ML20043B086

1973 Annual Rept Gulf States Util Co.

ML20043B086
Person / Time
Site:	River Bend
Issue date:	12/31/1973
From:	GULF STATES UTILITIES CO.
To:
Shared Package
ML20042C775	List: ML20043B069 ML20043B073 ML20043B086 ML20043B089 ML20043B092 ML20043B095 ML20043B099 ML20043B122
References
FOIA-89-559 NUDOCS 9005240167
Download: ML20043B086 (155)

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The electric utility industry faced new and a share was raised in June to 285 a share, with greater challenges in 1973, and your Company dividends for the year totaling $1.10, 6< above was no exception. 1972. The Company's peak load demand reached in our case, these conditions required a num- 3,790,300 kilowatts.

ber of extraordinary changes in our operations. Construction expenditures for the year totaled Petroleum and natural gas shortages resulting $106.8 million. Major projects were at Willow in a dramatic jump in the cost of fuels for gen- Glen Station on the Mississippi River in Louisi-erating power, conservation measures, rate ad- ana and at Sabine Station on the Neches River justments, antitrust litigation, a heavy construction in Texas. Also, Cities Service commenced work schedule, engineering plant design work, progress on a 12-mile fuel oil pipeline from its refinery toward securing a construction permit for our two terminal in Lake Charles to our Nelson Station.

announceo nuclear generating plants, an aggres- This pipeline will augment our storage and deliv-slie fossil fuel acquisition program, and our entry ery facilities at this station.

into a coal-fired generating operation, combined Conversion of the 522,000 kilowatt Willow Glen with the normal demands of operating a rapidly Unit No. 4, enabling it to burn heavy fuel oil as growing service organization to make 1973 a most well as natural gas, has been completed, and interesting and exciting year, modification of the remaining units at Willow Glen Operating revenues rose 20% to $288.6 million, and Nelson Stations has been scheduled to pro-and net income reached $50.2 million,11% over vide them with the additional capability of burn- ,

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1972. Common stock earnings increased 11e a ing oil continuously. The 580,u00 kilowatt gas i share to $1.70; the quarterly dividend rate of 26e burning Sabine Statiori Unit No. 4 is nearing com-meum ~ru unmauemm

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pletlen and should be in commercial operation Promotional ad'vertising was drastically altered

. by late spring. Construction of oil burning Willow in view of market changes caused by 'he fuel Glen No. 5 is progressing and Work on Sabine crisis. Our consumer communications program Station No. 5, a 480,000 kilowatt combination gas- to inform customers about efficient energy man-oil unit, will begin shortly. agement was intensified. These messages were in March, the Loulslana Public Service Com- supplemented with* Information oescribing what mission approved our rate increase request that we. as a company, are doing to continue to pro-

> was applicable to all retail electrical business in vide electric power. Construction on the residen-Lcuisiana. Earnings growth over 1972 was en- tial and commercial scene continued its steady .

hinced by this action and by a complete year's growth, and construction is moving ahead rapidly experience with our revised Texas rates, at the ecologically planned city north of Houston in other activity, the Company flied a request called "The Woodlands," which your Company ,

with the- Federal Power Commission to increase will serve. Industrial growth has also shown pro-wholesale rates to rural electric cooperatives, gress, including a recent announcement that a municipalities, and one other electric company, large steel manufacturing plant would be con-By late summer,72% of our proposed $3.4 miillon structed in Beaumont.

Increase was in effect, most of which is still sub- For all intents and purposes, the antitrust suits Jact to refund depending upon the outcome of filed against the Company by Cajun Electric Power further proceedings. Cooperative, Inc., and the Cities of Lafayette and During the year, our application for a permit to Plaquemine have been settled, but the agreements ccnstruct our first nuclear generating plant was reached with the cities are subject to review by

. accepted by the Atomic Energy Commission and the Federal Power Commission, was formally docketed. Progress on this applica- We continue to monitor our organizational struc-tirn is now moving along on schedule, ture, seeking flexibility in adapting to the frequent The most pressing challenge of the past year changes in our operations, in this regard Mr. Nor-was in overcoming oil and gas shortages. During man Lee was named President and principal the year, we were successful and none of our operating officer of the, Company effective June 1 customers were curtailed because of a lack of During 1974, new challenges will undoubtedly fuel. Continuous negotiations are being con. confront us, presenting your Company with new ducted to obtain fuel in the " spot" market, to opportunities to enhance its image as a leader in sicure short-term contracts, and to obtain long- fulfilling its service, social, and civic obilgations tirm commitments where possible. Varibus Cor- to its customers and to the public. I am con-l poration, a wholly-owned subsidiary, is actively fident that the 3,200 capable, innovative and dedi-engaged in programs, including exploration ven- cated employees of your Company will succeed tures, to obtain the fuels necessary to operate in meeting these objectives, our generating plants. Although there are consid- The information on the following pages should grable risks in oil and gas exploration ventures, be ' interesting reading to you, and I invite your prospects for success appear promising. Coal is attention to the entire report.

l also due to play a major role in our plans for the l g neration of electricity, and during the year we contracted for future purchases of 50 million tons

of low-sulphur Wyoming fuel. Present plans call <:dT' I e @. M l

for the delivery of this coal, beginning in 1977, to our first two generating units scheduled for the Chairman of the Board of Directors Lake Charles area. We are optimistic that our February 25, 1974 L fuel acquisition efforts will enable us to continue I

to provide our customers with a reliable power

! supply.

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KILOWATT-HOUR SALES , . . . . . . . . . . . . . . . . . . . . . . . .' . . . . . . . 5% Highlights . . . . . . . . . . . . . . . . 2 increased 1 billion to total i-' over 21.7 billion System Operations . . . . . . . . 3 PEAK KILOWATT DEMAND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5%

olimbed 187,000 kw to M Construction . . . . . . . . . . , , , 3 3.790.300 kw -

OPERATING REVENUES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . '. 20 % Nuclear Power ....... ... 5 advanced to $268.6 million.

a gain of $48.6 million . . Marketing ...... ........ 5 NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 %

- roes $5 million - Financing ............. .. 7 to total $50.2 million

. EARNINGS PER COMMON SHARE. . . . . . . . . . . . . . . . . . . . . . 7% Employee Relations . . . . . , . 7 were $1.70.. .

-. up 8.11 Management - Changes ', . . . . 8 UTILITY ! AND OTHER PLANT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8%

expanded $101.5 mHHon Brief History . . . . . . . . . . . . . . , 8

- to bring groes plant .

to $1.4 billion -

COAL-FIRED GENERATING UNITS GSU Facts . . . . . . . . . . . . . . 10 Y: announced construction of Company's first coal-fired -- .

generating units to be located near Lake Charles, and Financial Review :. . . . . . . . . . 11 contracted for future purchases of 50 million tons of western a low sulphur coal to fire the units. .

Summaries-1963-1973 Financial Progress ... 12

- Operations Growth . . 13 .

. Statement of incoine ,, ..14 .

Retained Earnings . ... 14 Statement of Changes in Financial Position . . .15 Balance Sheet . . . . . .. .16 ABOUT OUR COVER. ,

Capitalization . . . 18 -

Notes ...... . ..... 19 Independent Accountant's Report . . . . . .. . . ... 20 System Map . . . . Foldout Back Officers and Directors ..... .. .lBC 1

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Important changes in the Company's operations 65% of earnings per share being paid out in divi-occurred during 1973, foremost among them be- dends. .The Company estimates that none of the h ing the utilization of oli, as well as natural gas, common dividends paid in 1973 will be declared f;r boiler fuel and continued progress toward the a return of capital, and 100% of these dividends use of coal and uranium as future fuels. Our con- will be taxable as dividend Income, struction continued at increasing cost levels. Also, there was a continued rise in electrical usage in Effect Of Rate Actions spite of an abnormally wet and cool summer. Effective March 15,1973, the Loulslana Public Operating revenues reached $288.6 million, an Service Commission granted the Company an increase of 20% over 1972. However, a large electric rate increase for all oi its retail business prtion of this increase was because of the sub- In that State, resulting in a net increase to the stitution of higher priced fuel oils for the cur- Company of $4.4 million annually after income l triled supplies of natural gas, thereby increasing taxes, based on a 1971 test year. Earnings growth the cost of electricity to our customers. These over 1972 was also enhanced by the rate increase same factors caused a significant increase in 'in Texas, which was in effect throughout 1973,

' cperation and maintenance expenses. -

but during o.nly seven months of 1972.

Major efforts were required to obtain necessary Also, the Company filed with the FPC a request alternate supplies of na+ ural ys and oil for our to increase rates to rural electric cooperatives, Loulalana generating stations, and fuel was again municipalities, and one other electric company the largest single cost of doing business during by about $3.4 million. Approximately 72% of the 1973. Cost of fuel for power generation reached requested le. crease became effective August 13,

$82,750,000, an increase of some 71% over the subject to more complete FPC review. Most of 1972 figure of $48,358,000. the increase is subject to refund, depending on Taxes chargeable to income during the year FPC decision. The amount not now effective is were $47.7 million and continue to rank as 'one before the courts for determination.

cf the Company's largest expense items. Federal and State income taxes of $29.7 million repre-sented 62% of all taxes charged to income.

Three Loulslana cities and towns and eight parishes renewed their electric franchises with The effect of gas curtallment reaches far beyond a shortage of boller fuels for power the Company, each for 60 years, expiring in 2033.

One newly-incorporated community in Texas generation. It has also caused the Company to commit many millions of dollars to construct granted a 50-year electric franchise to the Com-environmentally-approved facilities that can use pany, alternate fuels. These necessary additional ex-Earnings sad Dividend increase penditures will increase the cost of producing The year's net income of $50.2 million was an electricity.

11% gain over 1972. Earnings per share of com- The capital outlay for construction during mon stock-increased to $1.70,11 cents over the 1973 was $106.8 million, $10.7 million less than prior year. The major impact on growth in earn- originally anticipated because of record rainfall ings in 1973 resulted from the rate relief dis- which delayed construction schedules.

cussed later. The quarterly dividend rate of 26 Construction work in 1973 continued to be cents per '3 hare was .ralsed in June to 28 cents centered at Willow Glen Station near Baton Rouge a share, with dividends for the year being $1.10, and at Sabine Station near Bridge City between six cents above 1972. The increase resulted in Port Arthur and Orange, Texas.

, 1973 1974 Construction Construction (Actual) (Estimated)

Generating Plants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 73,500,000 $131,700,000 Transmission & Distribution. . . . . . . '......... ...... ..... 31,000,000 37,400,000 Other Electric . . . . . . . . . . . . . . . . . . . . . . . ... . ........ 1 300,000 3,200,000 Total Electric . . . . . . . . . . . . ....... . . . . $105,500,000 $172,300,000 Gas ...... . . . ... ............... .. .. .. .... 1,200,000 1,500,000 Steam Products ... ... . . . . .... ..... 100,000 200,000 Total . . . . ... ..... ...... ... . . . $106.800,000 $174,000.000 i I

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Willow Glen Station's Unit No. 4, designed to j be a 580,000 kilowatt gas burner, has been modi-fled to burn heavy fuel oil and is now rated as a 522,000 kilowatt oil-burning unit. Modification has-been scheduled on tr.e remaining seven units at Willow Glen and Nelson Station. Willow Glen Unit No. 5, a 580,000 kilowatt unit, is being con-structed as an oil-burning unit and is expected to be in commercial operation in late 1975.

Sabine Station Unit No. 4, a 580,000 kilowatt  !

natural gas unit, is nearing completion and L should go into commercial operation in the spring {

of 1974. This unit was constructed using metheds '

which will facilitate its conversion to heavy fuel oil, , g; y ,, , ., g

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4 Station Unit No. 5, a 460,000 kilowatt oil and gas I

.h Ui 3 -l unit. ,f, i The Company's present and long-range con- ei

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struction program is planned to provide facilities ,

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to supply reliable electric power in the face of -

the current fuel crisis and the changes that fuel "

shortages will bring about in the future.

This program includes plans to build the Com-pany's first two coal-burning generating units, # # . Ifg capable of producing 540,000 kilowatts each. The units are planned to be in service in 1977 and dfr 1978. The Company has contracted for 50 million A O tons of low-sulphur content coal from Wyoming, /

l to be delivered over a 20 year period, beginnina l

In 1977. When these coal plants are operating at . ,  !

full capacity, the 6,000 tons needed every day will g ..

be delivered in unit-trains of about 110 cars each. V -

\ i Oil and Gas Supply .

Switching from almost total dependence on natural gas for boiler fuel in 1972, to reliance on ,

oil for about one-third of the Company's fuel - -

needs in 1975, is a complex and very expensive f a'

undertaking. As an example, the Company has l

provided the funds for the building of a fuel oil .- .# '

pipeline to connect Nelson Station to the Cities ,

Service Refinery terminal in Lake Charles. This Q - ,@

12 mile pipeline will aid in the delivery of oil to the generating station tank farm, which is also

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. ._N being expanded to store approximately one mil- .

f8iI lion barrels of fuel oil. Also, the Willow Glen oil ,  %

tank farm storage capacity is being enlarged from ,

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ww.mu:xww;..r.mm%maww.wi-.wt &cw a=au%%iwsax%k au A :M-s in 1973, the Company completed the first major The Company's service area continued to be hurdle in its quest to construct its initial nuclear of prime interest for the development of commer-I- generating plant. Our application for a construc- cial and industrial concerns.

ti:n permit for River Bend Station near St. Francis- Indu. trial inquiries for information concerning ville, t.oulslana, was accepted for formal review the area reached an all-time high, and are indica-and docketed by the Atomic Energy Commission. tive of continued prosperity for this part of the -

The site of the River Bend Station, where two nation. Most inquiries came from the refining and 940,000 kilowatt units will be initially installed, -

petrochemical industries, although the apparel in-was visited by various teams of' the AEC during dustry showed increasing interest. Steel and metal thispastyear. Routine conferences have b fabrication made headlines when it was announced part of the overall process leading to the,egunreceipt as that Georgetown Steel would construct a multi-of a construction permit. Meanwhile, the applica- m!!! ion dollar plant at Beaumont. This industry titn for a construction permit for Blue Hills Sta- alone will create some 1,000 jobs.

tion, near the southwest tip of Toledo Bend Res- Expansion of existing plants, as well as con-ervoir in Newton County, Texas, is nearing the struction of entirely new facilities in rural areas presentation stage, of,GSU's system, highlighted the developments in .

Environmental programs at both sites are con- the apparel industry. Several areas in Loulslana, tinuing. Scientists representing a number of uni- as well as Texas, will feel the economic impact of v;rsities, along with several other investigating this industry's growth Contributing factors to the teams, continue to study ecological and sociolog- continued prosperity of this region, besides oil, leal facets of the two sites.,These studies cover gas and timber, are the availability of deep waier numerous areas ranging from geological findings ports in Baton Rouge, Lake Charles, Beaumont, to detailed investigations of the flora and fauna. Port , Arthur and Orange, and a semi-tropical Yellow cake, a uranium concentrate, is the basic '

climate with an average mean temperature of raw material used to produce the fuel pellets that approximately 70 degrees, power a nuclear plant. The first contract for the in commercial construction, 479 all-electric future purchase of yellow cake was recently buildings were added to the system, with these signed by the Company klith Gulf Oil Corporation buildings representing some 61% of new com-for five million pounds, enough energy to run the mercral construction. Some 41% of all new homes four projected units for approximately six reactor- , connected during 1973 were total electric, while years. 98% of all apartments constructed were total As plans progress toward actual ground clear- electric, ing for River Bend Station, so does the expansion Several regional shopping malls were opened cf the Company's staff of nuclear-trained person- within the system during 1973, including Parkdale nel. By the time both nuclear stations are in com- Mall in Beaumont, and Corporate Square in Baton mercial operation, many more employees will be Rouge. From Lake Charles came announcements involved in the nuclear work. Technical personnel of two new all-electric buildings to be constructed are also beitig used regularly on a consultant on the lake shore. Relatively strong activity in the basis. Western Division was headed by the start of Research Your Company is not relying altogether on the conventional techniques available today for power generation in the future. Looking ahead, we are Cxploring many methods and alternatives that will provide the most economical and reliable f way possible. To this end we are involved in , f research and development on nuclear fusion and nuclear fast breeder reactors (gas and liquid fN

, jy metal), fuel cells, solar energy, geothermal en- cy crgy, coal gasification and many other projects. g About $180,000 directly and $540,000 through / ,M Electric Power Research Institute and Breeder f- , y Reactor Corporation were spent in these endeav- y ors during 1973. About $1,400,000 will be spent ;y,

,, f in 1974, with 20% of this total being spent under ~, /

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construction of "The Woodlands," a large' and have to go to the market often. Frorn 60-70% of comprehensive satellite city some 28 miles nortn this money must be financed externally. Beginning of' Houston. This new city, located on a 17,000 with the, sale of bonds in March of this year,

- Ecre plot,:Is p'rojected to have a population of permanent, financings will be scheduled with as L 150,000 at the end of its 20-year construction little variance as possible in our traditional cap-  !

. program. Plans include a university branch.

Italization ratios.

Mass media advertising and speakers' bureaus are being used to carry out a consumer informa-tion program designed to keep customers aware of the Company's efforts to attempt to insure a Success of the Company can largely be attrib- -

future dependable supply of electric power and uted to the competency of our personnel. Em-the_ wise use of this power. ployees numbered 3,177 at the year's end, as compared with 3,090 in 1972.

Our business demands that we maintain a a highly skilled work force. Company-sponsored On August 8 a new series of First Mortgage education and training programs help achieve Bonds was offered at competitive bidding. Under- this result. In 1973, many employees took ad- l writers, headed by Halsey, Stuart & Co., Inc., vantage of one or more home study courses, q cffered the low bid of 8.5733%, which is a record financial a'd for correspondence, vocational, tech- 1 high cost to the Company of invested funds. This nical, .high school and college-level programs. j series df 8%% bonds matures in 2003. The pro.- In addition, eight employees ' completed work to- j coeds were used to pay off $50 million of out- ward masters degrees, and one comple.ted re-

. standing bank loans ,and commercial paper, quirements for a doctoral degree. Four completed Common share quarterly dividends were in- advanced management studies under the Manage- J creased 2( per share on June 15,1973. The an- ment Development Program.  !

- nual dividend rate is now $1.12 per share. The Company eaiploys and promotes without' The FPC authorized the Company to borrow in regard to race, cer, sex, rellglon, or age. Em-the form of short-term promissory notes up to a ployment is stable, with 50% of the employees maximum of $125,000,000 during .1974 having been with the Company 10 years or longer, in order to raise the money needed for our four Safety training is a way of life with employees, year 1.3 billion construction program, we will in 1973 the accident frequency was reduced by 7  !

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-P 48% ove the previous year. The Company also pany from 1942 until December 31,1962, and achieved a milestone of wamh we are proud- led it through World War 11 and, the post war pe-1,000,000 manhours worked without a disabling riod of rapid development. He had served as an "

injury, Advisory Director since May 12, 1965.

The Company was honored for its safety efforts by the Edison Electric Institute, the National Safety Council, and the Southeastern Electric Exchange.

The Company was incorporated in 1925. A wholly-owned subsidiary company, Varibus Cor-porat!on, was organized in 1970 to enable Gulf Floyd R. Smith, Preeldent of the Company since States to anter~ into other types of utility related

- 1970, was isamed Chairman of the Board of Direc- buslaesses, parf.cularly computer services, fuel tors; he, continues as principal executive officer. procurement and *xploration.

Norman R. Lee was elected President and princi- Today, your Company serves over 398,000 elec-pal. operating officer, effective June 1. In Novem- tric customers in a service area covering some ber, R. Earl White, Assistant to the Chairman, 28,000 square miles of southeast Texas and south was named a Vice President and Assistant to the central Louisiana. in Baton Rouge and vicinity, Chairman of the Board, we distribute gas to over 71,000 customers, and

On December 26,1973, Roy S. Nelson, Advisory sell steam to four industrial customers. There are Director and former Chairman of the Board, died 286 towns and cities in our electric service area, in Beaumont, Texas. Mr. Nelson headed the Com- which has a population in excess of 1.3 million.

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~

> dVLF ' STATES UTILITIES COMPANY:

e. Is an investor-owned company incorporated in

Texas on August 25,1925, with the principal busi-l ness being the generation, transmission and dis-tribution of electric energy.

'e~ Serves over ~398,000 electric customers in a 28,000 square mile area of southeast Texas and

- south central Loulslana, including a 250-mile .

" stretch of Texas-Loulslana coastline.

e Maintains corporate headquarters in Beaumont, Texas, and has five operating division offices at , .

' Beaumont, Port Arthur and Conroe in Texas, and

. Lake Charles and Baton Rouge in Loulslana. ,

e Distributes natural' gas in over 71,000 customers '

in Baton Rouge, and vicindy, and operates a steam products business in that city, e Serves 286 Texas and Loulslana communities-with an estimated population of 1.3 million.

e' Sells electricity for resale to 14' municipally-

- owned systems, 6 rural co-ops and one other l utility. .

e Taxes average over $4.1 million a month.

• Pays 3,200 employees in excess of $2.7 million

, a month in wages and salaries.

• Haa a' gross plant investmem :a $1.4 billion.

• Owns and operates six interconnected electric ,

power stations which can generate over 97 million

kilowatt-hours daily:

Kilowatts

. Noches Station,L Beaumont 427,000 Sabine Station, Bridge City 890,000 ,

-Lewis Creek Station, Willis $30,000 Roy S. NelsonLStation,'Westlake 899,000 Louisiana Station, Baton Rouge 334,000 -

Willow Glen Station, Baton Rouge 1,484,000 Total generating capabi','ty 4.584,000 Annual Report to the Securities and

' Emergency interconnecteo capability 905,000 . Exchange Commission on Form 10-K The financial statements appearing in this report

- e Has announced" plans for two 940,000 kilowatt are substantially.the same as those which appear nuclear-fueled generating units to be located near in the Company's report to the Securities and St. Francisville,,Loulslana, and two 930,000 kilo- Exchange . Commission on Form 10-K.- In com-watt nuclear-fueled generating units in north New- pilance with'the regulations of the Securities and ton County, Texas, to be placed-in service be- Exchange Commission, the Form 10-K report in-tween 1980 and 1983. .

~

cludes certain additional financial information.

The Annual Report on Form 10-K will be made e Has' announced plans for two 540,000 kilowatt available to interested shareholders upon written coal-fired units to be placed in service in the Lake request to R. W. Jackson, Secretary, P. O. Box * ,

? Charles vicinity in 1977 and 1978. 2957, Beaumont, Texas 77704.

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summary of financial progress 1963-1973 W of Debars) . Ass, . Ass.1 . Aug. .

asned .

Asmusi Annusf  ;

O Gseeth ' Geust ~ Geese -

E %ef %ef %ef %ef  % ef . % ef %ef Rate Rate .I Este -

)j$$.]jf) . .!

5 .

1973 Rev. 1972 . Rev. 1971 Iter. 1970 Aer. 1969~ asv. 1968 ser. 1963 Rev. 1971 1973 1968Ll$[] *# ,

/ *  :

N OPERATING REVENUES i Electre- 33 $ 68J27 33 $ 63,E3 33 $ 59,821 33 $ 53.594 32 $ 35,428 32 12.9 % 11 1 ,i

32. S 79,022 "h Residential. . .

Commercial. .

. $ 91.355 55,659 - 19 5,600 19 40,899 19 31,50I 19 35,436 19 . -32.433 20 23,363 21 14.1% II. 11 II.

-(

?

industrial. . 99,231 34 77,941 33 68,J22 33 63.394 33 59.367 33 52,858 32 33J13 38 16.1% ' 13.

i 12,637 5 9,863 8.736 5 5,064 5 14.5 % 13 12 P

" 16.450 6 '15,203 6 6 10.961

• Other. . . . . . . . . ,

262,695 91 218JS6 91 190.585 91 175,319 90 164,487 5 50 . 147,621 89 97,568 88 14.4 % 12.

7 Total Electri, 12,363 8 3,905 8 3. 7. ]

18,689 6 14,972 6 13J46 6 13.463 7 13,305 7 11.6 %

j Steam Products.. . . .. 3 4,306 4 i 5.  ;

3 6,272 3 5.927 3 5,820 . 3 5.348 3 5.423 7.5%

q Gas . . . . . . . . . . . . . . . . 7.237 II.

288,621 100 240,010 100 210,258 100 194,602 100 183.140 . 100 165,407 100 110J79 108 14.0% . 16.1 %

4 Total 0perahne Revenues 1 OPERTING EXPENSES I 42,347 ' 20 - 39,498 23 35,232 19 29,940 18 17,820 16 ~28.0% 22.6% 16 6 %

d Feel for Power Generahon. . 82J50 29 48,358 20 2 94 --

12.6 % 48.6%

2 4,478 2 I,807* l' 2,064* 1* 908 2J36  ;

y Purchased Power. . . . . . . . . 4.949 3,362 1 2,553 1 2,052 1 I,877 I I,909 1 2,059 I. 1,577 2 21.4% 10.3 % 7.9%

c Gas Purchased for Resale. . 15,593 13,211 12 8.1% 7.6% . 5.5% J 22,525 8 20,873 9 19.450 9 17.835 9 16,592 9 10

% Safaries and wages . . . . . . . . . . . . . . . 6.5% 14%

2,151 2,174 1 1,914 1 1,841 1 1,626 1 1,572 1 1,2 14 1 5.3% ,

v Employees' Pensions and ?enetts. . 1 8.5% 15% a I,005 1.078 1,069 1,003 932 I 649 406 .1%

Rentals . . . . . . . . . . . .

2,145 1 1.999 1 1,949 1 IJ94 1 1,662 I 1,174 - I 6.3%. 7.1% 7.2%

Transporfahon Costs. . 2.343 1 4 - 6.1%

3- 7,100 4 6,835 4 4,355 (41%) 2.8%

j Other Operating Expenses. . .

7,840 1,842 3 6.839 1,552 7,863 1,636 4

I 8,885 I,662 5

I 1,478 I I,323 I 862 1 3.5% 6.8% 7.9% a i Trimming Trees.

2 3,814 1

1 5,220 3 5,123 3 3,996 2 3,951 2 2,162 2 2.0% 6.6% 9.5 i

'; 0ther Maintena nce. .. . . . . . . . . . . .

Total 0pershon and Maintenance..

5.442 134,209 47 93,864 39 81J43 39 77,609 40 71,563 39 66.340 . 40 42,935 39 20.0 % til% 12.1%

29,906 13 23176 13 20.187 13 14J18 13 11.5% 12.1 % 93% }

Depreoshon. . . . . . . . . . . . . 35J84 12 33.606 14 14 25.801 542 ,

Amortization of Property Loss. . 136 542 /

i -

j TAXES i a Federallncome:

21,478 7 22,489 9 16,627 8 14,115 7 18,667 10 18,437 II 12,632 12 110% 3.1% i  :

g Current. . .

5,187 3 4,477 2 3,6M 2 3,212 3 11.2 % 13.2 % 7. 3 6J79 2 6.064 2 2 4.933 i Deferred . . . . . . . . . . . ............. 294* 295* 300* (1.49 J% .5% 'i 285* 286* 265* 273*

2 Amortizahon of Prior Years

• Deferments. .

4 State income:

1,044 I. 1,021 662 613 409 (123 9 2.1% E2% l.

', Current . 680 1.097 1

~-

206 217 74 Deferred .. 13,336 12,819 7 11,366 7 8,037 7 21.0 % 19% 8.5% .

18,228 6 17,217 7 14,870 7 7 f Other Than income. .

- Investment Credit:

1,361 1,800 1,917 1 3.570 2 2,439 2 2J02 2 1,103 I (27.5 9 (12.8 9 2.1% 5 3

Deferred . . . . . . . . . . . ...... .... 1 1 451* 387* 285* 215* (26.8 9 (2979 - i Amortuahon of Pnor Years' Deferments . 188* 517* ~

2 48,141 19 36,315 19 38.485 21 36,254 22* 25,093 23 9.4% 56% 6.6%

Total T axes . . . . . . . . . . . . . . . . . . . . . . . 47,659 16 20 39.003 5.

217,652 15 175.611 73 150,652 12 139,861 12 133.866 73 123.323 75 82JE 75 119% 12.0 % 10.2 % -

f TOTAL OPERATING EXPENSES AND TAXES.

