting for postretirement benefits to determine if special exceptions to this order are warranted. Entergy New Orleans is expensing its SFAS 106 costs. Pursuant to resolutions adopted in November 1993 by the Council related to the Merger, Entergy New Orleans' SFAS 106 expenses through October 31, 1996, were allowed by the Council for purposes of evaluating the appropriateness of Entergy New Orleans' rates. Pursuant to the PUCT's May 26, 1995, amended order, Entergy Gulf States is currently collecting its SFAS 106 costs in rates.

Total 1996, 1995, and 1994 postretirement benefit cost of Entergy Corporation and its subsidiaries, including amounts capitalized and deferred, included the following components (in thousands):

1996 Entergy Entergy Entergy Entergy Entergy Entergy Arkansas Gulf States Louisiana, Mississippi -New Orleans Service cost - benefits earned duringtheperiod S14,351 $3,128 $3,476 $2,155 $1,081 $661 Interest cost on APBO 26,133 5,580 8,164 4,283 2,171 3,085 Actual return on plan assets (1,654) - (388) - (479) (681)

Net amortization and deferral 14,214 3,397 5,370 2,694 1,458 1,977 Net postretirement benefit cost $53,044 $12,105 $16,622 $9,132 $4,231 $5,042

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-~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

1995 Entergy Entergy Entergy Entergy Entergy Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Service cost - benefits earned $10,797 S2,777 S1,864 $2,047 $909 $650 during the period Interest cost on APBO 25,629 5,398 8,526 4,215 1,969 3,258 Actual return on plan assets (759) (245) (514)

Net amortization and deferral 11,023 2,702 4,477 2,121 988 1,876 Net postretirement benefit cost S46,6o $10,877 S14,867. S8,383 S3,621 S5,270 1994 Entergy Entdrgy Entergy Entergy Entergy Entergy Aransas Gulf States ouisiaa Mississippi NewOrlen Service cost - benefits earned $11,863 $3,080 $2,169 S2,433 S876 $813 during the period Interest cost on APBO 23,312 5,510 6,449 4,422 1,833 3,502 Net amortization and deferral 9,891 3,833 2,832 3,066 1,122 2,569 Net postretirment benefit cost $45,066 $12,423 $11,450 S9,921 $3,831 $6,884 The fided status of Entergy's postretireent plans as of December 31, 1996, and 1995, was (in thousands):

1996

• Et Etagy Ezt16 Thtffv E&tff sif Aawrial jr tie v facbed

$2S,504 $54 5 $90,450 $44,083 $21,639 S3613 Odcr fully ft1* patiipents bo~bo& dW 28,507 5,599. .5,728 4,063 2,753 1,694 73,188 15,505 16,623 11,553 5,837 3,630 365,199 78,049 112,801 59,699 30,2 41,937 Phn s at fbax cWh 37,970 - 15,528 7,517 12,647 PYn ass km dfmAPBO (327,M) (78.4) (97,273) (59,tS9) (2,712) (29,M 183,557 63,252 92,853 47,546 24,031 42,861 Ur nized 1ct km (nyofdu (5,032) (13,414) (13,859) (7,726) (3,221) (11,704) kAuedba st ly) (I48,704) ($8211) ($18,7 ($19,879 ($1,902) $1,867

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1995 Fhagy a}rl Ert:Y urmy G&S pooamwt a a -f Rlais S244,192 $4633 S101,698 $3626 S15,957 $33,652 48,393 9,161 17,334 7,614 4,619 3,215 kom eig 71,464 16,745 15,96O 13,288 3,692 4,306 364,049 72,539 135,012 57,164 26,26f 41,173 POaff actimwciAus0 Pua fully C k6ii*M 15-,494 - . 5,131 103 Acumidbnf U (21,117) (3Q3M (348,5S) (72,539) (135,012) (37,164)

Pbse a fME Wy}

204,348 67,206 107,975 50,517 25,533 45,539 kbt mdonAB (L (16,757) (617) (8556) (6,17)) (13,835)

($145, (;22,(Q (, Z654) ($15,2) ($1,763) $874 The assumed health care cost trend rate used in measuring the APBO of Entergy was 7.6% for 1997, gradually decreasing each successive year until it reaches 5.0% in 2005. A one percentage-point increase in the assumed health care cost trend rate for each year would have increased the APBO of Entergy, as of December 31, 1996, by 11.5% (Entergy Arkansas-11.8%, Entergy Gulf States-10.4%, Entergy Louisiana-11.80/, Entergy Mississippi-12.2% and Entergy New Orleans-10.0%), and the sum of the service cost and interest cost by approximately 14.2% (Entergy Arkansas-15.0%, Entergy Gulf States-12.8%, Entergy Louisiana-14.40%o, Entergy Mississippi-14.4% and Entergy New Orleans-12.8%). The assumed discount rate and rate of increase in future compensation used in determining the APBO were 7.75% for 1996, 7.5% for 1995, and 8.5% for 1994, and 4.6% for 1996 and 1995, and 5.1% for 1994, respectively. The expected long-term rate of return on plan assets was 9.0% for 1996, and 8.5% for 1995 and 1994.

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NOTE 12. RESTRUCTURING COSTS (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans)

In 1994, 1995, and 1996, Entergy implemented various restructuring programs to reduce the number of employees and consolidate offices and facilities. The programs were designed to reduce costs and improve operating efficiencies in order to enable Enttergy to become a low-cost producer. Te balances as of December 31, 1994, 1995, and 1996, for restructuring liabilities associated with these programs are shown below by company along with the actual termination benefits paid under the programs.

Lidity AiiaW 1unwb lky Addift liby asd 19915 HEi as of 1996 M1zin amsi 0XrPWY 1W94 l s 1995 2I Hki~r~a~

. S12.2 $162 (0.1) $.3 93 ($7.8) $as 3*rW fs 6.5 13.1 (14.4 5.4 0.8 (5.4) 0.8 tlaida 6.8 6.4 (11.0 22 0.4 (26)

FBWirs 6.2 29 (66) 25 (1. (08) 3yw~ Qias 3.4 02 (3. ) 0.6 - (0.6)-

Ola __- 9.6 (4.4) 52 1.6 (57) [6 Tci S35.1 S4&4 ($593) S242 S1.4 (FE $32 The restructuring charges shown above primarily. included employee severance costs related to the expected termination of approximately 2,774 employees in various groups. As of December 31, 1996, 2,723 employees had either been terminated or accepted voluntary separation packages under the restructuring plan.

In December 1996, Entxrgy recorded S21.3 million of restructuring charges (of which S18 million was recorded by Entergy Services) associated with the transition to competition.

Additionally, Entergy recorded S24.3 million in 1994 (of which S23.8 million was recorded by Entergy Gulf States) and $1.6 million in 1996 for remaining severance and augmented retirement benefits related to the Merger.

Actual termination benefits paid under the program during 1995 and 1996 amounted to $21.6 million, and $3.4 million, respectively. At December 31, 1996, the total remaining liability for expected future Merger-related outlays was approximately S1 million.

NOTE 13. ACQUISITIONS (Entergy Corporation)

CitiPower On January 5, 1996, Entergy Corporation finalized its acquisition of CitiPower, an electric distribution company serving Melbourne, Australia, and surrounding suburbs. The purchase price of CitiPower was approximately $1.2 billion, of which $294 million represented an equity investment by Entergy Corporation, and the remainder represented debt. Entcrgy Corporation funded the majority of the equity portion of the investment by drawing down $230 million of its $300 million bank revolving credit facility, which was subsequently repaid throughout the course of the year.

CitiPower is one of five electric distribution businesses in the state of Victoria. CitiPower's distribution area covers approximately 10% of Victoria's population. During the twelve months ended December 31, 1996, CitiPower

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supplied approximately 4.2 million MWh of electricity to over 238,000 customer sites. Approximately 37,000, or 15%, of these sites were commercial customers.

The cost of the CitiPower license is being amortized on a striight-line basis over a 40 year period beginning January 5, 1996. As of December 31, 1996, the unamortized balance of the license was $606 million.

In accordance with the purchase method of accounting, the results of operations for Entergy Corporation reported in its Statements of Consolidated Income and Cash Flows do not reflect CitiPower's results of operations for any period prior to January 5, 1996. The pro forma combined revenues, net income, earnings per common share before the cumulative effect of accounting change, and earnings per common share of Entergy Corporation presented below give effect to the acquisition as if it had occurred on January 1, 1995. This pro forma information is not necessarily indicative of the results of operations that would have occurred had the acquisition been consummated for the period for which it is being given effect.

Twelve Months Ended December 31, 1995 (In Thousands of U.S. dollars, Except Share Data)

Operating revenues S 6,690,406 Net income S 503,880 Earnings per average common share before cumulative effect of accounting change S 2.06 Earnings per average common share $ 2.21 CitiPower's results of operations for the twelve months ended December 31, 1996, (beginning on January 5, 1996, at the date of acquisition) are included in Entergy Corporation's Consolidated Financial Statements and are stated separately below:

Twelve Months Ended December 31, 1996 (In Thousands of U.S. dollars)

Operating revenues S 384,803 Operating expenses $ 308,916 Interest charges S 77,545 Other During 1996, Entergy acquired several security companies and assets of other security companies for a purchase price of approximately $83 million.

NOTE 14. TRANSACTIONS WITH AFFILIATES (Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)

The various domestic utility companies purchase electricity from and/or sell electricity to other domestic utility companies, System Energy, and Entergy Power (in the case of Entergy Arkansas) under rate schedules filed with FERC. In addition, the domestic utility companies and System Energy purchase fuel from System Fuels, receive technical, advisory, and administrative services from Entergy Services, and receive management and operating services from Entergy Operations.

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I As described in Note 1, all of System Energy's operating revenues consist of billings to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans.

lhe tables below contain the various affiliate transactions among the domestic utility companies and System Entergy (in millions).

Intercompany Revenues Entergy Entergy Entergy Entergy Entergy System Arkansas Gulf States Louisiana MisSissippi New Orleans Energy 1996 S 282.7 S 21.2 S 5.6 $ 65.9 S 2.6 S 623.6 1995 S 195.5 S 62.7 S 1.6 S 43.3 S 3.2 S 605.6 1994 S 232.6 S 44.4 S 1.0 S 45.8 S 2.1 S 475.0 Intercompany Operating E!penses Entergy Entergy Entergy Entergy Entergy System Arkansas(1) Gulf States Louisiana Mississippi New Orleans EnergX 1996 S346.7 S395.7 S331.3 S294.6 S 185.9 S 8.6 1995 $316.0 $266.5 S335.5 S262.6 S 164.4 S 6.5 1994 S310.7 S296.9 S365.8 S280.2 S 170.1 S 10.5 (1) Includes S38.8 million in 996, $31.0 million in 1995, and S25.7 million in 1994 for power purchased from Entergy Power.

Overatint Expenses Paid or Reimbursed to Enteray Operations Entergy Entergy Entergy System Arkansas Gulf States Louisiana Enerzy 1996 S 163.3 S 133.7 S 97.7 S 98.1 1995 S 189.8 S 129.1 S 122.6 S 116.9 1994 S 221.2 S 210.2 S 152.5 S 179.6 In addition, certain materials and services required for fabrication of nuclear fuel are acquired and financed by System Fuels and then sold to System Energy as needed. Charges for these materials and services, which represent additions to nuclear fuel, amounted to approximately $44.7 million in 1996, $51.5 million in 1995, and S26.4 million in 1994.

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NOTE 1S. BUSINESS SEGMENT INFORMATION Entergy New Orleans)

Entergy New Orleans supplies electric and natural gas services in the City. Entergy New Orleans' segment information follows:

1996 1995 1994 Electric Gas Electric Gas Electric Gas (In Thousands)

Operating revmues $403,254 $101,023 S390,002 $80,276 S 360,430 $ 87,357 Revenue from sales to unaffiliated customers (1) $400,605 $101,023 S386,785 $80,276 S 358,369 S 87,357 Operating income before income taxes S 51,937 S 5,641 $ 61,092 .I 9,638 $ 23,976 S 9,387 Net utility plant $214,106 $63,865 $ 204,407 * $65,236 S209,901 $67,875 Depreciation expense S 16,525 S 3,342 S 15,858 $ 3,290 S 15,743 S 3,310 Construction expenditures $ 23,411 S 4,545 S 21,729 S 6,107 S 16,997 S 5,780 (I) Entergy New Orleans' intersegment transactions are not material (less than 1% of sales to unafliated customers).-

NOTE 16. SUBSEQUENT EVENT (UNAUDITED)

Acquisition of London Electricity plt (Entergy Corporation)

On Docenber 18, 1996, Entergy made a formal cash offer to acquire London Electricity for $2.1 billion.

London Electricity is a regional electric company serving approximately two million customers in the.metropolitan area of London, England. The offer was approved by authorities in the United Kingdom and as of February 7, 1997,

,; the offer was made uncoditional and Entergy, through an English subsidiary, controlled over 90% of the common shares of London Electricity. Through procedures available under applicable law, Entergy expects to gain control of 100% of the common shares of London Electricity. -The acquisition was financed with $1.7 billion of debt that is non-recourse to Entergy Corporation, and $392 million of equity provided by Entergy Corporation from available cash and borrowings under its $300 million line of credit.

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NOTE 17. QUARTERLY FINANCIAL DATA (UNAUDITED)

(Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)

The business of the domestic utility companies and System Energy is subject to seasonal fluctuations with the peak period occurring during the third quarter. Operating results for the four quarters of 1996 and 1995 were:

Operatin! Revenue Entergy Entergy Entergy Entergy Entergy System Enterry Arkansas Gulf States Louisiana Mississippi New Orleans Enersy (In Thousands) 199 6:

First Quarter S 1,603,384 33,081 S 456,631 S 417,767 S 203,902 S 127,280 S 156,424 Second Quarter 1,852,525

• 467,990 525,567 457,847 247,479 127,829 160,369 Third Quarter 2,138,27.3 529,276 592,130 549,295 297,118 150,937 154,467 Fourth Quarter 1,569,344 363,086 444,853 403,958 209,931 98,231 152,360 1995:

First Quarter 1,337,404) 339,596 399,346 353,462 180,559 104,494 151,664 Second Quarter 1,564,917 412,164 479,609 406,575 223,156 112,666 158,632 Third Quarter 1,955,019 530,448 540,287 529,458 280,339 146,720 144,758 Fourth Quarter 1,429,870 366,025 442,732 385,380 205,789 106,398 150,585 Operatinz Income (Loss)

Entergy Entergy Entergy ' . Entergy Entergy System Enterzy Arkansas(a) Gulf States(a) Louisiana MississipDpi New Orleans Enerzy (In Thousands) 1996:

First Quarter S 342,403 S 41,955 S 77,058- S 95,166 S 30,470 S 15,752 S 82,938 Second Quarter 500,017 . 105,237

• 118,420 119,736 57,283 19,608 82,894 Third Quarter 599,704 131,319 152,022 155,755 54,696 28,319 75,270 Fourth Quarter

• 236,597 31,639 . 64,398 65,789 22,147 (6,101) 75,937 1995:

First Quarter 258,441 26,343 47,209 88,013 25,633 14,138 79,377 Second Quarter 434,623 91,180 111,918 115,637 43,523 17,420 80,704 Third Quarter 606,104 132,264 154,268 181,171 57,717 31,000 76,719 Fourth Quarter 218,158 22,080 48,269 63,934 23,515 8,172 76,905 Net Income (Lois)

Entergy Entergy Entergy Entergy Entergy System Entergy(b) Arkansas(a)2b) Gulf States(a) Louisiana Mississini New Orleans Enerev (In Thousands) 1996:

First Quarter S (87,072) S 19,268 S(152,257) S 40,530 S 12,924 S 8,035 S 23,530 Second Quarter 188,323 55,712 47,140 55,385 29,819 10,360 23,382 Third Quarter 279,881 70,791 90,965 77,302 28,205 15,221 24,749 Fourth Quarter 38,895 12,027 10,265 17,545 8,263 (6,840) 27,007 1995:

First Quarter 90,392 46,129 3,635 36,062 9,774 6,245 22,565 Second Quarter 162,703 47,844 43,353 53,082 20,578 8,688 23,802 Third Quarter 263,118 73,963 68,112 92,819 29,228 16,862 23,366 Fourth Quarter 3,767 4,144 7,819 19,574 9,087 2,591 23,306

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Earninss (Loss) ver Average Common Share (Entergy Corporation) 1996 1995 First Quarter S (0.38) S 0.40 Second Quarter S 0.83 $ 0.71 Third Quarter S 1.22 S 1.16 Fourth Quarter (b) S 0.16 S 0.02 (a) See Note 12 for information regarding the recording of certain restructuring costs in 1995.

(b) The fourth quarter of 1995 reflects an increase in net income of S35.4 million (net of income taxes of S22.9 million) and an increase in earnings per share of S.15 due to the recording of the cumulative effect of the change in accounting method for incremental nuclear refueling outage maintenance costs. See Note I for a discussion of the change in accounting method.

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I Item 9. Changes In and Disagreements With Accountants On Accounting and Financial Disclosure.

No event that would be described in response to this item has occurred with respect to Entergy, System Energy, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, or Entergy New Orleans.

PART III Item 10. Directors and Executive Officers of the Registrants (Entergy Corporation, Entergy Gulf States, Entergy Mississippi, Entergy New Orleans, and System Energy)

All officers and directors listed below held the specified positions with their respective companies as of the date of filing this report ENOERGY CORPORATION Directors Information required by this item concerning directors of Entergy Corporation is set forth under the heading "Election of Directors" contained in the Proxy Statement of Entergy Corporation, (the "Proxy Statement"), to be filed in connection with its Annual Meeting of Stockholders to be held May 9, 1997, ("Annual Meeting'), and is incorporated herein by reference. Information required by this item concerning officers and directors of the remaining registrants is reported as of December 31, 1996.

N&Me Polition Period Oftern Edwin Lupberger (a) 60 Chairman of the Board, Chief Executive Officer, and Director of 1985-Present Entergy Corporation Chairman of the Board and Chief Executive Officer of Entergy Arkansas, 1993-Present Entergy Louisiana, Entergy Missisarppi, and Entergy New Orleans Chairman of the Board, ChiefExecutive Officer and Director of Entergy 1994-Present Gulf States Chairman of the Board and Director of Entergy Integrated Solutions 1996-Present Chairman of the Board of System Energy and Entergy Enterprises 1986-Present Chaiman of the Board of Entergy Operations 1990-Present Chairman of the Board of Entergy Services 1985-Present Chief Executive Officer of Entergy Services 1991-Present ChiefExecutive Officer of Entergy Power, Entergy Power Development 1993-Present Corporation, and Entergy-Richmond Power Corporation Chief Executive Officer of Entergy Pakistan, Ltd. and Entergy Power 1994-Present Asia, Ltd.

Chi f Executive Officer of EP Edegel, i., Entergy Power Development 1995-Present biteniational Corporation, Entergy Power Holding ILLtd., Entcrgy Power Marketing Corporation, Entergy Power Operations Corporation, Entergy Power Operations Holdings, Ltd., Entergy Power Operations Pakistan LDC, Entergy Victoria LDC, Entergy Victoria Holdings LDC, EPG Cayman Holding I, EPG Cayman Holding H Entergy Power CBA Holding. Ltd., and Entergy Power Edesur Holding, Ltd.

Chief Executive Officer of Entergy Power International Holdings 1996-Present Corporation and Entergy Mexico Ltd.

President of Entergy Corporation 1995-Present President of Entergy Services and Entergy Enterprises 1994-Present Director of EntergyArkansas, Entergy Louisiana, Entergy Mississippi, 1986-Present Entergy New Orleans, and System Energy Director of Entergy Operations and Entergy Services 1994-Present Director of Entergy Enterprises 1984-Present L

Chief Executive Officer of Entergy Edegel Inc., Entergy Power 1995-1996 Holding L Ltd., and Entergy Yacyreta L Inc.

Chitirman of the Board of Entergy Power 1990-1993

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U-S-W Position Ecd Chief Executive Offi~cr of Entergy Enterprises 1991-1994 Director of System Fuels 1986-1992 Jerry L. Maulden 60 Vice Chairman of Entery Corporation 1995-Present Vice Chairman and Chief Operating Officer of Entergy Arkansas, 1993-Present

. Entery Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans Vice Chairman of Entcrgy Services 1992-Present Directcr of Entergy Arkansas 1979-Present Director of Entergy Gulf States 1993-Present Director of Entergy Louisiana and Entergy New Orleans 1991-Present Director of Entergy Mississippi 1988-Present Diret of Entergy Operations 1990-Present Director of System Energy 1987-Present Director of Entergy Services 1979-Present Chairman of the Board ofEntergy Arkansas 1989-1993 Chairman of the Board and Chief Executive Officer of Entergy Louisiana 1991-1993 and Entergy New Orleans Chairman of the Board and Chief Executive Officer of Entergy 1989-1993 Mississippi Chief Executive Officer of Entergy Arkansas 1979-1993 President and Chief Operating Officer of Entergy Corporation 1993-1995 Group President, System Executive - Transmiission, Distribution, and 1991-1993 Customer Service ofEntergy Corporation Group President, System Executive - Transmission, Distribution, and 1991-1992 Customer Service ofEntergy Services Director of System Fuels 1979-1992 JerryD. Jsackn 52 Executive Vice President - External Affairs of Entergy Corporation 1994-Present Executive Vice President - External Affairs of Entergy Arkansas, 1995-Present Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans Executive Vice President - External Affairs of Entergy Services 1994-Present Director of Entergy Arkansas, Entergy Louisiaua, Entergy Mississippi 1992-Present and Entergy New Orleans Director of Entergy Gulf States 1994-Present Director of Entergy Services 1990-Present Director of Entergy Enterprises 1996-Present Executive Vice President of Marketing for Entergy Corporation 1994-1995 Executive Vice President - Marketing of Entergy Arkansas, Entergy Gulf 1995-1995 States, Entergy Louisiana, Entergy Mississippi and Entergy New Orleans.

Executive Vice President - Marketing of Entergy Services 1994-1995 President and Chief Administrative Officer of Entergy Services 1992-1994 President of Entergy Enterprises - 1991-1992 Executive Vice President -Finan and External Affairs of Entergy 1990-1994 Corporation Executive Vice President - Finance and External Affairs and Secretary of 1992-1994 Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and

. Entergy New Orleans Executive Vice President - Finance and External Affairs of Entergy Gulf 1993-1994 States .

Exetive Vice President - Finance and External Affairs of Entergy 1990-1992 Services Secretary of Entergy Corporation 1991-1994 Secretary of Entergy Gulf States 1994-1995 Diretor of System Energy 1993-1995 Director of Entergy Power and Entergy Enterprises 1990-1992

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N Position Period Donald C. Hintz 54 Executive Vice President and Chief Nuclear Officer of Entergy 1994-Present Coi-oraticxi Executive Vice President - Nuclear of Entergy Arkansas, Entergy Gulf 1994-Present States, and Entergy Louisiana Executive Vice President of Nuclear for Entergy Services 1996-Present Chief Executive Officer and President of System Energy and Entergy 1992-Present Op.rations Director of Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, 1992-Present System Energy, System Fuels, and Entergy Services Director of Entergy Gulf States 1993-Present Director of Entergy Operations 1990-Present Director of GSG&T, Prudential Oil & Gas. Southern Gulf Railway, and 1994-Present Varibus Corporation Senior Vice President and ChiefNuclear Officer of Entergy Corporation 1993-1994 Senior Vice President - Nuclear of EntcrgyArkansas 1990-1994 Senior Vice President -Nuclear of Entergy Gulf States. 1993-1994 Senior Vice President - Nuclear of Entergy Louisiana IM-1994 President of Entergy Operations 1992-1992 Director of Entergy New Orleans 1992-1994 Chief Operating Officer and Executive Vice President of Entergy 1990-1992 Oprtions Group Vice President - Nuclear of Entergy Louisiana 1990-1992 Gerald D. McInvale 53 ExeccUive Vice President and Chief Financial Officer of Entergy 1995-Present Caporation, Entcrgy Services, Entcrgy Arkansas, Entergy Gulf States, Entergy Louisiana. Entergy Mississippi, Entergy New Orleans, System En rgy, Entergy Enterprises, Entergy Operations, System Fuels Inc.,

Entergy Integrated Solutions, GSG&T, Prudential Oil & Gas, Soithn Gulf Railway, and Vanbus Corporation Execlive Vice President, Chief Financial Officer and Director of 1996-Present Entergy Technology Holding Company Exective Vice President and Chief Financial Officer of Entergy 1996-Present Op:rations Services, Inc.

Senior Vice President, Treasurer, and Director of Entergy Pakistan, Ltd. 1994-Present and Entergy PowerAsia, Ltd.

Senior Vice President, Treasurer, and Director of Entergy Power 1993-Present Development Corporation and Entergy-Richmond Power Corporation Senior Vice President, Treasurer, and Director of EP Edegel, Inc., 1995-Present Entergy Power Development International Corporation, Entergy Power Holding ILLtd., Entergy Power Maketing Corporation, Entcrgy PoNver Operations Corporation, Entergy Power Operations Holdings, Ltd., Entergy Power Operations Pakistan LDC, Entergy Victoria LDC, Entergy Victoria Holdings LDC, EPG Cayman Holding L EPG Ca]man Holding IL Entergy Power CBA Holding, Ltd., and Entergy Power Edesur Holding, Ltd.

Senior Vice President, Treasurer, and Director of Entergy Power 1996-Present Intrniational Holdings Corpoiation Senior Vice President, Treasurer, and Director of Entergy Power 1993-Present Senior Vice President and Director or Entergy Mexico, Ltd. 1996-Present Senior Vice President and Treasurer of Entergy Peru S.A. 1996-Present Director of Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, 1995-Present Entergy Mississippi Entergy New Orleans, Entergy Services, System Energy, Entergy Operations, GSG&T, Prudential Oil & Gas, Southern GulfRailway, and Varibus Corporation Director of System Fuels 1992-Present Directr of Entergy Integrated Solutions 1993-Present Director of Entergy Power International Corporation. 1996-Present Senior Vice President, Treasurer, and Director of Entergy Edegel L Inc., 1995-1996 Entergy Power Holding L Ltd., and Entrgy Yacyreta I, Inc.

Chairman of the Board of Entergy Integrated Solutions 1994-1995

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'-: -:11 . .. I . I I Nxme Position Period ee Senior Vice President and Chief Financial Officer of Ehitergy 1991-1995

'C tion, Entcrgy Arkansas, EntergyLouisiana, Entergy Mississippi, Entergy New Orleans, System Ene;Entergy Operations, Entergy Services, and Entcrgy Enterprises Senior Vice President and Chief Financial Officer of Entergy Gulf States 1993-1995 Senior Vice President and Chief Financial Officer of System Fuels 1994-1995 Director and Acting Chief Operating Officer of Entergy Enterprises 1994-1995 Treasurer of Entcrgy Enterprises 1992-1996 Michael G. Thompson 56 Senior Vice President and General Counsel of Entergy Corporation and 1992-Present Entergy Services Senior Vice President, General Counsel and Secretary ofEntergy 1995-Present Arkansas, Entergy Gulf States) Entergy Louisiana, Entey Mississippi, and Entergy New Orleans Senior Vice President-Law and Secretary of Entergy Enterprises 1992-Prcsnt Senior Vice President, Secretary, and Director of Entergy Palistan, Ltd. 1994-Present and Entergy Power Asia, Ltd.

Senior Vice President, Secretary, and Director of Entergy Power 1994-Present Marketing Corporation, Entergy Power Operations Holding Ltd., and EP Edegel, Inc.

Senior Vice President, Secretary, and Director of Entergy Power 1995-Present Development International Corporation, Entergy Power Holding ,

Ltd., Entergy Power Operations Corporation, Entergy Power Operations Pakistan LDC, Entargy Victoria LDC, Entergy Victoria Holdings LDC, EPG Cayman Holding L EPG Cayman Holding IL Entrgy Power CBA Holding, Ltd., and Entergy Power Edesur Holding, Ltd.

Senior Vice President, Secretary and Director of Entergy Power 1996-Preset International Holdings Corporation and Entergy Mexico Ltd.

Senior Vice President, Secretary, and Director of Entergy Power 1992-Present Development Corporation and Entergy-Richmond Power Corporation Vice President, Secretary, and Director of Entergy Power 1994-Present Vice President and Secretary of Entergy Integrated Solutions. 1993-Present Secretary of Entergy Corporation 1994Present Director of Entergy Integrated Solutions 1992-Present Director of Entergy Power International Corporation and Entergy 1996-Present Operations Services, Inc.

Senior Vice President, Secretary and Director of Entergy Edegel I, Inc., 1994-1996 and Entergy Yacyreta , Inc.

Senior Vice President, Secretary, and Director of Entergy Power Holding 1995-1996 I,Ltd.

Senior Vice President, Chief Legal Officer, Director and Secretary of 1993-1994 Entergy Power Assistant Secretary of Entergy Corporation 1993-1994 Senior Partner of Friday, Eldredge & Clark (law firm) 1987-1992 S. M. Henry Brown, Jr. 58 Vice President - Federal Governmental Affairs ofEntergy Corporation 1989-Present and Entergy Services WOiam J. Regan, Jr. 50 Vice President and Treasurer of Entergy Corporation, Entergy Arkansas, 1995-Present Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, System Energy, Entergy Operations, Entergy Services, System Fuels Inc., GSG&T, Prudential Oil & Gas, Southern Gulf Railway, and Varibus Corporation Vice President and Treasure of Entergy Technology Holding Company 1996-Present and Entergy Operations Services, Inc.

Treasurer of Entergy Mexico Ltd. 1996-Present Assistant Secretary of System Fuels Inc., GSG&T, Prudential Oil & Gas, 1995-Present Southern Gulf Railway, and Varibus Corporation.

Senior Vice President and Corporate Treasurer of United Services 1989-1995 Automobile Association Louis E. Buck, Jr. 48 Vice President and Chief Accounting Officer of Entergy Corporation, 1995-Present Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, System Energy, Entergy

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PLame Position Operations, and Entergy Services A.sistant Secretary of Entergy Arkansas, Entergy Gulf States, Entergy 1995-Present Louisiana, Entergy Mississippi Entcrgy New Orleans, Entergy Operations, and Entergy Services Director of Entergy Operations Services 1996-Present Ainistant Secretary of Entergy Corporation and System Energy Resources 1996-Present Vice President and Chief Financial Officer of North Carolina Electric 1992-1995 Membership Corporation Manager of Finance of Texas Utilities Services 1988-1992 John A. Brayman 50 Executive Vice President and Director of Entergy Enterprises 1995-Present Chairman of the Board, President, Chief Executive Officer and 1996-Present Director of Entergy Technology Holding Company Executive Vice President of Business Development of Entergy 1996-Present Corporation Independent consultant 1994-1995 Senior Executive of Ameritech 1990-1994 Tery L Ogletree 53 Ececutive Vice President-International of Entergy Corporation 1996-Present Chief Operating Officer, President and Director of Entergy Power 1993-Present Development Corporation, Entergy Power, and Entergy-Richmond Power Corporation Chief Operating Officer, President and Director of Entergy Pakistan Ltd., 1994-Present and EP Edegel Inc.

Chief Operating Officer, President and Director of Entey Power 1995-Present Development International Corporation, and Entergy Power Marketing Corporation Chief Controlling Officer, President and Director of EPG Cayman 1995-Present Holding . EPO Cayman Holding 1L Entergy Victoria LDC, and Entergy Victoria Holdings LDC Chief Operating Officer, President and Director of Entergy Power 1996-Present International Holdings Corporation President and Director of Entergy SA and Entergy Transener S.A 1993-Present President and Director of Entergy Power Operations Corporation, 1995-Present Entergy Power Holding IL Ltd., Entergy Power Operation Holdings, Ltd., Entergy Power Operations Pakistan LDC, Entergy Power CBA Holding, Ltd., and Entergy Power Edesur Holding, Ltd.

Piesident and Director of Entergy Power Asia 1994-Present President and Director of Entergy Mexico Ltd. 1996-Present Ececutive Vice President of Entergy Peru SA 1996-Present Director of Entergy Power International Corporation and Entergy 1996-Present Operations Services, Inc  :

Pivsident and Director of Entergy Argentina and Entergy Argentina SA, 1993-1996 Ltd.

President and Director of Entergy Edegel L Entergy Power Holding L 1995-1996 Ltd., and Entergy Yacyreta L Inc.

Executive Vice President and Director of Entergy Enterprises 1994-1995 President of Constellation Energy 1989-1993 Michael B. Benis (b) 49 Executive Vice President of Retail Services for Entergy Corporation 1996-Present Executive Vice President - Retail Services and Director of Entergy 1992-Present Arkansas, Entergy Louisiana, and Entergy Mississippi EExecutive Vice President - Retail Services ofEntergy Gulf States 1993-Present E cecutive Vice President - Retail Services of Entergy New Orleans and 1992-Present Entergy Services Director of Entergy Gulf States 1994-Present Director of System Fuels 1992-Present Director of VanIbus Corporation, Prudential Oil & Gas, Inc., GSG&T, 1994-Present and Southern Gulf Railway Company Director of Entergy Services, Entergy Enterprises, and Entergy Integrated 1996-Present Solutions President and Chief Operating Officer of Entergy Louisiana and Entergy 1992-1992 New Orleans Director of Entcrgy New Orleans 1992-1994

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..t

.: ' , , '!k I II :

Name kze Position Period Frank F. Gallaher 51 Executive Vice President of Operations for Entergy Corporation 1996-Present Board of System Fuels ,ofhe  ;: ! 1992-Present of the Board nd Director of Varis boporation,Prudential 1993-Prest Oil & Gas, Inc., GSG&T, and Southern Gulf Railway Company Chairman of the Board and Director of Entergy Operations Services, Inc. 1996-Present Executive Vice President - Operations of Entergy Arkansas, Entergy 1993-Present Louisiana, Entergy Mississippi, Entergy New Orleans,and Entergy Services Director of Entergy Gulf States 1993-Present Director of Entergy Services and System Fuels 1992-Present Senior Vice President - Fosil Operations of Entergy Arkansas, Entergy 1992-1993

.Louisiana, Entergy Mississippi Entagy New Orleans. and Entergy Seices President of Entergy Gulf States 1994-1996 Richard J. IAndy 51 Senior Vice President and ChiefAdministrative Officer of Entergy 1996-Present Ctoepration President, Chief Executive Officer and Director of Entergy Integrated 1996-Presat Solutions Senior Vice President and Chief Administrative Officer of Entergy 1995-Present Arkansas, Entergy Operations, Entergy Services, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and EntrgyNew Orleans Drector of Entergy Enterprises, Entergy Operations, and Entergy 1996-Present Operations Services, Inc.

Vice President - Human Resources and Administration of Entergy 1991-1995 Arkansas, Entergy Louisiana, Entergy Mississippi Entergy New Orleans, Entergy Services, and Entergy Operations Vice President - Human Resources and Administration of Entergy Gulf 1993-1995 States ENTERGY ARKANSAS, INC.

Directors 61 President and Director of Entergy Arkansas 1989-Present Chief Operating Officer of Entergy Arkansas 1989-1992 Secretary of Entergy Arkansas 1991-1992 MichaelB.Bemis See information under the Entergy Corporation Officers Section above.

Donald C. Hintz See information under the Entergy Corporation Officers Section above.

Jensy D.Jackson See infonation under the Entergy Corporation Officers Section above.

Edwin Lupberger See information under the Entergy Corporation Officrs Section above.

Jerry L. Miaulden See information mder the Entergy Corporation Officers Section above.

Gerald D. McInvale See information under the Entergy Corporation Officers Section above.

Ofmce Michael R. Niggli 47 Senior Vice President - Customer Accounts for Entergy Arkans, 1996-Present Entergy Gulf States, Entergy Louisiana, Entergy Mississippi Entergy New Orleans, and Entergy Services.

Senior Vice President - Marketing of Entergy Arkansas, Entergy Gulf 1993-1996 States, Entergy Louisiana, Entergy Mississippi, EntergyNew Orleans, and Entergy Services Vice President - Customer Services of Entergy Louisiana, Entergy New 1993-1993 Orleans, and Entergy Services Vice President - Strategic Planning of Entergy Services 1990-1992 Vice President and Directr of Entergy Enterprises 1991-1992 Cecil L. Alexander 61 Vice President - Governmental Affairs of Entergy Arkansas 1991-Presat James S. Pilgrim 61 Vice President - Customer Service of Entergy Arkansas 1994-Present Director, Central Region, TDCS Customer Service 1993-1994 Central Division Manager of Mississippi 1991-1993 C. Hiram Walters 60 Vice President - Customer Service of Entergy Arkansas 1993-Praent

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Name Position Period Vicc President - Customer Service of Entrgy Louisiana 1994-Present Vice President - Customer Service, Central Region of Entergy Services 1993-Present Saiior Vice President - Customer Service of Entergy Services 1991-1992 Edwvin Lupberger See information under the Entergy Corporation Officers Section above.

Jerry L Maulden See information under the Entergy Corporation Officers Section above.

R. Drake Keith See information under the Entergy Corporation Officers Section above.

Michael B. Bemis See information under the Entergy Corporation Officers Section above.

Jerry D. Jackson See information under the Entergy Corporation Officers Section above.

Frank F. Gallaher See information under the Entergy Corporation Offlicrs Section above.

Donald C. Hintz See information under the Entergy Corporation Officers Section above.

Gerald D. Melnvale See information under the Entergy Corporation Officers Section above.

Michael 0. Thompson See information under the Entergy Corporation Officers Section above.

Richard 3. andy See information under the Entergy Corporation Officers Section above.

William J. Regan, Jr. See information under the Entergy Corporation Officers Section above.

Louis E. Buck, Jr. See information under the Entergy Corporation Officers Section above.

8NTERGY GULF STATES, INC Karen Johnson 52 Stab: President - Texas and Director of Entergy Gulf States 1996-Present Vice President - Governmental Affairs of Entergy Gulf States - Texas 1994-Present Executive Director of State Bar of Texas (state agency). 1990-1994 John J. Cordaro 63 Stat: President - Louisiana, and Director for Entergy Gulf States and 1996-Present Eategy Louisiana President and Director of Entergy Louisiana and Entergy New Orleans 1992-1996 Group Vice President - External Affairs of Entergy Louisiana and 1989-1992 Eatergy New Orleans Michael B. Benis See information under the Entergy Corporation Officers Section above.

Frank F. Gallaher See information under the Entergy Corporation Officers Section above.

Donald C. Hintz See information under the Entergy Corporation Officers Section above.

Jerry D. Jackson See information under the Entergy Corporation Officers Section above.

Edwin Lupberger See information under the Entergy Corporation Officers Section above.

Jerry L Maulden See infomaton under the Entergy Corporation Officers Section above.

Gerald D. Mclnvale See information under the Entergy Corporation Officers Section above.

irs William E. Coiston 61 Vice President - Customer Service of Entergy Gulf States 1994-Present Vica President - Customer Service of Entergy Louisiana 1993-Present Vice President Customer Service of Southern Region of Entergy 1993-Preent Srvices Regional Director of Entergy Louisiana 1992-1993 S. G. Cunningham, Jr. 56 Vic: President - Regulatory and Govermnental Affairs of Entergy 1996-Present Loxiisiana and Entrgy Gulf States Vic: President - State Regulatory Affairs of Entergy Services 1994-1996 Vic: President - Entergy Corporation, Entergy Gulf States Transition 1993-1994 Regulatory Affairs of Entergy Services Vioe President - Rates and Regulatory Affairs of Entergy Louisiana and 1991-1994 Entergy New Orleans Vio: President - Regulatory Affairs of Entergy Services 1992-1993 J. Parker McCollough 46 Vic: President - State Governmental Affairs of Entergy Gulf States 1996-Present Vice President - Govermnental Affairs, Texas Association of Retailors 1996-1996 Member- Texas House of Representatives 1989-1996 Wright & Greenhill, PC (law firm) 1991-1993 Edwin Lupberger See information under the Entergy Corporation Officers Section abovc Jerry L Maulden See infoimation under the Entergy Corporation Officers Section above.

Frank F. Gallaher See information under the Entergy Corporation Officers Section above.

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Name P'osition Erod Michael B. Bernis See information under the Entergy Corporation Officers Section above.

Jerry D. Jackson See information under the Entergy Corporation Officers Section above.

Donald C. Hintz See infonnation under the Entcrgy Corporation Ofices Section above.

Gerald D. MchIvale See information under the Entergy Corporation Officers Section above.

Michael G. Thompson See'information under the Entergy Corporation Officers Section above.

Michael R. Niggli Sec information under the Entergy Arkansas Office Sction above.

Richard J. Landy See information under the Entergy Corporation Officers Section above.

Karen Johnson See information ufider the Entcrgy Gulf SatesiDirector section above.

John J. Cordaro See information under the Entergy Gulf Sates Director section above.

William J. Regan, Jr. See information under the Entergy Corporation Officers Section above.

Louis E. Buck, Jr. See information under the Entcrgy Corporation Officers Section above.

ENTERGY LOLUISIANA, INC.

Director Michael B. Bemis See information under the Entergy Corporation Officers Section above.

John J. Cordaro See infomation under the Entergy Gulf Sates Director section above.

Donald C. Hintz See information under the Entergy Corporation Officers Section above.

Jerry D. Jackson See information under the Entergy Corporation Officers Section above.

Edwin Lupberger See information under the Entergy Corporation Officers Section above.

Jerry L. maulden See information under the Entergy Corporation Officers Section above.

Gerald D. Mclnvale See information under the Entergy Corporation Officers Section above.

Ofcers James D. Bruno 57 Vice President - Customer Service of Entergy Louisiana and Entergy 1994-Present New Orleans Vice President - Metro Region of Entergy Services 1993-Present Region Director - Metro Region of Entergy Services 1991-1993 Edvwin Lupberger See information under the Entergy Corporation Officers Section above.

JerryL. Maulden See information under the Entergy Corporation Officers Section above.

John J. Cordaro See information under the Entergy Gulf Sates Director section above.

Michael B. Bemis See information under the Entergy Corporation Officers Section above.

Jerry D. Jackson See information under the Entergy Corporation Officers Section above.

Frank F. Gallaher See information under the Entergy Corporation Officers Section above.

Donald C. Hintz See information under the Entergy Corporation Officers Section above.

Gerald D. Mclnvalc See information under the Entergy Corporation Officers Section above.

Michael G. Thompson See information under tbiEntergy Corporation'Officer S&tion above.

Michael R. Niggli See information under the Entergy Arkansas Officers Section above.

Richard J. Landy See information under the Entergy Corporation Officeis Section above.

Willian E. Colston See information under the Entergy Gulf Sates Officers section above.

William J. Regan, Jr. See infornation under the Entergy Corporation Officers Section above.

Louis E. Buck, Jr. See information under the Entergy Corporation Officers Section above.

C. Hiram Walters See information under the Entergy Arkansas Officers Section abovc.

S.. Cunningham, Jr. See information under the Entergy Gulf Sates Officers section above.

ENTERGY MISSLSSEPPL INC.

Directorn Donald E. Meiners (c) 61 President and Director of Entergy Mississippi 1992-Present Chief Operating Officer and Secretary of Entergy Mississippi 1992-1992 Michael B. Bemis See information under the Entergy Corporation Officers Section above.

Donald C. Hintz See information under the Entergy Corporation Officers Section above.

Jerry D. Jackson See information under the Entergy Corporation Officers Section above.

Edwin Lupberger See information under the Entcrgy Corporation Officers Section above.

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Name Agetio Positilon Jerry L. Maulden Sex information undea the Entergy Corporation Officers Section above.

Gerald D. McInvale See information under the Entergy Corporation Officers Section above.

Bill F. Cossar S8 Vice President - Governmental Affairs of Entergy Mississippi 1987-Present Edwin Lupbere See information udder the Entergy Corporation Officers Section above.

Jerry L. Maulden See information under the Entergy Corporation Officers Section above.

Donald E. Meiners See information under the Entergy Mississippi Diretors Section above.

Michael B. Bemis See information under the Entcrgy Crporation Officers Section above.

Jerry D. Jackso See information under the Entergy Corporation Officers Section above.

Frank F. Gallaher See information under the Entergy Coportion Officers Section above.

Gerald D. Mclnvale See information under the Entergy Corporation Officers Section above.

Michael G. Thompson See information under the Entergy Corporation Officers Section above.

fichael R Niggli See information under the Entergy Arpansas Officers Section above Richard . Landy See information under the Entegy Capration Officers Section above.

Wlliam . Regan. Jr. See information under the Entergy Corporation Officers Section above.

Louis E. Buck, Jr. Set information under the Entergy Corporation Officers Section above.

ENTERGY NEW ORLEANS, INC Daniel F. Packer 49 Stale President - City of New Orleans 1996-Presmt Vite President - Regulatory and Governmental Affairs of Entergy New 1994-1996 Orleans General Manager - Plant Operations at Waterford 3 1991-1994 Jerry D. Jackson Sec information under the Entergy Corporation Offices Section above.

Edwin Lupherger Sec infamation under the Entergy Corporation Officers Section above.

Jery L. Maden Sec information under the Entergy Corporation Officers Section above.

Gerald D. McInvale See infoimation under the Entergy Corporation Officers Section above.

Offlscei Edwin Lupherger See information unAEr the Entergy Corporaton Officers Section above.

Jerry L. Maulden See information under the Entergy Corporation Officers Section above.

Michael B. Bemis See information under the Entergy Corporation Officers Section above Jerry D. Jacbon See information under the Entergy Coiporation Officers Section above.

Frank F. Gallaher See informution under the Entergy Corporation Officers Section above.

Gerald D. Mclnvale See information under the Entergy Corporation Ofcers Section above.

Michael G. Thompson See information under the Entergy Coporation Officers Section above.

Michael R. Niggli See infornation under the Entergy Aransas Officers Setionabov Daniel F. Packer See information under the Entergy New Orleans Directors Section above.

Richard J. Landy See information under the Entergy Corporation Officers Section above.

James D. Bruno See infmation under the Entergy Louisiana Officers Section above.

William . Regan, Jr. See information under the Entergy Corporation Officers Section above.

Louis E. Buck, Jr. See information under the Entergy Corporation Officers Section above.

SYSTEM ENERGY RESOURCES, INC Donald C. Hntz See information under the Entergy Corporation Officers Section above.

Edwin Lupberger See information under the Entergy Corporation Officas Section above.

Jerry L. Maulden See information under the Entergy Corporation Officers Section above.

Gerald D. Mclnvale See information under the Entergy Corporation Officers Section above.

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AMe Age . . . '; ,POsItIOi Period Officers Joseph L. Blount so Secietay of System Energy and Entergy Operations 1991-Present Vice Priesident Legal and External Affairs ofEntergy Operations 1990-1993 Edwin Lupberger See infomation under the Entergy Corporation Office Section above.

Donald C. Hintz See information under the Ent=ry Corporation bflicers Section above.

Gerald D. Mdnvale See information under the Entergy Corporation Officers Section above.

William J. Regan, Jr. See information under the Entergy Corporation Officers Section above.

Louis P. Buck, Jr. See information under the Entergy Corporation Officers Section above.

(a) Mr. Lupberger is a director of First Commerce Corporation, New Orleans, LA, International Shipholding Corporation, New Orleans, LA, and First National Bank of Commerce, New Orleans, LA.

(b) Mr. Bemis is a director of Deposit Guamanty National Bank, Jackson, MS and Deposit Guaranty Corporation, Jackson, MS.

(c) Mr. Meiners is a director of Trustmark National Bank, Jackson, MS, and Trustmark Corporation, Jackson, MS.

Each director and officer of the applicable Entergy company is elected yearly to serve by the unanimous consent of the sole stockholder, Entergy Corporation, in lieu of an annual meeting scheduled to be held on May 5, 1997.

Directorships shown above are generally limited to entities subject to Section 12 or 15(d) of the Securities and Exchange Act of 1934 or to the Investment Company Act of 1940.

Section 16(a) Beneficial Ownership Reporting Compliance Information called for by this item concerning the directors and officers of Entergy Corporation is set forth in the Proxy Statenent of Entergy Corporation to be filed in connection with its Annual Meeting of Stockholders to be held on May 9, 1997, under the heading "Compliance with Section 16(a) of the Exchange Act, which information is incorporated herein by reference.

Item 11. Executive Compensation ENTERGY CORPORATION Information called for by this' item concerning the directors and officers of Entergy is set forth in the Proxy Statement under the headings Executive Compensation", 'Nominees", and "Compensation of Directors", which information is incorporated herein by reference.

ENTERGY ARKANSAS, ENTERGY GULF STATES, ENTERGY LOUISIANA, ENTERGY MISSISSIPPIENTERGY NEW ORLEANS, AND SYSTEM ENERGY Summary Compensation Table The following table includes the Chief Executive Officer and the four other most highly compensated executive officers in office as of Decber 31, 1996 at Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi Entergy New Orleans, and System Energy, (collectively, the "Named Executive Officers').

This determination was based on total annual base salary and bonuses from all Entergy sources earned by each officer for the year 1996. See Item 10, "Directors and Executive Officers of the Registrants," for information on the principal positions of the Named Executive Officers in the table below.

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Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy

-- As shown in Item 10, most Named Executive Officers are employed by several Entergy companies.

Because it would be impracticable to allocate such officers' salaries among the various companies, the table below includes the aggregate compensation paid by all Entergy companies.

Lont-Term Compensation Annual ComDensation Awards Payouts

. (b) Restricted Securities (c) (d)

(a) Other Annual Stock Underlying ILTIP All Other X.Mr Ssafrr Bo&nus Comnensatton Awrds lavouts ComDensation Michael B. Bemis 1996 $297,1 15 $ 168,125 S 43,884 (C) 5,000 shares S 0O S 12,813 1995 290,000 216,909 22,844 (e) 27,500 Z94,282 12,063 1994 2E8,846 76,923 32,940 (e) 2,500 28,275 8,596 Louis E. Buck, Jr. 1996 S 153,558 S 66,187 S 26,132 (e) 0shar S 0 S 20,683 1995 49,039 21,280 9,151 (e) 0 0 7,529 1994 0 0 0 (e) 0 0 0 Donald C. Hintz 1996 S 343,269 $231,299 S 12,516 (e) 5,000 shares S 0 S 14,197 1995 325,000 265,049 13,394 (') 30,000 40 9,414 9,750 1994 320,769 142,749 52,389 (C) 5,000 4 8,379 9,710 Jerry D. Jackso 1996 S 332,115 S 209,489 S. 37,928 5,000 shares S 0 S 13,862 1995 325,000 256,838 43,054 (e) *30,000 X422,438 9,750 1994 323,711 106,155 29,598 (C) 5,000 5'6,550 9,634 Edwin LupberWu 1996 S735,577 448,794 $123,601 (e) 10,000 shares S 0 S 23,567 1995 700,000 568,400 89,163 (e) 60,000 781,337 21,000 1994 681,539 218,789 93,816 (e) 10,000 139,525 20,446 Jerry L Maulden 1996 $435,000 S 260,301 S 27,056 (C) 5,000 shas S 0 S 14,550 1995 435,000 353,220 26,248 (C) .30,000 422,438 13,050 1994 426,134 135,962 63,994 (e) 5,000 56,550 12,859 Geald D. Mdnvale 1996 $271,730 S 179,576 S 13,995 (C) 5,000 shar $ 0 S 12,051 1995 255,481 186,739 12,525 (e) 27,500 294,282 7,664.

1994 244,165 66,227 14,146 (C). 2,500 28,275 7,275 William J. Regan, Jr. 1996 S190,000 S 81,132 S 20,684 (C) 0 shares. 0- S 8,852 1995 120,577 54,727 21,141 (C) 2,000 0 7,821 1994 0 0 0 (C) 0 0 0

• Chief Executive Officer of System, Energy.

• . Chief Executive Officer of Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi and Entergy New Orleans (a) Includes bonuses earned pursuant to the Annual Incentive Plan.

(b) Amounts used in the calculation of perquisites were previously reported in the column titled "All Other Compensation".

(c) Amounts include the value of restricted shares that vested in 1996, 1995, and 1994 (see note (e) below) under Entergy's Equity Ownership Plan.

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(d) Includes the following:

(1) 1996 benefit accruals under the Defined Contribution Restoration Plan as follows: Mr. Bemis

$4,414; Mr. HintziS5,798; Mr. Jackson $5,463; Mr.-,Lipberger S17,567; Mr. Maulden S8,550; Mr. McInvale $3,652; Mr. Regan $1,200.

(2) 1996 employer contributions to the System Savings Plan as follows: Mr. Bemis $4,500; Mr. Buck S1,431; Mr. Hintz S4,500; Mr. Jackson S4,500; Mr. Lupberger $4,500; Mr. Maulden S4,500; Mr. McInvale S4,500; Mr. Regan S4,500.

(3) 1996 employer contributions to the Employee Stock Ownership Plan as of November 30, 1996 are as follows: Mr. Bemis $3,899; Mr. Hintz $3,899; Mr. Jackson S3,899; Mr. Lupberger $1,500; Mr. Maulden $1,500; Mr. McInvale $3,899.

(4) 1996 reimbursements for moving expenses as follows: Mr. Buck S19,252; Mr. Regan S3,152.

(e) Restricted stock awarded under the Equity Ownership Plan will vest at the end of a three year period subject to the attainment of approved performance goals. -Restricted stock awards in 1996 'are reported under the "Long-Tern Incentive Plan Awards" table, and reference is made to this table for information on the aggregate number of restricted shares awarded during 1996 and the vesting schedule for such shares.

Accumulated dividends are paid on restricted stock when vested. The value of stock for which restrictions were lifted in 1996, 1995, and 1994, and the applicable portion of accumulated cash dividends, are reported in the LTIP Payouts column in the above table.

Option Grants in 1996 The following table summarizes option grants during 1996 to the Named Executive Officers. The absence, in the table below, of any Named Executive Officer indicates that no options were granted to such officer.

Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Entergy Individual Grants Potential Realizable

% of Total Value Number of Options MG at Assumed Annual A-"Nwm -La""&&

Securities Granted to Exercise Rates of Stock Underlying Employees Price Price Appreciation Options . In (per Expiration Option Termfb) for Optlon Termffl Granted  : 1996 share) Date 5% 10%

10%

Michael B. Bemis 5,000,(a) 6.1% S;t9.37S (a) 1125/06 S 92,369 S 234,081 Donald C. Hintz 5,000 (a) 6.1% 2 9.375 (a) 1V2S06 92,369 234,081 Jerry D. Jackson 5,000 (a) 6.1% 29.375 (a) 125/06 92,369 234,081 Edvin Lupberger 10,000 (a) 12.1% 29.375 (a) 1/25/06 184,738 468,162 Jerry L. Maulden 5,000 (a) 6.1% 29.375 (a) I/25/06 - 92,369

• 234,081 Gerald D. Mclnvale 5,000 (a) 6.1% 29.375 (a) Ul5/06 . 92,369 234,081 (a) Options were granted on January 25, 1996, pursuant to the Equity Ownership Plan. All options granted on this date have an exercise price equal to the closing price of Entergy Corporation common stock on the

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New York Stock Exchange Composite Transactions on January 25, 1996. These options became exercisable on July 25, 196.