70,969 25 64,399 27 59,606 28 54J41 28 49,274 27 42,084 25 28,033 25 90% 11.0 % 93% [

1 OPERATING INCOME . . . . . . . . . . .

ALLOWANCE FOR FUNDS USED 3 8J25 4 6,896 3 8,86 5 6,049 3 4J23 3 825 I 4.4% 163% 28.4 % '

DURING CONSTRUCTION . . . . . . . . 10.068

( 640 I* 30' 50 18* 156 18* -

32.6 % -

OEHER INCOME AND DEDUCTIONS. . .  %,963 28 28:840 26 17% 11 3 % . 11.0 %

INCOME BEFORE IWTEREST CHARGES.. 81.677 28 73,123 31 66,472 31 63.637 33 55,305 30 I

INTEREST CHARGES 13,454 8 8,804 8 15% 16.2 % 12.5 %

interest on teng. Term Debt . 28,543 10 26,969 11 24,685 . 12 21,721 11 17.675 10

• Amortization of Premium, Discount and....... .8%

+

32* 38' 47' 56* 54* 27* 19.0 % 143 %

Expense on Debt . 25* 19.9 % <

I l.018 1 2.816 I 2,965 2 2,974 1 860 1 486 -I .2% 28.2 %

Other interest Expense. 2.982 9 17.2% 13.0%

31,500 11 27,955 12 27,463 13 ' 24,639 13 20,593 11 14.260 9 9.263 8.5%  ;

Total enterest Charges . 9.9%

NET INCOME . . . . . . . . . . . . . . . . ~ 50,177 17 45.168 19 39.009 18 38,998 20 34JI2 19 32J03 19 19,577 11 8.8% 8.9%

2 2,474 2 181% 10 5 % 10.5 %

PREFERRED DIVIDENDS PAID. . . . . . . . . . . . . . 6J30 2 4.650 2 4.084 2 - 4.084 2 4.084 - 2 4.084 9.8%  ;

15 40,518 .11 34,925 16 34,914 18 30,628 17 28.619 17 17,103 15 - 7.6% 87%

INCOME APPLICABLE TO COMMON STOCK.. 43.447 11,619 1.9% . 92% .

i 28,102 26,569 11 25.009 12 22J40 12 20,819 12 19,182 12 10 7.3% -

10 COMMON filVf DENDS PAID. . . . . . .

5 $ 13,949 6 $ 9,916 4 $ 12.174 6 $ 9,809 5 $ 9.437 5 $ 5,484 5~ 8.0% 10.2% - 10.8 %

ADDED TO RETAINED EARNINGS... $ 15.345 31 - 4.5% 55% 7.6%

.'i EARNINGS PER AVERAGE SHARE". . $ 130 71 $ 1.59 91 $ I.46 21*$ 1.49 88 $ 138 6! $ 130 91 5 .82

• 61 3 .98 4! $ .94 71$ .88 7$ $ .% 81 3.9% 46% 7.0% ,

i DIVIDENDS PER COMMON SHARE" $ I.10 61 $ . I.04 Of $ 1.04 68 68 (.59 (.9%) 8.59 65 65 71 66 68 J PER CENT PAY 00T. . . . . . . . . . . . . . . .

25,547 25,547 23,881 23,431 22.141 22.031 20J47 2.9% 3.0% 2.1% - ,

AVERAGE SHARES OUTST ANDING". "

.i

,

• Denotes red figure. -

.' " Prior years restated for 2 for.1 common spht in May,1965. ,

. - 9

! Denote percentage increase over previous year. 1 j ~ '

1

() Dec 4

n 7

summ ry cf eparctions grcwth 1963-1973 s

Avg. Anasal ' Av8. Anasal ' Ave. fennel Growth Rate Greeth Rate GreHh sale -

?,

1973 1972 1971 1970 1969 1968 1963 1971.G73 1969-1973 1964 1973  %

ELECTRIC AND STEAM PRODUCTS DEPARTMENT e Customers ~

Residential. 349.292 340.360 330 416 319.325 313,661 307.357 268.845 ' 3.0% ' 2.6% ~25 Commercial . , 41,986 41.144 40,111 39.251 38,907 37,934 33.607 25 2.1% 2.3% .

Industrial. . 5,606 6.115 5.320 4.466 4,396 4,524 3J09 7.9% 4.4% 45 other. . . 1.433 1.391 1.320 1.324 1.211 IJ20 927 25 3.3% 45 .

Tot al . . . . . . . . . . . . . . . . . . . . . 398.311 389,010 371,227 364.3G6 ' 358,235 350J35 307,088 3.0%, 2.6% 2.6% j Kilowatt-Hour Sales (Thousands) -

3.546,355 3,132,933 ~ 2,860.259 2,319.248 Residentiat. . 3J30.837 2.665.542 1.406 326 9.3% 10.0 % 10 M Commercial. . ... 2.579,MI 2,380,471 2.114,689 1.923,879 IJ82.460 1,598.833 1.020.404 10 4 10 5 95 Industriat. 11,001,560 10.415,986 9.371.114 8.698.045 8.098,285 7.066,849 4.151J22 8.2% 95 10.2 %

Other. . . . . . . 1.519.578 IJ!9.249 I.482,560 1,338.427 1,222.307 1,059,655 551.490 45 7.5% 10 4 Total Utihty. . 18.831.936 18.062.061 16.101.296 14,820.610 13J68.594 12.044,585 1.129.912 .85 9.4% 10 2 %

Steam Products . 2,880.362 2.602.921 2.420,923 2.384J67 2,364.660 2,215.951 1.518J92 6.5% 5.4% 66%

Total System. . . . . 21J12.298 20,664.982 18.522 )l3 17,205,377 16.133.254 14.260,536 8.648 3 04 8.1% 8.8% 9.6%

Electric Customer Data

. Average Kilowatt-Hour Use Per Residential Customer. . . . . . . 10.819 10.571 9.645 9,044 8.602 7,652 .5,260 6.2% 7.2% 7.5%

Average Revenue Per Residential . . 4

Customer-Dollars. . . . . . . . . . . . . . . . . . . . . 264.91 235.55 211.57 200.67 193.04 176.83 132.52 95 84 7.2%

Average Revenue Per Kilowatt-Hour-Cents-I Residential. . . 2.45 2.23 2.19 2.22 2.24 2.31 2.52 3M 1.2% (.3%)

Cornmercial. 2.16 1.% 1.93 1.95 1.99 2.02 2.29 3.5% 1.4% (.6%)

j indirstriat . . . .90 .75 .73 .73 .13 .75 .81 7.2% 35 1.1%

4 GAS DEPARTMENT .

Customers. ..... ......... ..., 71,854 70,597 69.124 67,322 . 66,694 66.121 57.107 2.2% IM 2.3%

Natural Gas Purchased-M-Cubic Feet . 9,502,531 9.060,473 8J88,881 9.607) 94 9.291,090 9.612.566 8.190.199 (.4%) (.2%) 1.5% .

Sales 2M Cubic Feet . 9.114.942 8,441,612 8.585.412 9,209.457 8.982,181 9.094,833 7,493. % 5 (.3%) -

25 M ai n- Mile s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.019 979 949 937 917 882 766 25 2.9% 2.9%

CAPABILITY. LOAD AND RESERVES thilowatts)

Generating capabihty al time of peak load (l). 4.564,000 4.155,000 4,155.000 3.625.000 3.045,000 2.475.000 1.%I,000 80% 13.0 % 88%

i Capahhty purchased from Sam Rayburn and Toledo Bend Dams and Cajun E;ectric .

i Power Cooperahve, Inc. without reserves. . 168,000 204.000 98.000 98.000 98.000 52.000 , 0 19 5 26.4 % -

Total Capahhty at time of peak load. . . . . 4J32.000 4.359.000 4.253.000 3J23.000 3.143,000 2.527.000 1,%1.000 85 13.4 % 92%

Peak lead mctuding interruptible load (1). . 3J99,300 3,602300 3.285.000 3,039,400 2.850,600 2,554,000 . 1,531,400 7.6% 85 95 Plus: Power sales with reserves to .

other uhhty systems. . 0 0 100,000 100.000 50.000 0 0 - - -

Less: . ,

interruphble load at hme of peak load . . . . . . . 28,800 39,800 30,600 37,600 0 0 0 (8.5%) - -

Purchased power with reservss including TVA Diversity interchange . ...... 215,000 215.000 215.000 215.000 215,000 295,000 0 -

(6 4 ) -

Load for which reserves are provided . 3.546,500 3.347,900 3.139.400 2J86.800 2,685.600 2.259.000 1,531,400 74 9.4% 88% .

CapaNhty in excess of load. . . . . . ............. 1.185.300 1,011,100 1.113.600 836,200 457.400 268,000 429.600 12.3 % 34.6 % 10 5 Less: Scheduled maintenance at hme of peak load . 0 0 176.000 246,000 0 0 0 - - -

.L Reserve capabhty 1.185,500 1.011.100 937,600 590,200 457,400 268.000 429,600 26 M 34.6 % 10 5 Percent reserves . 33 30 30 20 17 12 28 18 5 22.4 % 15 Annualload factor. 68 5 68.9 % 68 5 68.4 % 68 4 67.4 % 68.3% .2% .4% .1%

Output:

Net M-kwh Generated . . . . . . . 21,890.507 21.281,658 20,643.077 19,290,514 17,337,296 14,943,316 9,104,325 45 7.9% 92%

31 5 Net Purchased and Interchanged. 917,992 519.575 990.059t 1.060.239t 249,426t 187,987 57,653 -

37M Total . . . . . 22.808.499 21,801,233 19.653,018 18.230.215 17,087,870 , 15.131,303 9.161.978 7.8% 8.6% 96%

MISCELLANEOUS .

Steam Sales-Millions of Pounds. . . . . . . . . . . . 25323 24.543 23.943 24.162 24,394 25.472 22J01 2.1% .2% IM f Maximum Steam Demand-M-Pounds Per Hour. 3,389 3.309 3,193 3.371 3.143 3.387 3,420 .2% -

(.1%) /

Efectric Line-Pole Miles: .

Transmission (69,000 Volts and over). 3.667 3,641 3.589 3.287 3.085 2.933 . 2.215 35 4.6% 52%

Distribution (34,500 Volts and under) . . . . 15.331 15.019 14.655 14,303 14.015 13,569 IlJ24 2.4% -2.5% 2M Underground Construction-Miles ot Rout t . 671 575 489 399 349 274 88 18.9 % 19 6 % 22 5 -

(1) Excludeslead served by and capabihty of the 76.000 kilowatt steam-electric installahon maintai ied and operated by the Industrial Chanicals Division of Athed Chenucal Corporatwi. .

t Denotes red figure. -

g ( ) Decrease. . .

A _ _ _ _ '__"+ _ -__________m_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ . . _ _ _ . _ _ _ _ . . _ _ _ . - _ _ _ _ _ _ _ _ _ _ _

__.-__._m._ w.-___._. -.___me._.__ 1

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• s -

t .

statement of in.come -

for the years ended December.31, 1973 1972 q

i

' OPERATING REVENUES: .

Elect ric . . . . . . . . . . . , , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $262,694,739 $218,766,007 Stea m products . . . . . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . 18,689,486 14,971,642 Gas ................................................... 7,236.781 6.271,980 Total operating revenues . . . . . ... ...... . . ..... -288,621.006 , 240.009.629

= OPERATING EXPENSES AND TAXES , ,

Operation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,694,222 83,288,329-Maintenance . . . . . . . . . , . . . . . . . . . . . . . . . . . . . . . . .... .... 13,515,232 10,575,336 Depreciation . . . . . . . . . . . . . . . . . ' . . . . . . . . ................ 35,783,667 33,606,217 Taxes-Income Cu rrent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ........ .... 22,157,825. 23,585,828 Deferred - net . ................ ....... ... ...... 6,700,428 6,055,076 i

investment credit - net . . . . . . . . . . .................... 572,783 1,282,734

.Other .................. ........... . .......... .. 18.227.880 17,216.957 Total operating expenses and taxes . . . . . . . . . . . .. ... 217.652.037 175.610.477 x OPER ATI NG ~ I NCOM E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,968,969 64,399,152

' ALLOWANCE FOft FUNDS USED DURING CONSTRUCTION . . . . . 10,068,523 8,724,829 OTHER INCOME AND (DEDUCTIONS)-NET . .' .. .. . . .

639,657 (1,245)

INCOME BEFORE INTEREST CHARGES . . . . . . ..... . .. .. 81,677,149 73,122,736 INTEREST CHARGES ................... ............. . . 31.499.953 27.955.100

~ N ET INCOM E . . . . . . . . . . . . . . . . . ... .. .. ... ..... _50,177,196. 45,167,636 PREFERRED ~ DIVIDENDS . . . . . . . . . . . . . . . . . . ..... ... .... 6.730.000 4,649.950 .

. INCOME APPLICABLE TO COMMON STOCK . . .... ........ $ 43,447.196 ' $ 40.517.686

' SHARES OF COMMON STOCK (average number outstanding) ....... . . ..... . .... 25,547.328 25,547,328 EARNINGS PER SHARE . . . . . . . . . . . ... ... ... ...'... ... $1.70 $1.59 retained earnings for the years ended December 31, 1973 1972 BALANCE AT BEGINNING OF YEAR, as previously reported. ..... $139,354,411 $125,405,946

- Less cumulative effect of chance to equity method of accounting for investments. , . . . , . . . . . 143,706 BALANCE AT BEGINNING OF YEAR, as restated. 139,210,705 125,405,946 ADDITIONS '

Net income . . . . . . ... .. . ... . ... .. . ... . 50.177,196 45,167,636 Total . . . . ...... . .. . ...... . .. 189.387.901 170.573.582

. DEDUCTIONS Prefer ed dividends . . . . . . ... .. . .. 6.730,000 4,649,950 Common dividends ($1.10 per share in 1973 and $1.04 per share in 1972) . . . . 28,102.061 26.569,221 Total . . . . . . . . . . . . . . . .. . . .. 34.832.061 31.219,171 BALANCE AT END OF YEAR. . . . $154,555.840 $139.354,411 The accompanying notes are en Integral part of the financial statements.

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s l statement of. hanges c .inf..inancial: pos.t. -i ion

for the years ended December 31 -

p

'1973

• 1972 1 i

Funds From:-

Net ' i ncome . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 50,177,196 $ 45,167,636 j

' ltems not affecting working capital:

_ Depreciation c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,783,667 33,606,217 Deferred income tax- -net , . . . . . . . . .'. . . . . . . . . . . . . . . . . . . . . . . . 6,700,428 6,055,076 Investment tax tredit-nei . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 572,783- 1,282,734

. Common stock equity component of allowance for (funds used during con.struction . . . . . . . . .................. (5,590.044) ~( 5.536.995)

Funds f rom operations . . . . . . . . . . . . . . . . . . . . . . . . . . . 87,644,030 80,574,668 Financing: .

• ' First mortgage bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000,000 ,

Prefe rred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , 35,054,935 -

Notes payab le . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -(30,796,362) 69,255,710 Other-not ............ .........,,........ . ........ .. 9,102,785 8.365.942 Total source of funds . . . . . . . . . . . . . . . . , . . . . . . . .' . . . . $115,950.453 $193,251,305 Funds For:

G ross plant additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , , $107,233,919 $111,314,414 - j Dividend s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,832.061 31,219,171- j Retirement of long. term debt , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 375,000 375,000 Temporary cash investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -(47,900,000) 47,900,000 Investment in and advances to subsidiary company. . . ...... ,..... 18.354.827 2,482.549 112,895,807 193,291,134 increase (decrease) in working capital, as detailed below. . . . . . . . ... 3,054,646 (39.829)-

Total funds used . . . . . . . . . , ........ .... ..... $115,950.453 $193,251,305 ,

Increase (decrease) in working capital (excluding notes payable and temporary cash investments):  !

Accounts receivable .... .... . .. . .. ,........... . $ 6,144,319 $ 5,305,391  ;

inventories . . . . . . . . . . . . . . . . . ... ....... .... ....... 1,096,784 (610,558)-

, Fuel stock . . . . . . ..................................... 7,797,11'r (678,347) = ,

,_ Fuel prepayments . . .... .. ... . . ............... . (32.652) 391,824 j t Other prepayments . . . . . . . .. . . ..... ............... (88,433) (775,339) '

Accounts payable . . ...... .... . ... ............... (7,715,558) (2,032,621)

Accrued taxes . . . . . . . . ....... ..... ............... (799,994) (472,639)  ;

Accrued interest . . ... . ..... . . ....... ......... (1,769,518) (20,835) I

' Other --net . . . . . ...... .. ... . .................. (1.577.419) (1 . 146,705)

$ 3.054,646 $ (39.829)

==

The accornpanying notes are an integralpart of the financial statements.

15

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.- ,) .

' ASSETS .

balance sheet 1973 1972 e I

as of December 31 i i

UTILITY AND OTHER PLANT, at original cost i Electric utility plant . . . . . . . . . . . . . , , . .. . . . . . . . . . . . . . . $1,154,380,238 $1,033,489,343 j

, Steam products plant . . . . . . ......,,,........ ... .. ,,. 52,770,531 52,495,562  !

Gas utility plant . . . . . . . . . . , . . . , , . . , , . . . .,,,......... 19,488,263 18,749,444 l Totai plant . . . . . . . ...... .,,. . .. ... . .. 1,226,639,032 1,104,734,349 l

Leps> Accumulated provision for depreciation . . . . . . . . . . . ... 292,977,235 261,871,773 j Total plant less accumulated provision for depreciation . . 933.661,797 842,862,576 - '

Construction work in progress, at cost . ....... ... . ... 154,046.224 174.489.774 t Total utility and uther plant . . , . , , , . ,, ... .. . 1,087,708,021 1,017,352.350

.OTHER PROPERTY AND INVESTMENTS Investment in and advances to subsidiary company, at equity ... ,.,,., ,. , ,. .,,, . .. . . 20,937,376 2,582,549 Other property and investments, at cost . ,, . . . ... .

1,020,125 1.012.119 i Total other property and investments .. ... . 21.957,501 3.594,668 CURRENT ASSETS Cash ................... . . ... . . , . . .. .... 3,801,388 5,741,214 Special deposits . . . . . . .. . .... ... .. . ........ 355,134 - 280,083 Temporary cash investments .,,.... ,,. .,,. .. .. 47,900,000 Accounts receivable, less accumulated provision for uncollectibles of $411,531 and $407,280, respectively . . . . . . . .. 30,588,051 24,443,732 Materials and supplies (including construction materials),

at average cost . ......... . .. .. . . . .. .. 5,886,551 4,789,767 Fuel stock .. .................. ... . . ..... .9,035,107 1,237,990 Fuel prepayments . ..... . .. .. ,..... ... 359,172 391,824 Other prepaymentt> .. . ... ., , . .... .... 1,388,209 1,476.642 i

Total current assets . . . .. . .. .. 51.413,612 86,261,252 DEFERRED DEDITS .

Unamortized debt discount and expense . 1,275,030 822,017 Other ... ........ .......... .. . . . 1,341.072 929.839 Total deferred debits , . . . 2.616,102 1,751,856 TOTAL $1,163.695.236 $1.108,960,126 The accompanying notes are an integral part of the financial statements.

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LIABILITIES .'

, 2, 1973 1972 CAPITAll2ATION (see following page) -

CAPITAL STOCK AND RETAINED EARNINGS Common stock, without par value . . . . . . . . . . . . . . . . . . . . . . . . 5 187,579,725 5 187,579,725 Retained ea rnings . . . . . . . . . . . . . . . . . . . . _. . . . . . . . . . . . . . . 154.555,840 139,354,411 Total ~........................................ 342.135,565 - 326,934,136

' Preferred stock, cumulative, $100 par value. . . . . . . . . . . . . . . . 117,500,000 - 117,500,000

! Premium on ' preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 655,236 655.236_ i

• Tota' capital stock and retained earnings. . . . . . . . . . . . . 460,290,801 , = 445,089,372 LONG.TE R M DE OT , , . . . . . . . . . . . . . . . . . . '. . . . . . . . . . . . . . . . . 529,125,000 479,500,000 Total capitalization . . . . . . .... .........,...... 989.415.801 924,589.372 c ,

CURRENT LIABILITIES Portion of long term debt due'within one year. . . .... , .... 304,000 303,000-Notes payable:

Bank'........,......... ........ .................. 21,962,500 51,000,000-Commercial paper ' . . . . . . . . . . . . . . . . . . . . . . .. . .......... 20.482.422 22.241,284 Total notes payable .. .* . . ... .,........... 42.444,922 73,241,284 Accounts payable . . . . . . . , ....... ..................... -18,981,683 11,266,125 Ta,xes acc rued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,117,27,4 5,317,280 Interest accrued .. ,................................... 8,530,485- 6,760,967 Other:........... .... .... ........ .............. 7,509,235 7,653.885 Total current liabilities . . ....... ..,....... .. 83,887,599 104,542,541

-DEFERRED CREDITS Unamortized premium on debt. . ... . .. . . .......... 1,093,773 1,159,510 investment tax credit . . . . . . . . . . . . ... . . .............. 19,689,033 16,785,058 Other . . . ... ... .. .. ... ....... ... . .. 292,095 274,179 Total deferred credits . .. ... .. .. ......

21,074,901 18.218,747

-OPER TING RESERVES . . . . . ... . . ...... ............ 1.770.954 1,714,992 CONTRIBUTIONS IN A10 OF CONSTRUCTION. . .. .. .... 3,829.331 3,320,277

- ACCUMULATED DEFERRED INCOME TAXES. . ., ... . ... 63,716.650 56,574,197 TOTAL ,... . . . . ...". . . .. .. . 51,163,695,236 51.108,960,126 The accompanying notes are an Integral part of the financial statements.

'17 e - _ _ . . . . .._ _ . . _ . .

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capitalization .

as of December St. * ,

1973 1972 CAPITAL STOCK AND RETAINED EARNINGS 00MMON STOCK-Without par value-Authorized 40,000,000 sharee-Outstand 6rt25.547,328 shares in 1973 (20,241 sharoowners): 25,547,328 shares in 1972 (20,499 sharoowners) . , , . ....... ..... .................... , . $187,579,725 $187,579.725 RETAINED EARNINGS ($42.235,249 restricted in 1973 es to cash dividends). J54,555.840 139,354,411 Total common stock and retained earnings. . . ....... ... ..... 342.135,565 326,934,136 PREFERRED STOCK-Cumulative-$100 par value-Authorized 3,000,000 sharoe-outstanding 1,175,000 shares in 1973 (2,872 shareowners); 1,175,000 .

shares in 1972 (2,796 sharoowners).*

The redempt6en pnees of all preferred stock issues, in the aggregate, were $124,407,510 at Decomtier 31, 1973, theres Outetenderg 7,000,000 7.000,000

. .30 Dividend . . . . . . . . . . . . . . . . 77600 120,000..

12,000,000 12,000,000

.40 Dividend' ............., ,..... . . . ..

.40 Divedend, 1949 Ser6es. .. . 50.000. . . . .. .

6.000,000 6,000,000

.44 Orvidend .. . ..... . . ... . 50.000. .. 5.000,000 5,000.000

.50 Dividend ............. .... 50,000.. .. . . 5,000,000 5.000,000

.52 DivWend' . .... .. .... . ,,. 100,000. . , , 10.000.000 10,000,000 5.00 Div6dend . . ......... ....... 75,000. . . .. .. 7.500,000 7,500.000

.08 06vidend' .. .. . ........ 100.000... . 10.000,000 10,000,000

.08 Dividend .... , , . .. 200,000. . ., , 20,000.000 20,000,000 35,000,000 7,56 Div6dend . . .... .,,........ 350,000. . .. . .. .. 35,000,000 Total preferred stock. , .1.175,000. . . . ... . .. ITW0F00 117,500,000 PREMlUM ON PREFERRED STOCK. ... . .. .......... ... . . .. .. 655,236 '

655.236 Total capital stock and retained earnings. .. ., .. , . ... _$460,290,lF01 _S445,009W LONG. TERM DEST FIRST MORTGAGE BONDS-Authorsted $1,000,000,000 principal amount.

Sinkina fund requirements for 1974 aggregate 56.488.D00. The Company expects a

to setiety such requirements by certifymg property additions to the Trustee, Septes 2% due 1976 (Excluding $1,000,000 in Treasury )' . . . . . . ,, $ 27,000,000 $ 27,000.000 3 due 1978' . . ..... ... .

12,000,000 12,000,000 2 eus 1979' ... . .. . .,, , . , , . 10,000,000 10,000,000 2 due 1980' ,., ,... ., , ... . ,,, .. . .. . 13,000,000 13.000,000 3 eue 1981* . . ., . . . . , , .. .... ... ... 10.000,000 ~10,000.000 3 due 1982* . . . .. .. . .. ... .,.,,.. . .,, 10,000.000 10,000,000 3 due 1983* ... .. .. . . . .. ..,.. .. .. 10,000,000 10,000,000 4 due 1986 .. . . . . . . . .... . . ., , 15,000,000 15,000,000 4 due 1987 . .... . .. .. . .. . . 17,000.000 17,000.000 4 due 1988 . .. ...... . . ... . . .. . ..... 20.000,000 20.000,000 4 due 1989 . .. ,,,, . . . . , 10,000,000 40,000,000 5 A due 1989.. ,,.. .. . . . . . . ..,, ,, 16,000,000 16,000,000 4 due 1990 ,... ... . . .. .. . . 17,000,000 17,000,000 4 due 1992 ,,... ... .... .,. . . . . . . . 17,000,000 17,000.000 5 due 1996 . ... , , ,, ,, , . , , ,. . ,

20.000,000 20,000,000 5 due 1997 , , ,, , . . ,. . . 35.000,000 35,000,000 6 due 1998 . . , ,. , , . , . . 25,000,000 25,000.000 6 A due 1998. . . . . . ,,....... ,, 40,000,000 40,000,000 7 due 1999 .. ..., .. . . . ., 25,000,000 25,000,000 8 A due 1999. . ., . .

25,000,000 25,000.000 8 due 2000 , ., , , .. . 30,000,000 30,000,000 7 A due 2000... ... . . . . 30.000,000 30,000.000 .

7 due 2001 . .. . . . .

35,000,000 35,000,000 8 due 2003 .. .., . . : , , ... .............. 50,000,000 Total fivst mortgage bonds . . . . . . . . . . . . 519,000,000 469,000,000 DEBENTURES-Authorized, $15,000.000 principal amount:.. ...

4%% due 1981 .. , .. . . .. , . ,, .

10,125,000 10,500,000 Total long term debt (excluding portion due within one year). . ., $529,125,000 $479,500.000 TOTAL CAPITAllZATION ,,.. ,, ...,,.. .. . .... .. ...... _$989,415,801 8924,589.372

• Listed on New York Stock Exchange, Inc.

• • Usted on New York, Midwest and Pacific Coast Stock Exchanges.

4 18 wew~m n ~. . - . , . _

m> emmumm A.

SUMMARY

OF SIGNIFICANT being amortized over the estimated usefullife ACCOUNTING POLICIES of the related pmperties.

• The Accounting records of the Company are The Company's investment in Varibus maintained in accordance with the Uniform Corporation, a wholly-owned subsidiary,is System of Accounts prescribed by the Federal accounted for on the equity basis in P:wer Commission and the Louisiana Public compliance with a Federal Power Commission Service Commission. order, adopted as of January 1,1973.

Utility and other plant is stated at original B. PENSION PLAN -

cost when first dedicated to public service and the amounts shown do not purport to represent The Company has a contributory pension plan reproduction costs or current value. Costs of covering all employees between the ages of repairs and minor replacements are charged 80 and 65 years who have had one year of to expense as incurred. The recorded cost of continuous se.rvice. Cost of the plan in 1973 and depreciable utility plant retired and cost of 1972 was $1,634,227 and $1,786,505, respectively, removal,less salvage, are charged to accum. of which $1,146,831 and $1,255,441, respectively, ulated provision for depreciation. The capitalized was charged to income and the remainder to cost of utility and other plant includes an construction and other accounts. The Company's tilowance for the cost of funds used during policy is to fund pension cost accrued. Funding construction which was computed at a rate of is under the aggregate cost actuarial method 7% % per annum during 1978 and 8% per which does not separately identify unfunded cnnum during 1972. The 1974 rate is 7%%. past service costs.