(b) Calculation based on the market price of the underlying securities assuming the market price increases over a ten-year option period and assuming annual compounding. The column presents estimates of potential values based on simple mathematical assumptions. The actual value, if any, a Named Executive Officer may realize is dependent upon the market price on the date of option exercise.

Aggregated Option Exercises in 1996 and December 31,1996 Option Values The following table summarizes the number and value of all unexercised options held by the Named Executive Officers. In 1996, no options were exercised by any Named Executive Officer.

Number of Securities Value of Unexercised Underlying Unexercised Options In-the-Money Options as of December 31. 1996 as of December 31. 1996(a)

Name Exercisable Unexercisable Exercisable Unexercisable Michael B. Bemis 15,000 25,000. S10,625 S 168,750 Donald C. Hintz 22,500 25,000 21,250 168,750 JerryD. Jackson 19,411 25,000 0 168,750 Edwin Lupberger 48,824 50,000 42,500 337,500 JerryL. Mauldea 25,000 25,000 21,250 168,750 Gerald D. McInvale 15,000 25,000 10,625 168,750 Willlam J. Regan, Jr. 0 2,000 0 13,500 (a) Based on the difference between the closing price of Entergy Corporation's common stock on the New York Stock Exchange Composite Transactions on December 31, 1996, and the option exercise price.

Long-Term Incentive Plan Awards in 1996 The following Table summarizes awards of restricted shares of Entergy Corporation common stock granted under the Equity Owivnrship Plan in 1996 to the Named Executive Officers.

Estimated Future Payouts Under Non-Stock Price-Based Plans(a)(b)

Number of Performance Period Until Shares Maturation or Payout Threshold Tegt Maximum EdwiLupbager 60,000 1/1196-12/31/98 20,000 40,000 60,000 JeryL Maulden 37,500 11119612/31198 12,500 25,000 37,500 Michael B. Bemis 30,000 1/1/96.12/31/98 10,000 20,000 30,000 Donald C. Ilntz 30,000 1/1/96-12/31/98 10,000 20,000 30,000 Jry D. Jackson 30,000 1/1/96-12/31198 10,000 20,000 30,000 Gerald D. McIlnvalc 30,000 1/119612/31/98 10,000 20,000 30,000 LouisE. Buck, Jr. 4,500 1/1196-12/31/98 1,500 3,000 4,500 William J. Regan, Jr. 4,500 1/1/96-12/31/98 1,500 3,000 4,500 (a) Restricted shares awarded will vest at the end of a three-year period, subject to the attainment of approved performance goals for Entergy. Restrictions are lifted based upon the achievement of the cumulative result of these goals for the performance period. The value any Named Executive Officer may realize is dependent upon both the number of shares that vest and the future market price of Entergy Corporation common stock (b) IThe threshold, target, and maximum levels correspond to the achievement of 50%,N 1000/ and IS0Y, respectively, of Equity Ownership Plan goals. Achievement of a threshold, target, or maximum level would

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result in the award of the number of shares indicated in the 'respective column. Achievement of a level between these three specified levels would result in the award of a number of shares calculated by means of interpolation.

Pension Plan Tables Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy Retirement Income Plan Tabk Annual Covered - Years of Service Comoensation IS 20 25 30 3S

$100,000 $ 22,500 S 30,000 S 37,500 S 45,000. S 52,000 200,000 45,500 60,000 75,000 90,000 105,000 300,000 67,500 90,000 112,500 135,000 157,500 400,000 90,000 120,000 150,000 180,000 210,000.

500,000 112,500 150,000, 187,500 225,000 .262,500 850,000 191,250 255,000 318,750. 382,500 .446,250 All of the Named Executive Officers participate in a Retirement Income Plan, a defined benefit plan, that provided a benefit for employees at retirement from Entergy based upon (1) generally all years of service beginning at age 21 through termination, with a forty-year maximum, multiplied by (2) 1.5%, multiplied by (3) the final average compensation. Final average compensation is based on the highest consecutive 60.months of covered compensation in the last 120 months of service. The normal form of benefit for a single employee is a lifetime annuity and for a'married employee is a 50% joint and survivor annuity. Other actuarially equivalent options are available to each retiree; Retiremnt benefits are not subject to any deduction for Social Security or other offset amounts. The amount of the Named Executive Officers' annual compensation covered by the plan as of December 31, 1996, is represented bythe salary column in the Summary Compensation Table above..

The credited years of service under the Retirement Income Plan, as of December 31, 1996, for the Named Executive Officers is as follows: Mr. Bernis 14; Mr. Buck 1, Mr. Maidden 31, and Mr. Regan 1. The credited years of service under the respective Retirement Income Plan, as of December 31, 1996 for the following Named Executive Officers, as a result of entering into supplemental retirement agreements, is as follows: Mr. Hintz 25; Mr. Jackson 17; Mr. Lupberger 33; and Mr. McInvale 24.

The maxinm benefit under each Retirement Income Plan is limited by Sections 401 and 415 -of the Internal Revenue Code of 1986, as amended; however, Entergy Arkanss, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy have elected to participate in the Pension Equalization Plan'sponsored by Entergy Corporation. Under this plan, certain executives, including the Named Executive Oficers, would receive an additional amount equal to the benefit that would have been payable under the Retirement Income Plan, except for the Sections 401 and 410 limitations discussed above.

In addition to the Retirement Income Plan discussed above, Entergy Arkansas, Louisiana, Mississippi New Orleans," and System Energy participate in the, Supplemental Retirement Plan of Entergy Corporation and Subsidiaries (SRP) and the Post-Retirement Plan of Entergy Corporation and Subsidiaries (PRP). Participation is limited to one-of these two plans and is at the invitation-of Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy. The participant may receive fom the appropriate Entergy company a monthly benefit payment not in excess of .025 (under the SRP) or .0333 (under the PRP) times the participants average basic annual salary (as defined in the plans) for a maximum of 120 months.. Mr. Hintz has entered into a SRP participation contract, and all of the other Named Executive Officers, (except for Mr. Buck, 195-

Mr. McInvale and Mr. Regan) have entered into PRP participation contracts. Current estimates indicate that the annual payments to the Named Executive Officers under the above plans would be less than the payments to that officer under the System Executive Retirement Plan discussed below.

System Executive Retirement Plan Table (1)

Annual Covered Years of Service Compensation is 20 25 30+

S 200,000 S 90,000 S 100,000 S 110,000 S 120,000 300,000 135,000 150,000 165,000 180,000 400,000 180,000 200,000 220,000 240,000 500,000 225,000 250,000 275,000 300,000 600,000 270,000 300,000 330,000 360,000 700,000 315,000 350,000 385,000 420,000.

1,000,000 450,000 500,000 550,000 - 600,000 (1) Benefits shown are based on a target replacement ratio of 50% based on the years of service and covered compensai shown. The benefits for 10, 15, aid 20 or more years of service at the. 45% and 55%

replacent levels would decrease (in the case of 45%) or increase Cn the case of 55/o) by the following percentages: 3.0/a, 4.5%/0, and 5.00/N, respectively.

In 1993, Entergy Corporation adopted the System Executive Retirement Plan (SERP). Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi Entergy New Orleans, and Systm Energy are participating employers in the SERP. The SERP is an unfided defined benefit plan offered at retirement to certain senior executives, which would currently include all the Named Executive Officers. Participating executives choose, at retirement, between th: retirement benefits paid under provisions of the SERP or those payable under the.

executive retirement benefit plan discussed above. Covered pay under the SERP includes final annual base salary (see the Summary CompensationTable above for the base salary covered by the SERP as of December 31, 1996) plus the Target Incentive Awarl (i.e., a percentage of final annual base salary) for the participant in effect at retirement. Benefits paid under the SERP are calculated by multiplying the covered pay times target pay replacement ratios (45%/, 50%, or 55%, dependent on job rating at retirement) that are attained, according to plan design, at 20 years of credited service. The target ratios are increased by 1% for each year of service over 20 years, up to a maximum of 30 years of service. In accordance with the SERP formula, the target ratios are reduced for each year of service below 20 years. The credited years of service under this plan are identical to the years of service for Named Executive Officers (other than Mr.' Bemis, Mr. Jackson and Mr. Mclnvale) disclosed above in the section entitled Pension Plan Tables-Retirement Income Plan Table". Mr. Bemis, Mr. Jackson, and Mr.

Mclnvale have 24 years, 23 years, and 15 years, respectively, of credited service under this plan.

The normal form of benefit for a single employee is a lifete annuity and for a married employee is a.50%

joint and survivor annuity. All SERP payments are guaranteed for ten years. Other actuarially equivalent options are available to each retiree. SERP benefits are offset by any and all defined benefit plan payments from Entergy and from prior employers. SERP benefits are not subject to Social Security offsets.

Eligibility for and receipt of benefits under any of the executive plans described above are contingent upon several factors. The participant must agree, without the specific consent of the Entergy company for which such participant was last employed, nct to take employment after retirement with any entity that is in competition with, or similar in nature to, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy or any affiliate thereof Eligibility for benefits is forfeitable for various reasons, including violation of an agreement with Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi Entergy New Orleans, and System Energy, resignation of employment, or termination of employment

%ithoutCoripany permission.

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42..

In addition to the non-bargaining unit employees Retirement Income Plan discussed above, Entergy Gulf States provides, among other benefits to officers, an Executive Income Security Plan for key managerial personnel.

The plan provides participants with certain retirement, disability, termination, and survivors' benefits. To the extent that such benefits are not funded.bythe employee benefit plans of Entergy Gulf States or by vested benefits payable by the participants' former employers, Entergy Gulf States' is'obligaed to make supplemental payments to participants or their survivors. The plan provides that upon the death or disability of a participant during his employment, he or his designated survivors will receive (i) during the first year following his death or disability an amount not to exceed his annual base salary, and (ii) thereafter for a number of years until the participant attains or would have attained age 65, but not less than nine years, an amount equal to one-half of the participant's annual base salary. The plan also provides supplemental retirement benefits for life for participants retiring after reaching age 65 equal to one-half of the participant's average final compensation rate, with one-half of such benefit upon the death of the participant being payable to a surviving spouse for life.

Entergy Gulf States amended and restated the plan effective March 1, 1991,'to provide such benefits for life upon termination of employment of a participating officer or key managerial employee without cause (as defined in the plan) or if the participant separates from employment for good reason (as defined in the plan), with 1/2 of such benefits to be payable to a surviving'spouse for life. Further, the plan was amended to provide medical benefits for a participant and his family when the participant separates from service. These medical benefits generally continue until the participant is eligible to receive medical benefits from a subsequent employer; but in the case of a participant who' is over 50 at the time of separation and was participating in the plan on March 1, 1991, medical benefits continue for life. By virtue of the 1991 amendment and restatemcifl, benefits for a participant under such plan cannot be'modified once he becomes eligible to participate in the plan.

Compensation of Directors For information regarding compensation of the directors of Entergy Corporation, see the Proxy Statement under the heading 'Compensation of Directors", whichinformation is incorporated herein by reference. Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy currently have no non-employee directors, and none of the current directors is compensated for his responsibilities as director.

Retired non-employee directors of Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans with a minimum of five years of service on the respective Boards of Directors are paid S200 a month for a term of years corresponding to the number of years of active service as directors. Retired non-employee directors with over ten years of service receive a lifetime benefit of $200 a month. Years of service as an advisory director are included in calculating this benefit. System Energy has no retired non-employee directors.

Retired non-employee directors of Entergy Gulf States receive retirement benefits under a plan in which all directors who served continuously for a period of years will receive a percentage of their retainer fee in effect at the time of their retirement for life. The retirement benefit is 30 percent of the retainer fee for service of not less than five nor more than nine years, 40 percent for service of not less than ten nor more than fourteen years, and 50 percent for fifteen or more years of service. For those directors who retired prior to the retirement age, their benefits are reduced. The plan also provides disability retirement and optional hospital and medical coverage if the director has served at least five years prior to the disability. The retired director pays one-third of the premium for such optional hospital and medical coverage and Entergy Gulf States pays the remaining two-thirds. Years of service as an advisory director are included in calculating this benefit.

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Employment Contracts and Termination of Employment and Change-in-Control Arrangements Entergy Gulf States As a result of the Merger, Entergy Gulf States is obligated to pay benefits inder the Executive Income Security Plan to those persons who were participants t the time of the Merger and who later terminated their employment inder circumstanos described in the plan. For additional description of the benefits under the Executive Income Security Plan, see the "Pension Plan Tables-System Executive Retirement Plan Table" section noted above.

Personnd Committee Interlocks and Insider Participation The compensation of Fntergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi Entergy New Orleans, and System Energy executive officers was set by the Personnel Committee of Entergy Corporation's Board of Directors, composed solely of Directors of Enter Corporation. No officers or employees of any Etergy company participated in deliberations concening compensation during 1996.

Item 12. Security OwnershiD of Certain Beneficial Owners and Manseement Entergy Corporation owns 100% of the outstanding common stock of registrants Entergy Arkansas, Erctergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New, Orleans, and System Energy. The information with respect to persons known by Entergy Corporation to be beneficial owners of more than 5% of Entergy Corporation's outstanding common stock is included under the heading "Voting Securities Outstanding" in the Proxy Statement, which information is incorporated herein by reference. The registrants know of no contractual arrangements that may, at a subsequent date, result in a change in control of any of the registrants.

The directors, the Named Executive Officers, and the directors and officers as a group for Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi Entergy New Orleans, and System Energy,* respectively, beneficially owned directly or indirectly common stock of Entergy Corporation as indicated

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J I~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Entergy Corporation Common Stock Azijount and Nature of Beneficial OwnershiDs)

Sole Voting and Other Investment Beneficial Name Power Ownership(b)

Entergy Corporation Michael B. Bemis* 11,480 10,000 W. Frank Blount* 4,434 John A. Cooper, Jr.* 6,934 Lucie J. Fjeldstad* 3,384 7 Dr. Norman C. Francis* 1,200 Donald C. Hintz** 8,779 7,500 Jery D. Jackson" 11,615 14,411 Robert v.d. Lufl* 3,684 -

Edwin Lupberger*** 34,392 41,324 (c)

Jerry L. Maulden* 25,015 20,000 Adm. Kinnaird R McKee* 2,467 -

Paul W. Murrill' 2,917 James R. Nichols* 5,078 Eugene H. Owen* 3,092 John N. Palmer, Sr.* 16,481 Robert D. Pugh 6,700 6,500 (c)

H. Duke Shackelford* 8,750 4,950 (d)

Wm. Clifford Smith* 5,600 -

Bismark A. Steinhagen* 7,637 -

All directors and executive officers 263,181 149,685 Entergy Arkansas Michael B. Bemis*** 11,480 10,000 Donald C. Hintz*** 8,779 7,500 Jery D. Jackson*** 11,615 14,411 RDrakeKeith* 13,189 7,174 Edwin Lupberger*** 34,392 41,324 (c)

Jerry L. Maulden*** 25,015 20,000 Gerald D. Mclnvale* 16,030 10,000 All directors and executive officers 189,117 137,909

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Entergy Corporation Common Stock Amount and Nature of Beneficial Ownership(a)

Sole Voting and Other Investment Beneficial Name Power OwnershiD(b)

Enterly Gulf States Micha-1 B. Bemis* 11,480 10,000 John J. Cordaro

• 6,833 5,000 Frank F. Gallaher* 20,401 7,500 Donald C. Hintz** 8,779 7,500 Jerry I). Jackson*** 11,615 14,411 Karen R. Johnion 349 Edwin Lupberger** 34,392 41,324 (c)

Jerry L. Maulden** 25,015 20,000 Gerald D. Mcnvale

• 16,030 10,000 All directors and executive officers 180,976 135,735 Entergy Louisiana Micha:l B. Bemis** 11,480 10,000 John J. Cordaro* 6,833 5,000 Donald C. Hintz*** 8,779 7,500 Jerry ). Jackson*** 11,615 14,411 Edwin Lupberger* 4 34,392 41,324 (c)

Jerry L. Maulden"*4 25,015 20,000 Gerald D. Mclnvale

• 16,030 10,000 All directors and executive officers 187,772 135,735 Entergy Mississippi t

Micha l B. Bemis ** 11,480 10,000 Donald C. Hintz* 8,779 7,500 Jerry I). Jackson*** 11,615 14,411 Edwin Lupberger*** 34,392 41,324 (c)

Jerry L. Maulden*4 25,015 20,000 Gerald D. Mclnvale*** 16,030 10,000 Donald E Meiners* 11,982 10,000 All directors and executive officers 177,804 140,735

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Entergy Corporation

-Common Stock Amount and Nature of Beneficial Ownership(a)

Sole Voting and Other Investment Beneficial Name Power Ownershi(b)

Entergy New Orleans Michael B. Bemis** 11,480 10,000 JerryD.Jackson*** 11,615 14,411 Edwin Lupberger* 34,392 41,324 (c)

Jerry L. Mauldi*** 25,015 20,000 Gerald D. McInvale*** 16,030 10,000 Daniel F. Packer

• 3,164 All directors and executive officers 160,465 123,235 System Energy Louis E. Buck, Jr.** 80 Donald C. Hintz*** 8,779 7,500 Edwin Lupberger*** 34,392 41,324 (c)

Jerry L. Maulden* 25,015 20,000 Gerald D. McInvale*** 16,030 10,000 William J. Regan ** 202 All directors and executive officers 89,185 78,824

• Director of the respective Company

• • Named Executive Officer of the respective Company

• • " Director and Named Executive Officer of the respective Company (a) Based on information furnished by the respective individuals. Except as noted, each individual has sole voting and investment power. The amount owned by each individual and by all directors and executive officers as a group does not exceed one percent of the outstanding securities of any class of security so owned.

(b) Includes, for the Named Executive Officers, shares of Entergy Corporation common stock in the form of unexercised stock options awarded pursuant to the Equity Ownership Plan as follows: Michael B. Bemis, 10,000 shares; John . Cordaro 5,000 shares; Frank F. Gallaher, 7,500 shares; Donald C. Hintz, 7,500 shares; Jerry D. Jackson, 14,411 shares; R. Drake Keith, 7,174 shares; Edwin Lupberger, 38,824 shares; Jerry L. Maulden, 20,000 shares; Gerald D. McInvale, 10,000 shares; and Donald E. Meiners, 10,000 shares.

(c) Includes, for the Named Executive Officers, shares of Entergy Corporation common stock held by their spouses. he named persons disclaim beneficial ownership in these shares as follows: Edwin Lupberger, 2,500 shares; and Robert D. Pugh, 6,500 shares.

(d) Includes 4,950 shares owned by the estate of Mrs. Shackelford, of which H. Duke Shackelford disclaims beneficial ownership.

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Item 13. Certain Relationships and Related Transactions Infornation called for by this item concerning the directors and officers of Entergy Corporation is set forth under the heading "Certain Transactions" in the Proxy Statement, which infonnation is incorporated herein by reference.

See Item 10, "Directors and Executive Officers of the Registrants," for information on certain relationships and transactions required to be reported under this item.

Other than as provided under applicable corporate laws,, Enteroy does not have policies whereby transactions involving executive officers and directors are approved by a majority of disinterested directors.

However, pursuant to the Entergy Corporation Code of Conuct, transactions involving an Entergy and its executive officers must have prior approval by the next higher reporting level of that individual, and transactions involving an Entergy company and its directors must be reported to the secretary of the appropriate company.

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PART IV Item 14. Exhibits, Financial Statement Schedules, and Repoits on Form 8-K.

(a)1. Financial Statements and Independent Auditors' Reports for Entergy, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy are listed in the Index to Financial Statements (see pages 38 and 39)

(a)2. Financial Statement Schedule Reports of Independent Accountants on Financialatemnt Schedules (see pag 14)

Financial Statement Scheues arc listed in the Index to Financial Statement Schedules (see page S-I)

(a)3. Exhibits Exhibits for Entergy, Entergy Arkansas, Enterg Gulf States, Entergy Louisiana, Entergy Mississippi Entergy New Orleans, and Syst= Energy are listed-in-the-ExhbiFrldex (see page E-1). Each management contract or ccnspensatory plan or arrangement required to be filed as an exhibit hereto is identified as such by footnote in the Exhibit Index.

(b) Reports on Form 8-K I--Entcrmv Corporation A current report on Form 8-K, dated October 11, 1996, was filed with the SEC on October 11, 1996, reporting information under Item 5. "Other Events".

A current report on Form 8-K, dated December 18, 1996, was filed with the SEC on December 18, 1996, reporting information under Item 5. "Other Events".

A current report on Form 8-K, dated February 7, 1997, was filed with the SEC on February 18, 1997, reporting information under Item 2. "Acquisition of Assets" and Item 5. "Other Events".

EnterMv Corporation and Entergv Arkansas A current report on Form 8-K, dated October 23, 1996, was filed with the SEC on October 29, 1996, reporting information under Item 5. "Other Events".

Enter&v Corporation and Entermv Gulf States A current report on Form 8-K, dated November 27, 1996, was filed with the SEC on November 27, 1996, reporting information under Item 5. "Other Events".

EXPERTS The statements attributed to Sandlin Associates regarding the analysis of River Bend Construction costs of Entergy Gulf States under -Item 1 "Rate Matters and Regulation - Rate Matters - Retail Rate Matters - Entergy Gulf States' and inNote 2 to Entergy Corporation and Subsidiaries Consolidated Financial Statements and Entergy Gulf States' Financial Statements, 'Rate and Regulatory Matters," have been reviewed by such firm and are included herein upon the authority of such firm as experts.

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ENTERGY CORPORATION SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities-Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company sill be deemed to relate only to matters having reference to such company and any subsidiaries thereof.

ENTERGY CORPORATION

- By Is/ Louis E. Buck Louis E. Buck Vice President and Chief Accounting Officer Date: March.10, 997 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed belowy' the followingjpersons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereoE Signature Title Date

/s! Louis E. Buck Louis E. Buck Vice President and March 10, 1997 Chief Accounting Officer (Principal Accounting Officer)

Edin Lupberger (Chairman of the Board, Chief Executive Officer and Director, Principal Executive Officer); Gerald D. McInvale (Executive Vice President and Chief Financial Officei, Principal Financial Officer); W. Frank Blount, John A. Cooper, Jr., Lucie J. Fjeldstad, N. C. Francis,. Kaneaster Hodges, Jr., Robert v.d. Luft Kinnaird R. McKee, Paul W. Murrill, James R. Nichols, Eugene H. Owen, John N. Palmer, Sr., Robert D. Pugh, R Duke Shackelford, Wm. Clifford Smith, and Bismark A. Steinhagen (Directors).

By: /s/ Louis E. Buck March 10, 1997 (Louis E. Buck, Attorney-in-fact)

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ENTERGY ARKANSAS, INC.

SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be doemed to relate only to matters having reference to such company and any subsidiaries thereof.

ENTERGY ARKANSAS, INC.

By Is/ Louis E. Buck Louis E. Buck, Vice President, Chief Accounting Officer and Assistant Secretary Date: March 10, 1997 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. he signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.

Sienature Title Date Is/ Louis E. Buck Louis E. Buck Vice President, Chief Accounting March 10, 1997 Officer and Assistant Secretary (Principal Accounting Officer)

Edwin Lupberger (Chairman of the Board, Chief Executive Officer and Director, Principal Executive Officer); Gerald D. McInvale (Executive Vice President, Chief Financial Officer, and Director, Principal Financial Officer); Michael B. Bemis, Donald-C. Hintz, Jerry D.

Jackson, R Drake Keith, and Jerry L. Maulden (Directors).

By Is/ Louis E. Buck March 10, 1997 (Louis E. Buck, Attorney-in-fact)

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ENTERGY GULF STATES, INC.

SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.

ENTERGY GULF STATES, INC.

By /s/ Louis E. Buck Louis E. Buck, Vice President, Chief Accounting Officer and Assistant Secretary Date: March 10, 1997 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.

Sienature Title Date IsI Louis E. Buck Louis E. Buck Vice President, Chief Accounting March 10, 1997 Officer and Assistant Secretary (Principal Accounting Officer)

Edwin Lupberger (Chaiman of the Board,. Chief Executive Officer and Director, Principal Executive Officer); Gerald D. McInvale (Executive Vice President, Chief Financial Officer, and Director, Principal Financial Officer); Michael B. Bemis, John J. Cordaro, Frank F.

Gallaher, Donald C. Hintz, Jerry D. Jackson, Karen R Johnson, and Jerry L. Maulden (Directors).

By: Is/ Louis E. Buck March 10, 1997 (Louis E. Buck, Attorney-in-fact)

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L 1, ENTERGY LOUISIANA, INC.

.; Jn SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.

ENTERGY LOUISIANA, INC.

By Is/ Louis E. Buck Louis E. Buck, Vice President, Chief Accounting Officer and Assistant Secretary Date: March 10, 1997 Pursuant to the requirements of the Securities Exchange Act of 1934,this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.

Sipnature Title Date IsJ Louis E. Buck Louis E. Buck Vice President, Chief Accounting March 10, 1997 Officer and Assistant Secretary (Principal Accounting Officer)

Edwin Lupberger (Chairman of the Board, Chief Executive Officer and Director; Principal Executive Officer); Gerald D. McInvale (Executive Vice President, Chief Financial Officer, and Director, Prificipal Financial Officer); Michael B. Bemis, John J. Cordaro, Donald C.

Hintz, Jerry D. Jackson, and Jerry L. Maulden (Directors).

By. Is/ Louis E. Buck March 10, 1997 (Louis E. Buck, Attorney-in-fact)

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ENTERGY MISSISSIPPI, INC.

SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company, and any subsidiaries thereof.

ENTERGY MISSISSIPPI, INC.

By /s/ Louis E. Buck Louis E. Buck, Vice President, Chief Accounting Officer and Assistant Secretary Date: March 10, 1997 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in th capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof Sienature Title Date Is/ Louis E. Buck Louis E. Buck Vice President, Chief Accounting March 10, 1997

-Officer and Assistant Secretary (Principal Accounting Officer)

Edwin Lupberger (Chairman of the Board, Chief Executive Officer and Director, Principal Executive Officer); Gerald D. Mcfnvale (Executive Vice President, Chief Financial Officer, and Director, Principal Financial Officer); Michael B. Bemis, Donald C. Hintz, Jerry D.

Jackson, Jerry L. Mauldn, and Donald E. Meiners (Directors).

By Isl Louis E. Buck March 10, 1997 (Louis E. Buck, Attorney-in-fact)

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ENTERGY NEW ORLEANS, INC.

SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.

ENTERGY NEW ORLEANS, INC.

By 1s1 Louis E. Buck Louis E. Buck, Vice President, Chief Accounting Officer and Assistant Secretary Date: March 10, 1997

- Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.

Siznature Title Date

/s/ Louis E. Buck Louis E. Buck Vice President, Chief Accounting March 10, 1997 Officer and Assistant Secretary (Principal Accounting Officer)

Edwin Lupberger (Chairman of the Board, Chief Executive Officer and Director, Principal Executive Officer); Gerald D. McInvale (Executive Vice President, Chief Financial Officer, and Director, Principal Financial Officer); Jerry. D. Jackson, Jerry L. Maulden, and Daniel F.