The pmvision for depreciation is computed C. COMMITMENTS using the straight line method at rates which will amortire the unrecovered cost of depreciable The Company has lease corr.mitments plant over the estimated remaining service life, which in the aggregate are not significant to -

either net income or stockholder's equity.

For income tax purposes, the Company has adopted accelerated methods of computing At December 31,1973 the Company had depreciation for eligible property. Pursuant to agreements with several banks which terminate regulatory commission order, amounts equal to December 81,1974, providing for borrowing the reductions in income taxes arising from the up to $51,080,000 at the prime commercial use of accelerated depreciation rather than lending rate in effect from time to time without straight-line tax depreciation are charged to payment of a commitment fee.The Company income and concurrently credited to accumulated maintains nonsegregated working cash

, d;ferred income taxes. Upon expiration of the balances which generally average, over the life periods of tax deferment, the amounts of the agreements, approximately 109 accumulated are used to offset the pmvision of the line of credit.

f:r income taxes in amounts equivalent to the The construction program involves expendi.

related increases in such taxes. tures of approximately $174,000,000 in 1974 Total Federal income tax expense was less and,in that connection, the Company has in.

In both 1978 and 1972 than the amount com. curred substantial commitments for equipment.

puted by multiplying income before tax by Reference is made to comments in l

the statutory rate of 48%. This was due this report under CONSTRUCTION and primarily to additional allowable tax deprecia. NUCLEAR POWER GETTING CLOSER tion, certain capitalized costs expensed for tax regarding an agreement to purchase coal purposes and investment tax credits. The and yellow eake, a uranium concentrate, j

cffective rates for these years were 27.2% and (See pages 3 and 5.)

i 29.5%. respectively.

l The Company plans to file a regisi. tion Amounts equal to the reductions in Federal statement with the Securities and ihchange income tax'es resulting from investment tax Commission on February 14,1974 for the credits are charged to income and concurrently proposed sale of $60,000,000 first mortgage I credited to deferred credits. These credits are bonds during March,1974.

1 19

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I L.. . Coopers & Lybrand TO THE SHAREHOLDERS, GULF STATES UTILITIES COMPANY:

i We have examined the balance sheet of Gulf States Utilities Company as of December 31,1973, and the re.  !

j lated statements of income, retained earnings and changes in finandel position for the year then ended. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records, and such other auditing procedures as we considered necessary in the circum. l stances. We 'previously examined and reported upon the financial statements for the year 1972. l In our opinion, the aforementioned fmancial statements (pages 14 through 19) present fairly the fmancial ]

l position of Gulf States Utilitibs Company at Decomter 31,1973 and 1972 and the results of its operation,s and j changes in financial position for the years then ended, In conformity with generally accepted accounting princl.

ples applied on a consletent basis.

Houston, Texas g j I

February 6,1974

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I FLOYD R. SMITH (38) WILLIAM E. HEANER, JR. (13) THOMAS A. PAGE (1)

Chairman of the Board of Directors Vlos Preendem Treasurer and Principo Executive Omoor Personnel Manager JAMES L BRASWELC (35)

NORMAN R. LEE (25) JOSEPH O. ROBICHAU (16) Controller and Assistant Treasurer President and Prinolpel Operating Officer V P e ident ROY E. EYLER (15)

, SAMUEL L ADAMS (35) . Auletant Secretary benior Vloe Preeldent R. EARL' WHITE (32)

Engineering and Production Construction Vlos Prwident and Assistant to the RAY S. PACE (37)*

'""*" " 8'" "

I JOSEPH R. MURPHY (37) senior Vloe Preeldent JASPER F. WORTHY (18) HANSFORD R. ROUSE (17)

Operations Vloe Proeident Assistant Treasurer 8 " ""0" ROBERT L WYNNE, JR. (35)

JER(d 1! M. STOKES (38)

Sen or Vice President ROBERT W. JACKSON (18) Anetant Treasurer Finance - Secretary y,,,, 3,,yi, 4

Elected February 16,1974 SAMUEL L ADAMS (1970) JOSEPH R. MURPHY (1970) OLIVER P. STOCKWELL (1969)

Senior Vice Proeident of the Company Senior V!ce President of the Company Member of the law firm of Stockwell, Beaumont, Texas Beaumont, Texas St. Olater. Slovert & Viccellio, counsel for the Company's JOHN W. BARTON (1970) BENJAMIN D. ORGAIN (1963) Lake Charles Div6olon P a de o Jacka le Ccmpany. Lake Charles, Loulslana Member of the

& Tucker, law firm general of Orgor theain, Sqtl counsel Company EDWARD H. TAUSSIG * (1944) .

SETH W DORBANDT (1970) Beaumont, Texas President, Taussig Corporation Chairman of the Board and President, Lake Charles, Louisiana First National Bank in Conroe Conroe, Texas GLENN E. RICHARD (1963) ELDON A. WERNER* (1970)

Retired Chairman of the Board of Vice President of Baton Rouge Aircraft,Inc.

EDWIN W. HIAM (1959) the Company Baton Rouge, Loulstens 8' ***"I' ****

NsYo'nYNassusetts FRED V. WILSON (1964) investments NORMAN R. LEE (1967) FLOYD R. SMITH (1965) Port Arthur, Texas President of the Company Chairman of the Board of Directors and Beaumont, Texas Principal Executive Officer of the CHARLES P. MANSHIP, JR. (1957) C a pany .

Beaumont, Texas President and Director, Capital City Press Baton Rou0s, Loulalana ( *) Adv6eory Date elected to Board HARRELL R. SMITH (1964) Director JOHN J. MORRISON* (1957) Retired General Manager. # Also served as a director of the Company Retired Chairman of the Board of Lake Charles Operat6ons, from 1962 until March 1,1970, when he the Company Cities Service Oil Company retired as President and Director of Beaumont, Texas Lake Charlos Loulelans the Company Transfer Agents:

The American National Bank of Beaumont, Beaumont Texas The Chase Manhattan Bank, N. A., New York, N.Y.

The First National Bank of Chicago, Chicago, Illinois Regletrars:

First Security National Bank of Beaumont, Beaumont, Texas Manufacturers Hanover Trust Company, New York, N.Y.

Northern Trust Company, Chicago, Illinois

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_ _ . ,. . m . . .. ~ . ~ _ ... _ . _ . ~ , . _ _ .. _ . .x Prospectus seo,ooo,ooo .

Gulf States Utilities Company First Mortgage Bonds,8%% Series due 2004 Due March 1, 2004 interest le payable March 1 and September 1

. The New Bonds will be redeemable at the opt en of the Company as a whole at any time or in part from time to time upon 30 days' notice at the applicable redemption prices shown herein.

with accrued Interest to the date fixed for redemption, except that prior to March 1,1979 no such redemption may be made through a refunding operation at an interest cost to the Company of less than 8.625% per. annum. The initial Regular and Special Redemption Prices are 108.63% and 100.06%, respectively.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY 18 A CRIMINAL OFFENSE.

uaderwritiae Pries to Discounts and Proceedele Pbblic (1) Comm6ssione (2) Company (1)(3)

Per Unit 100 % .478 % 99.522 %

Totat $60,000,000 $286,800 $59.713,200 (1) Plus accrued interest from March 1,1974 to date of payment and delivery.

(2) The Company has agreed to indemnify the Purchasers against certain civil liabilities, includmg certain liabilities unoer the securities Act of 1933.

(3) Before deduction of expenses payable by the Compasy, estimated at $107.000.

The New Bonds will be issued only as fully registered bonds in denominations of $1,000 and multiples thereof.

The New Bonds are offered when, as and if issued and accepted by the Purchasers named within, ar.1 subject to approval of legal matters by counsel, prior sale, or withdrawal, cancellation or modification of the offer without notice, it is expected that delivery of the New Bonds will be made in New York City on March 28,1974.

The First Boston Corporation Salomon Brothers Blyth Eastman Dillon & Co.

incorPet. d Dillon, Road & Co. InC.

The dMe of this Prospectus is March 20,1974.

_: ~ ~ . . _ . . _ ., --. -_ _ --;= _ _ - _ - - . _ _ - _

,,wr:mmmmmvmrw.wnm wm-mw m r.ia- , eu.c .m wma m.wm.m IN CONNECTION WITH THIS OFFERINO, THE PURCHASERS MAY OVER.

ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MAREET PRICE O{' THE BONDS OFFERED HEREBY AT A LEVEL AB'OVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZINO, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

l INTRODUCTORY STATEMENT Gulf States Utilities Company (the " Company") is subject to the informational requirements of the Securities Exchange Act of 1934 and in accordance therewith files reports and other information with the -

Securities and Exchange Commission. Information, as of particular dates, conceming directors and officers, their renn.neration, the principal holders of securities of the Company, and any material interest of such persons in transactions with the Company is disclosed in proxy statements filed with the Com-mission. The Company has not granted any stock options.

Such reports, proxy statements and other information can be inspected at the principal office of the Commission at 500 North Capitol Street, N.W., Washington, D. C., and copies of such material can be obtained from the Commissioa at its prescribed rates. In addition, such reports, proxy statements and other information can be inspected at the offices of the New York Stock Exchange, Inc.,11 Wall Street, New York, New York. The mailing address of the Company is P.O. Box 2951, Beaumont, Texas 77704 and its telephone munber is (713) 838-6631.

USE OF PROCEEDS The net proceeds from the sale of the Bonds offered hereby' (the "New Bonds"), after deduction of expenses and exclusive of accrued interest, will be used by the Company to pay off a portion of its then outstanding short term notes, expected to be approximately $110,000,000. The funds obtained from the issuance of such notes were used in connection with the Company's constructiorr program and for other corporate purposes.

All of the short term notes expected to be c>utstanding will either be in the fo'rm of commercial paper or short term notes issued under the Company's revolving credit agreements with banks. Short term borrowings by toe Company must comply with the provisions of the Federal Power Act. See

" Regulation".

CONSTRUCTION PROGRAM It is presently estimated that the Company's system peak load during 1974 will reach 4,131,000 kilowatts, at which time the Company estimates it will have a reserve of approximately 36%, During the periods 19641973 and 1%91973, the Company's peak load grew at average annual growth rates of approximately 9.5% and 8.2%, respectively; the 1974 estimated peak, if realized, will represent a 9%

increase aver 1973. To meet anticipated growth in system load, the Company has tentatively scheduled in the ten year period 1974 through 1983, the installation of six fossil fueled electric generating units with aggregate capability of approximately 3,260,000 kilowatts and four nuclear fueled units with aggregate capability of approximately 3,740.000 kilowatts. See " Business-Future Generating Plants".

The Company's estimate of peak loads and its presently scheduled construction program may change because of load growth changes, fuel availability, construction and regulatory contingencies, and the efIects of various programs which may be adopted or imposed to conserve electricity. The Com-pr.ny is keeping its constmetion plans as flexible as practicable with the intention of accommodating any such changes that may develop.

2 Mf Li.2"CE.1ML*fLMM'* '*3 at.* * **.: 1 1*.'.**L.".z..r.T M .J "r./. * * - *'* 1 t *_ r e u.t i t ' ** r --* * . i t n i* ". . . . - . . ----z . 1 . ~ . . - - :

p. . - cmmm-r.m ,m 1.,.a c...;.i _.4 .%.v m. t The cost of new construction in 1974 and l>75 is expected to be approximately $174,000,000 and i

. $260,000,000, respectively. In 1974 the program is expected to consist of the following principalitems:

Additional electric production plant . . . . . . . . . . . . . . . . . . . . . . $132,000,000 4 Additional electric transmission and distribution facilities . . . . 38,000,000 Other additional electric improvements . . . . . . . . . . . . . . . . . . . 2,400,000 Additional gas plant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,400,000 Additional steam plant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000 Total.................................... $1/4,000,000 The construction program presently contersplates the expeditute of approximately $900,000,000 du' ring 1976 1977.

The 1974-1975 construction program includes approximately $91,000,000 for expenditures in con-nection with the planned nuclear fueled units. Expenditure of such funds and those spent in connection with such units prior to 1974 (in the approximate amount of $26,000,000), as well s execution of contracts for the construction of such nuclear units and the purchase of equipment and fua therefor, prior to asmrance that construction permits and operating and other related licenses will be obtained, was deemed necessary by the Company to put it in a position to make application for the regulatory approvals required and to enable it to complete construction, once approval is obtained, within the time necessary to meet presently estimated increased load.

Actual expenditures and estimates for subsequent years may be affected by greater than anticipated escalation in costs, additional expenditures for environmental and other factors, and acceleration or delay of portions of such program.

It is anticipated that the Company will,in addition to the funds obtained from this offering and funds internally generated, require prior to the end of 1974, appmximately $43,000,000 from outside sources and that during 1975 the Company will require funds irom outside sources of approximately $172,000,000.

The Company expects that such funds will be obtained from short term bank loans and the issuance of commercial paper combined with permanent financing, the form, nature, time, and extent of which have not yet been determined.

Total gross additions to the plant account of the Company during the period January 1,1969, through December 31,1973, amounted to $544,467,000, and during the same period retirements from the plant account amounted to $27,541,000. Gross additions during the period amounted to approximately 509c of total net plant at December 31, 1973.

BUSINESS The Company was ' incorporated August 25, 1925, under the laws of the State of Texas and is engaged principally ir <he business of generating electric energy and transmitting, distributing and retailing such energy in a 28,000 square mile area in southeastern Texas and in south central Louisiana, extending a distance of over 350 miles along the Texas-Louisiana Coast. The Company also seils electric energy at wholesale in this area to various municipalities, rural electric cooperatives and one other utility. The Company's electric system is inte-connected, and interconnections with other utilities are maintained for the exchange of power. The Company also conducts a steam products business and sells natural gas in the Baton Rouge, Louisiana area.

Operations For the 12 month period ended December 31,1973,91% of the Company's operating revenues were derived from the electric utility business. 6.5% from the steam products business and 2.5% from the gas business. Of the electric operating revenues,55% were derived from within Iouisiana and 45% from within Texas. The gas and steam products businesses are conducted entirely in Louisiana. Additional 3 .

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l Information about the principal classes of service is provided under " Operating Statistics and Certain Details of Revenues."

. The Company has undertaken certain measures to reduce its internal consumption of electric power and energy and consumption by other utilities and ultimate customen. Its efforts with respect to the general public have consisted of news media advertising urging the conservation of electric energy and, with respect to industrial and large cornmercial customers, have consisted of consultation with such customers regarding more efficient use of electric energy by them. Although the Company believes that such steps have been successful in conserving electric energy, because of other variants, such as wer,ther, it is presently unable to identify how much reduction in kilowatt hour consumption has been experienced because of consenation efforts.

The Company and ten other investor-owned electric utility companies comprising the South Central ,

Electric Companies have an agreement with the Tennessee Valley Authority (TVA) to interchange 1,500,000 kilowatts of electric power. The Company's share of the exchange is 215,000 kilowatts. The companies have constructed a 500,000 volt electric transmission network linking their electric systems in ,

Louisiana, Texas, Arkansas, Oklahoma, Mississippi, Missouri and Kansaa. The Company has extended the 500,000 volt transmission line in its own senice area to improve reliability of senice.

There are 19 rural electric cooperatives, sponsored by the Rural Electrification Administration (REA), 21 municipet electric systems, and five investor owned utilities operating within or adjacent to the service area of the Company. The operation and extension of these cooperatives, municipalities, and other utilities in certain areas tend to restrict expansion of the Company's system in such arcati.

However, the Company is continuing to extend its service into areas around such municipalities, areas adjacent to such other utilities, and into rural areas. '

. The Cajun Electric Power Cooperative, Inc. (Cajun), fonnerly known as Louisiana Electric Cooperative, Inc., a super cooperative formed by 12 of the 13 REA cooperatives in Louisiana, has con-structed a 200,000 kilowatt generating plant in Louisiana which began commercial operation in June, 1972. The Company has entered into a ten year contract with Cajun which principally provides that the '

Company will furnish transmission service for energy generated by Cajun to four of its member coop-eratives and sell to Cajun the additional power it may need and request. The Company has also agreed to purchase from Cajun ceitain excess capacity and energy available from such plant. In December,1973, the Company signed a letter of intent to pursue negotiations with Cajun for further coordination of generation planning and additional transmission service. See " Regulation" with respect to proceedings, before the FPC and othenvise, involving Cajun.

The four cooperatives now receiving power from Cajun previously purchasM all or a substantial portion of their bulk power supply from the Company. From and after the effe&c date of the Cajun i contract on April 1,1973, the Company has only received a charge for transmission of the Cajun power to such cooperatives and will continue to receive only such transmission charge, unless and until such time as Cajun may purchase additional power from the Company under such contract to meet the needs of the cooperatives. The gross transmission charges received during 1973 from Cajun amounted to

. $580,453, compared to the gross revenues from power sales to such cooperatives during the same period of 1972 of $2,151,235.

In January,1974, the Cortpany executed separate power interconnection agreements with the Cities

• of Lafayecte and Plaquemine, Louisiana (the " Cities"), providing for the excht.nge of emergency, main-tenance, and surplus power, and for the Company to provide transmission service for each for purposes of coordinating generation. Such agreements have been filed for acceptance with the FPC, and contingent upon such regulatory action, facilities are expected to be in place to accommodate transactions under such agreements with Plaquemine beginning in 1974 and Lafayette beginning in 1975. Pursuant to such agreements, the Company has agreed to purchase various amounts of capacity from such Cities during the period 1975-77. See " Regulation" with respect to proceedings, before the FPC and otherwise, involving the Cities.

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Of the Company's steam products customers, Exxon Company, U.S.A., Ethyl Corporation, and Uniroyal are being supplief pursuant to contracts which will terminate pursuant to notice from the Company in 1978,1976 and 1976, respectively. The specially designed steam-clectric extraction plant which has been supplying process steam and by-product electric energy as part of, the requirements of these customers presently uses natural gas as primary boiler fuel. The Company proposes to negotiate new contracts with these customers covering higher rates, and in connection therewith expects to consider whether or not to convert such plant to a continuous oil burning as well as gas burning capability.

The Company constructed and owns a specially designed steam-clectric, extraction plant in Baton 4

Rouge which furnishes the requirements of the Industrial Chemicals Division of Allied Chemical Corporation for process steam and electricity. It it, being opented and maintained by Allied under a twenty-year contract, which runs to February 1,1989, and under which Allied makes annual payments to the Company, including amounts. sufficient to amortire the cost of such plant over the term of the contract.

The Company distributes natural gas in Baton Rouge and its environs which have an estimated population of 230,000. Such gas is purchased under an agreement, expiring December 31,1975, with Mid Louisiana Gas Company.

Fuel Supply All of the generating plants of the Company (with the exception of Willow Glen Unit No. 4

, discussed below) presently use natural gas as primary boiler fuel and have the capability of using No. 2 oil as boiler fuel on a short-term basis. Boiler gas is provided in Texas under contracts running until 1985 with Exxon Company, U. S. A., and Texas Intrastate Gas Company. The Company has been receiving gas needed in its Texas pla'nts from these suppliers pursuant to such contracts and does not expect any immediate material curt ilment of such supply. Gas deliveries from Texas Intrastate Gas Company, which supplies one-half of the requirements of one 265,000 kilowatt generating unit, may be ,

subject to curtailment pursuant to priorities established by the Texas Railroad Commission. Boiler gas is provided in Louisiana under a contract running until 1981 with Monterey Pipeline Company and under a contract running until 1987 (with provisions for price redetermination in 1977 and 1982) with United Gas Pipe Line Company (" United"). United provides gas to the Company's Willow Glen (other than to Unit' No. 4) and Roy S. Nelson stations in Louisiana which account for 1,861,000 kilowatts of the Company's electric generating capability. -

Since November,1970, United has been delivering less gas than the Company would have otherwise used under such contract. Soch curtailments are expected to continue at increasingly severe levels and may be further affected by the FPC actions discussed hereafter. There are numerous FPC pro-ceedings and related court appeals now in various stages involving the Company, United, and other customers of United. Such proceedings have already r'esulted in approval by the FPC of curtailments to the Company based upon certain priorities of use. Cu'trent orders provide that if it is necessary for the Company to avoid shedding firm electric load, United is authorized to deliver additional gas to the Company to the extent required to avoid such load shedding, but any such additienal deliveries are to

, be offset against subsequent gas allotments from United. One key issue yet to be finally determined is whether or not natural gas supplied by United for boiler fuel, particularly for the purpose of genera-tion of electricity, will be ordered terminated by the FPC, or, if authorized to be continued will be given sufficient priority to entitle the Company to obtain gas in adequate quantities. The Company cannot at this time anticipate the final outcome of such proceedings or the overall impact thereof upon

, the operation of its units served by Umted.

In an attempt to obtain gas to offset the effect of existing gas curtailment, the Company has been i able to purchase gas on a temporary, and for the most part, interruptible basis from Monterey Pipe-

. line Company, Texaco, Inc. and Sugar Bowl Industrial Gas Corporation; however, the Company expects that such supply from Texaco and Sugar Bowl will probably not continue to be available after mid 1974 The Company has to date been unable to contract for a long-term supply of gas to replace that curtailed and expects to continue to attempt to purchase gas on a short-term basis w hen available.

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Because of the ps supply problem, the Company has adapted its new Willow Glen Unit No. 4, to a continuous oil burning as well as gas burning capability. After delay caused by the adaptation of this Unit, it went into w. 4.1 operation in mid 1973. The cost of both the adaptation and the.construc- ,

- tion of oil supply facilities for this Unit was approximately $16.7 million. Such oil supply facilities are t also being used for other units at such station. The Company does not presently expect that additional emission control facilities for this Unit will be required. However, environmental regulations as to

. ambient air ' standards may necessitate additional expendituras of approximately $8.3 mitton for such facilities as early as 1975. This amount is not included in the Company's construction .ogram. The Company has contracted for the supply of low sulfur No. 6 fuel oil for thl's Unit through June,1974, and thereafter expects to purchase add'tiocal supplies when available on the market.

Because the Company expects that it may not be able to obtain from United or other sources a .

reliable supply of ps sufficient to natisfy the long-term requirements of the stations presently supplied by United, the Company han initiated a program to adapt all seven of its gas-fired units (with appro-priate emission control equipment) now served by United to enable them to have a continuous oil burning and ps burning capability. The cost of such program is estimated to be in excess of $75 million, including costs for environmental control and other related facilities. Fuel supply facilities incidental to such conversion are expected to cost an additional $16.9 million. It is estimated that the earliest this '

program can be completed is January 1,1977. If such adaptation requires time beyond the date for termination of United's ps service, should the FPC ultimately so order, the Company would seek from the FPC an extension of the time for such termination. The Company presently expects, through such an extension or by obtaining alternate sources of fuel or power, to be able to meet its e!ectric service requirements, but cannot at this time be assured of the success of its efforts to do so. The Company has not yet been able to obtain long term contracts for supply of No. 6 or other residual foel oil to supply the existing plants which are being converted to continuous oil burning capability or future plants planned to have such capability.

The Company has been using and expects in the future to make use of alternate sources of power and fuel. The Company has used power from other parts of its system and has severalinter connections with outside utilities. The Company is continuing to explore the purchase of gas from other sources, and has maintained the capability of storing and using No. 2 fuel oil for short periods. The Company has contracted for a limited supply of No. 2 iuel oil irom Exxon Company, U. S. A., through February 15, 1979 and, within the limits of available stotage, is purchasing additional supplies of No. 2 fuel oil as.

available on the market. It has already been necessary at times to burn substantial quantities of No. 2 fuel oil in' conjunction with gas to meet load demand, and the Company presently expects increasing need to burn such oil to meet load demand.

For the period February through April,1974, the Company estimates that it might produce as much as 30% ef its total kilowatt hour demand by burning No. 6 and No. 2 fuel oil, depending primarily on the level of curtailment from United and the availability of gas on an interruptible basis. The Company's ability to obtain such fuel oil in the future dqends in part on allocation and rationing rules recently promulgated by the Federal Energy Offics Pursuant to the Emergency Petroleum Allocation Act of 1973, the Federal Energy Office (FEO) has lasued Petroleum Allocation Regulations providing for allocation of fuel oil. Under such regulations monthly allocations of No. 6 fuel oil will be made to each electric utility including the Company. Each supplier of a utility will be notified of the volume which that supplier must supply each utility for the following month. There is no assurance that the FEO will set a nonthly allocation which meets the current '

requ8 :ements of the Company, or that any such supplier will have sufficient quantities of residual oil to satisfy such allocation. With respect to No. 2 fuel oil (middle distillate), regulations provide that until such time as the FEO undertakes to set allocations of distillate for each utility on an individual basis in the same manner as initially established for residual oil, each utility la entitled to an allocation level equal to 100 percent of its base period volumo which base period volume is the amount used in the equivalent month of 1972. The quantities of No. 2 fuel oil used by the Company during 1972 we;re extremely small.

A special pmvision of the regulations allows utilities which have lost a substantial supply of natural I

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gas as a result of a curtailment plan approved by a federal agency such as the FPC to request a special monthly allotment equivalent on a Btu basis to the quantity of natural gas so denied. However, this right is based upon the utility being classified as a "new customer" within the meaning of the regulations with respect to such amounts. The Company appears to be entitled to this special allocation because of the United curtailment, but will realize the advantage only if it can find a supplier who is willing to

, accept the Company as a new wholesale purchaser or have the FEO assign a supplier with respect to this additional allotment and such new supplier has the fuel oil available to meet ruch allotment.

The Company's wholly-owned subsidiary, Varibus Corporation ("Varibus"), is procuring and supplying a ponion of the fuel oil required by the Company and i.s lavolved in several programs to prospect for and develop fossil fuel resourec2. Such progrruns are speculative in nature and may not produce any new fuel sourco. Activity is in preliminary stages, and to date', only minor reserves have been proved and no production commenced. Through December,1973, Varibus has invested approximately $4 million in such programs, including acquisition of an undivided interest in leases on approximately 400,000 acres. Also, Varibus and two other ir,vestor owned electric utilities are negotiating long-term arrangements intended to assure a sufficient supply of fuel oil from Saudi Arabia. Such arrangements would include construction of refming and transp'ortition facilities. Since negotiations are at a preliminary stage, no assurance can be given that arrangements will be successfully concluded. At the present thne Varibus is committed only to share in certain relatively minor costs of developing such plana.

To date, there has been no reduction or interruption in service to the Company's customers because of fuel supply shortages. However, the ability of the Company to avoid interruptions and curtailments in the future will depend upon the success of its efforts to continue to obtain necessary gas and fuel oil to supplement its curtailed gas supply under tight market conditions and new governmental allocation

- programs.

From December,1970 to December,1973, the average cost of fuel on a system wide basis has risen from 20.43( to 57.97d per million Btu. The alternative sources of power and fuel discussed above are expected to result in higher costs to the Company, which costs cannot now be determined. In addition, the price of gas sold to the Company by United may be increased as a result of the court proceedings referred to above. The Company's rate schedules and contracts, cove (ing at: kilowatt hour sales, contain fuel adjustment provisions to recover the inercased fuel cats.

When the Company converts its equipment to be able to permanently use oli as fuel, such equipment is expected to need more maintenance, repair, and restorative work than as presently operated. In addition, the Company may experience more problems with air pollution in using oil and coal as fuel than it presently has using gas. See " Regulation-Environmenal Matters."

On September 28,1971, the Loulslana Public Service Commission issued an order to United, fol-lowed on September 30,1971, by an order to all pipeline companies operating in Louisiana and subject to its jurisdiction, instituting an investigation and requiring production of extensive infonnation concern-ing gas supply and transmission and ordering no further commingling of intrastate and interstate gas withoJt Commission authorization. The Company is presently unable to anticipate the effect, if any, such proceedings may have on the price or quantity of gas available to it.

Future Generating Plants The Company currently plans to construct four nuclear fueled units with an aggregate capability of approximately 3,740,000 kilowatts. Two of such units will be located on the Mississippi River north of Baton Rouge, Louisiana and two will be located in Newton County, Texas, near Toledo Bend Reser-voir. The Company has entered into contracts relating to the constructing and equipping of such units, and actual construction of the first nuclear fueled unit is expected to commence by mid 1975. The total cost of the four nuclear fueled units (including fuel, allowances for funds used during con-struction, and emironmental control facilities) is presently estimated to be approximately $1.84 billion 7

4

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(of which $26,000,000 had been expended through December 31,1973), with major expenditures beginning in 1974. In December,1973, the Company entered into a contract for the purchase of five -

million pounds of uranium concentrates which is expected to provide the initial core for the four nuclear units through 1983.

Construction and operation of nuclear fueled units are subject to regulation by appropriate govern-

. mental agencbs, including the issuing of pemiits and licenses by the Atomic Energy Commission (AEC).

. In June,1973, the Company applied to the AEC for construction permits for the two nuclear fueled units to be bu!!t in I.cuisiana, and the Company now expects to file in the second quarter of 1974 its application for permits to construct the two nuclear fueled units to be built in Texas. Although the Company expoets to pursue such permits and licenses diligently, there can be no assurances at this time as to when such permits and licenses will be issued. If significant delay is experienced for any reason in the licensing of any such nuclear units, the Company may incur substantial additional costs, including carrying charges, additional escalation of acquisition and construction costs, and costs of accelerating construction ot other fossil or nuclear fueled units to meet projected load prior to the completion dare of the then delayed nuc' ear unit. In December,1973, the AEC issued a policy statement to the effect that the AEC staff will take the position that no applicant for a nuclear license should refuse to grant reasonable access to any proposed nuclear facility to smaller electric utilities, either through joint ownership or through rights to purchase unit blocks of power from the nuclear facility at prices based upon the cost of owning and operating such facility. Since the Cornpany's four nuclear units have been planned solely on the basis of the Company's own anticipated load requirements, should a requirement of access be imposed upon the Company, a portion of the generation from the nuclear units involved would be diverted from the Company's use. If such diversion affected the Company's ability to meet its anticipated load, the Company would have to replace such diverted capacity through additional purchases of power, acceleration of construction of other planned units, or construction of additional unita.

Of the six fossil fueled units planned for const uction in the next ten years, it is presently antici-pated that one 580,000 kilowatt unit will be fueled with gas and have the capability to burn light oil for short periods; one 480,000 kilowatt unit will be fueled with gas and have a continuous oil burning as well as gas burning capabilityt cne 580,000 kilowatt unit will be fueled with oil and have a continuous oil burning as well as gas burning capability; and three units (with a combined capability of 1.620.000 kilowatts) will be fueled with coal. The total cost of the six fossil fueled units (including allowance for funds used during construction and environmental control facilities) is presently estimated to be approximately $735 million (of which $101 million had been expended through December 31,1973).

The Company has contracted for a supply of fifty million tons of coal, which the Company presently expects to be sufficient to fuel the first two coal units for twenty years. ,

The Coinpany's tentative cotatruction program in'the form outlined above is subject to numerous contingencie, including the future availability and cost of fossil fuel, and therefore there can be no assurances as to the timing or actual specifications of generating units which will be built. See "Regu.

lation-Emironmental Matters."

Employees The Company has approximately 3.100 employees. Of these, about 2,300 operating personnel are represented by the International Brotherhood of Electrical Workers under a collective bargaining agreement which continues until July 5,1975. Among the provisions of the agreement is a 59 wage increase affective on July 14,1974.

The Company has been advised of twenty-nine complaints filed with the Equal Employment Oppor-tunity Commisalon (EEOC) alleging discrimination in certain employment, pay, and discharge practices.

These matters are in various preliminary stages and the Company's liabilities, if any, cannot reasonably be estimated.

8 ,

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Electric Rates Efective March 15,1973, the Louisiana Public Service Commission granted the Company an electric rate increase for all of its retail business in Louisiana amounting to approximately $4,400,000 on an animal basis, after income taxes, based on 1971 business.' Increases in retail rates were placed in effect on June 1,1972 in Texas amounting to approximately $3,500,000 on an annual basis, after income taxes,1= sed on 1971 business.

Under effective orders of the FPC,.the Company has been charging increased rates for wholesale service to most rural electric cooperatives, municipal resale systems, and other electric corporations since mid 1973. The Company estimatea that such increase in the base rates will produce approximately

$1,800,000 at the 1973 level of use plus revenues from a fuel adjustment clause which recovers fuel cests i

above a level of 2.1 mills per Kwh. Most collections of such rase increases are subject to refund pend.

ing final action by the FPC. Two wholesale customers have appealed the order of the FPC to the United States Court of Appeals fo'r the District of Columbia, and if such appeals should result in reversal of the FPC orders as to such customers, approximately 74% of the increase in the base rates could be lost pending further FPC action or termination of the existing contracts with such customers.

i  : Requ%ts by the Company for increases which would produce an estimated $1,330,000 on the base rate at the 1973 level of use are pending further action in the FPC, with 'a hearing now set for June 10,1974, and in the same Court of Appeals.

PPC Propc9als On August 6,1971, the FPC in Docket No. R-424 issued a Notice of Proposed Rulemaking con-taining an amendment to the procedure for accounting for interperiod differences in the tax and account-Ing treatment of items such as interest and taxes charged to construction, effective with the year 1971.

If such proposals are adopted in their present forfh, the Company and numerous other electric and gas -

companies similarly situated will be required to establish a oeferred tax reserve at the then current effec-tive Federal income tax rate on the amotmts of interest and taxes capitalized in the construction accounts but deducted for Federal income tax purposes. On July 6,1972, the FPC in Docket No. R-446 issued a Notice of Proposed Rulemaking containing an amendment to procedures for accounting for interperiod differences in the tax and accounting treatment of depreciation, effective with the year 1972, by expand-in'g deferred tax accounting to include the difference between book depreciation and tax depreciation.

The amounts involved in these proposals are substantial and the deduction of the amounts involved in either proposal from net income would cause a material reduction in reported earnings per share for 1972 and subsequent years. On February 11, 1974, the FPC issued orders in these dockets which in general deferred for further studies the major issues of accounting for such interperiod differences.

REGULATION The retail rates of the Company in Texas are subject to the jurisdiction of municipal authorities, and as to all retail rates, including those in unincorporated towns and rural areas, the District Court has authority to declare unlawful an extortionate or unreasonable rate. Texas does not have a state utility regulatory body with jurisdiction over the rates or issuance of securities of the Company.

In Louisiana (in which state the Company is duly qualified to' carry on business as a foreign corporation), a statute provides that the Louisiana Public Service Commission shall have jurisdiction over ,

the retail rates and services of public utility companies. There is some question, in view of certain provi.

sions in the I.ouisiana Constitution giving such jurisdiction to some municipalities, as to whether the aforesaid statute is constitutional as applied to such municipalities. In the opinion of the Company's counsel neither the Louisiana Public Service Commission nor any other governmental authority in the State of Louisiana has any jurisdiction over the issuance of securities by the Company.

9

. ,n - , . , - - - -

b .

c The Company is not subject to the Public Utility Holding Company Act of 1935.-

in certain of its activities, including its wholesale sales of electric energy in interstate commerce and the rates therefor, transmission of electric energy in interstate commerce, and the issuance and sale of the securities covered by this Prospectus, the Company is subject to the jurisdiction of the Federal Power Commission (FPC). At present, the rates of the Company, as a public utility, are exempt from price control under Phase IV of the Federal Economic Stabiliention Program.

The Cities of Lafayette and Plaquemine, Louisiana (the Cities), joined by Dow Chemical Company in several of the proceedings, have intervened in numerous FPC proceedings since 1970 in which the Company has applied for authorisation or approval to conduct its short term financing, to issue various securities, and to enter into interconnection agreements with Cajun (see " Business-Opuations").

In each proceeding the FPC has granted the authority or approval sought by the Company, but in response to the various allegations by the intervenors of anticompetitive conduct by the Companf. In Louisiana, the FPC ordered an investigation of such charges. Such investigation was stayed pending ,

certain appeals taken by the Company, and although such appeals have now been er.hausted, the investiga-tion remains under stay order at this time. On December 27,1973, Dow moved to withdraw from such investigative proceeding, but the FPC has not acted thereon. As to the Cities, see below.

,. On July 24,1973, Cajun and the Cities filed separate actions in United States District Courts in the Eastern District of Louisiana, against the Company and other adjoining investor-owned electric utilities, seeking treble damages and injunctive relief, alleging various anticompetitive activities in Louisiana. .

In conneetloa with the letter of intent entered into with Cajun in December,1973, regarding mutual consideration of additional coordination (see " Business-Operations"), on January 9,1974, Cajun executed a release and covenant not to sue wherein it released the Company from any claims based upon acts or omissions alleged to be anticotypetitive in nature occurring prior to such date and covenanted not to sue or seek any relief before the FPC or AEC based upon any such prior acts or omission's Pursuant  !

, to such release, the civil action by Cajun described'above was dismissed as to the Company on February 22,1974. Further,in connection with the power interconnection agreements reached with Lainyctte and Plaq'uemine (see " Business-Operations"), on January 8,1974, both Cities entered into agreements to release the Company from claims for any such prior acts or omissions, to dismiss as to the Company their civil actions described above, to withdraw their interventions now pending in the various FPC proceedings described above, and to refrain from intervening in AEC proceedings of the Company based on any such prior acts or omissions. Such agreements by the Cities are, however, contingent upon acceptance by the FPC of the respective power interconnection agreements entered into by the Company with them without imposition by the FPC of conditions unacceptable either to the respective City or to the, Company. Such agreements have been filed and are pending before the FPC at this time.

In March,1971, the United States Department of Justice issued Civil Investigative Demands  ;

demanding that the Company and certain other electric utility companies in Louisiana produce certain I documents in the course of an inquiry as to whether such companies may have been violating antitrust laws. While preserving certain objections through motions filed in a U. S. District Court in Louisiana, the Company has attempted to reach agreement with the Department of Justice regarding the scope of such inquiry, and has been voluntarily supplying certain documents demanded by such department. A hearing in such proceeding has resulted in an order requiring the Company to deliver certain documents and upholding the Company's right not to deliver others. No suit has been filed by the government alleging violations of the antitrust laws. Matters principally under investigation appear to include activities involving Cajun and some of such companies. In consultation with the Justice Department and the staff of the AEC relative to the Company's application for permits to construct nuclear generating units, the Company has been unofficially advised that if satisfactory agreements can be reached with the Company regarding competitive issues raised in the antitrust review required with respect to all permit applications, further need for the Justice Department to pursue its investigation or to file suit based upon alleged prior conduct will be unlikely.

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Pursuant to Section 204 of the Federal Power Act, the Company must have FPC approval to snake short term borrowings in excess of 5fo of the sum of (i) the par value of outstanding preferred stock and (ii) the snarket value on the date of issue of other securities outstanding. Under an existing FPC order, the Company has authority to issue short-tenn actes with maturities no later than December 31, 1975 in the form of m.wcial paper or notes to banks up to an aggregate amount of $125 million at any one time outstanding. The Company has requested that such authority not be reduced upon authoriza-tion by the FPC of the New Bonds. The Corapany's bank credit arrangements were increased in February,1974 to a level sufficient to permit short term borrowings of approximately $117 million.

E,nvironmental Matters .

. The application of Federal and State restrictions to protect the environment involves or may involve review, certification or issuance of perimts by various' State or Fedecal authorities (including the Admin-istrator of the Environmental Protection Agency (" EPA") and the Corps of Engineers) with respect to construction of new facilities or modification of existing facilities and with respect to initial or con-tinued operation of facilities. The Company believes that it is in substantial complisnce with :.11 presently

. applicable requirements, and is not involved in pending proceedings and does not know of any threatened proceeding in which the Company is or will be charged with materia! violation of such requirements. ,

However, environmental restrictions, particularly in regard to emissions into the air and water, thermal' mixing zones and water temperature variations, as well as prospective application of the so-called "non-degradation" theory recently involved in the case of Fri v. Sierra Club (formerly captioned Sierra Club

v. RucArishaus), may limit, prevent or substantially increase the cost of operations of the Company's generating installations and may in the future require substantial investments in new equipment at existing installations and cause delay in operation and substantial increases in the cost of proposed new facilities. (See " Fuel Supply" and "F6ture Generating Plants" under " Business".) The Company has no reason to believe that the capital expenditures and operating costs incurred in response to environmental considerations will not be fully allowable for rate-making purposes. However, there -

can be no assurance that this will be the case. Other than the emission control facilities necessary to meet emission regulations applicable to generating units in Louisiana which are being adapted to a continuous oil burning capability (see " Business Fuel Supply"), the. Company is not immediately faced with significant expenditures for environmental control facilities at its present units. However, sub-

- stantial portions of the Company's construction program are expected to be for environmental control facilities.

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GULF STATES UTILITIES COMPANY STATEMENTS OF' INCOME The following statements of income for the years 1969 through 1973 have been examined by Coopers &

Lybrand, independent certi6ed public accountants, whose report appears hereinafter. The state nents should be read in conjunction with the other nnancial statements and related notes included in this Prospectus.

. Years Er.ded December 31 1973 1972 1971 1970 1969 Operating revenues:

Dre'.rie...................................... $262,694JJ9 $218,766,007 $190.584,697 $175,319,093 $164,486,585 S team products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,689.486 14,971,642 13,745,515 13,463,081 13,305,245

. Gas......................................... 7.236,781 6,271.980 5,927.590 5,820.244 5,347.925 Total operating revenues . .. . . . . . . . . 288,621,006 240,009,629 210,257,802 194.602,418 183,139J55 Operating expenses and taxes (Notes G and H):

Fuel and purchased power (Note 2) ........... 87,699J02 52,835.384 40,539,430 37.433,878 36,136,113 Other operationn . . . . . . . . . . . . . . . . . . . . . . . . . . . , . . 32,994,520 30,452,945 29,813,119 29,335,854 26.349,424 Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.515.232 10,575,336 11,390,241 10,839.'286 9,076,923 Depreciation (Note A) . . . . . . . . . . . . . . . . . . . . . . . . 35.783,667 33,606,217 29,905,528 25,801.337 23,275,653 Aenertlantion of property loss . . . . . . . . . . . . . . . . . . 135,613 542,449 Taxes (Note A) (Note 1):

Federal incomes .

Current .............................. 21,477,821 22,488Je9 16,627.586 14,115,388 18,666,680 Defertwl--net ........................ 6,494.404 5J77.741 4,921,769 4,660.452 4,183J22 Investment credit:

. De f erred . . . . . . . . . . . . . . . . . . . . . . . . . 1.361,369 1.800,068 1,916,906 3,569,432 2,438,868 ,

Amortisation of prior years' defer.

ments . . . . . . . . . . . . . . . . . . . . . . . . . . (788,586) ($17.334) (450.669) (386,962) (285,434)

State locame .

Current .............................. 680,004 1.097.039 1 N3,701 1,021.069 662,449 Deterred-net ...................... . 206,024 277,335 74,503 Other than incom ..... ................. 18,227,880 17,21t\957 14 S69,655 13,335,865 12,819,163

' Total operating expenses and taxes 217,652,037 175,610.477 150,651J69 139,861,512 133,866,010 Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. . 70,968,969 64,399,152 59,606,033 54J40,906 49,273,745

• Allowance ioc funds used during construction (Note 4) 10,068.523 BJ24,829 6,896,475 8,846,362 6.049,508 Other income and deductions-net (Note 3) ........ 639,657 (1.245) (30,228) 49.821 (17.97j)

Income be fore interest charges . . . . . . . . . . . . . . . . . . . . . 81,677.f49 13.122J36 66,472.280 63,637.089 !5,305.280 Interest charges:

Interest on long. term debt . . . . . . . . . . . . . . . . . . . . . 28,543.186 26.968J70 24,685,457 21.720,614 15,675,477 Amortisation of premium, discount, and expense on debt (Note A) . . . . . . . . . . . . . . . . . . . . . . . . . . (23,270) (31J73) (38,070) (46,981) (35,511)

Other interest expense . . . . . . . . . . . . . . . . . . . . . . . . . 2,962,037 1,018.103 2.815,655 2,%5,046 2,973,791 Total hterest charges . . . . . . . . . . . . . 31.499.953 27.955.100 27.463,042 24,638,679 20,593,757 Net income (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,177.1 % 45,167.636 39,009,238 38,9?8,410 34J11.523 Preferred dividend requirements . . . . . . . . . . . . . . . . . . . 6J30,000 4 M9.950 4,084,000 4.084,000 4,084,000 Income applicable to common stock . . . . . . . . . . . . . .. . $ 43,447,196 $ 40,517,696 $ 34,925,238 $ 34.914.410 $ 30,627.523 Common dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 28.102,061 $ 26,509.221 MX$[$ $ 22,NU35I W818,48it Average common shares

• outstanding . . . . . . . . . . . . . . . 25,547.Jett 25,547,328 ' 23,860,001 23,430W 22,147,323

~

Earnmgs per average common share . . . . . . . . . . . . . . . . $110 $1.59 $1.46 $1.49 $1.38 Dividends per common share . . . . . . . . . . . . . . . . . . . . . . $1.10 $1.LM $1.N $ .98 $ ,94 Ratio of Earnings to Fixed Charges (Note 5) ..... 3.48 3.66 3.25 3.86 J46 _

Pro forma Ratio of Earnings to Fixed Charges

( N ote 5 ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.66

( . ) Denotes red 6gure.

The notes to the financial statements and the notes on the following pages are integral pms of this statement.

12 5

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weenmurumsmm1mimaww <. 2,,;au.m s.a.nvu n awsu.w v ww ww.u. mr.uwv.x.n QULF STATES UTILITIES COMPANY NOTES TO STATEMENTS OF INCO'ME (1) Federal income tax provisions for 1973 are less than the amount obtair.ed by using the 48%

statutory rate primarily due to the following: -

33 S tatutory rate .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48.0 %

Decrease:

Excess of allowable tax depreciation and amortiration over book amounts (9.4)

Capitalized costs on books, expennd for income taxes:

Taxes, pensions and thrif t plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.6)

Allowance for funds used during construction . . . . . . . . . . . . . . . . . . . . (6.1) ,

Investment tax credits . . . . . . . . . . . . s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.7)

Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2.0) 0 Actual rat e . . . . ; . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.2 %

==

(2) See " Fuel Supply" for increases in cost of " Fuel and purchased power" during 1973.

(3) As of January 1,1973, in compliance with Federal Power Commission Order No. 469, the Company adopted the equity method of accounting for its investments in Varibus Corporation, a wholly-owned subsidiary. The cumulative effect of the change to January 1,1973 of $143,706 has been charged to retained eamings. Since the effect of the change on years prior to 1973 is not material, the statements of income for such prior years have not been restated. The undistributed earnings for 1973 of $140,937 is included in Other Income and Deductions.

(4) During the period January 1,196? to December 31,1973, the Company changed interest rates employed for the accrual for the Allowance for Funds Used During Construction ("ADC") as follows:

Effective in 1973-89 to 7H% per annum Effective in 1971-7H% to 8% per annum Effective in 1970-6H% to 7M% per annum These changes decreased net income $671,000 in 1973 and increased net income for 1971 and 1970 by.

$431,000 and $1,180,000, respectively.

Construction funds used are assumed to have been derived from capital sources in the same pro-portions as the average capitalization ratios for the respective pars. On this basis the ADC attributable to funds provided by common equity amounted to 12.9%,13.7%,12.1%.15.1%, and 12.2% of Income Available for Common Stock for the years 1973,1972,1971,1970, and 1%9, respectively. The amount of ADC varied from year to year depending principally upon the level of construction in progress and the cost of capital, thereby affecting the relationship between such allowance and net income.

(5) The ratio of earnings to fixed charges, i.e., the number of times fixed charges are cove, red by earnings, is determined by using as earnings the net income before income taxes, deferred income taxes, investment tax credits and fixed charges. Fixed charges consist of all interest charges, amortization of premium, discount, and expense on debt and one-third of all rentals charged to income.

The pro forma ratio of earnings to fixed charges for the twelve months ending December 31,1973.

is 2.66 giving erTect to the annual interest on the New Bonds (at an assumed interest rate of 8H9): on

$50,000,000 of 8H9 Bonds issued in August,1973, the annualinterest on $50,000,000'short-term notes 13 N r-W

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t GULF STATES UTILITIES COMPANY NOTES TO THE STATEMENTE OF INCOME -(Continued) expected to be outstandirig after application of the proceeds from the sale of the New Bonds, and to the elimination of interent charges during such period on all short term notes replaced by securities issued during the period. A difference of %% in the actual interest rate from the assumed rate on the New Bonds would change the ratio of earnings to fixed charges by approximately .0048.

(6) See "BusineswElectric Rates" for rate increases placed ih effect on June 1,1972, March 15, 1973 and August 13, 1973.

The Statements of income renects the results of past operations and is not intended as any repre-sentation as to results of operatione for any future period. Future operations will necessarily be affected by varixs and diverse factors and developments including possible changes in electric rates, business activity, tax'es, labor contracts, fuel costs, environmental expenditures, the, effects of various electricity conservation programs., and other matters, the nature and effect of which cannot now be determined.

Operating revenues, income applicable to common stock, and earnings per average common share for the twelve months ended February 28, 1974, amounted to $300,095,000, $43,455,000 and $1.70 respectively. These amounts are unaudited, but, in the opinion of the Company, reflect all adjustments,

. consisting only of normal accruals, necessary for a fair statement thereof.

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M dHiMEXiK4%M%Ti%%MMWraw.c7mvmamwgcw.m GULF STATES UTILITIES COMPANY OPERATING STATISTICS AND* CERTAIN DETAILS OF REVENUES Years Ended December St.

1973 1972 1971 1970 1969 ELECMIC AND StaAM PBoDUC'fst E. Number of customers: 319,325 349.292 340.3(o 330.416 313.661 R esidential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,251 38,907 41.986 41.144 40.171 Commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,115 5,320 4,466 4.396 I ndustrial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.006 1,433 1,391 1,320 1,324 1,271 Other..................................

389,010 377.227 364,366 358,235 Total ......................... 398.317 CArAatWTT. IAAD ANo Rasrevas (kilowatts) 3,625,000 3.045,000 Generating capability at time of peak land (1) 4,564,000 , 4,155,000 4,155.000 Capability purchased from Sam Rayburn and Toledo Bend Dams arul Cajun Electric Coop.

168.000 2M,000 98,000 98.000 98.000 erative. Inc. without reserves . . . .. . . . . . . . . .

4.359,000 4.253,000 3J23.000 3,143.000 Total capability at time of penk load ......... 4J32.000 3.602J00 3,285,000 3,039,400 2.850,600 Peak load including interruptible load (1) .... 3Jo0.300 Plus: Power sales with reserves to other 100rin0 100.000 50.000 utility systems . . . . . . . . . . . . . . . . . . . . . . .

Less t 30,600 37,600 Interruptible load at time of peak load 28,800 39,800 Purchased power with reserves includ.

215.000 215,00) 215,000 215.000 Ing TVA diversity interchange .... 215.000 1.oad for which reserves are provided ....... 3,546.500 3.347,900 3,139,400 2.886.800 2.685.600 1,011.100 I,113.600 836,200 457,400 Capability in excess of load . .. .. .... .. . . .. . . 1.185.500 Len: Scheduled maintenance at time of peak .

176.000 246,000 load ................ . .................

, R eserve capability . . . . . . . . . . . . . . . . . 1.185.500 1.011,100 937,000 590.200 457.400 33 30 30 20 17 Percent reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Maximum demand steam sold-M pounds per 3,389 3.300 3,193 3,371 3.143 hour0.00166 days <br />0.0397 hours <br />2.364418e-4 weeks <br />5.44115e-5 months <br /> .....................................

Output-net-kwhrs (thousands):

21,890.507 21,281,658 20.643.077 19,290.514 17.337.296 Generated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Purchased and interchanged . . . . . . . . . . . . 514.575 '(990.059) (1,060,239) (249.426) 917.99? ,

22,808,4W 21.801.233 19,653.018 18,230,275 17,087.870 T otat . . . . . . . . . . . . . . . . . . . . . . . . . .

Sales of electric energy--kilowatt.bours (thou-sands) :

3J30,837 3.54355 3.132.933 2,860.259 2.665.542 R esidential . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Commercial .............. ..... ..... 2,579. % 1 2,380.471 2.114.689 1.923 R79 1.782.460 I ndust rial . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.0ht.860 10.415.086 9,371.114 8.698.045 8.098.285 Steam products . . . . . . . . . . . . . . . . . . . . . . . . . 2,880.362 2.602.921 2.420.023 2.3M.767 2,364,660 1.519,578 ' 1JI9.249 1.482,560 1,338,427 1,222,307 Ot her sales . . . . . . . . . . . . . . . . . . . . . . . . . . . .

20.6M,982 18.522,219 17.205.377 16,133,2 5 Total Sales . . . . . . . . . . . . . . . . . . . . 21J12.298 Steam sales--millions of pounds . . . . . . . . . . . . 25,723 24.543 23,M3 24.162 24.394 Electric line.-pole miles:

3.667 3,641 3,589 3,287 3.085 Transmission (69.000 volts and over) .... 14,655 14,303 Distribution (34,500 volts and under) .... 15,337 15,019 14.015 Underground construction--miles of route 671 575 489 399 349 Averare annual use per customer:

Residential:

Kilowatt hours . . . . . . . . . . . . . . . . . . . 10.819 10.571 9.M5 9.044 8.602 Revenue per kilowatt. hour-cents ... 2.45 2.23 2.19 2.22 2.24 Commercial:

Kilowatt-hours . . . . . . . . . . . . . . . . . . . . 62,120 SR.562 $3.275 49.291 46.395 Revenue per kilowatt. hour-cents .... 2.16 1.96 1.93 1.95 1.90 Industrial:

Kilowatt hours . . . . . . . . . . . . . . . . . . . . . 1.830.542 1,740.058 1.M9.440 1,980.R80 1.801.220 Revenue per kilowatt. hour- cents .... .90 . .75 J3 J3 .73 (1) Excludes load served by and capability of the 76,000 kilowatt steam-electric installation rnain.

tained and ooerated by the Industrial Chemicals Division of Allied Chemical Corporation.

15

_- - - _ --------_ _~---m QULF STATES UTILITIES COMPANY '

OPERATING STATISTICS AND CERTAIN DETAILS OF REVENU1:8-(Continued) i ,

Years Ended December 31.

1973 1972 1971 1970 1969 gas Number of cuousners . . . . . . . . . . . . . . . . . . . . . . 71,854 70,597 60,134 , 67,322 66,694 Ompu6 -M cu. ft. of natural gas purchased .. 9,502,531 9,060,473 8J88,881 9,607/ 94 9,291,090 Sales-M ca. f t. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,114,942 8,441,612 8,585.412 9,209,457 8,982,181 ,

Mashman daily output--M cu. f t. . . . . . . . . . . . 97,984 83,284 85.237 97.483 82,135 Maine-miles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,019 979 949 937 917 OrsaAnne Rarswuss: -

Electric anr1 steem producto-Sales of slecstic men 8Fa R = M 1 ......................... $ 91,355,021 $ 79,021,925 $ 6BJ27.248 $ 63,463,435 4 $9,820J44 t'

J.1 ........................ 55,658,876 46,599,660 40,898J86 37.501,242 35,435,809 Industrial . . . . . . . . . . . . . . . . . . . . . . . . . . 99,231,146 77.941.110 68,322,257 63,393,594 59,% 7,304

- Steam products . . . . . . . . . . . . . . . . . . . . . 15J77,138 12,073.611 10,829,047 10,547,052 10.510,620 Other............................'.. 14,229,267 13,132,964 11,223,230 10,321.501 9,460,839

, Total sales of electric energy .... 276,251,448 228J69,270 300,000,568 185,226,824 174,595.316 Other electric and steam products revenue 3,175,407 3,011.430 2,374,949 1.609,196 1,227,423 Steam sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,957.370 1,956,949 1.954,695 1,946,154 1.969,091 Tosa! electric and steam products 281,384,225 233J37,649 204,330,212 188.782,174 177,791,830 Geo-Sales of gas: .