Packer (Directors).

By: Is/ Louis E. Buck March 10, 1997 (Louis E. Buck, Attorney-in-fact)

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SYSTEM ENERGY RESOURCES, INC.

SIGNATURES Pursuant to the requiremmnts of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof SYSTEM ENERGY RESOURCES, INC.

By sI Louis E. Buck Louis E. Buck, Vice President and Chief Accounting Officer Date: March 10, 1997 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. he signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof Sienature Title Date

/s/ Louis E. Buck Louis E. Buck Vice President and March 10, 1997 Chief Accounting Officer (Principal Accounting Officer)

Donald. C. Hlntz (President, Chief Executive Officer and Director, Principal Executive Officer); Gerald D. Mclnvale (Executive Vice President, Chief Financial Officer, and Director, Principal Financial Officer); Edwin Lupberger (Chairman of the Board), and Jerry L. Maulden (Directors).

By: /l Louis E. Buck March 10, 1997 (Louis E. Buck, Attorney-in-fact)

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tAtilb whIat)

CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in Post-Effective Amendment Nos. 2, 3, 4A, and A on Form S-8 and the related Prospectuses to the registration statement of Entergy Corporation on Form S-4 (File Number 33-54298) and on Form S-3 (File Numbers 333-02503 and 333-22007) of our reports dated February 13, 1997, on our audits of the consolidated financial statements and consolidated financial statement schedules of Entergy Corporation as of December 31, 1996 and 1995, and for each of the three years in the period ended December 31, 1996, which reports include an emphasis paragraph related to a rate-related contingency and an explanatory paragraph related to changes in accounting methods for the impairment of long-lived assets and for long-lived assets to be disposed of and incremental nuclear plant outage maintenance costs by certain of the Corporation's subsidiaries, and are included in this Annual Report on Form 10-K.

We consent to the incorporation by reference in the registration statements and the related Prospectuses of Entergy Arkansas, Inc. (formerly Arkansas Power & Light Company) on Form S-3 (File Numbers 33-36149, 33-48356, 33-50289, 333-00103 and 333-05045) of our reports dated February 13, 1997, on our audits of the financial statements and financial statement schedule of Entergy Arkansas, Inc. as of December 31, 1996 and 1995, and for each of the three years in the period ended December 31, 1996, which reports include an explanatory paragraph related to the Companys 1995 change in its method of accounting for incremental nuclear plant outage maintenance costs, and are included in this Annual Report on Form 10-K.

We consent to the incorporation by reference in the registration statements and the related Prospectuses of Entergy Gulf States, Inc. (formerly Gulf States Utilities Company) on Form S-3 (File Numbers 33-49739 and 33-51181), Form S-8 (File Numbers 2-76551 and 2-9801 1) and on Form S-2 (File Number 333-17911), of our reports dated February 13, 1997, on our audits of the financial statements and financial statement schedule of Entergy Gulf States, Inc. as of December 31, 1996 and 1995 and for each of the three years in the period ended December 31, 1996, which reports include an emphasis paragraph related to a rate-related contingency and an explanatory paragraph related to a change in accounting for the impairment of long-lived assets and long-lived assets to be disposed of, and are included in this Annual Report on Form 10-K.

We consent to the incorporation by reference in the registration statements and the related Prospectuses of Entergy Louisiana, Inc. (formerly Louisiana Power & Light Company) on Form S-3 (File Numbers 33-46085, 33-39221, 33-50937, 333-00105, 333-01329 and 333-03567) of our reports dated February 13, 1997, on our audits of the financial statements and financial statement schedule of Entergy Louisiana, Inc. as of December 31, 1996 and 1995, and for each of the three years in the period ended December 31, 1996, which are included in this Annual Report on Form 10-K.

We consent to the incorporation by reference in the registration statements and the related Prospectuses of Entergy Mississippi, Inc. (formerly Mississippi Power & Light Company) on Form S-3 (File Numbers 33-53004, 33-55826 and 33-50507) of our reports dated February 13, 1997, on our audits of the financial statements and financial statement schedule of Entergy Mississippi, Inc. as of December 31, 1996 and 1995, and for each of the three years in the period ended December 31, 1996, which are included in this Annual Report on Form 10-K.

We consent to the incorporation by reference in the registration statements and the related Prospectuses of Entergy New Orleans, Inc. (formerly New Orleans Public Service Inc.) on Form S-3 (File Numbers 33-57926 and 333-00255) of our reports dated February 13, 1997, on our audits of the financial statements and financial statement schedule of Entergy New Orleans, Inc. as of December 31, 1996 and 1995, and for each of the three years in the period ended December 31, 1996, which are included in this Annual Report on Form 10-K.

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We consent to the incorporation by reference in the registration statements and the related Prospectuses of System Energy Resources, Inc. on Form S-3 (File Numbers 33-47662, 33-61189 and 333-06717) of our report dated February 13, 1997, on our audits of the financial statements of System Energy Resources, Inc. as of December 31, 1996 and 1995, and for each of the three years in the period ended December 31, 1996, which report includes an explanatory paragraph related to the Companys 1996 change in its method of accounting for incremental nuclear plant outage maintenance costs, and is included in this Annual Report on Form 10-K.

COOPERS & LYBRAND L.L.P.

New Orleans, Louisiana March 7, 1997

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EXHIBIT 23(b)

CONSENT in this Annual We consent to the reference to our firm under the heading "Experts" and to the inclusion the analysis by our Report on Form 10-K of Entergy Gulf States, Inc. of the statements (Staternents) regarding

- Rate Matters and Firm of River Bend construction costs which are made herein under Part L Item 1. Business Gulf States' 2 to Entergy Regulation" and in the'discussion of Texas jurisdictional matters set forth in Note Financial Statements Financial Statements and Note' 2 to Entergy Corporation and Subsidiaries' Consolidated or reviewed by us (Sandlin appearing as Item 8. of Part II of this Form 10-K, which Statements have been prepared statements of Entergy Gulf States Associates). We also consent to the incorporation by reference in the registration and 2-98011) and on on Form S-3 (File Numbers 33-49739 and 33-51181), Form S-8 (File Numbers 2-76551 Form S-2 (File Number 333-17911) of such reference and Statements.

SANDLIN ASSOCIATES Management Consultants Pasco, Washington March 10, 1997

- 213 -

REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES To the Board of Directors and the Shareholders of Entergy Corporation We have audited the consolidated financial statements of Entergy Corporation and Subsidiaries and the financial statements of Entergy Arcansas,; Inc. (formerly Arkansas Power & Light Company), Entergy Gulf States, Inc. (formerly Gulf States Utiliies Company), Entergy Louisiana, Inc. (formerly Louisiana Power & Light Company), Entergy Mississippi, Inc. (formerly Mississippi Power & Light Company) and Entergy New Orleans, Inc. (formerly New Orleans Public Service Inc.) as of December 31, 1996 and 1995, and for each of the three years in the period ended December 31, 1996, and have issued our reports, included elsewhere in this Form 1K, thereon dated Februazy 13, 1997, which reports as to Entergy Corporation and Entergy Gulf States, Inc. include an emphasis paragraph related to a rate-related contingency and an explanatory paragraph related to a change in accounting for impairment of long-lived assets and long-lived assets to be disposed of and which reports as to Entergy Corporation and Entergy Arkansas, Inc. include an explanatory paragraph related to changes in accounting for incremental nuclear plant outage maintenance expenses. In connection with our audits of such financial statements, we have also audited the related financial statement schedules included in Item 14(a)2 of this Form 1.-K In our opinion the financial statement schedules referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly, in all material respects, the information required to be included therein.

COOPERS & LYBRAND L.L.P.

New Orleans, Louisiana February 13, 1997

- 214 -

INDEX TO FINANCIAL STATEMENT SCHEDULES Schedule Pae Financial Statements of Entergy Corporation:

Statements of Income - For the Years Ended December 31, 1996, 1995, and 1994 S-2 Statements of Cash Flows - For the Years Ended December 31, 1996, 1995, and 1994 S-3 Balance Sheets, December 31, 1996 and 1995 S-4 Statements of Retained Earnings and Paid-In Capital - For the Years Ended December 31, 1996, 1995, and 1994 S-5 H Valuation and Qualiying Accounts 1996, 1995, and 1994:

EnterD Corporation and Subsidiaries S-6 Entergy Akansas, Inc. S-7 Entergy Gulf States, Inc. S-8 Entergy Louisiana, Inc. S-9 Entergy Mississippi Inc. S-10 EntergyNew Orleans, Inc.. S-Il Schedules other than those listed above are omitted because they are not required, not applicable or the required information is shown in the financial statements or notes thereto.

Columns have been omitted from schedules filed because the information is not applicable.

S-1

ENTERGY CORPORATION SCHEDULE I-FINANCIAL STATEMENTS OF ENTERGY CORPORATION STATEMENTS OF INCOME For the Years Ended December 31, 1996 1995 1994 (In Thousands)

Income:

Equity in income of subsidiarics $459,350 S549,144 S369,701 Interest on temporary investments 4,840

• 20,641; 25,496 Total 464,190 569,7S5 395,197 E ses and Other Deductions:

Administrative and general ex:enses 34,402 53,872' 57,846 Income taxes (credit) (1,558) (5,383) (6,350)

Taxes other than income (credit) 828 1,102 465 Interest (credit) 10,491 214 1,395 Total 44,163 A9,805, 53,356 Net Income $420,027 SS19,980 $341,841 See Entergy Coporation and Subsidiaries Notes to Financial Statements in Part I, Item 8.

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ENTERGY CORPORATION SCIHEDULE I - FINANCIAL STATEMENTS OF ENTERGY CORPORATION STATEMENTS OF CASH FLOWS For the Yean Ended Demler 31, 1996 1995 1994 (tl T oUnD&)

Operaing Activities:

Net income S420.027 S519,980 S341.41 Noncas item inclded i nd income:

Equity i minp of subrdisies (459,350) (549,144) (369.701)

Deferred ioone txes 8,499 (2,024) 7,007 1.628 1,421 959 Changes in warking capital:

Receivables 3.232 2,161 (5,025)

PRyzbks 9.919 (3.776) (11.945)

Offffwwking apita scat (1,170) (1.701) (2,563)

Coimon sO dividads recived fiom subsidianes 554,200 565,5S9 763,400 0dw (3,524) 8,652 (12.137_

533,461 541,152 711,776 Investing Atiies:

lavestment in subsdiawies (266,681) (477.709) (49.f92)

(3.175)

Proceeds received from the sal of propetty 26,000 Advance to subsidiary 221.540 (118.40)

Net cash flow ued in invesing activities (266.681) (256.169)

(38.910)

Fucing Activities:

Changes in t4en botrwinw. 20,000 (43.000)

Common stoc dividen&paid (405.346) (408,553) (410.223) lsuance of common stoc 11.OS7 (119,4S6)

Net cah flow used in fincing aivities (267,259) (408,553) (572.709)

Net ncrs (decrusc) in cah and cash equivalents (479) (123,564) 100,157 Cash amd ch equivalents at begitining ofperiod 129,144 252.708 152,551 Cash and cash equivlents at end of period S128,665 S129,144 S252,708 See Entegy Corporstion and Subsidiaries Notes to Finncial Statmets in Pat IL Item S.

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- t~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

ENTERGY CORPORATION SCHEDULE I - FINANCIAL STATEMENTS OF ENTERGY CORPORATION BALANCE SHEETS December 31, 1996 1995 (In Thousands)

ASSETS Current Assets:

Cash and cash equivalents:

Cash $23 $25 Temporary cash investments - at cost, which approximates market:

Associated companies 57,986 29,180 Other 70,656 .99,939 Total cash and cash equivalents 128,665 129,144 Accounts receivable:

Associated companies 5,940 8,697 Other 356 Interest receivable 378 497 Other 20,389 9,511 Total 155,372 148,205 Investment in Wholly-onAed Subsidiaries 6.531,729 6,354,267 Deferred Debits 74,891 47,381 TOTAL $6,761.992 S6,549,853 LIBILIMES AND SHAREHOLDERS' EQUITY Current Liabilities:

Notes Payable S20,000 Accounts payable:

Associated companies 11,613 762 Other 22 1,142 Interest Accrued 188 Other current liabilities 15,638 5,930 Total 47,461 7,834 Deferred Credits and Noncurrent Liabilities 73,616 70,299 Shareholders' Equity:

Common stock, S.0I par value, aulIorized 500,000,000 shares; issued 234,456,457 shares in 1996 and 230,017,485 shares in 1995 2,345 2,300 Paid-in capital 4,320,591 4,201,483 Retained earnings 2,341,703 2,335,579 Cumulative foreign currency translation adjustment 21,725 Less cost of treasury stock 1,496,118 shares in 1996 and 2,251,318 shares in 1995) (45,449) (67,642)

Total common shareholders' equity 6,640.915 6,471,720 Total $6,761,992 $6,549,853 See Entergy Corporation and Subsidiaries Notes to Financial Statements in Part U,Item 8.

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ENTERGY CORPORATION SCHEDULE I - FINANCIAL STATEMENTS OF ENTERGY CORPORA1TON STATEMENT'S OF RETAINED EARNINGS AND PAID-IN CAPITAL For the Yean Ended December 31, 1996 1995 1994 (In Thousands)

Retained Earnings, January I S2,335,579 $2,223,739 S2,310,082 Add:

Net income 420.027 519,980 341,841 Total 2,755,606 2,743,719 2,651,923 Deduct Dvidends declared on common stock 412,250 409,801 411,806 Common stock retirments" - 13,940 Capital stock and othe expenses 1,653 (1.661) - 2,438 Total 413,903 408,140 428,184 Retained Earnings, December 31 S2,341,703 $2,335,579 S2,223,739 Paid-in Capital, January I S4,201,483 $4,202,134 $4,223,682 Add:

Gain (loss) on reaquisition of subsidiaries' preferred stock 1,795 (26) (23)

Common stock issuances related to stock plans 117,560 (3,002)

Total 4,320,838 4,199,106 4,223,659 Deduct Common stock retirements - 22,468 Capital stock discounts and other expenses 247 (2,377) (943)

Total 247 (2,377) 21,525 Paid-in Capital, December 31 $4,320,591 $4,201,483 S4,202,134 See Entergy Corporation and Subsidiaries Notes to Consolidated Financial Statements in Part 1L Iten 8.

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ENTERGY CORPORATIONAND SUBSIDLARIES SCHEDULE.LI - VALUATION AND QUALIFYING ACCOUNTS Years Ended December 31, 1996,1995, and 1994 (In Thousanda)

Coln A Cohman B Column C Cokm D Cohnun E Additions Deductions Balance at &r Balanct Beghinkig Ciarged to Provisions at End of Period Incole (Note 1) of Period Ycar ended December31, 1996 Accumulated Provisions Deducted fiom Assob-Doubtfil Accounts S7,109 S18,403 S17,690 S7,822 Other 12.337 - 12,337 Total S 19.446 -- 4I40,T2 -33T S7,82 Accumulated ProisOs Not Deducted fiom Asct Prope insurance S36,733 $26,136 S27,843 S35,026 Injuries and damages (Note 2) 19,981 23,373 17,209 26,145 Environmental 40,262 2599 5.142 37.719 Total S96,976 S52,108 ST509 S98,890 Year ended December 31, 1995 Accumulated Provisons Deducted from Assets-Doubtu Accounts S6,740 S14,586 S14,217 S7.109 Other So 12.337 - S12,337 Total S6,740 S26,923 S14iT2 _ S19,446 Accumulated Provisions Not Deducted f&ro Ats Property insurance S32,871 S16,263 S12,401 S36,733 Injuries and damages (Note 2) 22,066 11,667 133752 19,981 Environmental 42,739 7,639 10.116 40,262 Total S97,676 S--35,S6 S--366 S96,976 Year ended December31. 1994 Accumulated Provisions Deducted from Asset-Doubtfl Accounts S8,808 S8,266 S10,334 S6,740 Accumulaed Provisions Not Deducted fiom Assets:

Propat insurance S34,546 $25,592 S27,267 S32,871 Injuies and damages (Note 2) 23,096 10,993 12.023 22,066 Environmental 26,753 2I.2 5,306 42,739 Total S84,395 S $79f 7,616 Notes:

(I) Deductions from provisios reprcent loss:s or cxpenss fi)r which the respoctiv provisions we creatod. In the case of thc provision for doubtful accounts, such deductions are reduced by recoveries of amounts previously written o£ (2) Injuries and damages provision is provided to absorb all current expenses as appropriate and fur the estimated cost of setling claims for injuris and damages.

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ENTERGY ARKANSAS, INC.

SCHEDULE 11 --VALUATION AND QUALIFYING ACCOUNTS Years Ended December 31, 1996, 1995, and 1994 (In Thousands)

Cohnmn A Cohlumn B Column C Cohmn D Cohlmn E Other Addltons Changes Deductions Balance at from Balance Begnning Charged to Provisions at End Description of Period Income (Note 1) of Period Year ended December 31, 1996 Accumulated Provisions Deducted from Assets-Doubtful Accounts S2,058 S5,341 S5,073 S2,326 Accumulated Provisions Not Deducted from Assets:

Property insurance S900 S8,808 S9,694 S14 Injuries and damages (Note 2) 1,810 2,980 1,980 2,810 Environmental 6,514 1,320 _ _

2,671 5,163 Total $9,224 S13.108 S14,345 S7,987 Year ended December 31, 1995 Accumulated Provisions Deducted from Assets-Doubtful Accounts S1,950 S3,997 S3,889 S2,058 Accumulated Provisions Not Deducted from Assets:

Property insurance S1,916 S4,810 S5,826 S900 Injuries and damages (Note 2) 2,660 710 1,560 1,810 Environmental 5,350 4,435 3,271 6,514 Total S9,926 . 9,9SS $10,657 S9,224 Year endedDecember 31, 1994 Accumulated Provisions Deducted from Assets-Doubtfil Accounts S2,050 S1,967 S2,067 $1,950 Accumulated Provisions Not Deducted from Assets:

Property insurance S2,821 $18,782 S19,687 S1,916 Injuries and damages (Note 2) 3,259 1,316 1 1,915 .2,660 Environmental 6,825 . 1510 2,985 5,350 Total S12,905 $21,608 $24,587 S9,926 Notes:

(1) Deductions from provisions represent losses or expenses for which the respective provisions were created. In the case of the provision for doubtful accounts, such deductions are reduced by recoveries of amounts previously written off.

(2) Injuries and damages provision is provided to absorb all current expenses as appropriate and for the estimated cost of settling claims for injuries and damages.

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ENTERGY GULF STATES, INC.

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS Years Ended December 31, 1996,1995, and 1994 (In Thousands)

Cohn A Column B Column C Cohlumn D Column E Other Additions Changes Deductos Balance at from Balance Beghinkg Charged to Provlonss t EnM Description of Period come (Note 1) of Period I If 1 Qq or.~~~~~~-

I Mar aUzc LCQcl .M, I 1U Acownulated Piovisions Deducted from Assets-Doubtfal Accounts $1,608 S4.709 S4,320 $1,997 Accumulated Provisions Not Deducted firom Assets-Propety insurancoe $14,141 $5,899 $3,037 S17,003 Injuries and damages (Note 2) 5,199 7,955 3,560 9,594 Environmental 21,864 365 400 21,829 Total S41,204 S14,219 S6,997 S48,426 Year ended December 31, 1995 Accumulated Provisions Deucted fiom Assets-DoubtfUl Accounts S715 S3,715 $2,822 51,608 Accumulated Provision, Not Deducted from Assets-Propty insurance S10,451 S6,396 S2,706 S14,141 Injuries and damages (Note 2) 6,922 6,243 7,966 5,199 Environmental 20,314 2,483 933 21,864 Total S37,687 S15,122 511,605 S41,204 Year ended December 31, 1994 Accumulated Provisions Deducted from Assets-Doubtful Accounts S2,383 S701 $2,369 $715 Accumulated Provisions Not Deducted from Assets-Property insurance S10,872 - 2,170 $2,591 S10,451 Injuries and damages (Note 2) 9,469 2,970 5,517 6,922 Envirmental 18,151 2,589 426 20,314 Total S38,492 S7,729 S8,534 S37,687 Notes:

(1)Deductions from provisions represent losses or expenses for which the respective provisions were crated. In the case of the provision for doubtful accounts, such deductions are reduced by recoveries of amounts prvviously written ofT.

(2) Injuries and damages provisiot is provided to absorb all current expenses as appropriate and for the estimated cost of setling claims for injuries and damages.

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ENTERGY LOUISIANA, INC SCHEDULE II-- VALUATION AND QUALIFYING ACCOUNTS Years Ended December 31, 1996, 1995, and 1994 (In Thousands)

Column A Colhmn B Coumn C Column D Column E Other Additions Ches Deductkos Balnce at from Balance Beg ing Charged to Provisions at End Descripton ofPerod Incoxe (Note 1) of Period Year ended Dcembe 31, 1996 Accumulated Provisions Deducted firm Assets-Doubtful Accounts $1,390 S3,241 S3,202 S1,429 Accumulated Provisions Not Deducted from Assets:

Ppat insurance S1.013 $4,583 $5,335 S261 -

Injuries and damages (Note 2) 8,414 10,646 9,617 9,443 Environmental 11,379 495 _ _

1,895 9,979 Total $20,806 $15,724 S16,847 S19,683 Year ended Decemba 31, 1995 Accumulated Provisions Deducted from Assets-Doubtful Accounts $1,175 $2,450 S2,235 $1,390 Accumulated Provisions Not Deducted from Assets:

Propety insurance S814 S3,537 $3,338 $1,013 Injuries and damages (Note 2) 7,350 4,486 3,422 8,414 Environmental 16,394 (89) 4,926 11,379 Total S24,558 $7_934 _$11,686 S20,806 Year ended December 31, 1994 Accumulated Provisions Deducted from Assets-Doubtful Accounts $1,075 S2,023 $1,923 S1,175 Accumulated Provisions Not Deducted fiom Assets:

Prop" insurance S2,388 S3,120 S4,694 S814 Injuries and damages (Note 2) 4,779 5,848 3,277 7,350 Environmental 1,237 16,868 1,711 16,394 Total - $8,404 S25836 S9,682 S24 558 Notes:

(1) Deductions from provisions represent losses or expenses for which the respective provisions were created. In the case of the provision for doubtful acnmts, such deductions are reduced by recoveries of amounts previously written off.

(2) Injuries and damages provision is provided to absorb all current expenses as appropriate and for thecstimated cost of setling claims for injuries and damsges.

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I-ENTERGY MISSISSIPPI, INC.

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS Years Ended December 31, 1996, 1995, and 1994 (In Thousands)

Cobamn A Cohlumn B Column C Cohlmn D Cohmn E Other Additions Chs Deductions Balance at from Balance Beg Charged to Provisions at EAd Description of Period Income (Note 1) of Period Year ended December 31, 1996 Accumlated Provisions Deducted fiom Assets-Doubtful Acouts $1,585 S2,996 S3,207 S1,374 Accumulated Provisions Not Deducted from Assets:

Proy insurance S5,013 S6,846 S9,777 S2,08i Injuries and damages (Note 2) 2,565 928 588 2,905 Environmental 467 330 104 693 Total S8,045 $8,104 S10,469 S5,680 Year ended December31, 1995 Accumulated Provisions Deducted fiom Assets-Doubtfiu Accounts $2,070 $1,691 $2,176 $1,585 Accumulated Provisions Not Deducted fiom Assets:

Property insurance $3,779 S1,520 S286 $5,013 Injuries and damages (Note 2) 3,725 (1,154) 6 2,565 Environmental 684 735 952 467 Total $8,188 $1,101 S1.244 $8,045 Year ended December 31, 1994 Accumulated Provisions Deducted firm Asss-Doubtful Accoumts $2,470 $1,897 S2,297 S2,070 Accumulated Provisions Not Deducted fm Assets:

Properly insurance S2,554 $1,520 S295 S3,779 Injuries and damages (Note 2) 3,478 365 118 3,725 Environmental 500 300 116 684 Total $6,532 S2,185 S529 $8.188 Notes:

(1)Deductions from provisions represent losses or expenses for which the respective provisions were created. In the case ofthe provision for doual accounts, such deductions ae reduced by recoveries of amounts previously written off.

(2) Injuries and damages provision is provided to absorb all cunrent expenses as appropriate and for the estimated cost of settling clains for injuries and damages.

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ENTERGY NEW ORLEANS, INC SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS Years Ended December 31, 1996, 1995, and 1994 (In Thousands)

Column A Column B Column C Column D Cohumn E Other Additions Changes Deductions Balance at from Balance Beginnng Charged to Provisions at End Description of Period Income (Note 1) of Period Year endedDecember 31, 1996 Accumulated Provisions Deducted from Assets-Daubtfal Accounts $468 S2,116 Sl,888 $696 Accumulated Provisions Not Deducted from Assets:

Property insurance S15,666 S15,666 Injuries and damages (Note 2) 1,993 864 1,464 1,393 Environmental 38 89 72 55 Total $17,697 S953 S1,536 S17,114 Year ended December 31, 1995 Accuulated Provisions Deducted from Assets-Doubtful Accounts S830 $2,733 S3,095 S468 Accumulated Provisions Not Deducted from Assets:

Property insurance S15,911 - $245 S15,666 Injuries and damages (Note 2) 1,409 1,382 798 1,993 Environmental (3) 75 34 38 Total S17,317 $1,457 Sl,077 $17,697 Year endedDecember 31, 1994 Accumulated Provisions Deducted from Assets-Doubtful Accounts S830 $1,678 S1,678 S830 Accumulated Provisions Not Deducted from Assets:

Property insurance S15,911 - - S15,911 Injuries and damages (Note 2) 2,111 494 1,196 1,409 Environmental 40 25 68 (3)

Total $18,062 $519 Sl,264 S17,317 Notes:

(1) Deductions from provisions represent losses or expenses for which the respective provisions were created. In the case of the provision for doubtful accoumts, such deductions are reduced by recoveries of amounts previously written off.

(2) Injuries and damages provision is provided to absorb all current expenses as appropriate and for the estimated cost of settling clairs for injuries and damages.

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EXHIBIT INDEX The following exhibits indicated by an asterisk preceding the exhibit number are filed herewith. The balance of the exhibits have heretofore been filed with the SEC, respectively, as the exhibits and in the file numbers indicated and are incorporated herein by reference. The exhibits marked with a (+) are management contracts or compensatory plans or arrangemnts required to be filed herewith and required to be identified as such by Item 14 of Form 10-K. Reference is made to a duplicate list of exhibits being filed as a part of this Form 10-K, which list, prepared in accordance with Item 102 of Regulation S-T of the SEC, immediately precedes the exhibits being physically filed with this Form 10-K.

(3) (i) Articles of Incorporation Entergy Corporation (a) 1 - Certificate of Incorporation of Entergy Corporation dated December 31, 1993, (A-1(a) to Rule 24 Certificate in 70-8059).

System Energy (b) 1 - Amended and Restated Articles of Incorporation of System Energy and amendments thereto through April 28, 1989 (A-1(a) to Form U-1 in 70-5399).

Entergy Arkansas (c) 1 - Amended and Restated Articles of Incorporation of Entergy Arkansas and amendments thereto through April 22, 1996 (3(a) to Form 10-Q for the quarter ended March 31, 1996 in 1-10764).

Entergy Gulf States (d) 1 - Restated Articles of Incorporation of Entergy Gulf States and amendments thereto through April 22, 1996 (3(b) to Form 0-Q for the quarter ended March 31, 1996 in 1-2703).

Entergy Louisiana (e) 1 - Restated Articles of Incorporation of Entergy Louisiana and amendments thereto through April 22, 1996 (3(c) to Form 10-Q forthe quarter ended March 31, 1996 in 1-8474).

Entergy Mississippi (f) 1 - Restated Articles of Incorporation of Entergy Mississippi and amendments thereto through January28, 1997 Entergy New Orleans (g) I - Restatement of Articles of Incorporation of Entergy New Orleans and amendments thereto through April 22, 1996 (3(e) to Form 10-Q for the quarter ended March 31, 1996 in 0-5807).

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(3) (ii) By-Laws (a) - By-Laws of Entergy Corporation effective August 25, 1992, and as presently in effect (A-2(a) to Rule 24 Celtificate in 70-8059).

(b) - By-Laws of System Energy effective May 4, 1989, and as presently in effect (A-2(a) in 70-5399).

(c) - By-Laws of Entergy Arkansas as amended effective May 5, 1994, and as presently in effect (3(d) to Form 10-Q for the quarter ended June 30, 1994).

(d) - By-Laws of Entergy Gulf States as amended effective May 5, 1994, and as presently in effect (A-12 in 70-8059).

(e) - By-Laws of Eatergy Louisiana effective January 23, 1984, and as presently in effect (A-4 in 70-6962).

(f) - By-Laws of Entergy Mississippi effective April 5, 1995, and as presently in effect (3(ii)(f) to Form 10-K fr the year ended December 31, 1995 in 0-320).

(g) - By-Laws of Entergy New Orleans effective May 5, 1994, and as presently in effect (3(g) to Form 10-Q for the quarter ended June 30, 1994 in 0-5807).

(4) Instruments Defining Rights of Security Holders, Including Indentures Entergy Corporation (a) I - See (4)(b) through (4)(g) below for instruments defining the rights of holders of long-term debt of System Energy, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi and Entergy New Orleans.

(a) 2 - Credit Agreenuxt, dated as of October 3, 1989, between System Fuels and The Yasuda Trust and Banking Co., Ltd., New York Branch, as agent (B-l(c) to Rule 24 Certificate, dated October 6, 1989, in 70-7668).

(a) 3 - First Amendment, dated as of March 1 1992, to Credit Agreement, dated as of October 3, 1989, between System Fuels and The Yasuda Trust and Banking Co., Ltd., New York Branch, as agent (4(a)5 to Form 10-K for the year ended December 31, 1991 in 1-3517).

(a) 4 - Second Amendment, dated as of September 30, 1992, to Credit Agreement dated as of October 3, 1989, between System Fuels and The Yasuda Trust and Banking Co., Ltd., New York Branch, as agent (4(a)6 to Form 10-K for the year ended December 31, 1992 in 1-3517).

(a) 5 - Security Agreerent, dated as of October 3, 1989, as amended, between System Fuels and The Yasuda Trust and Banking Co., Ltd., New York Branch, as agent (B-3(c) to Rule 24 Certificate, dated October 6, 1989, in 70-7668), as amended by First Amendment to Security Agreement, dated as of March 14, 1990 (A to Rule 24 Certificate, dated March 7, 1990, in 70-7668).

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(a) 6 - Consent and Agrccment dated as of October 3, 1989, among System Fuels, The Yasuda Trust and Banking Cotd., New York Branch, as agentAErgy Arkansas, Entergy Louisiana, and System Energy (B-5(c) to Rule 24 Certificate, dated October 6, 1989, in 70-7668).

(a) 7 - Guaranty of Entergy Corporation dated October 12, 1995 of Entergy Enterprises' payment and performance under Guaranty of Entergy Enterprises dated October 12, 1995, of amounts payable by EP Edegel, Inc. to reimburse Union Bank of Switzerland for drawings on Letter of Credit in amount of $10 million (filed as Exhibit C-1) to Form USS for the year ended December31, 1995).

(a) 8 - Guaranty and Guaranty Agreement, each dated as of November 27, 1995, by Entergy Corporation to Union Bank of Switzerland, as Agent, of payment and performance of the Guaranty and Guaranty Agreement, by Entergy Enterprises of amounts payable by EP Edegel, Inc. pursuant to Union Bank of Switzerland Credit Agreement, each as amended by First Amendment, dated as of March 12, 1996 between Entergy Corporation and Union Bank of Switzerland (filed as Exhibit C-1Ij) to'Form USS for the year ended December 31, 1995).

(a) 9 - Share Sale Agreement (Revised) of December 12, 1995, relating to acquisition of CitiPower Limited, among State Electricity Commission of Victoria, the State of Victoria, Entergy Victoria LDC, Entergy Victoria Holding LDC and Entergy Corporation (filed as Exhibit C-1(o) to Form USS for the year ended December 31, 1995 pursuant to Rule 104).

(a) 10- Multi-Option Syndicated Facility Agreement, dated as of January 5, 1996, among CitiPower Limited as Borrower, Commonwealth Bank of Australia as Facility Agent, Bank of America N.T. & S.A. as Arranger,' and Commonwealth Bank of Australia as Security Trustee (filed as Exhibit C-I(p) to Form U5S for the year ended December 31, 1995).

(a) 11- Undertaking Agreement, dated as of March 7, 1996, of Entergy Corporation to Commonwealth Bank of Australia as Facility-Agent, of CitiPower Limited's obligations up to maximum of

$7,367,000 under the Multi-Option Syndicated Facility Agreement (filed as Exhibit C-l(q) to Form U5S for the year ended December31, 1995).

• (a) 12- Credit Agreement, dated as of September 13, 1996, among Entergy Corporation, Entergy Technology Holding Company, the Banks (The Bank of New York, Bank of America NT &

SA, The Bank of Nova Scotia, Banque Nationale de Paris (Houston Agency), The First National Bank of Chicago,' The Fuji Bank Ltd., Societe Generale Southwest Agency, and CIBC Inc.) and The Bank of New York, as Agent (the ntery-ETHC Credit Agreement').

• (a) 13- Amenimet No. 1, dated as of October 22, 1996 to' CreditAreemt Entergy-ETHC Credit Agrenent.'

• (a) 14- Guaranty and Acknowledgment Agreement, dated as of October 3, 1996, by Entergy Corporation to The Bank 'of New York of certain promissory notes issued by EMIC in connection with acquisition of 280 Equity Holdings, Ltd.

• (a) 15- Amendment, dated as of November 21, 1996, to Guaranty and Acknowledgment Agreement by Entergy Corporation to The Bank of New York of certain promissory notes issued by EHC in connection with acquisition of 280 Equity Holdings, Ltd.

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• (a) 16- Guaranty and Acknowledgment Agreement, dated as of November 21, 1996, by Entergy Corporation to The Bank of New York of certain promissory notes issued by EHC in connection with acquisition of Sentry.

• (a) 17- Amended and Restated Credit Agreement, dated as of December 12, 1996, among Entergy, the Banks (Bank. of America National Trust & Savings Assoriation, The Bank of New York, The Chase Manhattan Bank Citibank, N.A., Union Bank of Switzerland, ABN Anro Bank N.V.,

The Bank of Nova Scotia, Canadian Imperial Bank. of Commerce, Mellon Bank, N.A., First National Bank of Commerce and Whitney National Bank) and Citibank, N.A., as Agent.

System Energy (b) I - Mortgage and I)eed of Trust, dated as of June 15, 1977, as amended by twnty-one Supplemental entures (A-1 in 70-5890 (Mortgage); B and C to Rule 24 Certificate in 70-5890 (First); B to Rile 24 Certificate in 70-6259 (Second); 20(a)-S to Form 10-Q for the quarter ended June 30, 1981, in 1-3517 (Third); A-1(e)-1 to Rule 24 Certificate in 70-6985 (Fourth); B to Rule 24 Certificate in 70-7021 (Fifth); B to Rule 24 Certificate in 70-7021 (Sixth); A-3(b) to Rule 24 Certificate in 70-7026 (Seventh); A-3(b) to Rule 24 Certificate in 70-7158 (Eighth); B to Rule 24 Certificate in 70-7123 (Ninth); B-1 to Rule 24 Certificate in 70-7272 (Tenth); B-2 to Rule 24 Certificate in 70-7272 (Eleventh); B-3 to Rule 24 Certificate in 70-7272 (Twelfth); B-1 to Rule 24, Certificate in 70-7382. (hirteenth); B-2 to Rule 24 Certificate in 70-7382 (Fourteenth); A-2(c) to Rule 24 Certificate in 70-7946 (Fifteenth);

A-2(c) to Rule 24 Certificate in 70-7946 (Sixteenth); A-2(d) to Rule 24 Certificate in 70-7946 (Seventeenth); A-2(e) to Rule 24 Certificate dated May 4, 1993 in 70-7946 (Eighteenth); A-2(g) to Rule 24 Certificate dated May 6, 1994, in 70-7946 (Nineteenth); A-2(a)(1) to Rule 24 Certificate dated August 8, 1996 in File No. 70-8511 (Twentieth); and A-2(aX2) to Rule 24 Certificate dated August 8, 1996 in File No. 70-8511 (Twenty-first)).

(b) 2 - Facility Lease No. 1, dated as of December 1, 1988, between Meridian Trust Company and Stephen M Carla (Steven Kaba, successor), as Owner Trustees, and System Energy (B-2(cXl) to Rule24 Certificate dated January9, 1989 in 70-7561), as supplemented by Lease Supplement No. I dated as of April 1, 1989 (B-22(b) (1) to Rule 24 Certificate dated April 21, 1989 in 70-7561) and Lemas Supplement No. 2 dated as of January 1, 1994 (B-3(d) to Rule 24. Certificate dated January 31, 1994 in 70-8215).

(b) 3 Facility Lease Na. 2, dated as of December 1, 1988 between Meridian Trust Company and Stephen M.. Caita (Steven Kaba, successor), as Oner Trustees,. and System Energy (B-2(cX2) to Rule 24 Certificate dated January 9, i989 in 70-7561), as supplemented by Lease Supplemnmt No. 1 dated as of April. l, 1989 (-22(b) (2) to Rule 24 Certificate dated April 21, 1989 in 70-7561) and Lease Supplement No. 2 dated as of January 1, 1994 (B4(d)

Rule 24 Certificate dated January 31, 1994 in 70-8215).

(b) 4 - Indenture (for Unsecured Debt Securities), dated as of September 1, 1995, between System Energy Resource;, Inc., and Chemical Bank (B-10(a) to Rule 24 Certificate in 70-8511).

Entergy Arkansas, (c) 1 - Mortgage and Deed of Trust, dated as of October 1, 1944, as amended by fifty-three Supplemental Indentures (7(d) in 2-5463 (Mortgage); 7(b) in 2-7121 (First); 7(c) in 2-7605 (Second); 7(d) in 2-8100 (Third); 7(a)4 in 2-8482 (Fourth); 7(a)-S in 2-9149 (Fifth); 4(a)-6 in E-4

L.

2-9789 (Sixth); 4(a)-7 in 2-10261 (Seventh); 4(a)-8 in 2-11043 (Eighth); 2(b)-9 in 2-11468 (Ninth); 2(b)-10 in 2-15767 (Tenth); D in 70-3952 (Eleventh); D in 70-4099 (Twelfth); 4(d) in 2-23185 (Thirteenth); 2(c) in 2-24414 (Fourteenth); 4 2(c) in 2-25913 (Fifteenth); -2(c) in 2-28869 (Sixteeith);; 2(d) in 2-28869 (Seventeenth, 2(c) in 2-35107. (Eighteenth); 2(d) in 2-36646 (Nineteenth); 2(c) in 2-39253 (Twentieth);' 2(c) in 2-41080 (Twenty-first); C-1 to Rule24 Certificate in 70-5151 (Twenty-second); C-i to Rule24 Certificate in 70-5257 (Twenty-third); C to Rule 24 Certificate in 70-5343 (Twenty-fourth); C-1 to Rule 24 Certificate in 70-5404 (Twenty-fifth); C to Rule 24 Certificate in 70-5502 (Twenty-sixth); C-1 to Rule 24 Certificate in 70-5556 (Twenty-seventh); C-1 to Rule 24 Certificate in 70-5693 (Twenty-eighth); C-1 to Rule 24 Certificate in 70-6078 (Twenty-ninth); C-1 to Rule 24 Certificate in 70-6174 (Thirtieth); C-1 to Rule 24 Certificate in 70-6246 (hirty-first); C-1 to Rule 24 Certificate in 70-6498 (Thirty-second); A-4b-2 to Rule 24 Certificate in 70-6326 (Thirty-third); C-1 to Rule 24 Certificate in 70-6607 (irty-fourth); C-I to Rule 24 Certificate in 70-6650 (Thirty-fifth); C-1 to Rule 24 Certificate, dated December 1, 1982, in 70-6774 (hirty-sixth); C-1 to Rule 24 Certificate, dated February 17, 1983, in 70-6774 (Thirty-seventh);' A-2(a) to Rule 24 Certificate, dated December 5, 1984, in 70-6858 (Thirty-eighth); A-3(a) to Rule 24 Certificate in 70-7127 (irty-ninth); A-7 to Rule 24 Certificate in 70-7068 (Fortieth); A-8(b) to Rule 24 Certificate dated July 6, 1989 in 70-7346 (Forty-first); A-8(c) to Rule 24 Certificate, dated February'l, 1990 in 70-7346 (Forty-second);

4 to Form 10-Q for the quarter ended September 30, 1990 in 1-10764 (Forty-third); A-2(a) to Rule 24 Certificate, dated November 30, 1990, in 70-7802 (Forty-fourth); A-2(b) to Rule 24 Certificate, dated January 24, 1991, in 70-7802 (Forty-fifth); 4(d)(2) in 33-54298 (Forty-sixth), 4(c)(2) to Form 10-K for the year ended December 31, 1992 in 1-10764 (Forty-seventh); 4(b) to Form 10-Q for the quarter ended June 30, 1993 in 1-10764 (Forty-eighth);

4(c) to Form 10-Q for the quarter ended June 30, 1993 in 1-10764 (Forty-ninth); 4(b) to Form 10-Q for the quarter ended September 30, 1993 in 1-10764 (Fiftieth); 4(c) to Form 10-Q for the quarter ended September 30, 1993 in 1-10764 (Fifty-first); 4(a) to Form 10-Q for the quarter ended June 30, 1994 (Fifty-second); and C-2 to Form U5S for the year ended December 31, 1995 (Fifty-third)).

(c) -2 - Indenture for Unsecured Subordinated Debt Securities relating to Trust Securities between Entergy Arkansas and Bank of New York (as Trustee), dated as of August 1, 1996 (filed as Exhibit A-l(a) to Rule 24 Certificate dated August 26, 1996 in File No. 70-8723).

(c) 3 - Amended and Restated Trust Agreement of Entergy Arkansas Capital I,' dated as of August 14, 1996 (filed as Exhibit A-3(a) to Rule 24 Certificate dated August 26, 1996 in File No. 70-8723).

(c) 4 -'Guarante Agreement between Entergy Arkansas (as Guarantor) and The Bank of New York (as Trustee), dated as of Augu'st 14, 1996,-with respect-to Entergy Arkansas CapitalI's obligations on its 8 1/2% Cumulative Quarterly Income Preferred Securities, Series A (filed as Exhibit A-4(a) to Rule 24 Certificate dated August 26, 1996 in File No. 70-8723).

Entergy Gulf States (d) 1 - Indenture of Mortgage, dated September 1, 1926, as amended by certain Supplemental Indentures (B~a-I-1 in Registration No. 2-2449 (Mortgage); 7-A-9 in Registration No. 2-6893 (Seventh);'B to Form 8-K dated Septenber 1, 1959 (Eighteenth); B to Form 8-K dated February 1, 1966 (Twenty-second); B to Form 8-K dated Mirch 1, 1967 (Twenty-third); C to Form 8-K dated March 1, 1968 (Twenty-fourth); B to Form 8-K dated November 1, 1968 E-5

(Tuenty-fifth); B to Form 8-K dated April 1, 1969 (Twnty-sixth); 2-A-8 in Registration No.

2-66612 (hirty-eighth); 4-2 to Form 10-K for the year ended December 31, 1984 in 1-2703 (Forty-eighth); 4-2 to Form 10-K fbr the year ended December 31, 1988 in 1-2703 (Fifty-second); 4- to Form 10-K for the year ended December 31, 1991 in. 1-2703 (Fifty-third); 4 to Form 8-K dated July 29, 1992 in 1-2703 (Fifth-fourth); 4 to Form 10-K dated December 31, 1992 in 1-2703 (Fifty-fifth); 4 to Form 10-Q for the quarter ended March 31, 1993 in 1-2703 (Fifty-sixth); and 4-2 to Amendment No. 9 to Registration No. 2-76551 (Fifty-seventh)).

(d) 2 - Indenture, dated March 21, 1939, accepting resignation of Ihe Chase National Bank of the City of New York as trustee and appointing Central Hanover Bank and Trust Company as successor trustee (B-a-1-6-in Registration No. 2-4076).

(d) 3 - Trust Indentun: for 9.72% Debentures due July 1, 1998 (4 in Registration No. 3340113).

(d) 4- Indenture for Unsecured Subordinated Debt Securities relating to Trust Securities, dated as of January 15, 197 (filed as Exhibit A-11(a) to Rule 24 Certificate dated February 6, 1997 in

- File No. 70-8721).

(d) 5 - Amended and Restated Trust Agreement of Entergy Gulf States Capital I dated January 28, 1997 of Series A Preferred Securities (filed as Exhibit A-13(a) to Rule 24 Certificate dated February 6, 1997 in File No. 70-8721).

(d) 6 - Guarantee Agnement between Entergy Gulf States, Inc. (as Guarantor) and The Bank of New York (as Trustee) dated as of January 28, 1997 with respect to Entergy Gulf States Capital I's obligation on its 8.75% Cumulative Quarterly Income Preferred Securities, Series A (filed as Exhibit A-14(a) to Rule 24 Certificate dated February 6, 1997 in File No. 70-8721).

Entergy Louisiana (e) 1 Mortgage and Deed of Trust, dated as of April 1, 1944, as amended by fifty-one Supplemental Indentures (7(d) in 2-5317 (Mortgage); 7(b) in 2-7408 (First); 7(c) in 2-8636 (Second); 4(b)-3 in 2-10412 (hird); 4(b)-4 in 2-12264 (Fourth); 2(b)-5 in 2-12936 (Fifth); D in 70-3862 (Sixth); 2(b)7 in 2-22340 (Seventh); 2(c) in 2-24429 (Eighth); 4(c)-9 in 2-25801 (Ninth);

4(c)-10 in 2-26911 (Tenth); 2(c) in 2-28123 (Eleventh); 2(c) in 2-34659 (Twelfth); Cto Rule 24 Certificate in 704793 (Thirteenth); 2(b)-2 in 2-38378 (Fourteenth); 2(b)-2 in 2-39437 (Fifteenth); 2(b)-2 in 2-42523 (Sixteenth); C to Rule 24 Certificate in 70-5242 (Seventeenth)`

C to Rule 24 Certificate in 70-5330 (Eighteenth); C-1 to Rule 24 -Certificate in 70-5449 (Nineteenth); C-1 to Rule 24 Certificate in 70-5550 (Twentieth); A-6(a) to Rule 24 Certificate in 70-5598 (Tventy-first); C-1 to Rule 24 Certificate in 70-5711. (Twenty-second);,C-1 to Rule 24 Certicate in .70-5919 (Twenty-third); C-1 to Rule 24 Certificate in 70-6102 (Twenty-fourth); C-l to Rule24 Certificate.in 70-6169 (Twenty-fifth); C- to Rule24 Certificate in 70-6278 ' (Twenty-sixth); C-1 to Rule 24 -Certificate in 70-6355 (Twenty-seventh2); C-1 to Rule 24 Certificate in 70-6508 (Twenty-eighth); C-1 to Rule 24 Certificate in 70-6556 (Twenty-ninth); C-1 to Rule 24 Certificate in 70-6635 (hirtieth); C-1 to Rule 24 Certificate in 70-6834 (Ihirty-first); C-1 to Rule 24 Certificate in 70-6886 (thirty-second); C-- to, Rule 24 Certificate in 70-6993 (Thirty-third); C-2 to Rule 24 Certificate in 70-6993 (Thirty-fourth); C-3 to Rule 24 Certificate in 70-6993 (Thirty-fifth);

A-2(a) to Rule 24 Certificate in 70-7166 (hirty-sixth); A-2(a) in 70-7226 (hirty-seventh);

C-1 to Rule 24 Certificate in 70-7270 (hirty-eighth); 4(a) to Quarterly Report on Form 10-Q for the quarter ended June 30, 1988, in 1-8474 (irty-ninth); A-2(b) to Rule 24 Certificate in E-6

70-7553 (Fortieth); A-2(d) to Rule 24 Certificate in 70-7553 (Forty-first); A-3(a) to Rule 24 Certificate in 70-7822 (Forty-second); A-3(b) to Rule 24 Certificate in 70-7822 (Forty-third);

A-2(b) to Rule 24 Certificate in File No. 70-7822 (Forty-fourth); A-3(c) to Rule 24 Certificate in 70-7822 (offth); A-2(c) to Rule 24 Certificte dated April 7, 1993 in 70-7822 (Forty-sixth); A-3(d) to Rule 24 Certificate dated June 4, 1993 in 70-7822 (Forth-seventh); A-3(e) to Rule 24 Certificate dated December 21, 1993 in 70-7822 (Forty-eighth); A-3(f) to Rule 24 Certificate dated August 1, 1994 in 70-7822 (Forty-ninth); A4(c) to Rule 24 Certificate dated September 28, 1994 in 70-7653 (Fiftieth) and A-2(a) to Rule 24 Certificate dated April 4, 1996 in File No. 70-8487 (Fifty-first)).

(e) 2 - Facility Lease No. 1, dated as of September 1, 1989, between First National Bank of Commerce, as Owner Trustee, and Entergy Louisiana (4(c)-i in Registration No. 33-30660).

(e) 3 - Facility Lease No. 2, dated as of September 1, 1989, between First National Bank of Commerce, as Owner Trustee, and Entergy Louisiana (4(c)-2 in Registration No. 33-30660).

(e) 4 - Facility Lease No.3, dated as of September 1, 1989, between First National Bank of Commerce, as Owner Trustee, and Entergy Louisiana (4(c)-3 in Registration No. 33-30660).

(e) 5 - Indenture for Unsecured Subordinated Debt Securities relating to Trust Securities, dated as of July 1, 1996 (filed as Exhibit A-14(a) to Rule 24 Certificate dated July 25, 1996 in File No.

70-8487).

(e) 6 - Amended and Restated Trust Agreement of Entergy Louisiana Capital I dated July 16, 1996 of Series A Preferred Securities (filed as Exhibit A-16(a) to Rule 24 Certificate dated July 25, 1996 in File No. 70-8487).

(e) 7 - Guarantee Agreement between Entergy Louisiana, Inc. (as Guarantor) and The Bank of New York (as Trustee) dated as of July 16, 1996 with respect to Entergy Louisiana Capital 's obligation on its 9% Cumulative Quarterly Income Preferred Securities, Series A (filed as Exhibit A-19(a) to Rule 24 Certificate dated July 25, 1996 in File No. 70-8487).

Entergy Mississippi (f) I - Mortgage and Deed of Trust, dated as of September 1, 1944, as amended by twenty-five Supplemental Indentures (7(d) in 2-5437 (Mortgage); 7(b) in 2-7051 (First); 7(c) in 2-7763 (Second); 7(d) in 2-8484 (Third); 4(b)4 in 2-10059 (Fourth); 2(b)-5 in 2-13942 (Fifth); A-1l to Form U-1 in 704116 (Sixth); 2b)-7 in 2-23084 (Seventh); 4(c)-9 in 2-24234 (Eighth);

2(b)-9(a) in 2-25502 (Ninth); A-1(a) to Form U-1 in 70-4803 (Tenth); A-12(a) to Form U-1 in 70-4892 (Eleventh); A-13(a) to Form U-i in 70-5165 (Twelfth); A-14(a) to Form U- in 70-5286 (Thirteenth); A-15(a) to Form U-1 in 70-5371 (Fourteenth); A-16(a) to Form U-1 in 70-5417 (Fifteenth); A-17 to Form U-1 in 70-5484. (Sixteenth); 2(a)-19 in 2-54234 (Seventeenth); C-1 to Rule 24 Certificate in 70-6619 (Eighteenth); A-2(c) to Rule 24 Certificate in 70-6672 (Nineteenth); A-2(d) to Rule 24 Certificate in 70-6672 (Twentieth);

C-1(a) to -Rule 24 Certificate in 70-6816 (Twenty-first); C-l(a) to Rule 24 Certificate in 70-7020 (Twenty-second); C-1(b) to Rule 24 Certificate in 70-7020 (Twenty-third), C-i(a) to Rule 24 Certificate in 70-7230 (Twenty-fourth); and A-2(a) to Rule 24 Certificate in 70-7419 (Twenty-fifth)).

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(k) 2 - Mortgage and Deed of Trust, dated as of February 1, 1988, as amended by tenth Supplemental Indentures (A-2(a)-2 to Rule 24 Certificate in 70-7461 (Mortgage); A-2(b)-2 in 70-7461 (First); A-S(b) to Rule 24 Certificate in 70-7419 (Second); A-4(b) to Rule 24 Certificate in 70-7554 (Third); A-l(b)-1 to Rule 24 Certificate in 70-7737 (Fourth); A-2(b) to Rule 24 Certificate dated November 24, 1992 in 70-7914 (Fifth)--A-2(e) to Rule 24 Certificate dated January 22, 1993 in 70-7914 (Sixth); A-2(g) to Form U-1 in 70-7914 (Seventh); A-2(i) to Rule 24 Certificate dated'November 10, 1993 in 70-7914 (Eighth); A-20) to Rule 24 Certificate dated July 22, 1994 in 70-7914 (Ninth); and (A-2(1) to Rule 24 Certificate dated April 21, 1995 in File 70-7914 (Tenth)).

Entergy New Orleans (g) 1 - Mortgage and Ded of Trust, dated as of July 1, 1944, as amended by eleven Supplemental Indentures (B-3 in 2-5411 (Mortgage); 7(b) in 2-7674 (First); 4(a)-2 in 2-10126 (Second);

4(b) in 2-12136 (Tlhird); 2(b)-4 in 2-17959 (Fourth); 2(b)-5 in 2-19807 (Fifth); D to Rule 24 Certificate in 70-4023 (Sixth); 2(c) in 2-24523 (Seventh);'4(c)-9 in 2-26031 (Eighth); 2(a)-3 in 2-50438 (Ninth); 2(a)-3 in 2-62575 (Tenth); and A-2(b) to Rule 24 Certificate in 70-7262 (Eleventh)).

(g) 2 - Mortgage and Ded of Trust, dated as of May 1, 1987, as amended by six Supplemental Indentures (A-2(c) to Rule 24 Certificate in 70-7350 (Mortgage); A-S(b) to Rule 24 Certificate in 70-7350 (First); A-4(b) to Rule 24 Certificate in 70-7448 (Second); 4(f)4 to Form 10-K for the year ended December 31, 1992 in 0-5807 (hird); 4(a) to Form 10-Q for the quarter ended September 30, 1993 in 0-5807 (Fourth); 4(a) to Form 8-K dated April 26, 1995 in File No. 0-5807 (Fifth); and 4(a) to Form 8-K dated March 22, 1996 in File No. 0-5 807 (Sixth)).