Residential . . . . . . . . . . . . . . . . . . . . . . . . . 4,979,121 4,382,289 4,253,967 4,332,508 ; 3,930,360 f*a=== cal and ladustrial . . . . . .. . . . 2,198,738 1,801J35 1,634.856 1,487,226 1.416,666 Total sales of gas . . . . . . . . . . .. . . 7.177,859 6,184,024 5,888,823 5,819,734 5,347,026 Other gas revarae . . . . . . . . . . . . . . . . . . . . . . ~ 58,922 87.956 38J67 510 899 Total gas . . . . . . . . . . . . . . . . . . . . . . 7,236J81 6.271.900 5,927,590 -~ 5,820,244 5,347.925 -

Tota:, Orsuanxo Rawsuves .................... $288,621,006 $240,009.629 $210,257,802 $194,602,418 $183,139J55 Euctaic Ano StzAm Pacocers OrsaAnwo Rave-wuse-% or TorAL . . . . . . . . . . . . . . . . . . . . . . . .. . 97.5 97,4 97.2 97.0 97.1 CAS OrsaAfino Revssvas-% or total ........ 2.5 2.6 2.8 3.0 2.9 e

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DESCRIPTION OF NEW BONDS General The New Bonds are to be issued under and secured by the Cornpany's Indenture of Mortgage dated September 1,1926, as supplemented and modified by supplemental indentures thereto, including a Thirty-second Supplemental Indenture to be dated as of the dale of the New Bonds (said Indenture of Mortgage as so supplemented and modified being hereinafter called the " Indenture"), undet which Manufacturers Hanover Trust Company is Trustee (hereinafter under this caption called the " Trustee"). A copy of the Indenture is filed with the Registration Statement as an Exhibit. The bonds of all series which may be issued under the Indenture are hereinafter under this caption referred to as the " Bonds". .

The statements herein concerning the New Bonds and certain provisions of the Indenture are merely an outline and do not purport to be complete. They are qualified in their entirety by reference to the Indenture for complete statements and for the definitions of various terms and phrases, including those in italics. Whenever particular Articles, Sections and other subdivisions are referred to, such Articles, Sections and other subdivisions refer to the Seventh Supplemental Indenture, dated as of May 1,1946, unless otherwise indicated.

The Ne'v Bonds are to be dated as of the first day of the month in which they are issued ("the date of the New Bonds"), are to mature thirty years from su'ch date, and will bear interest at the rate set forth in the title thereof, payable semiannually beginning six months from the date of the New Bonds to bondholders of record on the tenth day prior to the interest payment date. Principal and interest are to be ,

payable at the corporate trust office of Manufacturers Hanover Trust Company, Trustee, in New York, New York.

The New Bonds will be fully registered bonds without coupons. New Bonds will be exchangeable for other New Bonds in equal aggregate principal amounts. While the Indenture provides that the Company may make a charge of up to $2 per bond in connection with exchanges and transfers,it is not its present intention to do so with regard to the New Bonds.

Sinking and Irnprovement Fund The sinking and improvement fund payments, beginning April 30, 1975, and continuing to and including April 30,2003, are 1.2% per year of the greatest amount of New Bonds outstanding prior to March 15th of su:h year less certain New Bonds retired (if $1,000,000 or more thereof have been retired). Payments may be made in cash', principal amount of New Bonds, or by credit of New Donds previously redeemed under certain circumstances, or available net additions or certain pross property additions taken in each case at 60% of the amount thereof. Cash in the sinking itmd shall be applied to the redemption of New Bonds at the applicable special redemption prices. Similar, but not identical, provisions are made with regard to Bonds of other series outstanding. As long as any New Bonds are outstanding, Bonds retired for the various sinking and improvement funds cannot be used as the basis for the issue of . additional Bonds, the release of properties, or the withdrawal of cash from the trust estate.

(Section 4.03. Also Section 1.03 of the Thirty second Supplemental Indenture.)

Maintenance and Replacement Fund The Company will pay or deliver to the Trus.ee on or before April 1 in each year, an amount in cash, Bonds, or refundable indebtedness equal to the t mount of the minimum protision for detreciation (15%

of operating revenues less the cost of gas and electSty purchased for resale and certain other deductions, after deducting from such 15% the amount expended for maintenance and repairs) for the preceding calendar year, less certain credits for property additions, debt retirements and waivers of the right to authentication of Bonds. The Company may at any time substitute such cash or credits, one for another, on similar bases. The Company may also have any of such cash applied to the redemption or purchase of Bonds or rcfundable indebicdness. As long as any New Bonds are cutstanding, no Bonds or refundable indebecdness so redeemed or purchased may be used as the basis for the issue of additional Bonds, the release cf prop (rties or the withdrawal of cash from the trust estate unless and until requisite cash or 17

)

i

.s .m , . . . . . . . .

i propeny additions shall have been substituted therefor. (Section 4.04. Also Section 1.04 of the Thirty-second Supplemental Indenture.)

Security In the opinion of counsel for the Company, the New Bonds will be secured, equally and ratably with all other Bonds issued and outstanding under the Indenture, by a valid and direct first mortgage on all the principal properties of the Company (except as stated below), subject only to the prior tien of the Tntstee .

for its compensation, expenses and liability, to such easements, leases, contracts, covenants, liens and other encumbrances and defects as are customarily encountered in comparable utility systems ar.d are not of a character to interfere materially with the use and operation of such properties, current taxes and other liens or encumbrances which are of a minor nature and which do not secure the payment of money, and .

to permitted entambrontes on the Company's bondable property, franchises and permits.

• * ~

There are excepted from the lien of the Indenture bills, notes, accounts receivable, etc., and cash, contracts, shares of stock, bonds, and notes, other evidences of indebtedness and other securities, and

'other choses in action; merchandise held for sale; materials and supplies; fuel; aircraft, automobiles and .

trucks, etc.; oil, gas, and other minerals underlying mongaged lands; office furniture, equipment and supplies; and certain other properties. (Granting Clauses of the Indenture.)

The Indenture permits the Company to acquire bondable property subject to prior tiens. The Indenture provides for subjection to the lien thereof of all property which the Company may acquire after the date of the Indenture except propeny of the character expressly excepted and subject to certain limitations in cases of merger and consolidations. (Sections 9.06 and 9.12 and Article Fourteen.)

Property Subject to Prior Liens Property subject to any prior lien cannot constitute property additions for use as a basis for action or credit under the Indenture unless such lien is established as a refundable lien and (1) the principal amount of the outstanding indebtedness secured by such prior lien will not exceed 60% of the amount of the propeny subject thereto, (2) the total principal amount of prior lien indebitdness to be outstanding will not exceed 15% of the total principal amount of Bonds then' outstanding and Bonds which the Company would then be entitled to have authenticated and delivered, and (3) the principal amount of prior lien indebtedrass being established es refundable will not exceed 60% of atoilable net additions (Section 2.01).

Issuance of Additional Bonds Additional Bonds ranking equally and ratably with the New Bonds may be issued under the Indenture, subject to the limitation that the aggregate principal amount of Bonds at any one time outstanding shall not exceed $1,000,000,000. Such additional Bonds may be authenticated and delivered

. (1) to an aggregate principal amount not exceeding 60% of otsilable net additions (Section 5.04), (2) against the deposit of cash with the Trustee (Section 5.05), and (3) against the retirement of Bonds and/or refundable indebirdats: (Section 5.06). Cash deposited with the Trustee pursuant to (2) above may be withdrawn to the extent of 60% of etellable net additions or 100% of available retirements of Bonds, or refundable indebtedness (Sections 8.02 and 8.03). The New Bonds will be issued against atoilable net additions.

At December 31, 1973 the Company had approximately $224,250,000 of ateilable att additions, entitling it to issue $134,550,000 principal amount of Bonds on the basis of atoilable net additions and none on the basis of retirement of Bonds or refundable indebtedness. ,

As a condition to the authentication and delivery of additional Bonds, except against retirema.nts of Bonds or refundable indebtedness in cenain cases, net earnings atoilable for interest for twelve consecu-tive months out of the preceding fifteen months must have been at least twice the aggregate amount of the annual interest charges upon the outstanding Bonds, the Bonds then applied for, and any indebtedness te be outstanding secured by prior tiens (Section 1.09).

18

mmwxetmuavmunsmm.memscw:mocaauguwm 1 Release and Substitution of Property

• Pmperties subject to the lien of the Indenture may be released against (1) the deposit of cash or (within certain limits) purchase money obligations and, in certain cases, governmental or municipal obligations (Section 7.04); (2) the deposit of the proceeds under a prior lien; (3) otollable net sdditions; and (4) available retirements of Bonds or refundable indebtedness (Section 7.06). No prior notice to bondholders is required in connection with releases but subsequent reports are required in certain cases (Section 11.04). In the event of the sale, taking or release of substantially all of the bondable property of the Company not subject to any non refundable prior tien, the proceeds must be applied to the purchase ,

or redemption of Bonds or refundable indebtedness (Section 8.01).

. Covenant as to Dividenda, Etc.

So long as any of the New Bonds remain outstanding, the Company wil! not declare any dividend (other than dividends payable in Common Stock of the Company) on any shares of its Common Stock, unless such dividend is declared to be payable within 60 days after'the date of declaration thereof, and further, it will not (a) declare any such dividend or make any other distribution on any shares of its Common Stock, or (b) purchase or otherwise retire for a consideration (other thah in exchange for or from the proceeds of other shares of capital stock of the Company) any shares of its Common Stock, if the aggregate amount so declared, distributed or expended af ter December 31,1945, would exceed the aggregate of the net income of the Company available for dividends on its Common Stock accumulated after December 31,1945, to and including a date not earlier than the end of the second calendar month, preceding the date of declaration in the case of a dividend and the date of payment in any other case, plus the sum of $378,000. (Section 9.10. Also Section 1.07 of the Thirty-second Supplemental Indenture.) .

Trustee The Indenture provides that if the Trustee acquires a conflicting interest, as defined, it must eliminate such conflict or resign, and in certain cases it is requested to share the benefit of payments received as a creditor after the beginning of the fourth month prior to a default. { Sections 15.13 and 15.14.) The Company maintains deposit accounts with and from time to time borrows funds from the Trustee. The holders of a majority of the aggregate principal amount of the Bonds may require the Trustee to take certain action under the Indenture, including the enforcement of 'he tien thereof. Before acting, among other conditions, the Trustee may require indemnification satisfactory to it and its counsel (Section 12.20).

Defaulta An event of default is defined as: default in payment of principai; default for 30 days in payment of interest; default for 60 days in satisfaction of sinking, improvement, maintenance, or replacement fund obligations; default under the covenants, conditions and agreements on the part of the Company in the Indenture for 90 days after notice by the Trustee or the holders of 15% of the aggregate principal amount of the outstanding Bonds; and certain events in bankruptcy, insolvency, receivership or reorgani-zation proceedings (Section 12A1). The Company is required to deliver to the Trustee each year an officers' certificate stating whether or not, to the best of the knowledge of the signers, any default exists (Section 9.17).

Modification or Amendment of Indenture The Indenture and the rights and obligations of the Company and the holders of the Bonds and coupons may be modified with the consent of the holders of not less than 75% in principal amount of the outstanding Bonds, including not less than 60% of each series affected, but,no such modification shall (1) extend the maturity of any of the Bonds or reduce the rate or extend the time of payment of interest thereon or reduce the amount of principal thereof, or reduce any premium payable on the redemption thereof, without the consent of the holder of each Bond affected; or (2) permit the creation of any tien, not otherwise pertnitted, prior to or on a parity with the lien of the Indenture, without the consent of the ,

19 l

- - - - - ^_ - - , - m_-

- _ , _ .. n . . m 4 ., . . . . -

r .

holders of all of the Dends then outstanding; or (3) reduce the percentage of holders of Bonds required to approve any such supplemental indenture, svithout the consent of the holders of all of the Bonds thea outstanding (Sections 18.02 18.06).

Redemption Provisions The New Bonds will be redeemable at the option of the Company as a whole at any time or in part from time to time upon thirty days' notice, at the applicable redemptian price set forth below, with interest accrued to the redemption date; provided that no New Bonds shall be redeemed at the Regular Redemption Prices prior to 1darch 1,1979 with borrowed funds, or in anticipation of funds to be borrowed, having an effective interest cost (calculated in accordance with generally r.ccepted financing practices) of less than 8.625% per annum. The Regular Redemption Prices apply to c!! redemptions except in the following cases to which the Special Redemption Prices are applicable: (a) redemptions for the Sinking and Improvement Fund for the New Bonds, (b) redemptions by application of cash in the Maintenance and Replacement Fund or from certain other moneys held under the Indenture (consisting chiefly of release, condemnation award, and insurance moneys), and (c) redemptions within 12 months after the acquisition of a majority of the Company's Common Stock by a governmental or cooperative entity. If at the time notice of redemption is given (except sinking fund redemptions) the redemption moneys are not on deposit with the Trustee, the redemption may be made subject to receipt by the Trustee of such redemption moneys prior to the date designated for redemption and the notice thereof shall be of no effect unless such moneys are so received. (Article Ten. Also Section 1.02 of the Thirty second Supplemental Indenture.)

See also " Release and Substin: tion of Property".

Redettption Prices of New Bonds u n.4 4 '"* T U!**d?"

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" int' il"Jir WTO '

• Fa? Wir Wir 1974 ............. 108.63 100.06 1989............. 104.17 100.05 1975............. 108.33 100.06 1990............. 103.87 100.05 1976............. 108.04 100.06 1991............. 103.57 100.04 1977............. 107.74 100.06 1992............, 103.28 100.04 1978............. 107.44 100.06 1993............. 102.98 100.04 1979.... ........ 107.14 100.06 1994............. 102.68 100.04 1980...... ...... 106.85 , 100.06 1995............. 102.38 100.04 1981............. 106.55 100.0'5 1996............. 102.09 100.03 1982.......,..... 106.25 100.05 1997............. 101.79 ' 100.03 1983 ............. 105.95 100.05 1998............. 101.49 100.03 1984............. 105.66 100.05 1999............. 101.19 100.02 1985............. 105.36 100.05 2000............. 100.90 100.02 1986............. 105h6 100.05 2001............. 100.60 100.02 1987 ............. 104.76 100.05 2002............. 100.30 100.01 1988............. 104.47 100.05 2003............. 100.00 100.00 es

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-mmvwawue:enacvmrmm :< ,rx. wrr.nwenu wv.r:s w swu-;.:nmwaw,uu a..uum REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To the Shareholders of -

Gtn.r Starts Urrt.mts COMPANY:

We have examined the balance sheet of Gtn.P STArr.s Urrutras COMPANY as of December 31,1973, and the related statements of income (page 12), retained earnings and changes in financial position for the years,1%9 through 1973. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.

In our opinion, the financial statements referred to above present fairly the financial position of ,

Gulf States Utilities Company at December 31,1973, and the results of its operations and changes in financial position for the years 1969 through 1973, in conformity with genertly accepted accounting principles applied on a consistent basis. .

COOPERS & LYBRAND Houston, Texas February 6,1974 e

4 4

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GULF STATE 8' UTILITIES COMPANY BALANCE SHEET ASSETS Deeember 31,1973 Utility and other plant (including intangibles) at original cost:

Electric utility plant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,154.380,238 Steam products plant . . . ; . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,770,531 Gas utility plant . . . . . . . . . . . . . . t . . . . . . . . . . . . . . . . . . . . . . 19.488.263 $1,225,639,032 Less: Accumulated provision for depreciation (Note A) ... 292,977,235 Total plant less accumulated provision for depreciation 933,661,797 Construction work in progress, at cost . . . . . . . . .' . . . . . . . . . . . . . . 154,046,224

. Total utility and other plant . . .' . . . . . . . . . . . . . 1.087,708.021 Other property and investmentst .

Investment in and advances to subsidiary company at equity

( N ote A ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,937,376 Other property and investments, at cost . . . . . . . . . . . . . . . . . . 1,020,125 Total other property and investments . . . . . . . . 21,9:7,501 Current assets' I Cash ( Note B ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,801,388 Special deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 355,134 .

Accounts receivable:

Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,922,504 Others........................................... 2,077,078 30,999,582 Less: Accumulated provision for uncollectibles . . . . . . . . 411,531 30,588,051 l Materials and supplies (including construction materials) at average cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,8S6,551 .

Fu el stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.035,107 Fuel prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 359,172 Other prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,388,209 Total current assets . . . . . . . . . . . . . . . . . . . . . . . . 51.413,612 Deferred debits: .

Unamortized debt discount and expense (Note A) . . . . . . . . 1,275,030 Other................................................ 1,341,072 Total deferred debits . .. . . . . . . . . . . . . . . . . . . . 2,616,102 i

$1,163,695,236  !

The accompanying notes are an integral part of the financial statements.

22 1

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GULF STATES UTILITIES COMPANY BA1.ANCE SHEET .

LIABILITIES Docember St.1973 ,

Capitalization:

Capital stock and retained earnir.gs:

• C- stock. without par value (Note C) . . . . . . . . . . $ 187,579/25 Retained earnings (Note D) . . . . . . . . . . . . . . . . . . . . . . . . 154,555,840 $ 342,135,565 Pref erred stock (Note C) . . . . . . . . . . . . . . . . . . . . . . . . . . , 117,500,000 Premium on preferred stock (Note C) . . . . . . . . . . . . . . . 655,236 Total capital stock and retained earnings . . . . . . . 460,290,801 Long-term debt (Note E): '

First mortgage bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 519,000,000 Debentu res . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,125.000 529,125,000 Total capitalisation . . . . . . . . . . . . . . . . . . . . . . . . 989,415,801 Current liabilities:

Debentures, due within one year, less amount, acquired for sinking f und purposes (Note E) . . . . . . . . . . . . . . . . . . . . . 304,000 ,

Notes payable (unsecured):

Bank ( Note B ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,962,500 Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,482,422 42,444,922 Account s payable, trade . . . . . . . . . . . . . . . . . . . .'. . . . . . . . . . . . 18,981,683 Customers' deposits . . . . . . . . . . . . . .'. . . . . . . . . . . . . . . . . . . . . .- 2,746,178 Tax es accrued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,117,274 Interest accrued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,530,485 Payroll accrued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 785,526 Other................................................ 3,977,531 Total current liabilities . . . . . . . . . . . . . . . . . . . . . 83,887,599 Deferred credits: 1 Unamortised premium on debt (Note A) . . . . . . . . . . . . . . . . . 1,093,773 Investment tax credit (Note A) . . . . . . . . . . . . . . . . . . . . . . . . 19,689,033 Other............................................... 292,095 Total' deferred credits . . . . . . . . . . . . . . . . . . . . . 21,074,901 Operating reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,770,954 Contributions in aid of construction . . . . . . . . . . . . . . . . . . . . . . . . . 3,829,331 Accumulated deferred income taxes (Note A) . . . . . . . . . . . . . . . . 63,716, 650 Commitments (Note F)

$1.163,695,236 The accompanying notes are an integral part of the fmancial statements.

23 i

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wrrrm v rr.Tmrmrrr-mTwus:mm ,. c u u.m ws; w.n.mm..uvma GULF STATES UTILITIES COMPANY

p. ' . STATEMENTS OF RETAINED EARNINGS 9 .

Years Ended December 31 1973 1972 1971 1970 1969 Balance,' iesinning of period, as previ.

$139,354.411 $125,405,946 $115,489,929 $103,366,168 $ ,93,557,133 ously reported . . . . . . . . . . . . . . . . . . . . . . .

Less: Canulative erect of change to equity method of accounting for in.

vestments (See . Note (3) to State.

ments of Income) . . . . . . . . . . . . . . . . . 143,706 nal ,=, beginning of period, as restated 139,210.705 125,405.M6 115,489.929 103,366,168 93,557.133

. Additions:

50,177,1 % 45.167.636 39,009,238 38,998,410 34.711.523 Net income . . . . . . . . . . . . a . . . . . . . . . . . .

189,387.901 170,573,582 154,499,167 142,364,578 128,268.656 Deductions Capital stock expense . . . . . . . . . . . . . . . . 50,268 Cash dividends:

Preferred stock (at annual rates in.

dicated below):

528,000 528,000 . 528,000 528,000 528,000

$4.40 dividend . . . . . . . . . . . . . . . . . .

225.000 225,000 225,000 225,000 225,000 M50 dividend . . . . . . . . . . . . . . . . . .

264,000 2M.000 264,000 2M,00? 2M,000

$4.40 dividend-1949 series.......

294,000 294,000 294,000 294,tWO 2M,000

$4.20 dividend . . . . . . . . . . . . . . . . . .

222,000 222,n00 222,000 222,000 222,000 K44 dividend . . . . . . . . . . . . . . . . . .

J75.000 : 375,000 375,000 375,000 375,000

$5.00 dividend . . . . . . . . . . . . . . . . . .

508.000 508,000 508,000 508,000 508.000

$5.08 dividend . . . . . . . . . . . . . . . . . .

452,000 452,000 452,000 452,000 452,000

$4.52 dividend . . . . . . . . . . . . . . . . . .

1,216,000 1,216,000 - 1,216,000 1,216,000 1,216,000

$6.08 dividend . . . . . . . . . . . . . . . . . .

. $7.56 dividend . . . . . . . . . . . . . . . . . . 2,646,000 565,950 28,102,061 26,569,221 25,009,224 22,740,381 20,818,488 Common stock . . . . . . . . . . . . . . . . . . . . . . .

34,832,061 31.219.171 29,093,221 26,874,649 24,902,488 Balance, end of period (Note D) ....... $154,555,MO $139,354,411 $125,405.946 $115,489,929 $103,366,168 The accompanying notes are an integral part of the financial statements.

4 24

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GULF S'NTf.4 WtiLIT!M COMPANY STATEMENTS OF CMAmmE IN FINANCIAL POSITION 1.

Years Ended December 31, 1973 1972 1971- 1970 1969 Funds from . Operations:

N et i ncome ( a) . . . . . . . . . . . . . . . . . . . . . . . .

$ 50,177,1% $ 45.167,636 $ 39,009738 $ 38,998,410 $ 34J11,523 Items not afecting worlang capital Deprad=*Ian ......................... 35J83,667 33.606,217 29,905,528 25,801,337 23,275,653 Amortisatwo of toes on sale of property 135,613 542,449 Deferred Federal income tam--net ..... 6,4W,404 5J77J41 4,921J69 4.660,452 4,183J22 Deferred State income tax--not ....... 206,024 277,335 74,503 Inve.seinant tax credit-not . . . . . . . . . . . . 572J83 1.282J34 1,466,237 3.182,470 2,153.434 Common stock equity component of allowance ior funds used during con.

struction . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,590,044) (5,536,995) (4,208.574) (5,283,048) (3J40,457) ,

Funds f resa operations '. . . . . . . . . . . . 87,644,030 80,574,668 71.168J01 67.495,234 61,126,324 Financing:

First mortgage bonds . . . . . . . . . . . . . . . . . . . 50,000,000 35.000.000 60,000,000 50,000,000 Preferred stock . . . . . . . . . . . . . . . . . . . . . . . . 35,054,985 Common stock . . . . . . . . . . . . . . . . . . . . . . . . . 40,280,000 28,217.000 '

Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . (30J96,362) 60,255,710 (29,000,688) (17,220,445) 26,311,188 Increase in other-net (b) . . . . . . . . . . . . . . . . 9.102J85 8,365,M2 5,328,919 6,607.187 4,245J51 Total funds provided . . . . . . . . . . . . $115,950,453 $193,251,305 $122.776,932 $145.098,976 $141,683,263 Funds for:

Gross plant additions ( a) . . . . . . . . . . . . . . . $107,233,919 $111,314,414 $ 91.994,125 $110,596,364 $123,327,953 Dividends ............................. 34,832,061 31.219,171 29,093,221 26,824,381 24,902,488 Petirement of long.tenn debt . . . . . . . . . . . . 375,000 375,000 375,000 375,000 375,000 Investment in and advances to subsidiary company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.354,827 2,482.549 Tanporary cash investments . . . . . . . . . . . . (47,900,000) 47.900,000 112,895,807 193,291.134 121.462,346 137,795,745 148,605,441 Increase (decrease) in working capital as detailed below . . . . . . . . . . . . . . . . . . . . . . . . . . 3,054,646 - (39.829) 1,314,586 7,303,231 (6.922,178)

Total funds used . . . . . . . . . . . . . . . . . $115.950.453 $193,251,305 $122J76,932 $145,098,976 $1'41,683,263 Increase (decrease) in working capital (excluding notes payable):

Accounts receivable . . . . . . . . . . . . . . . . . . $ 6,144,319 $ 5,305,391 $ (630,462) $ 2,565,096 $ 2,129,606 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . 1.096,784 (610.558) 116,436 599,810 (142,194)

Fuel stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.797,117 (678,347) 1.529,693 518 (3,786)

Fuel prepayments . . . . . . . . . . . . . . . . . . . (32,652) 391,824 Other prepayments . . . . . . . . . . . . . . . . . . . (88,433) (775.339) 85JO9 169,488 404,593 Accounts payable . . . . . . . . . . . . . . . . . . . . . (7,715,558) (2,032,621) 1,286,864 (1,795,644) (1,400,864)

Accrued taxes . . . . . . . . . . . . . . . . . . . . . . . (799,994) (472,639) 1.074,371 SJ30,833 (4J47,320)

Accrued interest . . . . . . . . . . . . . . . . . . . . . (1J69.518) (20,835) (46P,670) (1.312,419) (1,298.579)

Other.-net . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,577,419) (1.146J05) (1,679,355) 1,345,549 (1,863.634)

$ 3,054,646 $ (39,829) $ 1.314.586 $ 7,303,231 $ (6,922,178)

(a)' Includes allowance for funds used during construction. See Note 4 to Statements of Income.

(b) Includes common stock equity component of allowance for funds used during construction.

The accompanying notes are an integral part of the financial statements.

25 i i

= - _ - . - . - - _ _ _ _ - - . ___

- - . TNr"J""~T'" 7W""TV'= rf%p w= y 17 g i Ty 7y 4 g; =y y narr=",N7y g.T n wg h -uAu yL- 7 p ,3 igq gy GULF STA,TES UTILITIES COMPANY NOTES TO FINANCIAL STATEMENTS (A) The major accounting policies of Gulf Sta+es Utilities Company are outlined below. These policies are presented to assist the reader in evaluating the financial statements and other data presented

. in this prospectus.

The Accounting records of the Company an: maintained in accordance with the Unifonn System of Accounts prescribed by the Federal Power Commission and the Louisiana Public Service Commission.

Utility and other plant is stated at original cost when first dedicated to public service and the amounts shown (o not purport to represent reproduction costs or current value. Costs of repairs and minor replacements are charged to expense as incurred. The recorded cost of depreciable utility plant retired and cost of removal, less salvage, are charged to accumulated provision for depreciation.

The capitalized cost of utility and other plant includes an allowance

• for the cost of funds used during

. construction.

The provision for depreciation is computed using the s:raight-line method at rates which will amortire the unrecovered cost of depreciable plant over the estimated remaining service life. The pro-visions for depreciation for the years 1969 through 1973 were equivalent to average percentages of depreciable plant as follows: Electric 3.2%, Steam Products 3.8% and Gas 2.9%.

The Company's investment in Varibus Corporation, a wholly-owned subsidiary, is accounted for on the equity basis. See Note (3) to Statements of Income, No specific provision has been made for amortization of intangibles. '

For income tax purposes, the Company has adopted accelerated methods of computing depreciation for eligible property. Pursuant to regulatory commission order, amounts equal to the reductions in income taxes arising irom the use of accelerated depreciation rather than straight-line tax depreciation are charged to income and concurrently credited tp accumulated deferred income taxes. Upon expiration

. - of the periods of tax deferment, the amounts accumulated are used to offset the provision for income taxes in amounts equivalent to the related increases in such taxes.

Amounts equal to the reductions in Federal income taxes resulting from investment tax credits are charged to income and concurrently credited to deferred credits. These credits are being amortized over the estimated usefullife of the related properties. ,

Unamortized premium, discount and expense on bonds and debentures are being amortized ratably over the lives of the respective issues.

(D) At December 31, 1975 the Company had agreements with several banks which terminate Decemixr 31,1974, providing for borrowing up to $51,080,000 at the prime commercial lending rate in effect from time to time without payment of a commitment fee. 'The Company maintains nonsegregated working cash balances which generally average, over the life of the agreements, approximately 10% of the line of credit. .

The weighted average interest rate of the aggregate short term borrowings at December 31,1973, was 9.89. For th'e 12 months ended December 31,1973, the maximum aggregate short-term borrowings mttstanding at any one time (notes payable to banks and to holders of commercial paper) were

$73,300,000. The average monthly short-term borrowings during the period approximated $36,700,000 and the average interest cost was approximately 7.1%. Average, monthly short term borrowings represent the sum of the ending monthly borrowings outstanding divided by 12 and the average interest rate is detenuined by dividing accrued interest during the year by this average.

. (C) Common Stock, without par value; authorized 40,000,000 shares; outstanding, 25,547,323 shares. The Company in November,1971, sold 2,000,000 additional shares for an aggregate of S-10.280,000; and in February,1970, sold 1,400,000 additional shares for an aggregate of $28,217,000.