(10) Material Contracts Entergy Corporation (a) I - Ageement, dated April 23, 1982, among certain System companies, relating to System Planning and Development and Intra-System Transactions (10(a)I to Form 10-K for the year ended December.31, 1982, in 1-3517).

(a) 2 - Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a)-2 in 2-41080).'.

(a) 3 - A findmcnt, dated February 10, 1971, to Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a)-4 in 2-41080).

(a) 4 - Amendment, dated May 12, 1988, to Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a)-4 in 2-41080).

(a) 5 - Middle South Utilities System Agency Coordination Agreement, dated December 11, 1970 (5(a)-3 in 2-41080)'.

(a) 6 - Service Agreement with Entergy Services, dated as of April 1, 1963 (5(a)-5 in 2-41080).

(a) 7 - Amnment, dated January 1, 1972, to Service Agreement with Entergy Services ((a)-6 in 2-43175).

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(a) 8 - Amendmnt, dated April 27, 1984, to Service Agreement with Entergy Services (I0(a)-7 to Form 10-K for the year ended December 31, 1984,in 1-3517).

(a) 9 - Amendment, dated August 1, 1988, to Service Agreement with Entergy Services (0(a)-8 to Form 10-K forthe year ended December31, 1988, in 1-3517).

(a) 10- Amendment, dated January 1, 1991, to Service Agreement with Entergy Services (10(a)-9 to Form 10-K for the year ended December 31, 1990, in 1-3517).

(a) 11 - Amendment, dated January 1, 1992, to Service Agreement with Entergy Services (10(a)-i for the year ended December 31, 1994 in 1-3517).

(a) 12- Availability Agreement, dated June 21, 1974, among System Energy and certain other System companies (B to Rule 24 Certificate, dated June 24, 1974, in 70-5399).

(a) 13- First Amnent to Availability Agreement, dated as of June30, 1977 (B to Rule24 Certificate, dated June 24, 1977, in 70-5399).

(a) 14- Second Amendment to Availability Agreement, dated as of June 15, 1981 (E to Rule 24 Certificate, dated July 1, 1981, in 70-6592).

(a) 15 - Third Amendment to Availability Agreement, dated as of June 28, 1984 (B-13(a) to Rule 24 Certificate, dated July 6, 1984, in 70-6985).

(a) 16- Fourth Amendment to Availability Agreement, dated as of June 1, 1989 (A to Rule 24 Certificate, dated June 8, 1989, in 70-5399).

(a) 17- Fifteenth Assignment of Availability Agreement, Consent and Agreement, dated as of May 1, 1986, with Deposit Guaranty National Bank, United States Trust Company of New York and Malcolm J. Hood, as Trustees (B-3(b) to Rule 24 Certificate, dated June 5, 1986, in 70-7158).

(a) 18- Eighteenth Assignment of Availability Agreement, Consent and Agreement, dated as of September 1, 1986, withtUnited States Trust Company of New York and Gerard F. Ganey, as Trustees (C-2 to Rule 24 Certificate, dated October 1, 1986, in 70-7272).

(a) 19- Nineteenth Assignment of Availability Agreement, Consent and Agreement, dated as of September 1, 1986, with United States Trust Company of New York and Gerard F. Gancy, as Trustees (C-3 to Rule 24 Certificate, dated October 1, 1986, in 70-7272).

(a) 20- Twenty-sixth Assignment of Availability Agreement, Consent and Agreement, dated as of October 1, 1992, with United States Trust Company of New York and Gerard F. Ganey, as Trustees (B-2(c) to Rule 24 Certificate, dated November 2, 1992, in 70-7946).

(a) 21- Twenty-seventh Assignment of Availability Agreement, Consent and Agreement, dated as of April 1, 1993, with United States Trust Company of New York and Gerard F. Ganey as Trustees (B-2(d) to Rule 24 Certificate dated May 4, 1993 in 70-7946).

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(a) 22 - Twenty-eighth Assignment of Availability Agreement, Consent and Agreement, dated as of December 17, 1993, with Chemical Bank, as Agent (B-2(a) to Rule 24 Certificate dated December 22, 1993 in 70-7561).

(a) 23- Twenty-ninth Assignment of Availability Agreement, Consent and Agreement, dated as of April 1, 1994, with United States Trust Company of New York and Gerard F. Ganey as Trustees (B-2(f) to Rule 24 Certificate dated May 6, 1994, in 70-7946).

(a) 24- Thirtieth Assignment of Availability Agreement, Consent and Agreement, dated as of August 1, 1996, among System Energy, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi arid Emtergy New Orleans, and United States Trust Company of New York and Gerard F. Ganey, as Trustees (filed as Exhibit B-2(a) to Rule 24 Certificate dated August 8, 1996 in File No. 70-8511).

(a) 25- Thirty-firsi Assignment of Availability Agreement, Consent and Agreement, dated as of August 1, 1996, among System Energy, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi ad Entergy New Orleans, and United States Trust Company of New York and Gerard F. Garcy, as Trustees (filed as Exhibit B-2(b) to Rule 24 Certificate dated August 8, 1996 in File No. 70-8511).

(a) 26- Thirty-second Assignment of Availability Agreement, Consent and Agreemt, dated as of December 27, 1996, among System Energy, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans; and The Chase Manhattan Bank (filed as Exhibit B-2(a) to Rule 24 Certificate dated January 13, 1997 in File No. 70-7561).

(a) 27- Capital Funds Agreem dated June 21, 1974, between Entergy Corporation and System Energy (C to Rule 24 Certificate, dated June 24, 1974, in 70-5399).

(a) 28- First Amendment to Capital Funds Agreement, dated as of June 1, 1989 (B to Rule 24 Certifcate,'dated June 8, 1989, in 70-5399).

(a) 29 - Fifteenth Supplementary Capital Funds Agreenent and Assignment, dated as of May 1, 1986, with, Deposit Guaranty National Bank, United States Trust Company of New York and Malcolm I. HoAd, as Trustees (4(b) to Rule 24 Certificate, dated June 5, 1986, in 70-7158).

(a) 30- Eighteenth Supplementary Capital Funds Agreement and Assignment, dated as of September 1, 1986, with United States Trust Company of New York and Gerard F. Ganey, as Trustees (D-2 to Rule 24 Certificate, dated October 1, 1986, in 70-7272).

(a) 31 - Nineteenth Supplementary Capital Funds Agreement and Assignment, dated as of September 1, 1986, with United States Trust Company of New York and Gerard F. Ganey, as Trustees (D-3 to Rule 24 Certificate, dated October 1, 1986, in 70-7272).

(a) 32- Twenty-sixth Supplementary Capital Funds Agreement and Assignment, dated as of October 1, 1992, with United States Trust Company of New York and Gerard F. Ganey, as Trustees (B-3(c) to Rule 24 Cerificate dated November 2, 1992 in 70-7946).

(a) 33 - Twenty-seventh Supplementary Capital Funds Agreement and Assignment, dated as of April 1, 1993, with United States Trust Company of New York and Gerard F. Ganey, as Trustees (B-3(d) to Rule 24 Certificate dated May 4, 1993 in 70-7946).

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,ty' , , lw (a) 34- Twenty-cighth Supplementary Capital Funds Agreement and Assignment, dated as of Deccrnbcr 17, 1993, with Chemical Bank, as Agent (B-3(a) to Rule 24 Certificate dated December 22, 1993 in 70-7561).

(a) 35- Twenty-ninth Supplmcnintary Capital Funds Agreernent and Assignment, dated as of April 1, 1994, with United States Trust Company of New York and Gerard F. Ganey, as Trustees (B-3(f) to Rule 24 Certificate dated May 6, 1994, in 70-7946).

(a) 36- Thirtieth Supplementary Capital Funds Agreement and Assignment, dated as of August 1, 1996, among Entergy Corporation, System Energy and United States Trust Company of New York and Gerard F. Ganey, as Trustees (filed as Exhibit B-3(a) to Rule 24 Certificate dated August 8, 1996 in File No. 70-8511).

(a) 37- Thirty-first Supplementary Capital Funds Agreement and Assignment, dated as of August 1, 1996, among Entergy Corporation, System Energy and United States Trust Company of New York and Gerard F. Ganey, as Trustees (filed as Exhibit B-3(b) to Rule 24 Certificate dated August 8, 1996 in File No. 70-8511).

(a) 38- Thirty-second Supplenentary Capital Funds Agreement and Assignment, dated as of December 27, 1996, among Entergy Corporation, System Energy and Te Chase Manhattan Bank (filed as Exhibit B-1(a) to Rule 24 Certificate dated January 13, 1997 in File No.

70-7561).

(a) 39- First Amendment to Supplementary Capital Funds Agreements and Assignments, dated as of June 1, 1989, by and between Entergy Corporation, System Energy, Deposit Guaranty National Bank, United States Trust Company of New York and Gerard F. Ganey (C to Rule 24 Certificate, dated June 8, 1989, in 70-7026).

(a) 40- First Amendment to Supplementaxy;Capital Funds Agreements and Assignments, dated as of June 1, 1989, by and between Entergy Corporation, System Energy, United States Trust Company of New York and Gerard F. Ganey (C to Rule 24 Certificate, dated June 8, 1989, in 70-7123).

(a) 41- First Amendment to Supplementary Capital Funds Agreement and Assignment, dated as of June 1, 1989, by and between Entergy Corporation, System Energy and Chemical Bank (C to Rule 24 Certificate, dated June 8, 1989, in 70-7561).

+(a) 42- Agreement between Entergy Corporation and Edwin Lupberger (10(a)-42 to Form 10-K for the year ended December31, 1985,in 1-3517).

(a) 43- Reallocation Agreement, dated as of July 28, 1981, among System Energy and certain other System companies (B-1(a).in 70-6624).

(a) 44- Joint Construction, Acquisition and Ownership Agreement, dated as of May 1, 1980, between System Energy and SMEPA (B-1(a) in 70-6337), as amended by Amendment No. 1, dated as of May 1, 1980 (B-1(c) in 70-6337) and Amendment No. 2, dated as of October 31, 1980 (I to Rule 24 Certificate, dated October 30, 1981, in 70-6337).

E-I I

(a) 45- Operating Agreement dated as of May 1, 1980, between System Energy and SMEPA (B(2Xa) in 70-6337).

(a) 46 - Assignment, Assumption and Further Agreement No. , dated as of December 1, 1988, among System Energy, Meridian Trust Company and Stephen M. Carta, and SMEPA (B-7(c)(1) to Rule 24 Cerdfiate, dated January 9, 1989, in 70-7561).

(a) 47- Assignment, Assumption and Further Agreement No. 2, dated as of December 1, 1988, among System Energy, Meridian Trust Company and Stephen M. Carta, and SMEPA (B-7(cX2) to Rule 24 Certificate, dated January 9, 1989, in 70-756 1).

(a) 48- Substitute Pomwnr Agreement, dated as of May 1, 1980, among Entergy Mississippi System Energy and SMEPA (B(3)(a) in 70-6337).

(a) 49- Grand Gulf Unit No. 2 Supplementary Agreement, dated as of February 7, 1986, between System Energy and SMEPA (10(aaa) in 33 4033).

(a) 50- Compromise and Settlement Agreement, dated June 4, 1982, between Texaco, Inc. and Entergy Louisiana (28(a) to Form 8-K, dated June 4, 1982, in 1-3517).

+(a) 51- Post-Retirement Plan (10(a)37 to Form 10-K for the year ended December 31, 1983, in 1-3517).

(a) 52- Unit Power Sales Agreenent, dated as of June 10, 1982, between System Energy and Entergy Arkansas, Entergy Louisiana, Entergy Mississippi and Entergy New Orleans (10(a)-39 to Form 10-K for the year ended December31, 1982, in 1-3517).

(a) 53- First Amendment to Unit Power Sales Agreement, dated as of June 28, 1984, between System Energy and Entergy Arkansas, Entergy Louisiana, Entergy Mississippi and Entergy New Orleans (19 to Fonn 10-Q for the quarter ended September 30, 1984, in 1-3517).

(a) 54 - Revised Unit Pover Sales Agreement (10(ss) in 334033).

(a) 55- Middle South Uilities Inc. and Subsidiary Companies Intercompany Income Tax Allocation Agreement, dated April 28, 1988 (Exhibit D-1 to Form U5S for the year ended Docember 31, 1987).

(a) 56- First Amendment, dated January 1, 1990, to the Middle South Utilities Inc. and Subsidiary Companies Intenrompany Income Tax Allocation Agreement (D-2 to Form USS for the year ended December 31, 1989).

(a) 57- Second Amendment dated January 1, 1992, to the Entergy Corporation and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-3 to Form U5S for the year ended December 31, 1992).

(a) 58- Third Amendment dated January 1, 1994 to Entergy Corporation and Subsidiary Companies Intercompany Icme Tax Allocation Agreement (D-3(a) to Form USS for the year aded December31, 1993).

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(a) 59- Guaranty Agreement between Entergy Corporation and Entergy Arkansas, dated as of September 20, 1990 (B-l(a) to Rule 24 Certificate, dated September 27, 1990, in 70-7757).

(a) 60- Guarantee Agreement between Entergy Corporation and Entergy Louisiana, dated as of September 20, 1990 (B-2(a) to Rule 24 Certificate, dated September 27, 1990, in 70-7757).

(a) 61- Guarantee Agment between Entergy Corporation and System Energy, dated as of September 20, 1990 (B-3(a) to Rule 24 Certificate, dated September 27, 1990, in 70- 7757).

(a) 62- Loan Agreement between Entergy Operations and Entergy Corporation, dated as of September 20, 1990 (B-12(b) to Rule 24 Certificate, dated June 15, 1990, in 70-7679).

(a) 63 - Loan Agreement between Entergy Power and Entergy Corporation, dated as of August 28, 1990 (A-4(b) to Rule 24 Certificate, dated September 6, 1990, in 70-7684).

(a) 64- Loan Agreement between Entergy Corporation and Entergy Systems and Service, Inc., dated as of December 29, 1992 (A-4(b) to Rule 24 Certificate in 70-7947).

+(a) 65 - Executive Financial Counseling Program of Entergy Corporation and Subsidiaries (10(a) 52 to Form 10-K for the year ended December31, 1989, in 1-3517).

+(a) 66 - Entergy Corporation Annual Incentive Plan (10(a) 54 to Form 10-K for the year ended December 31, 1989, in 1-3517).

+(a) 67- Equity Ownership Plan of Entergy Corporation and Subsidiaries (A-4(a) to Rule 24 Certificate, dated May 24, 1991, in 70-7831).

+(a) 68 - Retired Outside Director Benefit Plan (10(a)63 to Form 10-K for the year ended December 31, 1991, in 1-3517).

+(a) 69 - Agreement between Entergy Corporation and Jerry D. Jackson. (10(a) 67 to Form 10-K for the year ended December 31, 1992 in 1-3517).

+(a) 70- Agreement between Entergy Services, Inc., a subsidiary of Entergy Corporation, and Gerald D. McInvale (10(a) 68 to Form 10-K for the year ended December 31, 1992 in 1-3517).

+(a) 71 - Supplemental Retirement Plan (10(a) 69 to Form 10-K for the year ended December 31, 1992 in l-3517).

+(a) 72- Defined Contribution Restoration Plan of Entergy Corporation and Subsidiaries (10(a)53 to Form 10-K for theyear ended December31, 1989 in 1-3517).

+(a) 73- Amendment No. 1 to the Equity Ownership Plan of Entergy Corporation and Subsidiaries (0(a) 71 to Form 1-K forthe year ended December31, 1992 in 1-3517).

+(a) 74- Executive Disability Plan of Entergy Corporation and Subsidiaries (10(a) 72 to Form 10-K for the year ended December 31, 1992 in 1-3517).

+(a) 75- Executive Medical Plan of Entergy Corporation and Subsidiaries (10(a) 73 to Form 10-K for the year ended December 31, 1992 in 1-3517).

E-13

- l~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

+(a) 76- Stock Plan for Outside Directors of Entergy Corporation and Subsidiaries, as amended (10(a) 74 to Form 10-K for the year ended December 31, 1992 in 1-3517).

+(a) 77- Summary Description of Private Ownership Vehicle Plan of Entergy Corporation and Subsidiaries (10(a) 75 to Form 10-K for the year ended December 31, 1992 in 1-3517).

(a) 78- Agreement and Plan of Reorganization Between Entergy Corporation and Gulf States Utilities Company, dated June 5, 1992 (1 to Current Report on Form 8-K dated June 5, 1992 in 1-3517).

+(a) 79- Amendmnt to Defined Contribution Restoration Plan of Entergy Corporation and Subsidiaries (10(a)81 to Form 10-K for the year ended December 31, 1993 in 1-11299).

+(a) 80- System Executive Retirement Plan (10(a) 82 to Form 10-K for the year ended December 31, 1993 i 1-11299).

System Energy (b) 1 through (b) 15 - See 10(a)-12 through 10(a)-26 above.

(b) 16 through (b) 30- See 10(a)-27 through 10(a)-41 above.

(b) 31- Reallocation Agreement, dated as of July 28, 1981, among System Energy and certain other System companies (B-1(a) in 70-6624).

(b) 32- Joint Construction, Acquisition and Ownership Agreement, dated as of May 1, 1980, between System Energy and SMEPA (B-1(a) in 70-6337), as amended by Amendment No. 1, dated as of May I, 1980 (B-I(c) in 70-6337) and Amendment No. 2, dated as of October 31, 1980 (1 to Rule 24 Certificate, dated October 30, 1981, in 70-6337)., . . :

(b) 33- Operating Agriement, dated as of May 1, 1980, between System Energy and SMEPA (B(2Xa) in 70-6337).

(b) 34- Installment Sale Agreement, dated as of December 1, -1983 between System Energy and Claiborne County, Mississippi (B-i to First Rule 24 Certificate in 70-6913).

(b) 35- Installment Sale Agreement, dated as of June 1, 1984, between System Energy and Claiborne County, Mississippi (B-2 to Second Rule 24 Certificate in 70-6913).

(b) 36- Installment Sale Agreement, dated as of December 1, 1984, between System Energy and Claiborne County, Mississippi (B-i to First Rule 24 Certificate in 70-7026).

(b) 37- Instillment Sale Agreement, dated as of May 1, 1986, between System Energy and Claiborne County, Mississippi (B-l(b) to Rule 24 Certificate in 70-7158).

(b) 38 - Amended and Restated Installment SaleAgreenent, dated as of May 1, 1995, between System Energy and Claiborne County, Mississippi (B-6(a) to Rule 24 Certificate in 70-8511).

E-14

(b) 39 - Amended and Restated Installment Sale Agreernent, dated as of February 15, 1996, between System Energy and Claiborne County, Mississippi (filed as Exhibit B-6(a) to Rule 24 Certificate dated March 4, 1996 in File No.70-851 1).

(b) 40- Facility Lease No. 1, dated as of December 1, 1988; l oetwen Meridian Trust Company and Stephen M. Carta (Stephen J. Kaba, successor), as Owner Trustees, and System Energy (B-2(cXl) to Rule 24 Certificate dated January 9, 1989 in 70-7561), as supplemented by Lease Supplement No. 1 dated as of April 1, 1989 (B-22(b) (1) to Rule 24 Certificate dated April 21, 1989 in 70-7561) and Lease Supplement No. 2 dated as of January 1, 1994 (B-3(d) to Rule 24 Certificate dated January 31, 1994 in 70-8215).

(b) 41- Facility Lease No. 2, dated as of December 1, 1988 between Meridian Trust Company and Stephen M. Carta (Stephen J. Kaba, successor), as Owner Trustees, and System Energy (B-2(c)(2) to Rule 24 Certificate dated January 9, 1989 in 70-7561), as supplemented by Lease Supplement No. 1 dated as of April 1, 1989 (B-22(b) (2) to Rule 24 Certificate dated April 21, 1989 in 70-7561) and Lease Supplement No. 2 dated as of January 1, 1994 (B-4(d)

Rule 24 Certificate dated January 31, 1994 in 70-8215).

(b) 42 - Assignment, Assumption and Further Agreement No. 1, dated as of December 1, 1988, among System Energy, Meridian Trust Company and Stephen M. Carta, and SMEPA (B-7(c)(1) to Rule 24 Certificate, dated January 9, 1989, in 70-7561).

(b) 43 - Assignment, Assumption and Further Agreement No. 2, dated as of December 1, 1988, among System Energy, Meridian Trust Company and Stephen M. Carta, and SMEPA (B-7(c)(2) to Rule 24 Certificate, dated January 9, 1989, in 70-7561).

(b) 44- Collateral Trust Indenture, dated as of January 1, 1994, among System Energy, GGIB Funding Corporation and Bankers Trust Company, as Trustee (A-3(e) to Rule 24 Certificate dated January 31, 1994, in 70-8215), as supplemented by Supplemental Indenture No. 1 dated January 1, 1994, (A-3(f) to Rule 24 Certificate dated January 31, 1994, in 70-8215).

(b) 45- Substitute Power Agreement, dated as-of May 1, 1980, among Entergy Mississippi System Energy and SMEPA (B(3Xa) in 70-6337).

(b) 46- Grand Gulf Unit No. 2 Supplementary Agreement, dated as of February 7, 1986, between System Energy and SMEPA (10(aaa) in 33-4033).

(b) 47- Unit Power Sales Agreement, dated as of June 10, 1982, between System Energy and Entergy Arkansas, Entergy Louisiana, Entergy Mississippi and Entergy New Orleans (10(a)-39 to Form 10-Kforthe year ended December 31, 1982, in 1-3517).

(b); 48- First Amendment to the Unit Power Sales Agreement, dated as of June 28, 1984, between System Energy and Entergy Arkansas, Entergy Louisiana, Entergy Mississippi and Entergy New Orleans (19 to Form 10-Q for the quarter ended September 30, 1984, in 1-3517).

(b) 49 - Revised Unit Power Sales Agreement (10(ss) in 33-4033).

(b) 50- Fuel Lease, dated as of February 24, 1989, between River Fuel Funding Company #3, Inc. and System Energy (-1(b) to Rule 24 Certificate, dated March 3, 1989, in 70-7604).

E-15

(b) 51 - System Energy's Consent, dated January 31, 1995, pursuant to Fuel Lease, dated as of February 24, 1989, between River Fuel Funding Company #3, Inc. and System Energy (B-1(c) to Rule 24 Certificate, dated February 13, 1995 in 70-7604).

(b) 52- Sales Agreement, dated as of June 21, 1974, between System Energy and Entergy Mississippi (D to Rule 24 Certificate, dated June 26, 1974, in 70-5399).

(b) 53- Service Agreement, dated as of June 21, 1974, between System Energy and Entergy Mississippi (E to Rule 24 Certificate, dated June 26, 1974, in 70-5399).

(b) 54- Partial Termination Agreement, dated as of December 1, 1986, between System Energy and Entergy Mississippi (A-2 to Rule 24 Certificate, dated January 8, 1987, in 70-5399).

(b) 55- Middle South Utilities, c. and Subsidiary Companies Intercompany Income Tax Allocation Agreement, dated April 28, 1988 (D-1 to Form USS for the year ended December 31, 1987).

(b) 56- First Amendment, dated January 1, 1990 to the Middle South Utilities Inc. and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-2 to Form U5S for the year endedDecember31, 1989).

(b) 57- Second Andment dated January 1, 1992, to the Entergy Corporation and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-3 to Form U5S for the year ended December 31, 1992).

(b) 58- Third Amendment dated January 1, 1994 to Entergy Corporation and Subsidiary Companies htercompany Income Tax Allocation Agreement (D-3(a) to Form USS for the year ended December31, 1993).

(b) 59 - Service Agreement with Entergy Services, dated as of July 16, 1974, as amended (10(b)-43 to Form 10-K for the year ended December 31, 1988, in 1-9067).

(b) 60- Amendment, dated January 1, 1991, to Service Agreement with Entergy Services (10(b)-45 to Form 10-K for the year ended December 31, 1990, in 1-9067).

(b) 61- Amendment, dated January 1, 1992, to Service Agreement with Entergy Services (10(a) -11 to Form 10-K for the year ended December 31, 1994 in 1-3517).

(b) 62- Operating Agreement between Entergy Operations and System Energy, dated as of June 6, 1990 (B-3(b) to Rule 24 Certificate, dated June 15, 1990, in 70-7679).

(b) 63- Guarantee Agreement between Entergy Corporation and System Energy, dated as of September 20,:1990 (B-3(a) to Rule 24 Certificate, dated September 27, 1990, in 70-7757).

+(b) 64- Agreement between System Energy and Donald C. Hlntz (10(b)47 to Form 10-K for the year ended December 31, 1991, in 1-9067).

+(b) 65- Agreement between Entergy Corporation and Edwin Lupberger (10(a)-42 to Form 10-K for the year ended December 31, 1985 in 1-3517).

E-16

+(b) 66- Agreement between Enter-y Services and Gerald D. McInvale (O(a)-69 to Form IO-K for the year ended December31, 1992 in 1-3517).

(b) 67 - Amended and Restated Reimbursement Agreement, dated as of December 1, 1988 as amended and restated as of-December 27, 1996, among SysternEnergy Resources, Inc., The Bank of Tokyo-Mitsubishi, Ltd., as Funding Bank and Th Cliis Manhattan Bank (as successor by merger with Chemical Bank), as administrating bank, Union Bank of California, N.A., as documentation agent, and the Banks named therein, as Participating Banks (B-3(a) to Rule 24 Certificate dated January 13, 1997 in 70-7561).

Entergy Arcansas (c) 1 - Agreanent, dated April 23, 1982, among Entergy Arkansas and certain other System companes, relating to System Planning and Development and Intra-System Transactions (1O(a) 1 to Form 10-K fortheyear ended December31, 1982, in 1-3517).

(c) 2 - Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a)2 in 2-41080).

(c) 3 - Amendment, dated February 10, 1971, to Middle South Utilities System Agency Agreement, dated Dcenber 11, 1970 (5(a)-4 in 2-41080).

(c) 4 - Amnment, dated May 12, 1988, to Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a) 4 in 2-41080).

(c) S - Middle South Utilities System Agency Coordination Agreement, dated December 11, 1970 (5(a)-3 in 2-41080).

(c) 6 - Service Agreement with Entergy Services, dated as of April 1, 1963 (5(a)-5 in 2-41080).

(c) 7 - Amendment, dated January 1, 1972, to Service Agreement with Entergy Services ((a)- 6 in 2-43175).

(c) 8 - Amendment, dated April 27, 1984, to Service Agreement, with Entergy Services (10(a)- 7 to Form 10-K for the year ended December 31, 1984, in'1-3517).

(c) 9 - Amendment, dated August 1, 1988, to Service Agreement with Entergy Services (10(c)- 8 to Form 10-Kfor the year ended December 31, 1988, in 110764).

(c) 10- Amendment, dated January 1, 1991, to Service Agreement with Entergy Services (10(c)-9 to Form 10-K for the year ended December 31, 1990, in 1-10764).

(c) 11 - Amendment, dated January 1, 1992, to ServiceAgiement with Entergy Services (10(a)-l to Form 10-K for the year ended December 31, 1994 in 1-3517).

(c) 12 through (c) 26 - See 10(a)-12 through 10(a)-26 above.