26 ,

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• GULF STATES UTILITIES COMPANY' NOTES TO FINANCIAL STATEMENTS--(Continued)

Preferred Stock, $100 par, cumulative; authorized 3,000,000 shares; outstanding 1,175,000 shares as follows:

120,000 shares $4.40 dividend, entitled upon redemption to $108 per share .... $ 12,000,000 ,

50,000 shares $4.50 dividend, entitled upon redemption to $105 per share ... . 5,000,000 60,000 shares $4.40 dividend,1949 series, vntitled upon redemption to $103 per share ................................................... - 6,000,000 70,000 shares $4.20 dividend, entitled upon redemption to $102.818 per share . . 7,000,000 50,000 shares $4.44 dividend, entitled upon redemption to $103.75 per share . . 5,000,000 75,000 shares $5,00 dividend, entitled upon redemption to $104.25 per share .. 7,500,000 100,000 shares $5.08 dividend, entitled upon redemption to $104.63 per share . . 10,000,000 100,000 shares $4.52 dividend, entitled upon redemption to $103.57 per share .. 10,000,000 200,000 shares $6.08 dividend. entitled upon redemption to $105.34 per share prior to July 1,1977, and thereaf ter to $103.34 per share . . . . . . . . . 20,000,000 350,000 share: $7.56 dividend, entitled upon redemption to $108.36 per share prior to September 1,1977, then until September 1,1982 to $106.80 per share, then until September 1,1987 to $103.80 per share, and

• thereaf ter to $101.80 per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,000,000

$117,500,000 In September,1972, the Company sold 350,000 additional shares of $7.56 Dividend Preferred Stock for an aggregate of $35,054,985.

The redemption and liquidation prices of all preferred stock issues, in the aggregate, were

$124,407,510 at December 31,1973.

Premium on Preferred Stock incieased $54,985 in September,1972, as a result of the sale of 350,000 shares of $7.56 Dividend Preferred Stock, $100 par value.

No shares are reserved for oHicers and employees or for options, warrants, conversions and other rights.

(D) Certain limitations on the payment of cash dividends on common stock are contained in the Company's Articles of Incorporation and indentures, ti le most restrictive presently being that contained in the Articles of Incorporation which provides generally that no cash dividends shall be paid except out of earnings accumulated after May 31,1958, plus $28,262,988, provided, however, that such dividends are limited to 75% of "available net income" if the " common stock equity" (excluding premium on preferred stock) falls below 25% of " total capitalization" (excluding premium on preferred stock).

Under this provision, retained earnings unrestricted as to cash dividends on common stock amounted to $112,320,591 at December 31,1973.

(E) First mortgage bonds comprise': .

2H% Series, due May 1,1976 (excluding $1,000,000 in treasury) ... $ 27,000,000 3 % Series, due April 1,1978 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000,000 2% % Series, due December 1,1979 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000,000 2% % Series, due June 1,1980 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,000,000 3H% Series, due November 1,1981 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000,000 3% % Series, due December 1,1982 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000,000 3H% Series, due December 1,1983 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000,000 4% % Series, due September 1,1986 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000,000 4% % Series, due October 1,1987 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,000,000 27

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-E - ' NOTES TO FINANCIAL STATEMENTS-(Continued) l 4 - % Series, due May 1, 1988 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 20,000,000 4% % Series, due January 1,1989 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 10,000,000 5% % Series A, due December 1,1989 . . . . . . . . . . . . . . . . . . . . . . . . . . 16,000,000 4H % Series, due July 1, 1990 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,000,000

- 4H % Series, due May 1, 1992 . . . . . . . . . . . . . . . . .'. . . . . . . . . . . . . . . 17,000,000 :

5 - % Series, duc January 1,1996 . . . . . . . . . . s. . . . . . . . . . . . . . . . . . . 20,000,000 l >

SH % Series, due February 1,1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,000,000 6H% . Series, due February 1,*1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ,25,000,000

. 6H % Series A, due October 1,1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000,000

, 7% % Series, due March 1, 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000,000 -

8H % Series A, due September 1,1999 . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000,000 8H % Series, due February 1, 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000,000 7H % Series A, due December 1, 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000,000 7H % Series, due ' November 1, 2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,000,000 8H 9 Series, due August 1, 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000,000

$519,000,000 The Company's mortgage comains sinking fund provisions which require generally that the Company

• ' make semi. annual cash deposits with the Trustee equivalent to H of 1% of the greatest aggregate principal amount of the 1976 Series Bonds authenticated and delivered and annual cash deposits equal to 1.2% of the greatest aggregate principal amount of bonds subsequently authenticated and_ delivered; or in lieu thereof in each instance, to apply property additions or reacquired bonds to that purpose. The Company has satisfied the mortgage requirements in past years by certifying to the Trustee "available net additions" and plans to continue such practice.

The debentures bear interest at 4H% and are due October 1,1981. The trust indenture requires annual redemption for sinking fund purposes of $375,000 principal amount through 1980.

Jggregate sinking fund requirements of bonds and debentures outstanding, for each of the five years subsequent to December 31,1973, are as follows:

1974 ...'.................................. $6,488,000 1975..................................... 6,559,000-1976 ..................................... 6,279,000 1977..................................'... 6,279,000 1978 ..................................... . 6,135,000 ~

The Company's 2H% Series of First Mortgage Bonds amounting to $28,000,000 are due May 1, t

' 1976 and the Company's 3% Series of First Mortgage Bonds amounting to $12,000,000 are due April 1, 1978.

(F) The construction program involves expenditures of approximately $174,000,000 in 1974. See

" Construction Program". In that connection, the Company has incurred substantial commitments for  !

equipment.

See " Business-Future Generating Plants" for a description of recent commitments to purchase coal and uranium concentrates.

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e GULF STATES UTILITIES COMPANY NOTES TO FINANCIAL STATEMENTS--(Continued) .

(G) The Company has a contributory pension plan covering all employees between the ages of 30 and 65 years who have had one year of continuous service. The Company's policy is to fund pension cost accrued. Since 1969 the aggregate cost actuarial method of funding the plan has been used. Under

- this method, unfunded past service cost is not separately identified.

Cost of the plan charged to income and to construction and other accounts for the years 1969-1973' are as follows:

Years Ended December 31.

1973 1972 1971 1970 1969

• Charged to income . . . . . . . . . . . . . . . . . . . . . . . . . . $1.146,831 $1.255,441 $1.277,185 $1,205,059 $1,019,906 Charged to construction and other' accounts ... . 487,396 531,0M + 539,733 469,060 - MB,897 Total : . . . . . . . . . . . . . . . . . . . . . . $1,634.227 $1.786,505 $1,816,918 $1,674.119 $1,468,803

- t (H) Suret.tuzwTAar Paorir Awo Loss InronuArrow:

The amounts of maintenance, repairs and depreciation, other than those shown in the statements of income, and the amounts of royalties, advertising costs, and research and development costs have been omitted as each is less than one percent of total revenue and sales. Taxes, other than federal and state income taxes, are set forth by classes as follows:

Years Ended December 31, 1973 1972 1971 1970 1969 Real estate and property . . . . . . . . . . . . . . . . . . $ 8,696,041 $ 9,030,733 $ 8.548,265 $ 7,877,807 $ 7,678,805 G ross receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,537,941 4,311,855 3,908,805 3,524.568 3.299,145 Payroll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.281,760 972,098 872,905 708,979 717,462 Street rental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 836.775 743;150 695,043 644,464 591.111 Other................................... 1,875.354- 2,159,121 844.637 580,047 532,640

$16,227,880 $17,216.957 $12.819,15

• Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . $14,869,655 $13,335.865 Taxes, other than income, were also charged to various other accounts (stores and tansportation expense clearing, construe.

tion, etc.) in the amounts of . . . . . . . . . . . $ 1.620.442 $ 808.622 ' $ 658,843 $ 614,838 $ 487,740 Rents charged to income * . . . . . . . . . . . . . . . . . $ 1.764.255, $ 1,803.787 $ 1,774,609 $ 1,7M,774 $ 1.398,044

• The Company's lease agreements at December 31,1973 generally do not contain options to extend the lease terms or to purchase the leased properties. The present value, as of Dece $er 31,1973, of minimum lease commitments is less than five percent of long. term debt and shareholders' equity. The efect on net income if all financing leases were to be capitalized is less than three percent of the average net income for the most recent three years and therefore is not significant.

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.- 4 PURCHASERS OF THE NEW BONDS The Purchasers named below have severally agreed to purchase from the Company, in accordance with the l - Bond Purchase Contract, the principal amounts of New Bonds set forth below opposite their respective names.

Preseneal Addnes Anneens My The First Boston Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Exchange Place. New York. N. Y.10005 $10.000.000 Salomon B rothers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . One New York Plaza, New' York N. Y.10004 10,950,000 Blyth Eastman ,Dillon & Co. Incorporated . . . . . . . . . . . . . . . . Or'e Chase Manhattan Plaza. New York. N. Y.10005 4.000.000 10.000.000 Dillon Read & Co. Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 William Street. New York. N. Y.10005 H ayden S tone Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 767 Fitth Avenue. New York, N. Y.10022 s. 3.500.000 ,

14 Wall Street, New York, N. Y.10005 3,500,000

, W. E. H ut ton & Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SoGen. Swiss International Corporation . . . . . . . . . . . . . . . . . . . 100 Wall Street New York, N. Y.10005 a

• 3.500.000 '

• 3.500.000 Thomson & McKinnon Auchincloss Kohlmeyer Inc. ...... Two Broadway. New York. N. Y 10004 Wood Struthers & Winthrop Inc. . . . . . . . . . . . . . . . . . . . . . . . . 20 Exchange Place, New York N. Y.10005 3.500.000 1.!00,0r.0 A. E. Ames & Co. Incorporated . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Wall Street. New York, N. Y.10005 1.500,000 Nomura Securities International. Inc . . . . . . . . . . . . . . . . . . . . 100 Wall Street. New York N. Y.10005 1,500,000 Wood Gundy Incorporated . . . . . . . . . . . . . . . . . . .. . . . . . . . . 100 Wall Street. New York, N. Y.'10005 Stone & Youngberg . . . . . . . . . . . . . . . . . . . . . . . . . , . . . . . s . . One California Street, San Francisco. California 94111 750.000 Bcettcher & Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 828 Seventeenth Street, Denver. Colorado 80202 500.000 Howard, Well, Labouisse. Friedrichs incorporated ........ 211 Carormlelet Street. New Orleans, Louisiana 70130 500.000 McCormick & Co., Incorporated . . . . . . . . . . . . . . . . . . . . . . . . Two First National Plaza. Chicago, Illinois 60670 500.000 500,000 S uplee. M osley Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1700 Market Street, Philadelphia, Pennsylvania 19103

. Schar H & J ones. I nc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 330 One Shell Square. New Orleans t.ouisiana 70152 ' 300.000-Total . . , .,. . ... . . $60.000.000 The Company has agreed to indemnify the several Purchasers against certain liabilities, including certain liabilities under the Securities Act of 1933. .

The Company has been advised by the Purchasers through their Representatives, The First Boston Corporation, Salomon Brothers, Blyth Eastman Dillon & Co. Incorporated and Dillon. Read & Co. Inc., as follows:

The Purchasers propose to make a public offering of the New Bonds at the public offering price set forth on the cover page of the Prospectus. The Purchasers may allow to certain dealers a concession from the public offering price of 34 of 1% of the principal amount. The Purchasers may allow and such dealers may reallow a discount of jf of ITc to certain other dealers. After the initial public offering, the public offering price and concessions may be' changed.

The Purchasers are obligated to purchase all of the New Bonds if any are purchased. However, under certain circumstances involving defaults by Purchasers, less than all of the New Bonds may be purchased.

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LEGAL OPINIONS ,

The legality of the New Bonds will be passed on by Messrs. Orgain, Bell & Tucker, Beaumont,

~

Texas, counsel for the Company and by Messrs. Beckman & Bogue, Five Hanover Square, New York,

- N. Y., counsel for the Purchasers. All matters pertaining to conformity to Texas laws, franchises, titles to property and the lien of the Indenture in Texas will be passed on only by Messrs. Orgain, Bell

& Tucker. All rnatters pertaining to conformity to Louisiana laws, to franchises, titles'to prope-ty and the' lien of the Indenture in Louisiana cast of the Atchafalaya River will be passed on only by Messrs.

Taylor, Porter, Brooks & Phillips, Baton Rouge, Louisiana. All matters pertaining to franchises, titles to property and the lien of the Indenture in Louisiana west of the Atchafalaya River will be passed on only by Messrs. Stockwell, St. Dizier, Sievert & Viccellio, Lake Charics, Louisiana. Partners and associates of Messrs. Orgain,- Bell & Tucker, Messrs. Taylor, Porter, Brooks & Phillips and Messrs.

Stockwell, St. Dizier,' Sievert & Viccellio beneficially own, respectively 12,913 shares of Common Stock and 3 shares of Preferred Stock of the Company; 1,200 shares of Common Stock and 100 shares of Preferred Stock of the Company; and 300 shares of Common Stock of the Company. -

EXPERTS The financial statements which appear in the Prospectus and in the Registration Statement have

.been examined by Coopers & Lybrand, independent certified public accountants, to the extent indicated by their report. Such financial statements have been included in reliance upon such report of said firm and upon the authority of said firrq as experts in accounting and auditing.

The statements of legal conclusions made herein under " Regulation" and " Description of New Bonds" have,been prepared or reviewed (a) as to all matters, except those governed by the laws of Louisiana, by Messrs. Orgain, Bell & Tucker, (b) as to all matters under " Security" under " Description of New Bonds" insofar as the same relate to properties of the Company in Louisiana west .of the Atchafalaya River, by Messrs. Stockwell, St. Dizier, Sievert & Viccellio, and (c) as to all other matters governed by the laws of Louisiana, by_ Messrs. Taylor, Porter, Brooks & Phillips, all counsel for the Company. All such statements are, as to matters of law, made on the authority of said respective counsel as experts.

GULF STATES UTILITIES COMPANY, By F. R. SattTu, Chairman of the Board of Director.t B

31 i

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1

\ -

-' Gulf States

. Utilities Company-TAILLE OF CONTENTS -

Pene $60,000,000 Introductory Statement . 2 Use of Proceeds- 2 ,

Construction Program . 2 '

Business .

3 First Mortgage Bonds Regulation' . o as4% Series due 2004

. Statements of income : 12 Operating Statistics and Certain Details of Revenues . 15 Description of New Bonds '. 17 Report of Independent Certified Public Accountants 21 March 20,1974 Financial Statements 22 Purchasers of the New Bonds . 30 '

Legal Opinions 31 Experts . 31 No dealer, salesman or any other person has been authorized to give any information of to make any representations, other than those contained in thle Proepectus, in connection with the oNet contained herein and, if given or made, such information or representations must not be relied upon as having been authorized. This Prospectus does not constitute an oNet to soll, or a solicitation of an oNet to buy, the .

securities oNored hereby in any state to any person to whom it is unlawful to make such an oNet or solici.

.tation. Neither the delivery of this Prospectus not any sale made hereunder shall, under any circumstances, create an implication that information herein is correct as of any time subsequent to its date.

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s.# N d S _O $N .h p b g p g'E $)$ g },ge -

~ ~ Z:ft C 1 T ."." T " . ". C.5. 2. C .'.C. E T 7 12371 NOTICES -

e.) '

I . made stacable &t trant.n ission or subtrans. (d) 'We parues to such reserve sharing compensate App!;es,r.t at app!! cable f.!st mission to:tage by of.e enti:y to a' totter, arranget. cut shall provide such amounts of rates. Any entity 41ss) requestta.; s'.'ch vara.

. (c) "Ent;ty" means pctson, a pntste or operatu:g rtrerve capacity as anay be ade. mission arranternen'.s that; gtte raastr.at;e

• publie corpcratic,n. a municipality. a ccoper. quate to atoid the trnposition of unreason. antance r.oGce c.f its (theirl schegu:e and j- atne, an a sociation, a jett.t stoca assoe: anon at,le dema.tds on the other in meeting the requirements. (The foregottg syphes to any of busitess trust ositing, operating or pro. normal contingencies of operating its system. er.titydes) to which Applicant r.ny to tr.ur.

posing to own or cperate equipment er fse11 Jtowever in no circumrances shr.H the om attes for the generatton, transmissen or alw ersting reserve requirements escoed the ha. cent acted in the future as sci; as t.use to

',s,

}- tribution of electricity: Prottoed. That, ex. stalled reserve requirement.

" cept'for munt:spauttes er rural electric co.

which it is now antereocnected.)

(b) Appuesnt thau include in its pir.nr.irg

< te) Interconnections wit! not be ilmtted and construction program sute:ent trans.

operattte,

• entity" is restricted to those . to low tottages when higher voltages are antaston capacity as requnted for the trattac.

whteb the lawsareoforthe winstate be pubhc in shleh utmtles underinstausble the entity the areafrom whereAppucant's instaued laterconnection is faccatles desired. ti+ns referred to in subparagraph tot of this  !

) **tnaaets of will transact business or under when the proposed arrangement la found to paragrapht Provided. Tt.at any ent:tytlesi 3 Ge Federal Power Act, and are or wul be be technically and economically feasible. in the Southes, stern Machigan area give Ap. .

i prsvidl.lg electric service under a contract of Control and telemetering facuttles than be plicant su?.icient adtatee not!re as scay te  !

A rate schedule on fde wat*.h and subject to the provided as recuired for safe and prudentquirements necessaryfrom to accolnmodate its (their) a t.tactional nr.d re.

technt:11 I

regulation of a state regulatory commission operation of the interconnected systems.

(f) Interconnection and coordination standpotnt and that such enti'Tttet) TCy ii or the 74deral Power Commission. i

} compensate Appiteant for its c.mst. Appiteent l 4

(d) ** Cost" means any cperating and main. agreements shall not embody any restrlettte shall not be required to construct tratsmas. 1

• - tenance any ownership expenses involved costs which tog 1ther with are reasonably al. provis10cs pertaining to inter. system esordt. anon faculues which win be of to atmcn. i

'locable to the transaction consistent with natton. Oood industry practice as developed strable present er future ber.eSt to Ap;ucant. '

in the area from time to time (tf non. 6. Appucant will seu pot /er at appbcable industry practices. No value shall be included restrictive) trill sattafy this provision. Aled rates for Maale to any entitplest in the for loss of retenues from sale of power at

} 3. Applicant will sell bult power from new Southeastern M1chtsan area now engsfitg in

,; ' 16holesale or retail by one party to a customer generating capacity planned or stader con. or proposing to enfa5% in retail distribut:rn i which another party might otherwise Cost shall include a reasonable return on serve, struction at sta- costs to or purchase bulk of electrio power.

Appilcant's investment. The sale of a portion power from any other entityines) in the 'I. 'Ite toregoing conditions thau be tm.

5 of the espacity of a generating unit than be Southeastern hinchigan ares engaging in or* piemonted in a manner cons. stent with the

- upon the tasis of a rate that wiu recover to proposing to engage in generstion of electrle provisions of the Federal Power Act and

power when such transecuena would serve auchigan Pubue Act lot of !!*CC as thereat

et the seller coets andthe pro rataand operaung partmaintenance of the Amedes* to reduce the overtu costs of new bulk power annended and n!! ratee, charTes or pracuces 4, . penses of the un18: Protuted. That. in cir* supply for itself or for the other party (lee)- in conneetten therewith are to be rdject to j cumstances in which Applicant and one or to the transaction /This refers spectacany to .the approtal of regulatory agesc;es having the opportunity to coordinate in the plan. Jurisdiction over them.

1-more entitles in the Soutbeastern M!chigan utng of new generatton, traneannaston and re-

}

area take an undivided interest in a unit in lated fae:3ities. This proelston shau not be fee. Sonstruction costa and operation and construed to require Applicaalt to purchase or M Wed WMN amj . 3 i4 mainter.ance expenses shall be paid pro rata, seu butt poweritt it anda such purchase or

2. (a) Appucant shnu interconnect with, sale infessible or its costa in connection with @ocket h SMs4A* SM594 j, and coordinate reserves by means of the sale such purchase or sale would exceed Its bene-and purchase of emergency and,or sclaaduled Sta therefro r., GULF STATES UTIUTIES CO.

maintenance bult power sith, any . entity j .

(les) in the Southeanern Machican area en* 4. Applicant and any succesor in tstle Notice of Receipt of Attorney Generr.I's gaging in or proposing to engage in electric shall c*er an opportunttr u paructpawin Advice and Time for Tinng of Fet tions the Oreenwood Nuclear Units 3 and 3 to any To Intement on Antitrust futte"$

YA$c*an*t a cats in co$nYcNore 1 enuty in southeasurn auchigan which slau j and a: low the other partyttesi full access to g I" ** ** t The Commission has received, pursu.

y the tenetts of rece te ecordinanc:a " ,g b

, m in pp or Qne ,30 ant to section 105c. of the Atomic Energy c (t) Emergency service and/or scheduled participate in any nuclear generating unit (s) Act of 1H4 as arnend2d a letter of od. >

1 maintenance service to be provided by each which they or etther ef tbem anay oonstruct. Vice from the Attorney Ge :fral of the g party shan be furnished to the fuunt ex* outs and operate in tne State of Mnchigan. United States. dated March 25, 1974, a

' uveraur or fototly, during the term of the copy of which is attached as Appendix A.

d[sfred by e y ne pp can instant ucenu or any enan a nnewat Any person whose interest may be af.

.f* g each partyttes) shan provide to the other emergency servlee and or scheduled main

• y"hchhan a*res by N '*

• Uby fected by this proceeding fn 7. pursuant t tenance serttee if and whe" available from ownership anterest in such unst(s), or by a to 12/114 of the Cornmt::alon's rules of ste own generatton and froaa generation of contractual right to purchase a reasonabio practice.10 CFR Part 2. file a setition fer ethers to the eurent it can do so without tm. portion of the output of such unstte) at the leave to intervene and reque9t a hearing cost thereof if the entitypes) ao elects, such on the antitrust aspects of the applica.

$er elec c"si te it r notice of snuncon to parucspace in fute tion. Petitions for leave to intervene ar.d

,, ""8 "**8'"" APPu** atla *Titlat 4 commitments'at (4) . Applica and the other partyttes) to PMo'r' to"the placeme"nt of of% for majcr requests !ct heating shall be filed 1y t , a terarre sharing arrangement shst from '9ut men n ua $ May 6.1974, either (1) by dellVery to

'

• 3 . tru "N we',f the AEC Pubile Document Roem at 1717

'$ reurrYeYbr"1Y3 o$dYor pIovQ as,p gmay be required for delivery of such power H 8treet NW.. Washington. D.C., or (2)

' under contractus1 arrangements as necessary to such entitypu) on a baals that wm ful 7 by mail or telegram addressed to the to maintain tu total a reserve marstn sum. compensate Appucant for its cost.  :

• . cient to provide adequate reliabsury of power 8. (a) Applicant shan fact 11 tate the es. Secretary. U.S. Atomic Energ7 Commis.  !

i

' supply to the interconnected sTstems of the change of bula power by transmission over alon. Washington. D.C. 20345. Attn.,

parties.

with other If Applicant h!achigan plans its reserve companies, margin two the reserves its tran-aiton factittles or more entitles between in the or amont Chief..Pubile Proceedings Branch.

Southeastern i' totntly estabiter.e4 hereunder sha11 be on the Micnisan area with which it is intercon. Por the Atomic Energy Commission.

sen,e taste. traless otherwtco agrud upon. nected; and between any euch enutroes) minimum reserves shall be calcu:ated as a and any entityttes) engestne in butt pouv' AnaAMOf 3P.AmWf.

• reentage of estin.ated peak load respons1 supply outside the Southeastern &fichigan Chief

• Ofice of Antifruf & In.

'i tuty. No party to the arrangement shall be area between whose factittles Applicant's demnity, Directorcic of U.

i required to maintain greater rearrtes than .transmtssten Itnes and other transmissice censing.

a* the percente;e of its estimated peak load Itnee would form a continuous electrical Appasrets A responsibilit; which results from the afore. path Proddtd. That (1) permission to utt.

}' e said calculat ton, provnded that, t! the re*erve Itco such other transmisalon Itnes has been f.!Ancss 25.2014.

g requ!Nments of Applicant are increased over obtahwd: (2) Prorfeed. That the re!!ablltty In regard: PN* W *aM **r'41 W the amount Apphesnt s ou'd be required to of App llcant's bu!2 power system te not --Out! States t?utsuts Gm.puy Nu::

?

mr.intMn withcut such interconnection. then thereby impaired and (3) the arrangements ket Nos. 80-4!8A and $4-t*frA Depart.

the other partytast shan te requitec to reasonably can to accommodated from a ment of Jusuce r;;e f 0-4t&-48.

carry or p?cvide for astu tthttri reserves the funcuonal and technical standpoint. Such You have requested our adT!ce pt.suant full amcunt in ht:owatts of such increase. transtmwon small be on terms that fully to the provisions of section 1C3 c! t e Ato:n;o

. BUI TfDERAL f.ICl5f tt. VOL. 29, NO. 67--r21 DAY. APRIL 3,1974

\Y/e Y ,"h W Y Y ^ ^

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., NOTICES 12075 2ed gnergy Act of 1954, as amended, in regard the retail ettetric power market in toutent. trust bearing be held on the tror* Ant app 11 88* to the above-cited appucation. with over flte-stnha of that business. Au the cauon and should etable the Depr'. ment.

4I3 Applicant. The app!! cant is a large elec. cooperstite systems tegetbet and an of the

• ben it recettes the Blue Flits spplue. ten.

1T+ trical ut111ty pric:1psur engaged in the muutcipsi systems together have less iban % nd?tse the Cornm1ston that no ar.titrust LD7 business of generat;tg electrient enerry and one twelfth of such business.respectively, bearing wit! be necessary coneeming the L4i distribut!ag and sening such energy at retatt Competition in Lerustana, here has been application.

i to' in Southeast Teams and South Central Lou:31 tigorous competitlen among electric utuittes Conclusion. If the poucy cor:cuteents ans, an approximately :3.tM square tr.t;e area in uutstana Untt! 1970. Loutstana law pro- contained in the attachment to App 1taant's MDS u.th an est:rnated population c,! 221.000.The babited utuittes from taking over customers h1 arch 20.1974 letter stere to be t=peeed by ens

• sppucant sens e:ectric er.efgy at retatt to already being serted by another uttuty LSA the Co:nmission as conditions to the pet.

788* 292 coc munattes in this territory. It se!!s R8 43:123, but the law did not apply to new mit applied for in the instant doci:et. as we

this for resale electric energy to 14n mt ntelpal customers. See 1outstant Power and Light bereby recommend. an anutrust bearing on ms) systems, sta rural electric cooperatives, and . Co. v. Charpentter." 163 So. 2d 614 (La. Ct. thls application would appear unnecessary.

AP* one other utnity. Applicant La seeking a 11 App, 1964). In 19'J0 1AA R8 45123 was

! be cense U butid and operate two generating amended to allc,w (except in certain cases) . hear 20.19% .

ib units 9 West Feliciana Partsh. Loutstana, a ututty preference in serving new cus. Re Oulf States Utuntes Company. River aleil *A be known se River Bend Station. Units tomers within 300 feet of its entsting lines. Send Nuclear Power Plant Unita 1 and 2:

SIIF 1 and 2. Each of these units wt!! bate a State large new loads (particularly industritt Application for Licetise to Construct Nuclar

'p"^* ut generating capacity of approximately 940 loads) would. in many 1catances, not be 10 Uttutauon Pacillstes: A.EC Dockets Ecs f,0-megawatts. River Eend Statton Unit i le cated within 300 feet of an existing distribu. 454 and 50-484.

03* echeduled to be la service in February 1980; tion Itne, competition continues to esist. We appreciate the opportunity to discuss 184* Unit 2 in September 1981. Further competition exista for service to sub. vartous mattere involved in the rettew by abt) Strwefure of the &cfrie Potter supply urban areas which are annexed by expand. your section of the Department of Justtee the Market in Louisiens. Applicant is one of the ing municipallties. The existing tuppiter relating to the pendtag !! cense a$putation E 13 gee major privately owned compantes sup. within the city, whether muntclpal system of this Oompany (Applicant) before the tion p!yttg power in bulk and at retatt in Loul. ce franchised utility, thereupon has the op. Atomic Energy Comtatssion for the construe.

stana; the other four are: Loutstana Power portunity to compete for new loads with the Ston of nuclear utt11astion faculties, as ref.

im* and Light Company (LP&L): Central Loutst. previous supp11er in the tret, erenced above.

the ans Eectrie Company (C1.ECO)1 Southwest. Competittre Conduct of the Applicant.*fbts We understand that your review of this 188 ern Doctric Power Corr.yany (SWEPCO), is 623erent from most of the other esses in appitention has raised certain questiens un.