(c) 27- Agreement, dated August 20, 1954, between Entergy Arkansas and the United States of America (SPAX13(h) in 2-11467). -

E-17

(c) 28 - Amendment, dated April 19, 1955, to the United States of America (SPA) Contract, dated August 20, 1954 (5(d)-2 in 2-41080).

(c) 29 - Amendment, dateiJanuary 3, 1964, to the United States of America (SPA) Contract, dated August 20, 1954 (5(d)-3 in 241080).

(c) 30- Amendmet dated September 5, 1968, to the United States of America (SPA) Contract, dated August 20, 1954 ((d)-4 in 2-41080).

(c) 31- Amendment, dated November 19, 1970, to the United States of America (SPA) Contract, dated August 20, 1954 (5(d)-S in 2-41080).

(c) 32- Amendment, dated July 18, 1961, to the United States of America (SPA) Contract, dated August 20, 1954 (5(d)-6 in 241080).

(c) 33 - Amendment, dated December 27,1961, to the United States of America (SPA) Contract, dated August 20, 1954 (5(d)-7 in 2-41080).

(c) 34- Amendment, dated January 25, 1968, to the United States of America (SPA) Contract, dated August20, 1954 (5(d)-8 in 2-41080).

(c) 35- Amendment, dated October 14, 1971, to the United States of America (SPA) Contract, dated August 20, 1954 (5(d)-9 in 243175).

(c) 36- Amendment, dated January 10, 1977, to the United States of America (SPA) Contract, dated August 20, 1954 (5(d)-10 in 2-60233).

(c) 37- Agreement, dated May 14, 1971, between Entergy Arkansas and the United States of America (SPA) (5(e) i 241030).

(c) 38- Amendment, dated January 10, 1977, to the United States of America (SPA) Contract, dated May 14, 1971 (5(e)-i in 2-60233).

(c) 39- Contract, dated May 28, 1943, Azendment to Contract, datedJuly 21, 1949, and Supplement to Amendment to Contract, dated December 30, 1949, between Entergy Arkansas and McKamie Gas Cleaning Company; Agreements, dated as of September 30, 1965, between Entergy Arkansas and former stockholders of McKamnie Gas Cleaning Company, and Letter Agreement, dated Jun: 22, 1966, by Humble Oil & Refining Company accepted by Entergy Arkansas on June 24, 1966 (5(k)-7 in 241080).

(c) 40- Agreeent, dated April 3, 1972, between Entergy Services and Gulf United Nuclear Fuels Corporation (50)-3 in 246152).

(c) 41- Fuel Lease, dated as of December 22, 1988, between River Fuel Trust #1 and Entergy Arkansas (B-l(b) to Rule 24 Certificate in 70-7571).

(c) 42- White Bluff Operating Agreement, dated June 27, 1977, among Entergy Arkansas and Arkansas Electric Cooperative Corporation and City Water and, Light Plant of the City of -

Jonesboro, Arkansas (B-2(a) to Rule 24 Certificate, dated June 30, 1977, in 70-6009).

E-18

(c) 43- White Bluff Ownership Agreement, dated June 27, 1977, among Entergy Arkansas and Arkansas Electric Cooperative Corporation and City. Water and Light Plant of the City of Jonesboro, Arkansas (B-1(a) to Rule 24 Certificate,-dated June 30, 1977, in 70-6009).

(c) 44 - Agreement, dad June 29, 1979, between Entergy nas and City of Conway, Arkansas (5(r)-3 in 2-66235).

(c) 45 - Transmission Agreement, dated August 2, 1977, between Entergy Arkansas and City Water and Light Plant of the City of Jonesboro, Arkansas (5(r)-3 in 2-60233).

(c) 46- Power Coordination, Interchange and Transmission Service Agreement, dated as of June 27, 1977, between Arkansas Electric Cooperative Corporation and Entergy Arkansas (5(r)-4 in 2-60233).

(c) 47- Independence Steam Electric Station Operating Agreenent, dated July 31, 1979, among Entergy Arkansas and Arkansas Electric Cooperative Corporation and City Water and Light Plant of the City of Jonesboro, Arkansas and City of Conway, Arkansas ((r)-6 in 2-66235).

(c) 48- Amendment, dated December 4, 1984, to the Independence Steam Electric Station Operating Agreement (10(c) 51 to Form 10-K for the year ended December 31, 1984, in 1-10764).

(c) 49- Independence Steam Electric Station Ownership Agreement, dated July 31, 1979, among Entergy Arkansas and Arkansas Electric Cooperative Corporation and City Water and Light Plant of the City of Jonesboro, Arkansas and City of Conway, Arkansas (5(r)-7 in 2-66235).

(c) 50- Amendment, dated December 28, 1979, to the Independence Steam Electric Station Ownership Agreement (5(r)-7(a) in 2-66235).

(c) 51- Amendment, dated December 4, 1984, to the Independence Steam Electric Station Ownership Agreement (10(c) 54 to Form 10-K for the year ended Decernber 31, 1984, in 1-10764).

(c) 52- Owner's Agreement, dated November. 28, 1984, among. Entergy Arkansas, Entergy Mississippi, other co-owners of the Independence Station (10(c).55 to Form 10-K for the year ended December 31, 1984, in 1-10764).

(c) 53.- Consent, Agreement and Assumption, dated December 4, .1984, among Entergy Arkansas, Entergy Mississippi other co-owners of the Independence Station and United States Trust Company of New York, as Trustee (10(c) 56 to Form 10-K for the year ended December 31, 1984, in 1-10764).

(c) 54- Power Coordination, Interchange and Transmission Service Agroeent, dated as of July 31, 1979, between Entergy Arkansas and City Water and Light Plant of the City of Jonesboro, Arkansas (5(r)-8 in 2-66235).

(c) 55- Power Coordination, Interchange and Transmission Agreement, dated as of June 29, 1979, between City of Conway, Arkansai and Entergy Arkansas (5(r)-9 in 2-66235).

(c) 56- Agreement, dated June 21, 1979, between Entergy Arkansas and Reeves E. Ritchie ((10)(b)-90 to Form 10-K for the year ended December 31, 1980, in 1-10764).

E-19

I (c) 57- Reallocation Agreement, dated as of July 28, 1981, among System Energy and certain other System companies (B-1(a) in 70-6624).

+(c) 58- Post-Retirement Plan (10(b) 55 to Form 10-K for the year ended December 31, 1983, in 1-10764).

(c) 9- Unit Power Sales Agreement, dated as of June 10, 1982, between System Energy and Entergy Arkansas, Entergy. Louisiana, Entergy Mississippi and Entergy New Orleans (0(a) 39 to Form 10-K for the year ended Decenber 31, 1982, in 1-35 17).

(c) 60 - First Amendmalt to Unit Power Sales Agreement, dated as of June 28, 1984, between System Energy, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi,- and Entergy New Orleans (19 to Form 10-Q fbr the quarter ended September 30, 1984, in 1-3517).

(c) 61 - Revised Unit Power Sales Agreement (10(ss) in 334033).

(c) 62- Contract For Disposal of Spent Nuclear Fuel and/or High-Level Radioactive Waste, dated June 30, 1983, among the DOE, System Fuels and Entergy Arkansas (10(b)-S7 to Form I-K for the year ended December 31, 1983, in 1-10764).

(c) 63- Middle South Ltilities, Inc. and Subsidiary Companies Intercompany Income Tax Allocation Agreement, dated April 28, 1988 (D-1 to Form U5S for the year ended December 31, 1987).

(c) 64- First Amendment, dated January 1, 1990, to the Middle South Utilities, Inc. and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-2 to Form USS for the year ended December31, 1989).

(c) 65- Second Amendment dated January 1, 1992, to the Entergy Corporation and Subsidiary Cnpanies Intercompany ecome Tax Allocation Agreement (D-3 to Form USS for the year ended December 31, 1992).

(c) 66- Third Amendment dated January 1, 1994, to Entergy Corporation and Subsidiary Companies Intercompany Irecome Tax Allocation Agreement (D-3(a) to Form USS for the year ended December31, 1993).

(c). 67- Assignment of Coal Supply Agreement, dated December 1, 1987, between System Fuels and Enty Arkansas (B to Rule 24 letter filing, dated November 10, 1987, in 70-5964).

(c) 68- Coal Supply Agreement, dated December 22, 1976, between System Fuels and Antelope Coal Company (B-I in 70-5964), as aended by First Aiendnt (A to Rule 24 Certificate in 70-5964); Secocd Amendment (A to Rule 24 letter filing, dated December 16, 1983, in 70-5964); and Third Amendment (A to Rule 24 letter filing, dated November 10, 1987 in 70-5964).

(c) 69- Operating Agreement between Entergy Operations and Entergy Arkansas, dated as of June 6, 1990 (B-1(b) toRule 24 Certificate, dated June 15, 1990, in 70-7679).

(c) 70- Guaranty Agrieemt between Entergy Corporation and Entergy Arkansas, dated as of September 20, 1990 (B-1(a) to Rule 24 Certificate, dated September 27, 1990, in 70-7757).

E-20

-~~-

(c) 71- Agreement for Purchase and Sale of Independence Unit 2 between Entergy Arkansas and Entergy Power,[dated as of August 28, 1990;- (-3(c) to Rule 24 Certificate, dated September 6, 1990, in 70-7684).

(c) 72 - Agreement for Purchase and Sale of Ritchie Unit 2 between Entcrgy Arkansas and Entergy Power, dated as of August 28, 1990 (B-4(d) to Rule 24 Certificate, dated September 6, 1990, in 70-7684).

(c) 73- Ritchie Steam Electric Station Unit No. 2 Operating Agreement between Entergy Arkansas and Entergy Power, dated as of August 28, 1990 (B-5(a) to Rule 24 Certificate, dated September 6, 1990, in 70-7684).

(c) 74- Ritchie Steam Electric Station Unit No. 2 Ownership Agreement between Entergy Arkansas and Entergy Power, dated as of August 28, 1990 (B-6(a) to Rule 24 Certificate, dated September 6, 1990, in 70-7684).

(c) 75- Power Coordination, Interchange and Transmission Service Agreement between Entergy Power and Entergy Arkansas, dated as of August 28, 1990 (10(c)-71 to Form 10-K for the yearendedDecember31, 1990, in 1-10764).

+(c) 76- Executive Financial Counseling Program of Entergy Corporation and Subsidiaries (10(a)52 to Form 10-K for the year ended December 31, 1989, in 1-3517).

+(c) 77- Entergy Corporation Annual Incentive Plan (10(a)54 to Form 10-K for, the year ended December 31, 1989, in 1-3517).

+(c) 78- Equity Ownership Plan of Entergy Corporation and Subsidiaries (A-4(a) to Rule 24 Certificate, dated May 24, 1991, in 70-783 1).

+(c) 79- Agreement between Arkansas Power & Light Company and R. Drake Keith. (10(c) 78 to Form 10-K for the year ended December 31, 1992 in 1-10764).

+(c) 80- Supplemental Retirenent Plan (0(a)69 to Form 10-K for the year ended December31, 1992 in 1-3517).

+(c) 81- Defined Contribution Restoration Plan of Entergy Corporation and Subsidiaries (10(a)53 to Form 10-KfortheyearendedDecember3l, 1989 in 1-3517)..

+(c) 82- Amendment No. 1 to the Equity Ownership Plan of Entergy Corporation and Subsidiaries (10(a)71 to Form 10-K for the year ended December 31, 1992 in 1-3517).

+(c) 83- Executive Disability Plan of Entergy Corporation and Subsidiaries (10(a)72 to Form 10-K for the year ended December31, 1992 in 1-3517).

+(c) 84- Executive Medical Plan of Entergy Corporation and Subsidiaries (10(a)73 to Form 10-K for the year ended December 31, 1992 in 1-3517).

+(c) 85- Stock Plan for Outside Directors of Entergy Corporation and Subsidiaries, as amended (10(a)74 to Form 10-K for the year ended December 31, 1992 in 1-3517).

E-21

+(c) 86 - Sumnmay Des:ription of Private Ownership Vehicle Plan of Entergy Corporation and Subsidiaries (O(a)75 to Form 10-K for the year ended December 31, 1992 in 1-3517).

+(c) 87 - Agreement between Entergy Corporation and Edwin Lupberger (10(a)42 to Form 10-K for the year ended December 31, 1985 in 1-3517).

+(c) 88 - Agreement between Entergy Corporation and Jerry D. Jackson (10(a)-68 to Form 10-K for the year ended Decimber 31, 1992 in 1-3517).

+(c) 89 - Agreement between Entergy Services and Gerald D. McInvale (1O(a)-69 to Form 10-K for the

• yearendedDecumber31, 1992in 1-3517).

+(c) 90- Agreement between System Energy and Donald C. Hintz (10(b)-47 to Form 10-K for the year ended December 31, 1991 in 1-9067).

+(c) 91- Summary Description of Retired Outside Director Benefit Plan. (10(c) 90 to Form 10-K for the year ended December 31, 1992 in 1-10764).

+(c) 92 - Amendment to Defined Contribution Restoration Plan of Entergy Corporation and Subsidiaries (10(a) 81 to Form 10-K fortheyearendedDecember 31, 1993 in 1-11299).

+(c) 93 - System Executive Retirement Plan (10(a) 82 to Form 10-K for the year ended December31, 1993 in 1-1 1299).

(c) 94- Loan Agreement dated June 15, 1993, between Entergy Arkansas and Independence Country, Arkansas (B-1 (a) to Rule 24 Certificate dated July 9, 1993 in 70-8171).

(c) 95- Installment Sale Agreement dated January 1, 1991, between Entergy Arkansas and Pope Country, Arkansas (B-i (b) to Rule 24 Certificate dated January 24, 1991 in 70-7802).

(c) 96- Installment Sale Agreement dated November 1, 1990, between Entergy Arkansas and Pope Country, Arcansas (B-1 (a) to Rule 24 Certificate dated November 30, 1990 in 70-7802).

(c) 97- Loan Agreement dated -June 15, 1994, between Entergy Arkansas and Jefferson County, Arkansas (B-1(a) to Rule 24 Certificate dated June 30, 1994 in 70-8405).

(c) 98- Loan Agreement dated June 15, 1994, between Entergy Arkansas and Pope County, Arkansas (B-1(b) to Rule :24 Certificate in 70-8405).

(c) 99- Loan Agreenent dated November 15, 1995, between Eztergy Arkansas and Pope County, Arkansas (10(c) 96 to Form 10-K fbr the year ended December 31, 1995 in 1-10764).

(c) 100- Agreement as to Expenses and Liabilities between Entergy Arkansas and Entergy Arkansas Capital , dated as of August 14, 1996 (46) to Form 10-Q for the quarter ended' September 30, 1996 in 1-10764).

E-22

Entergy Gulf States (d) 1 - Guaranty Agreement, dated July 1, 1976, between Entergy Gulf States and American Bank and Trust Conipany (C and D to Form 8-K, dated Aigiist 6, 1976 in 1-2703).

(d) 2 - Lease of Railroad Equipment, dated as of December 1,1981,'between The Connecticut Bank and Trust Company as Lessor and Entergy Gulf States as Lessee and First Supplement, dated as of December 31, 1981, relating to 605 One Hundred-Ton Unit Train Steel Coal Porter Cars (4-12 to Form 10-K for the year ended December 31, 1981 in 1-2703).

(d) 3 - Guaranty Agreement, dated August 1, 1992, between Entergy Gulf States and Hibernia National Bank, relating to Pollution Control Revenue Refunding Bonds of the Industrial Development Board of the Parish of Calcasieu, Inc. (Louisiana) (10-1 to Form 10-K for the year ended December 31, 1992 in 1-2703).

(d) 4 - Guaranty Agreement, dated January 1, 1993, between Entergy Gulf States and Hancock Bank of Louisiana, relating to Pollution Control Revenue Refunding Bonds of the Parish of Pointe Coupee (Louisiana) (10-2 to Form 10-K for the year ended December 31, 1992 in 1-2703).

(d) 5 - Deposit Agreement, dated as of December 1, 1983 between Entergy Gulf States, Morgan Guaranty Trust Co. as Depositary and the Holders of Depository Receipts, relating to the Issue of 900,000 Depositary Preferred Shares, each representing '1/2' share of Adjustable Rate Cumulative Preferred Stock, Series'E-$100 Par Value (4-17 to Form 10-K for the year ended December31, 1983 in 1-2703).

(d) 6 - Letter of Credit and Reimbursement Agreement, dated December 27, 1985, between Entergy Gulf States and Westpac Banldng Corporation relating to Variable Rate Demand Pollution Control Revenue Bonds of the Parish of West Feliciana, State of Louisiana, Series 1985-D (4-26 to Form 10-K for the year ended December 31, 1985 in 1-2703) and lpetter Agreement amending same dated October 20, 1992 (10-3 to Form 10-K for the year ended December 31, 1992 in 1-2703).

(d) 7 - Reirnbursement' and Loan Agreement, dated as of April 23, 1986, by. and between Entergy Gulf States and The Long-Term Credit Bank of Japan, Ltd., relating to Multiple Rate Demand Pollution Control Revenue Bonds of the Parish of West Feliciana, State of Louisiana, Series 1985 (4-26 to Form 10-K, for the year ended December 31, 1986 in 1-2703) and Letter Agreement amending same, dated February 19, 1993 (10 to Form 10-K for the year ended December 31, 1992 in 1-2703).

(d) 8 - Agreement effective February 1, 1964, between Sabine River Authority, State of Louisiana, and Sabine River Authority of Texas, and Entergy Gulf States, Central Louisiana Electric Company, Inc., and Louisiana Power & Light Company, as supplemented (B to Form 8-K, dated May 6, 1964, A to Form 8-K, dated October 5, 1967, A to Form 8-K, dated May 5, 1969, and Ato Form 8-K, dated December 1, 1969, in 1-2708).

(d) 9 - Joint Ownership Participation and Operating Agreement regarding River Bend Unit 1 Nuclear Plant, dated August 20, 1979, between Entergy Gulf States, Cajun, and SRG&T; Power Interconnection Agreement with Cajun, dated June 26, 1978, and approved by the REA on August 16, 1979, between Entergy Gulf States and Cajun; and Letter Agreement regarding E-23

I CEPCO buybacks, dated August 28, 1979, between Entergy Gulf States and Cajun (2, 3, and 4, respectively, to Form 8-K, dated September 7, 1979, in 1-2703).

(d) 10- Ground Lease, dated August 15, 1980, between Statnont Associates Limited Partnership (Statmont) and Entergy Gulf States, as amended (3 to Form 8-K, dated August 19, 1980, and A-3-b to Form 1O-Q for the quarter ended September 30, 1983 in 1-2703).

(d) 11- Lease and Sublease Agreement, dated August 15, 1980, between Statmont and Entergy Gulf States, as amended (4 to Form 8-K, dated August 19, 1980, and A-3-c to Form 10-Q for the quarter ended September 30, 1983 in 1-2703).

(d) 12- Lease Agreement, dated September 18, 1980, between BLC Corporation and Entergy Gulf States (1 to Form 8-K, dated October 6, 1980 in 1-2703).

(d) 13- Joint Ownership Participation and Operating Agreement for Big Cajun, between Entergy Gulf States, Cajun Eleciric Power Cooperative, Inc., and Sam Raybum G&T, nc, dated November 14, 1980 (6 to Form 8-K, dated January 29, 1981 in 1-2703); Amndment No. 1, dated December 12, 1980 (7 to Form 8-K, dated January 29, 1981 in 1-2703); Amendment No. 2, dated December 29, 1980 (8 to Form 8-K, dated January 29, 1981 in 1-2703).

(d) 14- Agreeenat of Point Ownership Participation between SRMPA, SRG&T and Entergy Gulf States, dated Jlme 6, 1980, for Nelson Station, Coal Unit #6, as amended (8 to Form 8-K, dated June 11, 1980, A-2-b to Form 10-Q For the quarter ended June 30, 1982; and 10-1 to Form 8-K, dated February 19, 1988 in 1-2703).

(d) 15- Agreements between Southern Company and Entergy Gulf States, dated February 25, 1982, which cover the construction of a 140-mile transmission line to connect the two systems, purchase of power and use of transmission facilities (10-31 to Form 10-K, for the year ended December31, 1981 in 1-2703).

+(d) 16- Executive Income Security Plan, effective October 1, 1980, as amended, continued and completely restated effective as of March 1, 1991 (10-2 to Form 10-K for the year ended December 31, 1991 in 1-2703).

(d) 17- Transmission Facilities Agreement between Entergy Gulf States and Mississippi Power Company, dated February 28, 1982, and Amendment, dated May 12, 1982 (A to Form 10-Q for the quartcr ended March 31, 1982 in 1-2703) and Amndment, dated December 6, 1983 (10-43 to Form 10-K, fr the year ended December 31, 1983 in 1-2703).

(d) 18- Lease Aremeat dated as of June 29, 1983, between Entergy Gulf States and City National Bank of Baton Rouge, as Owner Trustee, in connection with the leasing of a Simulator and Training Center for River Bend Unit 1 (A-2-a to Form 10-Q for the quarter ended June 30, 1983 in 1-2703) and Amendment, dated December 14, 1984 (10-55 to Form 10-K, for the year ended December 31, 1984 in 1-2703).

(d) 19- Participation Agreemt, dated as of June 29, 1983, among Entergy Gulf States, City National Bank of Baton Rouge, PruFunng Inc. Bank of the Southwest National Association, Houston and Bankers Lili Company, in connection with the leasing of a Simulator and Training Center of River Bend Unit I (A-2-b to Form 10-Q for the quarter ended June 30, 1983 in 1-2703).

E-24

I I (d) 20 - Tax Indemnity Agreement, dated as of June 29, 1983, between Entergy Gulf States and PruFunding, Inc., in connection with the leasing of a Simulator and Training Center for River Bend Unit I (A-2-c to Form 10-Q for the quarter ended June 30, 1993 in 1-2703).

(d) 21- Agreement to LUase, dated as of August 28, 1985, among Entergy Gulf States, City National Bank of Bat Rouge, as Owner Trustee, and Prudtial Interfunding Corp., as Trustor, in connection with the leasing of improvement to a Simulator and Training Facility for River Bend Unit I (10-69 to Form 10-K, for the year ended December 31, 1985 in 1-2703).

(d) 22- First Amended Power Sale's Agreement, dated Decenber 1, 1985 -between Sabine River Authority, State of Louisiana, and Sabine River Authority, State of Texas, and Entergy Gulf States, Central Louisiana Electric Co., Inc., and Louisiana Power and Light Company (10-72 to Form 10-K fbrthe year ended December 31, 1985 in 1-2703).

+(d) 23- Deferred Compensation Plan for Directors of Entergy Gulf States and Varibus Corporation, as amended January 8, 1987, and effective January 1, 1987 (10-77 to Form 10-K for the year ended December 31, 1986 in 1-2703). Amendment dated December 4, 1991 (10-3 to Amendment No. 8 in Registration No. 2-7655 1).

+(d) 24- Trust Agreement for Deferred Payments to be made by Entergy Gulf States pursuant to the Executive Income Security Plan, by and between Entergy Gulf States and Bankers Trust Company, effective November 1, 1986 (10-78 to Form 10-K for the year ended December 31, 1986 in 1-2703).

+(d) 25- Trust Agreement for Deferred Installments under Entergy Gulf States'- Management Incentive Compensation Plan and Administrativ& Guidelines by and between Entergy Gulf States and Bankers Trust Company, effective June 1, 1986 (10-79 to Form 10-K for the year ended December 31, 1986 in 1-2703).

+(d) 26- Nonqualified Deferred Compensation Plan for Officers, Nonemployee Directors and Designated Key Employees, effective -December 1, 1985, as amended, continued and completely restated effective as of March 1, 1991 (10-3 to Amendment No. 8 in Registration No. 2-76551).

-(d) 27- Trust Agreement for Entergy Gulf States' Nonqualified Directors and Designated Key Employees by and between Entergy Gulf States and First City Bank, Texas-Beaumont, N.A.

(now Texas Commerce Bank), effective July 1 1991 (10-4 to Form 10-K for the year ended December 31, 1992 in 1-2703).

(d) 28- Lease Agreement, dated as of June 29, 1987, GSG&T, Iic., and Entergy Gulf States related to the leaseback of the Lewis Creek generating station (10-83 to Form 10-K for the year ended December 31, 1988 in 1-2703).

(d) 29- Nuclear Fuel Lease Agreement between Entergy Gulf States and River Bend Fuel Services, Inc. to lease the fuel for River Bend Unit 1, dated February 7, 1989 (10-64 to Form 10-K for the year ended December 31, 1988 in 1-2703).

(d) Trust and Investment Management Agreement btween Entergy Gulf States and Morgan Guaranty and Trust Company of New York (the Decommissioning Trust Agreement) with E-25

respect to decommissioning finds authorized to be collected by Entergy Gulf States, dated March 15, 1989 (10-6 to Form 10-K for the year ended Decernber 31, 1988 in 1-2703).

(d) 31 - Amndment No. 2 dated November 1, 1995 between Entergy Gulf States and Mellon Bank to Decommissioning Trust Agreement (10(d) 31 to Form 10-K for the year ended December 31, 1995).

(d) 32- Credit Agreemnt, dated as of December 29, 1993, among River Bend Fuel Services, Inc. and Certain Commercial Lending Institutions and CIBC Inc. as Agent for the Lenders (10(d) 34 to Form 10-K fbryear ended December31, 1994).

(d) 33- Amendment No. I dated as of January 31, to Credit Agreement, dated as of December 31, 1993, among River Bend Fuel Services, Inc. and certain commercial lending institutions and CIBC Inc. as agent for Lenders (10(d) 33 to Form 10-K for the year ended December 31, 1995).

(d) 34- Partiership Aeement by and among Conoco Inc., and Entergy Gulf States, CTGO Petroleum Corporation and Vista Chemical Company, dated April 28, 1988 (10-67 to Form 10-K for the year ended December 31, 1988 in 1-2703).

+(d) 35- Gulf States Utilities Company Executive Continuity Plan, dated January 18, 1991 (10-6 to Form 10-K for the year ended December 31, 1990 in 1-2703).

+(d) 36- Trust Agreement for Entergy Gulf States' Executive Continuity Plan, by and between Entergy Gulf States and First City Bank, Texas-Beaumont,. N.A. (now Texas Commerce Bank),

effective May 20, 1991 (10-5 to Form 10-K for the year ended December 31, 1992 in 1-2703).

+(d) 37- Gulf States Utilities Board of Directors' Retirement Plan, dated February 15, 1991 (10-8 to Form 10-K for the year ended December31, 1990 in 1-2703).

+(d) 38 - Gulf States Utilities Company Employees' Trustee Retirement Plan effective July 1, 1955 as amended, continued and completely restated effective January 1, 1989; and Amendment No.1 effective January 1, 1993 (10-6 to Form 10-K for the year ended December 31, 1992 in 1-2703).

(d) 39- Agreement and Plan of Reorganization, dated June 5, 1992, between Entergy Gulf States and Entergy Corpotition (2 to Form 8-K, dated June 8, 1992 in 1-2703).

+(d) 40 - Gulf States Utilities Company Employee Stock Ownership Plan, as amended, continued, and completely restated effective January 1, 1984, and January. 1, 1985 (A to Form 11-K, dated December 31, 1985 in 1-2703).*.

+(d) 41- Trust Agreement under the Gulf States Utilities Company Employee Stock Ownership Plan, dated December 30, 1976, between Entergy Gulf States and the Louisiana National Bank, as Trustee (2-A to :Registration No. 2-62395).