D wbtch operates in Art:ansas and Texas as which the Department rf Justtee has ren. dar the antitrust laws relattn'g to the butt s veu as in a sman area in the northeast dered antitrust advice in that prior to recent. power supply poltetes of the Appitcanu Wh1N

%ott corner of Loulstana: and New Ortests Pubiac ing the Commtssion's request for adttee the it is the position of Applicant that Sta &c.

?!"4 Service, Inc. (NOPSI) an s.11ste of LP&L Department had been conducting an anti. Strities, and in parucular its butt power

_. wb!ch serves metropolitan New Orlests. trust investigation of the Appiteant's con. supply policies, should not concern any such

-}' , Applicant's 1970 system peak was 3.C39 duct. That intestigation was concerned with questions, the Appucant submits 2:s lever mw With a little more than one half of its basically the same antitrust allegations setting forth certain statemen'*.s regarding business in toutstant. LP&L's 1970 peak load against the Company as those set forth in tt.e such pottenes.

was 1872 mw. CLECO's 1970 system peak was dectaien of the United States Cou/t of Ap. In order to obviate the posv.bt!!ty of a

$75 mw. SWEPCO's 1970 system peat was peals for the District of Columbts Circuit in hearing on possible antitrust tssues 13 the 1393 mw two.Efths of which represented " City of Lafayette v. Securttles as Exchange above referenced proceeding, the Applicant SPS loads in Loutstana, with the remainder in Commtaston." 4H F. 2d 941 (C.A. D.C.1972). sets forth in the appendiz to this let'.ar g* g Texas and Arkansas. NOPS!'s 1970 peak was in essence a number of municipal systems in pollctea which it vul maintata during the 1164tnw. Loutstana bad alleged that over a number of parted of this lleente, subject to tbe under.

There are a number of munletpal electric years and through a variety of methods Ap. standings stated herein.It is understcod that ist utilities in toutstana. Some of these gmrate plicant, together with the other major prt. this statemert of polley satist.ee ste Depstt.

ggy a!! of a major part of their power require. vately owned ututtles in Lcunstana, at. ment's antitrust questions and w;1 enable ad. n ents; others purchase electric power in bult tempted to frustrate the developmtat of a the Department to render a no hear'.ng asti.

g

-I r.nd distribute it tt retall. The ger.ersting power pool among the municipals and others. trust adtice letter. In the event the Atomic municipals' 1970 ;onds totated approximately he allegations of concerted antloompetitive Energy Commission in any event enould in.

4. & SF) mw.: their combined 1970 generating action related exclusively to activities in stitute a hearing on ant: trust issues or at.

1 A. copsetty was 900 3r.w. 1.cunstana.

tempt to impose dt$erent. Inconsstent or gf. There are 13 cooperat!Te utultles operating It .s unnecessary to deta11 here the alle. additional conditions. App 3 cant oms not gng turna distribution systems in Loutstana, gations or our con'clusions with tnpect intend by this let*.et or the statement of

- p* Another cooperstite is based principany la thereto.Within the past year or so. Applicant

• policies attacbed to valve. and instead hereby

.gM Texas but conducts some operations in has evidenced a ecnstructive attitude in its Meerves all of ita rights under law to appear

, Muistana. Their combined 1970 post load relations with the smaller systemP in Loutst. In such proceeding and conteet the 1upoal.

=ME was approximately 900 mw. ann. In the course of our antitrust review tion of diferent. Enconsistent or additicnal 10 5 Twelve of the 131mutsiana cooperstites of the instant 11 cense applicatio$ Appineant conditions.

And

• have organized a generation and transmas. has discussed with the Department its fu. During our discumstons with you about

- by slon cooperattte. Cajttn Dectrie Power Coop. ture policlee in this regard. Whue not con. participatton in the subject nuc; ear units, to trative (formerly 14ut:1&ca Dertrie Coopera. coding that any of its prior conduct may we adeland you that we have not constructed 717- titel to handle their butt power supply have been antteompetitive. Applicant has and have not planned to construct any functions: Cajun has recently put its gen. indicated in the attached letter to the De. Jointly. owned electric generating plants on

_W ersting facilities into operation. McTever, the partment the policies which it wit! follow our erstem, and we have not and hue not the cooperatives preuntly obtain almost au of with respect to such aspects of its oper. planned to een unit powee from any p;esent 43 their bult power supply by purchase from ations id Loutstana as access to nuclear or future electric generating un:u White Applicant and the other private uttittles. no units. interconnection and reserve sharing. app!! cant appreciates that f.nant.a1 and tII,.. retnalning cooperatire. Southwest Loutstana wheeling, and exchanges of bulk power.51m. bustness conditions in the futute snay re.

1:lectric hiembership Cooperative (SLC!CO), 11ar poltelee win be fonowed by Applicant quire it to change such policies and f:rt such

_ 1s one of the largest rural electric coopera. in connectiod Mth its operations in Texas reason reserves the right to do so. Ap;!teant 1

11Tes in the United StatM and comprises although there. It should be noted, its ac. understands that the proposed Itceae condi.

roughly one third of t..e total cooperatite tivatles hare not raised the same degree of tions relating to partic:pation app;y only to load in toutstana. It has no rentrating fa. antitruss concern. ' Die Applicant has agreed nuclear units in 14u;s;ana, cuttles. but obtains psrt of its power supply that the policy commitments set forth in Appilcant intends to fle later this year

, from the privately. owned ut111ttes in Loutst. the attachment to its &farch 20. 1974 letter an application for a construction permit for ana and part from Southwestern Power Ad. to the Departmen't Fr.ay be imposed as con. certain nuclear units to be locatec in Texas 4 Inintstration under an arrangement in whteh ditions to the permit requested for the in. which are to be known as Blue E.;;s Unita power generated at federal hydroelectric fa. stant River Bend units. Applicant wiu nort. Nos. I and 2. Applicant Mll enter into sst.

tultles in the Southwest is wheeled over ly f.le an application for a construction per. lar polley commitments concerntag sucs spe.

,tyl1 ransmission facilities furnished by the pri. mit for two nuclear units known as Blue cific unt s; Prosided.T:ut as to other at c; ear

'CC utt11ttes. Hills Units 1 and 2 wh!ch it plans to build ger.erating units whte*n Atpucant mry con.

srt. , trtually all the high voltage and extra. In Texas. License conditions generally simuar struct, own and operate in Texas, the power e high voltage trantmlnten lines in the State to thow involved here wu; be ucceptable to from which La intended for use in Apphcant's ant M Loutstana are owned and operated by Ap. Appucant in cohneetten with the Blue Huls general system operation. Apphcunt win EUcant and the other privately. owned ut:1 Units permits, mere!y conarm to you by letter au laten.

- These deretopments enable the Depart. tion. under conditions then esistt?.g ar.d la t.ee diteussed above. App lesnt and the-e ment to inform the Commliaton that it accordance with applirsb:e Isr. to atew yar.

, omer private;y. owned utultles a!so dominn'.e would not appear necessary that an anti. ticipation in such other units on ecadit: ens h

FfMRAL gfCl$7ft. VOL 39, NO. 67-M! DAY, APRIL 3,1974 Q:.nm .v nev n ws we,a s , *-* y w w w 37y* y yu y p 9 7,71 sy ~ q m w w~ ~ . o- -* u_ ,

.,wn .

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• E376- NOTICES

.e, .

simitir 13g.thtse mitment atorded under Tclity C$m. 1 and D AEC licos:se AEC Dockets Nos. 60* aald calculation: prottdrd, that !! the re.

464 and 144f>9.

. We have now filed with the receral peteer Depittiosa.1. "Bult Power" sneats the serve requiremente of Apruft.nl are in .

+ trenned over the t Comrn; salon ecptes of the power intercontiet. electne power. and any attendar.t energy, be required to areount Anurant taintain v:tr.t.it reu:d such in. .

tion egreernents entered into b Appateant supptted of made stantable at trsnsa.assion terconnecten then the other partystes! ,

Mth Cajun and with theElectric Poser Cities cf Cooperstne.

Lafayett+ and P:aque.Int. or Itssubtransmieston generating facuttles, voltage by an entny from than be required to carry cr prov!!e fer as mine,14uas;&na. 3uch agnernents conts'n 2. " Entity" aitans person. a pritste or pub. watta ita (their) reserves of such the full amcunt in 214 increase.  ;

terina and provisions for bu: supply co. 11e corpersuon. governmental agency au sa. 4. The entitles wh:ch are panies t )

ordination and wansmisatcn erttee. Such sociation. a joint eteck association, bustness a reserve s!.aring agreement shall p,o rof tt e such l I agreements with Ca)un and the Cities were trust. municipality. or turat electric ecopera.

. ofered and r.rgotiated by Appucant in pur. tive ownlag, operating. or propostDs to own such amounts of ready reserve capacity as j- autt of the po.tcy ecmmitmenta attached.a d or operate equipment or faculues for the may be adequate to avoid the impcsitten cf it la Applicant) understanding that such generatton, transmission. or distribuMon of unreasonatie desnands on the cthers in agreemente (as subject to regulatcry action electricity petmartly for sale or Maale to the meettng the normal contingencies of cperaS tng its system. However. In no circumstar. cts and change with suen by settons of the partite) comply public. Provided. that. etcept for asuntelpall* .ntu the ready resorte requirenient etceed commttraente,

~I~ Nothing la LJs ietter shall be construed to cooperattres. ** entity" is f'.trther restricted the installed reserte requiren.ent.

ties governmental agencies, or rural electric

5. Interconnettons wiu not be It:nited to be a walver by the Applicant of its rights to to those which an or util be pubue utultles now voltages when higher vottr.ges are sta;

~j- appear or and express in oppeettion its posittorn to any epectAc on betatf propoests 70 of under the less of the State in which the able from Applicant e installed factittles in

. n' lating to butt poser eitppiv before any entity tranameta or wiu 1,raneact business or .Se area who e laterconnection la desired.

legnsistite, administrr. tite. Judicial, or other under the Federal Power Act, and are or wul when the proposed arrangernent is gov.r.d body. be providing electric service under a contract to be techtleally and econom.cally fesa. Die.

or rate achedule on Sie with and subteet *.o p! The Appliesnt would not object to an in. the regulation of a state regulatorv eommis. Control and telemetering fart 11tles shall elusion of th8s letter an, and the statements sicn or the Federal Power Comewton. be provided as Mqu! red for safe and p u.

i* and po!!cles exprested herein being made con. 3. " Cost" mesna all operating and mata. tems. dent operstloa of the intereennected sis.

-g dittent to the license applied for be!cre the SP"e ws e=**.**

4- VA. Atomic Energy Commission as refer. oosta p.o;.*ity *el.#. ** m*=*.W *nh=.r* *r* t . , , F. .irsterengnectlen and coor$1 nation agree.

'1 enced above, spec:Scally related to the River transaction. " Cost

• to be 4..t'.a

sharedparum=*

by particl*teema suan not tabody any ur. lawful or un.

(* Bend Nuclear Power 8tstlen Plant Unite for pante under condition g abau include all reasonably restrictive provisions pertata:*:g vhlek the subject application is pending. costs of sequisttton, construction. Owner. to intersystem ecordination. Good Indur.ry

'j s The commitmenta made are subject to the ship, capital, operstlen, and maintenance practice as developed in the area froer. *true following uuderstandings: reasonably allocable to the subject unit. to time (tf not untswfuuy or unreastu:ly 1- - (1) Appincant does not intend by these Costa shall include no value for loss of reve* restrictleel ttu sat!sfy this prit:rlon.

'8 commitmente to become a common cattler. nues from sale of power at wholesale or M* 'f. Applicant will sell (when atacarol j ($1 Appucant reserves all r1Cbts and pro. tall by one party to a oustomer which an* bulk power at its costa to or purchase is t.en

1. tection totati dis aforded it byoflaw

• .ributton Mth respect electrielty in 20ee to other party antght otherwise serve, eacept as needed) bulk power from sty other en. i j areas in which it holds franchista to conduct otherrlae authortred by any regulatory au*totitylles) thority having jurtadletion. Costa shall in,.

in orseretco Applicant's within reasonable prosmuty area in Loutstana en. '

. Ina business.

-)- clude a reasonable return on App 11eants gaging in or propeanng to engste In genera.

(5) That any licenne conditions imposed by investment, tion of electric pour at such entityntal 20 Atomic Energy Commisston upon Appl 1 Poltep eommitments.1. Applicant shall cost when such trananctions would serve to

{ ennt baeed in whole or in part upcn these interconnect with and coordinate resortes reduce the eterall costs of new butt poser 4

conuntsments shall be subject to continuing ju9tetettent and that Appilcant shall hate by means of the sale and purchase of emer* supply, each fot itsett and for the cther the F1thi to seek reitet from or mediacationpower rencyMthand/oranyscheduled entity (tes)maintenance in of within servebutt partyttee) to thethe to coordinate transactions plann:nr ofand newwould cen.

of such sonditions by appropriate legal M.

• reasonable proximity to Applicant's serv

• erstion. transanaston, and related it.ctist'et coune through the Atomic Energy Commis*

j ston, its succesact scent.et, or through any tce area in Loutstana engaging in or propos* by both the Applicant and the other enttet,

'j Other adm!nistratite legia:ative, or judicialoning to engage terms that vnt inprovtoe electric Ier bulkAppheant's power supp1T quireThis provtsion Applicant shallse to ;Vrth notorseseuconstru.d tu:*.i to re.

authority having jurtadiction.

j (4) That none et wese commitreents shnu costa in conneetton therewith and allow the power 1111 Snds such purchase or sale m.

, , require Applicant to enter into any blading other entityttes) fun access to the bene $te feasibleororsale purehane its costa wouldin connect:ca exceed with such its beneSta z* arrangemente Mth another party untti the and3.obligations Such of reserve emergency coordination.

servlee and/or ached. therefrom.

Anancial respona! butty of such party is evt. 8. Applicant and any successor in tttle I'

dent or reascnably aasured nor prior to uled maintenance servlee to be preended by resolution of any substantial questions as to esch entity shau be turnished to the fullest shall offer an opportun2ty to participata :n

{ essent arallable frota the supplying entity River Bend Nuclear Unita Nou. 3 and 2 fer e thethe in lawful authority of such party to engage and destred by the entity in need. App!lcant We term of the instant license or any ex.

traneaction.

and each entityUes) shall provide to the tension or renewal thereof. er such shorter (8) All of the understandlats and comit. other such emergency service and/or sched* term as Applicant and the participantist j

sments of we Applicant are contained in the uled maldtenance servlee if and when avau* may mutueuy agree upon, to any entityttest comm!traenta berein made and this cover able from its own generation and from gen

• in or within reasonable prom: mpy to Ap.

letter,

.$ erstion of others to the extent it osa do so alicant's service tres in the State cf t- 16) None of the commitments herein made without impatring service to its customers 1.oulalana which has In writing requq*ed 1

shall be construed as a walver by App!! cant including other electric systems to whom It participation therein prior to March a 1974.

of its rights to contest whether or not a fu. has Arm ecmmitments. and whleh no later than blarch 31.19'f5 has

'* ture factual situation is inconsistent with 8 M-~* *ue tne. out 'etawnsin) entered into an esecutory contract with re.

the commitmente hereta made or to contest which is tarei partynee) to a resene shar* spect to such partte patton, having taken all by appropriate legal proceedings the vaudity tag arrangement shall from time to tlano neesesary action for 14 to lawful:V do ao prar

• of any regulatloc. order, or requirement im. jointly establish the m1utmum reentes to to so doing, to a fair and ress:Dahle extent Posed upon Appilcant by any governmental be instaued and/or provided as necessary and on reasonable tertna and cendit!cas and 4

• or regulatory authority. includ;ng but not lim 1*,ed to he Atomic Energy Commission to snalataan in total a resene margin su8t* on a beats that wiu fuuy compensate Ap.

and the Federal Power Commaaston, or their enent to provide adequate systems rettsbutty of curredof power and thatpucant wiu notforadversely its costaafect incurred the and to be t..

successor agencies, supply the partiesto oonalenent the interconnected,d with goo usutty in.Ananeing and sonstructing of such nuclear (y) Enforcement of any of the commit, dustry practlee in the region. If Applicant unite. App!!aant shall stallarly ofer an op.

! mente aban only be through appropriate plana its tenne margte on a poM basis portunity to participate in any addition.nl proceedings agg,gog before the Atomic Energy Com. with other regional companies, the reserves nuclear generating unitis) the power frcm jotatly estabitshed hereunder shau be on the which is intended for use in App.icant's ren.

g very truly yours. same beats. Unless otherwise agreed upon eral system operations, whleh the App:Icant

, or estabitshed by such regional practice- may construct, out, and operate in Louns

.

ynga,y,. g. mtntmum resortes shall be calculated as & ans duttog the term of the Instfint Itcense.

President. Cn:2/ 3f ates f/8$ tics Compcny. pucentage of eemten peak load respond

• or any extension or renewal thereof. Part;c.

DUlty- 1pation than be either by oTuersh!p of or

• Mancit 20. Im. No party to the arrangement shall be re. purchase of unit yarticipat:on power frem Policy commitments of Oulf States Utill. the respective nuclear units. Participation tics Cornpany to be appended as conditions qutred to ms!ntain g? eater tederves than the in any form shall t$e on an equitable basis to River asend Nuclear Pexer Plant. Unita percentage of its estimated peak load Pe. whereby the participants. In preportion to sponsittlity which results from the afore. their interests, shr.re funy in an cocts and FIDftAL RfCl371t. VOL. 39, No. 67 JalDAY, APRit S.1974

,. muv . ,,,.+y..<=u.+s. s* ' v % ,,. ,,,,.~.4.~ .. . - - - ~ ~ - ' "~~".1 " ~ P 7

. , , yw . ,- **

g < .

NOTICES , 12377

) to, rtsts of the respe.ttre tutiest intt. In con.

3- j- esittee with such rtr.te:pation. Appurant the The specir.1 prehearing conference on' conoorrr ,

Nuance ci facility operating 11 r.t: ocer transmttr:en serrtee as ms; tie re. m ass 65!5: W y quired for detstery of such power to such censes which was in ttsted on March 26, Kit. Sbattas surgteal pnparation

"^ 1974. MH reconveno on MAY 3.1974. or (331* 6816-C76 7372, Kat ...... 40. 06 IMIApp:YcEcrINsN.*

• immediately subsequent to the comple. By the Committee.

S,, s. Appucar.t shau fact: state the exot.ange tion of the etidentiary hearings on of bula poner by tr.nsmuston over sta trana. enttronments! matters which will re*. Cuantta W. Ft.trenta.

such,: maston iscutt:ee betseen two or more en. contene on An-4 M 1974. *Izecuitve Director, me uuss engaging to bwt power supp:r in its -

y as The hcannss will be held in the Gold f ra Doc.wis7: rued 4-414;t:45 aml n og

• wrrace area in Loutstsna wnh whten at as - Room. The Royal Inn. 214 Madonna

• saterocanected; ar.s between any suth entnf in (ws) and any er.sttr(ieel engaging to bu;t Road. Aan %.111s_Oym Caufornia, com.

est, poswr supply outside Applicant s serence. area mencing at 10:00 a.m., local time, PROCUREMENT UST 1974 nas 5214usatana betaeen weone facuttles Apptt. The points which will be considered Addition to , Procurement Ust need cant a transmusion una and other transmts. at this prehearing conference will b* Notice of proposed addition to Procure.

sien unes would form a continuous electrical only the petition to intervene from the a te - ment List 1914. November 29, 1973 (38 rau. . mathi Prot-8ded.That (1) pernussion to utu. Mothers for Peace: and the petition of FR 33038), was pubushad in the FtnsaAL s 82 : Ise suchby entained other transmaaston the entittee invetted. Itnea (s) Appu'has*

twen the Scenic Shore!!ne Preservation Con

• eed, .s cant has appropriate agreements for trans. forence. IDc concerning suspension of Rrotsrta on January 17,1974 (39 TR 2138).

und mission wrrtee wnh the enuttes intercon. Construction Actdrities.

inte awted with Appucant at both the receiving Pursuant to the above notice the fol.

nasi Issued at Washington, D.C., this and lowing service is added to Procu.4 ment and doutery potosa en Appucants erstem. day of April 1974. List 1974.

pru, and (3) the arrangemente ren.nnsbty can be

,ye. , cocommodated from a functional and tecb- It is so ordered.

n!aal stancpotat, such transar.:ss;on shan he Industrial class 1641: Price ree, on terms that iu 1y cc:npensate Aypticant for Arcatre Sartry Asto 14ctNs* Furnitum mehabluta. List of prten un,- Its oces. Amy enutyttes) requesting such Iwo Boans. - tioa (02) . Loag avat:able from dag- ELasassrm 8.Bowmas, m e s e h. Catuornas.

transmiarton arranreinents shau site reason. OsA. r$4. Re.

stry able adesace nouco of its (abstr) schedule Chairmas plus 100.mue realus. glon S.

,gne cud requirements. (The foregoing appues to .eactuding aan Eheso bbly a;y entity (les) engagtng in Du;t power sup* [Pa Doc 34-7640 rced 4-414:8:48 aan) County and San Clo.

ply to which Applicant Inar be intercon. Imento,

, moeted in the future as seu as those to {Docht No.60-433 NIlPA] By the Cotr.mittee.

,3d, which it is now interconnected.)  %

en. - ACIFIC GAS AND ELECTRIC CO.

30. APPucaat shalt tactude su its planning Cmaatas W. Ptzressa*

egy and construction program sustetent trans. - Hearing on Energy Conservation en, m.mion capacitr as pquired for sne trannae. Esecuta Dirsetor*

,r. , In the matter of Pacific Oss and Eleca tra Dec.14-toss Ptted 4-4-74;8:45 ann t

-. That utna any referred to in paragropa entuy(sesi in sta serrtee9:area ProMJrd.

an tric Cotupany @9ble Camon Nuclear in)

> 33 Louhtana give Appt: cant sushetent advar.ee - t.r P1stnt, Unit 21

• • . sunt to me hearings on March 27 PROCUREMENT UST 1974 E'

'ild siI(Yhr) "E*N Yins re e 1974. the evidentiary hearing on energy sad techn3 cal stancpoint and that such conservation will begin on Aeril 30,1974. Additionto Procurement Ust r entity (tes) funy compenutw Applicent for at 10:00 a.m., local time, an tite cola Notice of proposed addition to Procttre-  !

g. .

ny*

Its cost. Applicant aball not b3 required to Room. The Royal Inn. 214 Madonna ment List 1974. November :91M3 (38 TR go. cinstruct be transmas. tonpresent of no ces:anstratte factitties oc whl:h futum wu! Road.Ern f* ObisDo. Calif.

33038) was published in the Fratrat u2t bencat to Apptuant, The public is antnea to attend this RectsTza on September 10.1973 (38 FR

n. 31. Appucant vul ae11 power (when avatI* proceeding. Limited appearances relst. 2N.

wh thle) ser tsaa:e to anr ectttr(test in its ing to the cluestion of energy corJerva, Pwsuant k N mW adet W M.

nts aerries area to Louts:ana now engastng in or tion Mll be accepted at that time. Lim. g ammodity is added to Mcm.  ;

proposing la good faith to engage in retail Med appearances W be Med to M 2nent List 1914.

igt, WW.rtbution of electria power. 'wheuever (5) minutes but there is no !!m!:stion on cossascorre n.a,e power to mcc the nun of such enutr(test the submittal of written stataments for Casse sies prses rn, as not arauable

- compeustre costa, from ancinate sourew at inclusion in the record. Twenty (20) seg. cloth Lunch (ar) Stos-464-ter . copies of written statements should be a714. Bundle of 200- ..- -.. s17.20

23. The foregoing conditions than be in passented.

is) au respects tmptemenwd on reasonable terms BP the Committee

• isp sp.

a.d conditions in a ar.acter consasent with Issued at Washington, D.C this 2nd the provatons of the Federal Poser Act and dr7 of Apr111974. C.W. PLETcura.

tf

ed ether app!! cable federal and state lasa and ' Ezecufke Dircefor, tegulatory orders, anJ shan be subject to It L'so cedered. *

74. force majeure, applicable egrtaf! ment pro- [FRDoc.74-7837 Filed 44-74:8:45 aml ins < trams. and engineertst and technical feast

• AtotgIC BAFITY aND 1JCENS.

m. bety for Apputant s system. None of the INe B OAan*

su forerotag condaticas shall re tutte App!! cant ELasaarTx 8.Bonas. PROCUREMENT UST 1974

.Ir to seu power. perform any serviet or engste Chairmes. ' Notice of Proposed Additions ta - la any tour 4e of action on s ba.ts which [FR Doc.74-7641 Filed 4-4 74;4:48 am]

rid would be unlawfully paterentta! or atacrim. Nottee ls hereby given pursuant to sec.

p.. Instory under any app:leabte law or that tion 2(a)(2) of Pub. L. 93-28: 85 Stat. 79.

n.- - wuad impate Applicants abuttr to render COMMITTEE FOR PURCHASE OF of the proposed additions of the fenow.

u. adequato and renable serr ee to its own eus.

e tonnere. An ratu. charges or practices in con. PRODUCTS AllD SERVICES OF ing services to Procmement un IM4'

n. 3 nutton therewith are to be sub:en to the THE BLIND AND OTHER SE. November 29.1973 (38 PR 33038).

at captoran of re;utatory atencim hamt Jura. VEftELY HANDICAPPED saamm

• "*** * * * "" ingsraiAf. CMSS 7899 PROCUREMENT UST 1974 Typewriter Repair, ITA Custr,ms. New York.

(8, [FR Doc.Wi439 Ftled 4-4-74:8:45 mm) New York.

Addition to Procurement ust .

,* Othee Machine Repair. U.S. Customs. New Docket Nos. 50-273 Of So-303 OL)

Notice of proposed addition to Pro. Tork.riew York.

Dr curernent List 1974. November 23. 1973' Osco Machine nepatt. 25 Federa! Plus. New

• PACIFIC GAS AND ELECTRIC CO. (33 FR 33038), wr.s pub!!shed in the T***'**"*

m Special Prehearing Conference Frotut. Rectsrta on Se;:tecaber 28,1973 (3B FR 27101). Comments and viers rer:trdini this In the matter of Paci!!c 03s and rec. proposed additlen may bc I!cd T.1th the j ; tric Company. 22.h Qn m "Me'.! lowing Pursuant to the above notice the fol.

g lYmP:m Unit: I n.t :D. commocity is t.dded to Procure. Committee on or tWore 2.!ay G. IU4. .

ment L!st 1974. Comrnunications should be n::ditted*to i

, ,the Executive D! rector. Comm:ttte for e

fit Ett.1 110l$152. VOL. 39. NO. ebfA: DAY. AMit 3.1974 1

Ef*%% %D ? */h3'Yg).*'OD4 pj" 4 I%*NI D $ M" .4 * * * # E N N# 'I F O' 'Wf)* EN N U Y**Y'CDL d* H -O -M WO

l3 t I:>.

R.C May 8, 1974 BYLAWS ,

of GULF STATES t..ILITIES COMPANY 9

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x '5-8-74 g BYLAWS of

, , GULF STATES UTILITIES COMPANY ARTICLE I.

Name.

The name of this Corporation shall be GULF STATES UTILITIES COMPANY.

ARTICLE II.

Shareholders' Meetings.

All meetings of the Share' holders shall be held at the princi-pal office of the Company, 285 Liberty Avenue, Beaumont, Texas.

With or without motion, the - Chaiman of any meeting of the Share-holders may appoint Inspectors and Tellers for such meeting who shall examine.into the qualifications of the Shareholders present in person-or represented at the meeting by proxy, report the

, shares represented at the meeting and tabulate the vote on such matters as may come before the meeting.

ARTICLE III.

Annual Meeting.