+(d) 42 - Letter Agreement dated September 7, 1977 between Entergy Gulf States and the Trustee, delegating certain of the Trustee's functions to the ESOP Committee (2-B to Registration Statement No. 2-62395).

E-26

+(d) 43- Gulf States Utilities Company Employees Thrift Plan as amended, continued and completely restated effective as of January 1, 1992 (28-1 to Amendment No. 8 to Registration No. 2-76551).

+(d) 44- Restatement of Trust Agreement under the Gulf States -,Utilities Company Employees Thrift Plan, reflecting cAges made through January 1,.1989, between Entergy Gulf States and First City Bank, Texas-Beaumont, N.A., (now Texas Commerce Bank), as Trustee (2-A to Form 8-K dated October 20, 1989 in 1-2703).

(d) 45- Operating Agreement between Entergy Operations and Entergy Gulf States, dated as of December 31, 1993 (B-2(f) to Rule 24 Certificate in 70-8059).

(d) 46- Guarantee Agreement between Entergy Corporation and Entergy Gulf States, dated as of December 31, 1993 (B-5(a) to Rule 24 Certificate in 70-8059).

(d) 47- Service Agreement with Entergy Services, dated as of December 31, 1993 (B-6(c) to Rule 24 Certificate in 70-8059).

+(d) 48- Amendment to Employment Agreement between J. L. Donnelly and Entergy Gulf States, dated December 22, 1993 (10(d) 57 to Form 10-K for the year ended December 31, 1993 in 1-2703).

(d) 49- Assignment, Assumption and Amendment Agreement to Letter of Credit and Reimbursement Agrement between Entergy Gulf States, Canadian Imperial Bank of Commerce and Westpac Binking Corporation (10(d) 58 to Form 10-K for the year ended December 31, 1993 in 1-2703).

(d) 50- Third Amendment, dated January , 1994, to Entergy Corporation and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-3(a) to Form. U5S for the year ended December 3 1, 1993).

(d) 51- Refunding Agreement between Entergy. Gulf States and 'West Feliciana Parish (dated December 20, 1994 (B-12(a) to Rule 24 Certificate dated December 30, 1994 in 70-8375).

• (d) 52- Agreement as to Expenses and Liabilities between Entergy Gulf States and Entergy Gulf States Capital 1, dated as of January 28, 1997.

Entergy Louisiana (e) 1 - Agreement, dated April 23, 1982, among Entergy Louisiana and certain other System companies, relating to System Planning and Development and Intra-System Transactions (10(a) to Form 10-Kforthe yearended December 31, 1982, in 1-3517).

(e) 2 - Middle South Utilities System Agency Agreement, dated December 11, 1970 ((a)-2 in 2-41080).

(e) 3 - Amendment, dated as of February 10, 1971, to Middle South Utilities System Agency Agreement, dated December 11, 1970 (S(a)4 in 2-41080).

(e) 4 - Amendment, dated May 12, 1988, to Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a) 4 in 2-41080).

E-27

-~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

(e) - Middle South Utilities System Agency Coordination Agreement, dated December 11, 1970 (5(a)-3 in 2-41080).

(e) 6 - Service Agreement with Entergy Services, dated as of April 1, 1963 (5(a)-5 in 2-42523).

(e) 7 - Amndment, dated as of January 1, 1972, to Service Agreement with Entergy Services (4(a)-6 in 2-45916).

(e) 8 - Amendment, dated as of April 27, 1984, to Service Agreement with Entergy Services (10(a) 7 to Form 10-K for the year ended December 31, 1984, in 1-3517).

(e) 9 - Amendment, dated as of August 1, 1988, to Service Agreement with Entergy Services (10(d)-8 to Form 10-K for the year ended December 31, 1988, in 1-8474).

(e) 10- Amendment, dated January 1, 1991, to Service Agreement with Entergy Services (0(d)-9 to Form 10-K for the year ended December 31, 1990, in 1-8474).

(e) 11- Amendment, dated January 1, 1992, to Service Agreement with Entergy Services (0(a)-I to Form 10-K for the year ended December 31, 1994 in 1-3517).

(e) 12 through (e). 26- See 10(a)-12 through 10(a)-26 above.

(e) 27- Fuel Lease, dated as of January 31, 1989, between River Fuel Company #2, Inc., and Entergy Louisiana (B-1(b) to Rule 24 Certificate in 70-7580).

(e) 28- Reallocation Agreement, dated as of July 28, 1981, among System Energy and certain other System companies (B-I(a) in 70-6624).

(e) 29- Compromise and Settlement Agreement, dated June 4, 1982, between Texaco, Inc. and Entergy Louisiana (28(a) to Form 8-K, dated June 4, 1982, in 1-8474).

+(e) 30- Post-Retirernent Plan (10(c)23 to Form 10-K for the year ended December 31, 1983, in 1-8474).

(e) 31 - Unit Power Sales Agreement, dated as of June 10, 1982, between System Energy and Entergy Arkansas, Entergy Louisiana, Entergy Mississippi and Entergy New Orleans (10(a) 39 to Form 10-K for the year ended December 31, 1982, in 1-3517).

(e) 32- First Amendment to the Unit Power Sales Agreement, dated as of June 28, 1984, between System Energy and Entergy Arkansas, Entergy Louisiana, Entergy Mississippi and Entergy New Orleans (19 to Form 10-Q for the quarter ended September 30, 1984, in 1-3517).

(e) 33 - Revised Unit Power Sales Agreement (10(ss) in 334033).

(e) 34- Middle South Utilities, Inc. and Subsidiary Companies Intercompany Tax Allocation Agreement, dated April 28, 1988 (D-1 to Form USS for the year ended December 31, 1987).

E-28

(e) 35- First Amendment, dated January 1, 1990, to the Middle South Utilities, Inc. and Subsidiary Companies Intercompany Income Tax Allocation Agreement, dated January 1, 1990 (D-2 to Form U5S for the Sar ended December 31, 1989)..^;

(e) 36- Second Amendment dated January 1, 1992, to the Etergy Corporation and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-3 to Form U5S for the year ended December31, 1992).

(e) 37- Third Amendment dated January 1, 1994 to Entergy Corporation and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-3(a) to Form U5S for the year ended December 31, 1993).

(e) 38 - Contract for Disposal of Spent Nuclear Fuel and/or High-Level Radioactive Waste, dated February 2, 1984, among DOE, System Fuels and Enteigy Louisiana (10(d)33 to Form 10-K forthe year ended December 31, 1984, in 1-8474).

(e) 39- Operating Agreement between Entergy Operations and Entergy Louisiana, dated as of June 6, 1990 (B-2(c) to Rule 24 Certificate, dated June 15, 1990, in 70-7679).

(e) 40- Guarantee Agreement between Entergy Corporation and Entergy Louisiana, dated as of September 20, 1990 (B-2(a), to Rule 24 Certificate, dated September 27, 1990, in 70-7757).

+(e) 41- Executive Financial Counseling Program of Entergy Corporation and Subsidiaries (10(a) 52 to Form 10-K for the year ended December 31, 1989, in 1-3517).

+(e) 42 - Entergy Corporation Annual Incentive Plan (10(a) 54 to Form 10-K for the year ended December31, 1989,in 1-3517).

+(e) 43- Equity Ownership Plan of Entergy Corporation and Subsidiaries (A-4(a) to Rule 24 Certificate, dated May 24, 1991, in 70-7831).

+(e) 44- Supplemental Retirement Plan (10(a) 69 to Form 10-K for the year ended December 31, 1992 in 1-3517)..

+(e) 45- Defined Contribution Restoration Plan of Entergy Corporation and Subsidiaries (10(a) 53 to Form 10-Kfor theyear ended December31, 1989 in 1-3517).

+(e) 46- Amendment No. 1 to the Equity Ownership Plan of Entergy Corporation and Subsidiaries (10(a) 71 to Form 10-K for the year ended December 31, 1992 in 1-3517).

+(e) 47 - Executive Disability Plan of Entergy Corporation and Subsidiaries (10(a) 72 to Form 10-K for the year ended December 31, 1992 in1-35 17).

+(e) 48- Executive Medical Plan of Entergy Corporation and Subsidiaries (10(a) 73 to Form 10-K for the yearended December31, 1992 in 1-3517).

+(e) 49- Stock Plan for, Outside Directors of Entergy Corporation and Subsidiaries (10(a) 74 to Form 10-K for the year ended December 31, 1992 in 1-3517).

E-29

l~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

+(e) 50- Summary Description of Private Ownership Vehicle Plan of Entergy Corporation and Subsidiaries (10(a) 75 to Form 10-K for the year ended December 31, 1992 in 1-3517).

+(e) 51 - Agreement between Entergy Corporation and Edwin Lupberger (10(a) 42 to Form 10-K for the yearended Deccenber31, 1985 in 1-3517).

+(e) 52- Agreement between Entergy Corporation and Jerry D. Jackson (10(a) 68 to Form 10-K for the yearendedDcember31, 1992in 1-3517).

+(e) 53 - Agremen.t between Entergy Services and Gerald D. McInvale (10(a) 69 to Form 10-K for the year ended December31, 1992 in 1-3517).

+(e) 54- Agreement between System Energy and Donald C. Hintz (10(b) 47 to Form 10-K for the year ended December31, 1991 in 1-9067).

+(e) 55 - Summary Description of Retired Outside Director Benefit Plan (10(c)90 to Form 10-K for the year ended Decxmber 31, 1992 in 1-10764).

+(e) 56- Amendment to Defined Contribution Restoration Plan of Entergy Corporation and Subsidiaries (10(a) 81 to Form 10-K for the year ended December 31, 1993 in 1-11299).

+(e) 57 - System Executive Retirement Plan (10(a) 82 to Form 10-K for the year ended December 31, 1993 in 1-11299).

(e) 58 - Installment Sale Agreement, dated July 20, 1994, between Entergy Louisiana and St. Charles Parish, Louisiana (B-6(e) to Rule 24 Certificate dated August 1, 1994 in 70-7822).

(e) 59- Installment Sale Agreement, dated November 1, 1995, between Entergy Louisiana and St.

Charles Parish, Louisiana (B-6(a) to Rule 24 Certificate dated December 19, 1995 in 70-8487).

(e) 60- Agreement as to Expenses and Liabilities between Entergy Louisiana, Inc. and Entergy Louisiana Capital I dated July 16, 1996 (4(d) to Form 10-Q for the quarter ended June 30, 1996 in 1-8474).

Entergy Mississippi (f) 1 - Agreement dated April 23, 1982, among Entergy Mississippi and certain other System companies, relating to System Planning and Development and Intra-System Transactions (10(a) 1 to Form 10-K for the year ended December 31, 1982, in 1-3517).

(f) 2 - Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a)-2 in 2-41080).

(f) 3 - Amendment, dated February 10, 1971, to Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a) 4 in 2-41080).

(f) 4 - Amendment, dated May 12, 1988, to Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a) 4 in 2-41080).

E-30

(f) 5 - Middle South Utilities Syiem Agency Coorfdination Agreement, dated December 11, 1970 (5(a)-3 in 2-41080).

(f) 6 - Service Agreement with Entergy Services, dated as of April 1, 1963 (D in 37-63).

(f) 7 - Amendment, dated January 1, 1972, to Service Agre nent with Entergy Services (A to Notice, dated October 14, 1971, in 37-63).

(f) 8 - Amendment, dated April 27, 1984, to Service Agreement with Entergy Services (10(a) 7 to Form 10-K for the year ended December 31, 1984, in 1-3517).

(f) 9 - Amendment, dated as of August 1, 1988, to Service Agreement with Entergy Services (10(e) 8 to Form 10-K for the year ended December 31, 1988, in 0-320).

(1) 10- Amndnt, dated January 1, 1991, to Service Agreement with Entergy Services (IO(e) 9 to Form 10-K for the year ended December 31, 1990, in 0-320).

() 11- Amendment, dated January 1, 1992, to Service Agreement with Entergy Services (0(a)- I to Form 10-K for the year ended December 31, 1994 in 1-3517).

(f) 12 though (f) 26- See 10(a) 0(a)-26 above.

(f) 27- Installment Sale Agreement, dated as of June 1, 1974, between Entergy Mississippi and Washington County, Mississippi (B-2(a) to Rule 24 Certificate, dated August 1, 1974, in 70-5504).

(f) 28 - Installment Sale Agreement, dated as of July 1, 1982, between Entergy Mississippi and Independence County, Arkansas, (B-1(c) to Rule 24 Certificate dated July 21, 1982, in 70-6672).

(f) 29- Installmint Sale Agreement, dated as of December 1, 1982, between Entergy Mississippi and Independence County, Arkansas, (B-1(d) to Rule 24 Certificate dated December 7, 1982, in 70-6672).

(f) 30- Amended and Restated Installiet Sale Agreement, dated as of-April 1, 1994, between Entergy Mississippi and Warren County, Mississippi, (B-6(a) to Rule 24 Certificate dated May 4, 1994, in 70-7914).

(f) 31- Amended and Restated Installment Sale Agreement, dated as of April 1, 1994, between Entergy Mississippi and Washington County, Mississippi, (B-6(b) to Rule 24 Certificate dated May 4, 1994, in 70-7914).

(f) 32- Substitute Power Agreement, dated as of May 1, 1980, among Entergy Mississippi System Energy and SMEPA (B-3(a) in 70-6337).

(f) 33- Amendment, dated December 4, 1984, to the Independence Steam Electric Station Operating Agreement (10(c) 51 to Form 10-K for the year ended December 31, 1984, in 0-375).

E-3 I

-ll~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

(f) 34 - Amendment, dated December 4, 1984, to the Independence Steam Electric Station Ownership Agreement (10(c) 54 to Form 10.-K for the year ended December 31, 1984, in 0-375).

(f) 35 - Owners Agreement, dated November 28, 1984, among Entergy Arkansas, Entergy Mississippi and other co- owners of the Independence Station (10(c) 55 to Form 10-K for the year ended December 31, 1984, in 0-375).

(f) 36 - Consent, Agreement and Assumption, dated December 4, 1984, among Entergy Arkansas, Entergy Mississippi, other co-owners of the Independence Station and United States Trust Company of New York, as Trustee (10(c) 56 to Form 10-K for the year ended December 31, 1984, in 0-375).

(f) 37- Reallocation Agreement, dated as of July 28, 1981, among System Energy and certain other System companies (B-I(a) in 70-6624).

+(f) 38- Post-Retirement Plan (10(d) 24 to Form 10-K for the year ended December 31, 1983, in 0-320).

(f) 39- Unit Power Sales Agreement, dated as of June 10, 1982, between System Energy and Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans (10(a) 39 to Form 10-K for the year ended December 31, 1982, in 1-3517).

(f) 40- First Amendment to the Unit Power Sales Agreement, dated as of June 28, 1984, between System Energy and Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans (19 to Form 10-Q for the quarter ended September 30, 1984, in. 1-3517).

(f) 41 - Revised Unit Power Sales Agreement (10(ss) in 334033).

(f) 42- Sales Agreement, dated as of June 21. 1974, between System Energy and Entergy Mississippi (D to Rule 24 Certificate, dated June 26, 1974, in 70-5399).

(f) 43- Service Agreement, dated as of June 21, 1974, between System Energy and Entergy Mississippi (E to Rule 24 Certificate, dated June 26, 1974, in 70-5399).

(f) 44- Partial Termination Agreement, dated as of December 1, 1986, between System Energy and Entergy Mississippi (A-2 to Rule 24 Certificate dated January 8, 1987, in 70-5399).

(f) 45- Middle South Utilities, Inc. and Subsidiary Companies Intercompany Income Tax Allocation Agreement, dated April 28, 1988 (D-1 to Form USS for the year ended December 31, 1987).

(f) 46- First Amendment dated January 1, 1990 to the Middle South Utilities Inc. and Subsidiary Companies Intercompany Tax Allocation Agreement (D-2 to Form USS for the year ended December31, 1989).

(f) 47- Second Amendment dated January 1, 1992, to the Entergy Corporation and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-3 to Forn U5S for the year ended December 31, 1992).

E-32

(f) 48- Third Amendment dated January 1, 1994 to Entergy Corporation and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-3(a) to Form USS for the year ended December 31, 1993).

+(f) 49- Executive Financial Counseling Program of Entergy Corporation and Subsidiaries (10(a) 52 to Form 10-K forth yearendedDecember31, 1989, in 13517).

+(f) 50- Entergy Corporation Annual Incentive Plan (10(a) 54 to Form 10-K for the year ended December 31, 1989, in 1-3517).

+(f) 51- Equity Ownership Plan of Entergy Corporation and Subsidiaries (A-4(a) to Rule 24 Certificate, dated May 24, 1991, in 70-783 1).

+(f) 52- Supplemental Retirement Plan (10(a)69 to Form 10-K fbr the year ended Decenber 31, 1992 in 1-3517).

+(f) 53- Defined Contribution Restoration Plan of Entergy Corporation and Subsidiaries (10(a)53 to Form 10-K forthe year ended December31, 1989 in 1-3517).

+(f) 54- Amendment No. 1 to the Equity Ownership Plan of Entergy Corporation and Subsidiaries (10(a)71 to Form 10-Kfortheyear ended December31, 1992 in 1-3517).

+(f) 55- Executive Disability Plan of Entergy Corporation and Subsidiaries' (10(a)72 to Form 10-K for the year ended December 31, 1992 in 1-3517).

+(f) 56- Executive Medical Plan of Entergy Corporation and Subsidiaries (10(a)73 to Form 10-K for the year ended December 31, 1992 in 1-3517).

+(f) 57- Stock Plan for Outside Directors of Entergy Corporation and Subsidiaries, as amended (10(a)74 to Form 10-K for the year ended December 31, 1992 in 1-3517).

+(f) 58- Summary Description of Private Ownership Vehicle Plan of Entergy Corporation and Subsidiaries (10(a)75 to Form 10-K for the year ended December 31, 1992 in 1-3517).

4(f) 59- Agreement between Entergy Corporation and Edwin Lupberger (10(a)-42 to Form 10-K for the year ended December 31, 1985 in 1-3517).

+(f) 60- Agreement between Entergy Corporation and Jerry D. Jackson (10(a)-68 to Form 10-K for the yea1 ended December 31, 1992 in 1-3517).

+(f) 61- Agreement between Entergy Services and Gerald D. Mcnvale (0(a)-69 to Form 10-K for the year ended December 31, 1992 in 1-3517).

+(f) 62- Agreement between System Energy and Donald C. Hintz (10(b)-47 to Form 10-K for the year ended December 31, 1991 in 1-9067).

+(f) 63- Summary Description of Retired Outside Director Benefit Plan (10(c)-90 to Form 10-K for the year ended December 31, 1992 in 1-10764).

E-33

I

+(f) 64- Amendment to Defined Contribution Restoration Plan of Entergy Corporation and Subsidiaries (10(a) 81 to Form 10-K fbrthe year ended December31, 1993 in 1-1 1299).

+() 65- System Executive Retirement Plan (10(a) 82 to Form 10-K for the year ended December 31, 1993 in 1-11299).

Entergy New Orleans (g) 1 - Agreement, dated April 23, 1982, among Entergy New Orleans and certain other System companies, relating to System Planning and Development and Intra-System Transactions (10(a)- to Form 10-K for the year ended December 31, 1982, in 1-3517).

(g) 2 - Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a)-2 in 2-41080).

(g) 3 - Amendment dated as of February 10, 1971, to Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a)-4 in 241080).

(g) 4 - Amendment, dted May 12, 1988, to Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a) 4 in 241080).

(g) 5 - Middle South Utilities System Agency Coordination Agreement, dated December 11, 1970 (5(a)-3 in 241080).

(g) 6 - Service Agreenent with Entergy Services dated as of April 1, 1963 (5(a)-5 in 242523).

(g) 7 - Amendment, dated as of January 1, 1972, to Service Agreement with Entergy Services (4(a)-6 in 245916).

(g) 8 - Amendment, dated as of April 27, 1984, to Service Agreement with Entergy Services (10(a)7 to Form 10-K for the year ended December 31, 1984, in 1-3517).

(g) 9 - Amendment, dated as of August 1, 1988, to Service Agreement with Entergy Services (10(f)-8 to Form 10-K for the year ended December 31, 1988, in 0-5807).

(g) 10- Amendment, dited January 1, 1991, to Service Agreement with Entergy Services (10(f)-9 to Form 10-K for the year ended December 31, 1990, in 0-5807).

(g) 11- Amendment, dated January 1, 1992, to Service Agreement with Entergy Services (10(a)-I to Form 10-K for year ended December 31, 1994 in 1-3517).

(g) 12 (g) 26- See 10(a) 10(a)-26 above.

(g) 27- Reallocation Agreement, dated as of July 28, 1981, among System Energy and certain other System companies (B-1(a) in 70-6624).

+(g) 28- Post-Retirement Plan (10(e) 22 to Form 10-K for the year ended December 31, 1983, in 1-1319).

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(g) 29 - Unit Power Sales Agreement, dated as of June 10, 1982, between System Energy and Entergy Arkansas, Entergy Louisiana, Entergy Mississippi and Entergy New Orleans (10(a) 39 to Form 10-KfortheyearendedDecember31, 1982,in 1-3517).

(g) 30 - First Amendment to the Unit Power Sales Agreement, dated as of June 28, 1984, between System Energy.aid Entergy Arkansas, Entergy Lcisiana, Entergy Mississippi and Entergy New Orleans (19 to Form 10-Q for the quarter ended September 30, 1984, in 1-3517).

(g) 31- Revised Unit Power Sales Agreement (10(ss) in 334033).

(g) 32- Transfer Agreement, dated as of June 28, 1983, among the City of New Orleans, Entergy New Orleans and Regional Transit Authority (2(a) to Form 8-K, dated June 24, 1983, in 1-1319).

(g) 33- Middle South Utilities, Inc. and Subsidiary Companies Intercompany Income Tax Allocation Agreement, dated April 28, 1988 (D-1 to Form USS for the year ended December 31, 1987).

(g) 34- First Amendment, dated January 1, 1990, to the Middle South Utilities, Inc. and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-2 to Form USS for the year ended Decmber 31, 1989).

(g) 35- Second Amendment dated January , .1992, to the Entergy Corporation and Subsidiary Companies Intercompany Income.Tax Allocation Agreement (D-3 to Form U5S for the year ended December31, 1992).

(g) 36- Third Amendment dated January l; 1994 to Entergy Corporation and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-3(a) to Form USS for the year ended December31, 1993).

+(g) 37- Executive Financial Counseling Program of Entergy Corporation and Subsidiaries (10(a)52 to Form 10-K for the year ended December 31, 1989, in 1-3517).

+(g) 38- Entergy Corporation Annual Incentive Plan (10(a)54 to Form 10-K for the year ended December31, 1989, in 1-3517).

+(g) 39- Equity Ownership Plan of Entergy Corporation and Subsidiaries (A-4(a) to Rule 24 Certificate, dated May 24, 1991, in 7-7831).

+(g) 40 - Supplemental Retirement Plan (10(a)69 to Form 10-K for the year ended December 31, 1992 in 1-3517).

+(g) 41- Defined Contribution Restoration Plan of Entergy Corporation and Subsidiaries (10(a)53 to Form 10-K fortbeyear ended Deember31,1989in 1-3517).

+(g) 42- Amement No. I to the Equity Ownership Plan of Entergy Corporation and Subsidiaries (10(a)71 toForm 10-KfortheyearendedDecember31, 1992in 1-3517).

+(g) 43- Executive Disability Plan of Entergy Corporation and Subsidiaries (10(a)72 to Form 10-K for the year ended December 31, 1992 in 1-3517).

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- t~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

+(g) 44- Executive Medical Plan of Entergy Corporation and Subsidiaries (0(a)73 to Form 10-K for the year nded December 31, 1992 in 1-3517).

+(g) 45- Stock Plan for Outside Directors of Entergy Corporation and Subsidiaries, as amended (10(a)74 to Form 10-K for the year ended December 31, 1992 in 1-3517).

+(g) 46- Summary Description of Private Ownership Vehicle Plan of Entergy Corporation and Subsidiaries (O(a)75 to Form 10-K for the year ended December 31, 1992 in 1-3517).

+(g) 47- Agreennt betwen Entergy Corporation and Edwin Lupberger (10(a)-42 to Form 10-K for the year ended December 31, 1985 in 1-3517).

+(g) 48- Agreement betveen Entergy Corporation and Jerry D. Jackson (10(a)-68 to Form 10-K for the year ended December 31, 1992 in 1-3517).

+(g) 49- Agreement between Entergy Services and Gerald D. Mclnvale (10(a)-69 to Form 10-K for the yearended December31, 1992 in 1-3517).

+(g) 50- Agreement between System Energy and Donald C. HIntz (10(b)-47 to Form 10-K for the year ended December 31, 1991 in 1-9067).

+(g) 51- Summaiy Descriptionof Retired Outside Director Benefit Plan (10(c)-90 to Form 10-K for the year ended December 31, 1992 in 1-10764).

+(g) 52- Amendment to Defined Contribution Restoration Plan of Entergy Corporation and Subsidiaries (10(a) 81 to Form 10-K for the year ended December 31, 1993 in 1-11299).

+(g) 53- System Executive Retirement Plan (10(a) 82 to Form 10-K for the year ended December 31, 1993 in 1-11299).

(12) Statement Re Computation of Ratios

• (a) Entergy Aricansas's Computation of Ratios of Earnings to Fixed Charges and of Earnings to Fixed Charges and Preferred Dividends, as defined.

• (b) Entergy Gulf States' Computation of Ratios of Earnings to Fixed Charges and of Earnings to Fixed Charges and Preferred Dividends, as defined.

• (c) Entergy Louisiana's Computation of Ratios of Earnings to Fixed Charges and of Earnings to Fixed Charges and Preferred Dividends, as defined.

• (d) Entergy Mississippi's Computation of Ratios of Earnings to Fixed Charges and of Earnings to Fixed Charges and Preferred Dividends, as defined.

• (e) Entergy New Orleans' Computation of Ratios of Earnings to Fixed Charges and of Earnings to Fixed Charges and Preferred Dividends, as defined.

'(f) System Energys Computation of Ratios of Earnings to Fixed Charges, as defined.

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(18) Letter Re Change in Accounting Principles

• (a) Letter from Coopers & Lybrand L.L.P. regarding change in accounting principles for System Energy.

• (b) Letter from Coopers & Lybrand L.L.P. regarding change in accounting principles for Entergy.

• (21) Subsidiaries of the Registrants (23) Consents of Experts and Counsel

• (a) The consent of Coopers & Lybrand L.L.P. is contained herein at page 211.

• (b) The consent of Sandlin Associates is contained herein at page 213.

• (24) Powers of Attorney (27) Financial Data Schedule

• (a) Financial Data Schedule for Entergy Corporation and Subsidiaries as of December 31, 1996.

• (b) Financial Data Schedule for Entergy Arkansas as of December 31, 1996.

• (c) Financial Data Schedule for Entergy Gulf States as of December 31, 1996.

• (d) Financial Data Schedule for Entergy Louisiana as of December 31, 1996.

• (e) Financial Data Schedule for Entergy Mississippi as of December 31, 1996.

• (f) Financial Data Schedule for Entergy New Orleans as of December 31, 1996.

• (g) Financial Data Schedule for System Energy as of December 31, 1996.

• Filed herewith.

+ Manageent contracts or compensatory plans or arrangements.

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