The ' Annual Meeting of the Shareholders of this Corporation shall be held on the second Wednesday in May in each year if ,

not a legal holiday and, it a legal holiday, then on the next succeeding Wednesday not a legal holid6y. In the event that such Annual Meeting is omitted by oversight or otherwise en the-date herein provided for, the Directors shall cause a meet-ing in lieu thereof to be held as soon thereafter as conven-iently may be, and any business transacted or elections held at such meeting'shall be as valid as if transacted or held at the Annual Meeting. Such subsequent meeting shall be called in the same manner and as provided for Special Shareholders' Meetings.

ARTICLE IV.

Special Meetings.

Special Meetings of the Shareholders of this Corpora-  ;

tion shall be hel.d whenever called by the Chairman of the Board of Directors, the President, a Vice President or a ,

majority of the Board of Directors, or whenever'the -

n ASI *

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4

-2 holder or holders of'one-tenth (1/10) of the shares of the capital stock issued and outstanding and entitled to vote shall make written application therefor to the Secretary or an Assistant Secretary, stating the time and purpose of the meeting applied for. Special Meetings of the Shareholders shall also be held following the accrual or termination of the right of the preferred stock of the Corporation, voting as a class, to elect the smallest number of Directors of this -

Corporation necessary to constitute a majority of the members of the Board of Directors, whenever requested to be called in '

the manner provided in Paragraph 6 of Article VI of the Articles of Incorporation of the Corporation as amended.

ARTICLE V.

Notice of Shareholders' Meetings.

Written or printed notice of all Shareholders' Meetings, stating the time and place and, in the case of Special Meet-ings, the purpose or purpos,es for which such meetings are .

called, shall be delivered by the Secretary or an Assistant Secretary, by mail, to each Shareholder of record, having voting power in respect of the business to be transacted there-at, at his or her registered address, at least ten (10) and not more than fif ty (50) days prior to the date of the meeting, and the person giving such notice shall make affidavit in relation thereto; provided that such notice shall be deemed to be delivered when deposited in the United States mail addressed to the Shareholder at his address as it appears on the stock transfer books of the Corporation, with postage thereon pre-paid, and further provided that notice of any such meeting shall be deemed to be sufficiently delivered to any Shareholder who, while the provisions of the Trading with the Enemy Act (Public Act No. 91 of the Sixty-fif th Congress of the United States of America, as now or hereafter amended) shall be opera-tive, shall appear from the stock book's to be or shall be known to the Corporation to be an " enemy" or " ally of enemy" as de-fined in the said Act and whose address appearing on such stock books is outside the United States, or the mailing to whom of notice shall at the time be prohibited by any other law of the United States of America or by any executive order or regulation issued or promul5 ated by any officer or agency of the United States of America (a) it, at least ten (10) days prior to the '

date of the meeting, a copy of the notice of the meeting shall be mailed to any person or agency who by any such law, order or regulation shall have been duly designated to receive such notice or duly designated or appointed as custodian of the property of such Shareholder; or (b) if a brief notice of such meeting, including, in the case of a Special Meeting, either a brief statement of the objects for which such meeting is called or a statement as to where there may be obtained a copy of a written notice containing a statement of such objects, vrn .; .y ,

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shall be p(ublished than ten by thethe-

10) days before Corporation ataleast meeting in dailyonce, not less newspaper published in the English language and of general ~ circulation

[; .in the City of Beaumont, Texas.

Any. meeting at which all Shareholders having voting power in respect of-the business to be transacted thereat are present, either in person or represented by proxy, or .

of which those not present have waived notice in writing, shall be a legal meeting for the-transaction of business, -

notwithstanding that notice has not been given as herein- .

before provided. *

' ARTICLE VI.

• w Waiver of N'otice.

Notice of any Shareholders' Meeting may be waived by

~

any-Shareholder and the presence at any meeting, either in person or by proxy, of a Shareholder having voting power in respect of the business to be transacted thereat shall be deemed as to such Shareholder a waiver of notice of the meeting.

ARTICLE VII.

Quorum.

At any meeting of the Shareholders, a majority of .the shares of capital stock issued and outstanding and entitled to vote in respect of the business . to be transacted thereat,

- represented by such Shareholders of record in person or by proxy,-shall constitute a quorum, but a less interest may-adjourn any meeting from time to time and the same shall be held as adjourned without further notice. When a quorum is present at any meeting, the vote of the holders of a majority of the shares of capital stock entitled to vote represented thereat shall decide all questions brought before such meet-

'ing, unless.the question is one upon which by express pro-vision of law or of the Articles of ' Incorporation of the Corporation or of these Bylaws a larger or different vote is required, in which case such express provision shall govern and control the decision of such question. The provisions of this Article are however, subject to the provisione of Para-graph 6 of Artic$e.VI of the Articles of Inco,rporation of the Corporation as amended.

ARTICLE VIII.

Proxy and Votina.

The voting power of the respective classes of stock of the Corporation shall be as provided in Article VI of the

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. . . . - . - . . . . - . - - . - . - . . , - . - . . . - - . . . . - - . . - . . _ . = _ . ~ . ~ . - . _ . ,

Articles of Incorporation of the Corporation as amended.

Shareholders of record entitled to vote may vote at any meet-

-ing either in person or by prox;p in writing, which shall 'be filed with the Secretary of the meeting before being voted.

Such proxies shall-entitle the holders thereof to vote at any

• adjournment of such meeting, but shall not be valid after the final adjournment thereof or after eleven (11) months from the date of ite: execution unless otherwise ?rovided in the proxy. Each holder of record of. stock of the Corporation of any class shall, as to all matters in respect of which such class of stock has voting power, be entitled to one vote for each share of stock of such class standing in his name on the books of!the Corporation. ,'

ARTICLE IX. -

Board of Directors.

A Board of fourteen (14) Directors shall be chosen by-ballot at the Annual Meeting of the Shareholders or at any meeting held'in place thereof as hereinbefore provided. The number of Directors may be increased or decreased from time to time by amendment of the Bylaws, but no decrease shall have the effect of shortening the term of any incumbent Director. Any

. directorship ~to be~ filled by reason of an increase in the number of Directors shall be filled by election at an Annual Meeting or at a Special Meeting of Shareholders called for that purpose.

Each Director.shall serve until the next Annual Meeting and' until his successor is' duly elected and qualified excepc as in these Bylaws may otherwise be provided. Directors must be Shareholders in the Corporation.

^

No person shall be eligible for election or re-election as a Director of the Company after attaining age sixty-five (65),

provided, however, that each person serving as a Director on September 1, 1973, shall be eligible to be re-elected as a Director at the next Annual Shareholders' Meeting without regard to such age restriction on eligibility, except that no Director shall be eligible for re-election after attaining age seventy (70) . Any director who is also a salaried officer or employee and who retires from active employment by the Company shall, concurrently with such retirement, resign as a Director of the Company.

Until age seventy (70) any Director who (i) has served continuously for at least ten (10) years immediately prior to retiring as such and is then not a salaried officer of the .

Company, or (ii) is then retiring as a Director and as Principal Executive Officer of the Company, shall be eligible for election and thereafter for re-election from year to year as an Advisory Director. Such election shall be by vote of the Board of Directors.

However, the restriction on election after attaining age 70 shall not apply to any person serving as a Director or an. Advisory Director on September 1, 1973, and any such Director, who other- t vise qualified for Advisory Director, and any such Advisory Director shall be eligible to be elected or re-elected an Advisory Director for one (1) year following the next succeeding Annual m.amnumrmrrw:rmium-m em rw- ~ n-m-,~ wm-

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c Shareholders' Meeting. At the pleasure of the Board of Directors, each' Advisory Director shall have the privilege of attending meetings of the Board of Directors in a consultative capacity but failure to give notice of meetings to an Advisory Director shall not be considered a violation of law,-the Articles of

' Incorporation,, or these Bylaws. No Advisory Director shall be entitled to. vote.on any business coming before the Board of

' Directors, nor shall any Advisory Director be counted as a member

' of the Board,of Directors for the purpose of determining whether

.a quorum is present or for any other corporate purpose whatsoever.

'Each Advisory Director shall be entitled to receive fees as e may.be fixed and determined by the. Board of Directors, but fees to Advisory Directors may be changed or eliminated at any time.

After attaining the age of seventy- (70) years, an advisory Director shall not be eligible for election or re-election as such. Any Director or Advisory Director who serves to age 70 shall become, at the expiration of the last term for which he is elected, a Director Emeritus. A Director Emeritus shall have no responsibilities.

The foregoing provisions alacing qualifications on the

-eligibility of Directors are, aowever, subject to Paragraph 6 of Article VI of the Articles of Incorporation of the Corporation as amended.

ARTICLE X.

Powers of Directors.

The Board of Directors shall have the entire management of the business of the Corporation. In the management and control of the property, business and affairs of the Corpora-tion, the Board of Directors is hereby vested with all the-

. powers possessed by.the Corporation itself,-so far as this delegation of authority is not-inconsistent with the laws of the State. of Texas, with the Articles of Incorporation of the Corporation or with these Bylaws. The Board of Directors shall have ' power to detemine what constitutes net earnings, profits and surplus, respectively, what amount shall be re-served for workin6 capital and for any other purposes, .and.

what amount shall be declared as dividends, and such determina-L tion of the Board of Directore shall be final and conclusive.

ARTICLE XI. .

Poes of Directors and Others.

The Board of Directors shall have power to fix and determine the fee or fees to be paid members of the Board of Directors, Advisory Directors, or any Committees appointed by the Directors or Shareholders for attendance at meetings of said Directors or Committees. Any fees so fixed and determined by the Board of Directors shall be sub, Ject to revision or amendment by the Shareholders.

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ARTICLE XII.

Executive and Other Committees.

The Board-of Directors, by resolution adopted by a ma- I l- jority ofsthe_ number of Directors fixed by the Bylaws, may. ,

elect from its number an Executive Committee of not.less than three- nor more -than .five ' members, which Committee may exercise the powers of .the Board of Directors . in' the management' of' the

-' business. of the Corporation when the Board is not in session except whereL action of ' the Board of Directors is specified or requi' red by law. The Executive Committee shall report its, actions to the Board for approval. The~ Executive Committee may make rules'for the notice, holding and conduct of its meetings and the keeping of the records thereof.

The Board of Directors may likewise appoin't from its num- '

i ber'or from the Shareholders other Committees from time to_ time, _!

the number composing such Committees and the powers conferred upon the same to be determined by vote of the Board of. Directors. '

, ARTICLE XKII.

Meetinas.

Regular Meetings of the Board of Directors shall be held at such places within or without the State of Texas and at such times as the Board by vote may determine from time to

• time,-and if so determined no notice thereof need be given. l Special Meetings of'the Board of Directors may be held at any time or place, either within or without the State of .l Texas,'whenever called by the Chairman of the Board of Direc-tors, the President, a Vice President, the Secretary, an Assistant Secretary or three,or more: Directors, notice there-of being given to each Director by the Secretary or an Assist-ant' Secretary or officer calling the meeting, or at any time

.without' formal notice provided all'the Directors are present or those not present have waived notice thereof. Notice of Special Meetings, stating the time and place thereof, shall be given by mailing-theLaame to each Director at his residence or business address at. least. two days before the meeting.or by delivering _the same to him personally or by telephoning or telegraphing the same to him at his residence or business address at least one day before the meeting.

ARTICLE XIV.

Quorum.

A~ majority of the Board of Directors shall constitute a quorum for the transaction of business, but a less number ,

may adjourn any meeting from time to time and the same may j

- _ _ _ . _ . ~ . . , . _ _ . _ , . . . - ..._,.._,.,..... . _ . _ ~. _ , _ ,.,.,_ , _ _ ,_,,,__, _ ,_

4 7

4 be held without further notice. When a quorum is present at any meeting,: a majority vote of the members in attendance thereat shall decide any question brought before such meeting,

except as otherwise provided by law or by these Bylaws.

ARTICLE XV. .

Officers.

The officers of this Corporation shall be a Chairman of the Board of Directors, a President, one or more Vice Presi-dents, a Secretary and.a Treasurer and such other officers and assistant' officers as are permitted or provided by these Bylaws and appointed by the Board of' Directors. The officers shall be elected by the Board of Directors after its election-by the Shareholders, and a meeting may be held without notice-for this purpose'insnediately after the Annual Meeting of the

. Shareholders and at the same place.

ARTICLE XVI.

Elimibility of Officers.

The Chairisan of the Board of Directors and the President may be, but need not .be, Shareholders and shall be Directors of the Corporation.. The Vice Presidents, Secretary, Treasurer and such other-officers as may be appointed may be, but need not be, Shareholders or Directors of the Corporation. Any

- person may hold more than one office-provided'the duties thereof can be consistently performed by the same person, .

and except that the President and Secretary shall not be tho' same person.

ARTICLE XVII.

Additional Officers and Antents.

The Board of Directors in its discretion may appoint one or more Assistant Secretaries, one or more Assistant Treasurers, and such other officers or agents as it may deem advisable, and prescribe the duties thereof.

ARTICLE XVIII.

Chairman of the Board of Directors and President.

The Chairman of the Board of Directors shall be elected from among the Directors of this Corporation. He may call meetings of the Board of Directors and of any ccamittee there-of whenever he deems it necessary. When present, he shall call to order and preside at all meetings of the Shareholders of this Corporation and of the Board of Directors. He shall be the 4

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principal executive officer of this Corporation, shall have

' general supervision over the business and policies of this Corporation, subject to the control of the Board of Directors, and may perform all. duties and exercise all powers as .are conferred by these Bylaws, or by law, on-the President except such duties as are required by law to be performed by a President, or.a Vice President. In particular, the Chairman of' t,he Board of Directors is hereby prescribed as an officer, in the place but not_to the exclusion of the President or a Vice President, authorized to sign certificates representing shares to which shareholders are entitled, as is permitted by Article- 2.19A of the Texas Business Corporation Act, subject to all the. provisions of said. Act as fully as if said signing were by the Pre.sident or a Vice President.' The Chairman of .

the Board shall perform such other duties and have such other '

powers as- the Board of. Directors shall designate from time to time.

The President shall be elected-from among the Directors of this Corporation. In the absence of the Chairman of the Board, the President shall perform the duties of such Chairman.

The President shall be the managing executive officer of this Corporation and shall perform all the duties commonly incident to his office and such other duties as the Board of Directors

-shall designate from time to time. The President or a Vice

-President, or such other officer or officers as may be authorized by the'se bylaws or such other person as is thereunto specifically authorized by vote of the Board of Directors, shall sign all-bonds, deeds and contracts of this Corporation. The President or a Vice President or such other officer or officers as these bylaws may prescribe shall sign :all certificates representing shares of stock in this Corporation to which Shareholders are entitled." .

ARTICLE-XIX.

Vice Presidents.

Except as especially limited by vote of the Board of Di-rectors, any Vice President shall perfom the dutics and have

.the . powers of the Pres 10ent during the absence or disability of the President, and shall have the power to sign all certificates of stock, bonds, deeds, and contracts of the Corporation. He shall perform such other duties and have such other powers'as the Board of Directors the Chaiman of the Board of Directors,

-or the President shall, designate from time to time. Prem time to time, as it may determine advisable, the Board of Directors may designate an Executive Vice President who, in the absence or disability of the President, shall be the managing executive officer of this Corporation. The Executive Vice. President shall possess all the powers conferred by these Bylaws on other Vice Presidents and shall perform such other duties and have such

~o ther powers as the Board of Directors, the Chairman of the Board of Directors, or the President may designate from time to , l time, i we m m m mmne mt.svm w- m ~. w ,y m.s..m ,nmy ,,,m_.m..,,,.m.,...y, .

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g ARTICLE XX. .

Secretary.

The Secretary shall keep accurate minutes of all meetings of the Sharehold'ers,.the Board of Directors and the Executive or other committees of the Board of Directors, resaectively, shall perform all the duties commonly incident to his office, ,

and shall-perform such other duties and have such other powers j

- as the Board of Directors shall-designate from time to time.

The Secretary shall have the power, together with the President i or a Vice President, to sign certificates of Stock of the Corp-oration. In his absence an Assistant Secretary or a Secretary ,

pro tempore shall perform his duties. The Secretary, any Assist- i ant Secretary and any Secretary pro tempore shall be sworn to <

the faithful discharge.of'their duties. ,

ARTICLE XXI.

Treasurer.

The Treasurer shall have and exercise, under the super-  !

vision of the Board of Directors, all the powers and-duties commonly incident to his office, and shall give bond (which i shall be in the custody of the President) in such form and with such securities'as shall be required by the Board of Directors. He shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts andshall oration and disbursements de?osit all in books and moneys belonging to the Corp other valuable ef fects in the name and to the credit of the Corporation, in such depositories as may be designated by the Board of Directors.

He shall-disburse.the funds of the Corporation as he may be ordered by the Board, making proper vouchers for such dis- .  ;

bursements, and shall render to the President and directors, at the regular meetings of the Board or whenever they may.

require it, an account of all his transactions as Treasurer and of the financial condition of the Corporation.

ARTICLE XXII.

Removals.

The Shareholders may, at any meeting called for the pur-pose, by a vote of a majority of the shares of the capital stock issued and outstanding and entitled to vote, remove from office any Director or other officer elected or appointed by the Shareholders or Board of Directors and elect or appoint his successor, but this provision is subject to Paragraph 6 of. Article VI of the Articles of Incorporation of the Corpora-

-tion as amended. The Directors may, by vote of not less than

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a majority of the entire Board, remove from office any of-

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ficer or agent or member or members _of any Committees selected or appointed by them or by the Executive Committee.

ABIE:. 2 dish. ,

Vacancies.

Any vacancy occurring in the Board of Directors (other than a vacancy created by an increase in the number of Di--

rectors, which is governed by Article IX of these Bylaws) may be filled for the unexpired term by the affirmative vote of a ma'jority of the remaining Directors though less than a quorum of the Board of Directors, but vacancies in the Board of_ Directors may be filled for the unexpired term by the Shareholders having voting power at a meeting called for that purpose, unless such vacancy shall have been filled by the '

Directors.

If the office of any officer or agent, one or more, be-c'omes vacant by reason of death, resignation, removal, dis-qualification-or otherwise, the Directors may, by a majority

-vote, choose a successor or successors-who shall hold office for the unexpired term. The foregoing provisions are, however, subject to Paragraph 6 of Article VI of the Articles of In-a corporation of the Corporation as amended.-

1 ARTICLE XXIV.

Canital Stock.

The amount of capital stock, and of each class thereof, shall be as fixed in the Articles of Incorporation or in any lawful amendments thereto and the votes of the Corporation from time to time.

ARTICLE XXV, certificates of Stock.

Every Shareholder shall be entitled to a certifidate or certificates representing shares of the capital atock of the Corporation in such form, complying with law as may be pre-scribed by the Board of Mrectors, duly numbered and sealed with the corporate seal of the Corporation and setting forth the number and kind of shares to which such Shareholder is

' entitled. Such certificates shall be signed by the President or a Vice President and by the Secretary or an Assistant Secretary. The Board of Directors may also appoint one or more Transfer Agents and/or Registrars for its stock of any rm class or classes and may require stock certificates t countersigned by one or more of them. If certificate r ep re -

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- senting shares of capital stock of this Corporatio'n are signed

• by a Transfer Agent and by a Registrar, the signatures there-on of the President.or a Vice President and the Secretary or an Assistant Secretary of this Corporation, may be facsimiles, engraved or printed. Any-provisions of-these Bylaws with j reference to the signing of stock certificates shall include, j in cases 'above permitted, such facsimile signatures. In case- .

a'ny officer or officers who shall have signed, or whose fac-  !

simile signature or signatures shall have been used on, any such certificate or certificates,-shall cease to be such of-ficer or officers of this C'orporation, whether because of-death, resignation or otherwise, before such certificate or-certif.icates shall have been delivered by this Corporation, such certificate or certificates may nevertheless-be adopted by the Board of Directors of this Corporation and be issued ,

and delivered as though the-person or persons who signed such c9rtificate or certificates or whose facsimals signature or

- . signatures shall have been used thereon had not ceased to be such officer or officers of this Corporation. Any- stock cer-tificates bearing facsimile signatures of officers of.this Corporation, as above provided, may also bear a facsimile of the seal of this Corporation.

ARTICLE XXVI.

Transfer of Stock.

Shares of stock may be transferred by delivery.of the certificate accompanied either by an assignment in writing on the back of the certificate or by a written power of at-torney to sell, assign and transfer the same signed by the i person' appearing by the certificate to be the owner of the

-shares represented thereby. No transfer shall affect the right of the Corporation to pay any dividend due upon the stock, or to treat the holder of record as the holder in fact, until'euch transfer is recorded upon'the books of the Corporation or a new certificate is issued to the person to whom it has been so transferred. It shall be the duty of every Shareholder to notify the Corporation of his post of- .

fice address.

ARTICLE XXVII.

Transfer Books.

The Board of' Directors shall have power to close the stock transfer books of this Corporation for a period not exceeding 50 days preceding the date of any meeting of share-holders or the date for payment of any dividend or the date for the allotment of rights or the date when any change or conversion or exchange of capital stock shall go into effect; provided, however, that in 21eu of closing the stock transfer books as aforesaid, the Board of Directors may fix in ad-gamkammmumsmmtanimesmwwmm m. ~ ~- m nm .-

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vance a date, not 'xceeding e 50 days preceding the date of any 4 meeting of shareholders or the date for the payment of any dividend,. or the date for the allotment of rights, or the

.. date when any change or conversion or exchange of capital stock  !

shall go into effect, as a record date for the determination of the shareholders entitled to notice of, and to vote at, -

any such meeting and any adjournment thereof, or entitled to

, receive payment of any such dividend, or-to any such allot-ment of rights, or to exercise the rights in respect of any such change, conversion or exchange of capital stock, and in such case ~only such shareholders as shall be shareholders of record on the dato so fixed shall be entitled to- such notice i a .

of, and to vote at, such meeting and any adjournment thereof, l or to receive payment of such dividend, or to receive such  ;

allotment of rights, or to exercise such rights, as the case may be, notwithstanding any transfer of any stock on the books of this Corporation af ter any such record date fixed as aforesaid, i

ARTICLE XXVIII.

Loss of Certificates.

In case of the loss, mutilation or destruction of i, .

certificate representing sharea of stock, a duplicate certifi-cate may be issued upon such terms as the Board of Directors may prescribe.  :

ARTICLE XXIX.

Seal. ,  :

The seal of this Corporation shall consist of a flat-faced circular die with the words and figures "OULF STATES  ;

UTILITIES COMPANY CORPORATE SEAL 1925 TEXAS" cut or engraved '

thereon. -

i ARTICLE YYY.

Books and Records.

' Unless otherwise expressly required by the laws of the State of Texas, the books and the records of the Corporation may be kept outside of the State of Texas at such place or

~ lp aces as may be designated from time to time by the Board of Directors. '

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A ARTICLE XXXI.

Amendments. ,

These Bylaws may.be amended, added to, altered or re . <

pealed by the Board of Directors of the Company. In the event j of any such amendment, alteration or repeal of these Bylaws  !

by the Board of Directors, the notice of the Annual Meeting

{

of the Shareholders which shall thereafter first be sent to.

the Shareholders shall state that the Bylaws.have been so a amended, added to, altered or repealed and shall describe or j set forth or be accompanied-by statement describing or setting .,

forth such amendment, addition, alteration or the text of any-article which has been repealed. Notwithstanding anything  !

hereinabove contained, these Bylaws may be amended, added to,

- altered'or repealed at any Annual or Special Meeting of the Shareholders by vote in either case of a majority of the voting power of the shares _of the capital stock' issued and -l outstanding and entitled-to vote in respect thereof, unless the question is one upon which by express provisions of law  !

~ or of the Articles of Incorporation or of these Bylaws a

' larger or different vote is required, in which case such ex-press provision shall govern and control the decision of such question, provided, however, that notice is given in the call

. of said meeting that an amendment, addition, alteration or-  !

- repeal is.to be acted upon.

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Gulf State 5 Utilities Compant jhi hli his

. Eight Months I e TJoust (ThousanE T DolIarsf_1974

1 1974 1973 1 Increase Over 1973 Larnings per share $ 1.11 Operating revenues j >

(16ctric o . 6 .

Destdentia) 71.337 58.858 21 Comeettal 44.312 35.471 25 Industrial 93.187 63.408 47 vther 15.655 9.944 57 Gas *

. 4.893 5.138 (5)

Steam 16.385 11.967 37 Operatino entectes 1 0 68 Payroll T Construction

'T Other 1.365 l'313 4 Expense 16.003 14.911 7

, Fuel 101.417 48.437 109 Average fuel cost (t/IN8TU) 67.14 33.10 103 Purchased power 2.822 3.172 (11)

Purchased gas 2.164 2.071 4 All other operatin9 expenses 14.679 12.779 15 Depreciation 29.826 23.721 ' 26 Taxes 31.652 33.605 ( 6)

Net 2ncome 28.342 32.934 (14)

Construction expenditures 96.705 64.240 $1 Credit for construction funds used 7.838 7.190 9 Interest expense 26.980 20.488 32 Short term borrowin95 outstanding 40.243 9.113 342 Tota ectr a4tes(Thcu.ofM.N) 3 Commercial 1.758 1.665 6 InduttHel 7.522 7.251 4 Other 990 1.050 (5) .

Steam pr.4. electric sales 1.905 1 ..

Get Sales .1CF 5.570 6,903

.719 (17)

Share of market A11. electric homes 40.0t 40.01 All. electric apartments 87.05 99.9%

Unesoloveent (July)

Beaumont 4.9% 7.21 Baton Rouge '6.25 6.55 Lake Charles 9.01 9.31 1974 Departure Heating from Degree Days 1974 197a Normal Nonne)

January 247 509 428 L1811 February 284 384 313 J 29L March 80 76 203 L123 i Aprl) 33 106 32 ( 1h tooling Degree Days May 365 259 310 55

-June 412 457 469 (57)

July $22 555 545 (23)

() Decrease-1 D.'8#.'D '.&.D' D 9.*m /* D b.7 F P. ~r* ' *.? 2 4 'es' L% 3 ?"* #'* * #'* .**2*.n****'.'"' .1 *.1 'M P 1 * * * * . ' ' 9i* . ".. m . *"'"V"a 7 ** ' 2 F*"***? T m A P ".t i Ts

1

• sy GULF STATES UTIL1T1ES C0MPANY Financial and Operations Review 1963 1973 Table of Contents

, Various facts About Gulf States Utilities Company . . . . . . . . . . . . . . . . . . . . . . . (Inside Front) .

Directors ............................................................... 2 O rg ani za ti o n C ha r t . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 S umma ry o f F i na nc i a l P rog re s s ' . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-5 Compa ra ti ve Ba l a nce S hee t s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-7 Capitalization ...............................~........................... 8 Fi na nci n gs S i nce Oc tobe r , 1944 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 El e c tri c Ope ra ti n g Revenue s . . . . . . . .'. . . . . . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . 10 Growth in Electric Industrial Revenues and KWH Sales . . . . . . . . . . . . . . . . . . . . 11 Electric Revenues From Industrial Customers ............................. 12 I ndus tri al Cu s tomers ( El ect ri c ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 income Appl i c abl e to Common S tock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Common Stock Earnings and Dividend Data ................................. 14 Total Plant Investment .................................................. 15 Summa ry of Ope ra ti on s G rowth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-17 Electric Operating Revenues Kilowatt-Hours Sold and Electric Plant ..... 18 Kil owatt-Hour Sal es -- El ectric Depa rtment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 F i na nc i a l S ta ti s ti cs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Addi ti ons of Gene ra ti ng Ca pa bi l i ty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Winter and Summer Peak Loads ............................................ 22 Summe r Ai r Condi ti oni ng Requi rements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Residential Cooling and Heating KWH Use Per Customer . . . . . . . . . . . . . . . . . . . . 24  ;

El ectri c Depa rtment Fuel Economy Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Electric Res i den ti al Appl i ance Da ta . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Monthly Resi denti al Servi ce Ra tes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Condensed Financial Statements ........................................... 28-31 Statements of Changes i n Financial Posi ti on . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 The general information presented in this report is not in connection with any proposed sale or offer to sell or solicitation of an offer to buy any securities, nor is it intended as a representation by the Company of the value.of any of its securities.

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GULF STATES tfTILITIES COMPANY 4

Dit'oc tors

'A401 L L . AllAM5 (19/0)

. NORMAN R. LLE (196i) N415ttLL R. SMITH (1964) 5emfor Vice Pre sident Presidint and Principal htired Genere) Meneger of the of the Compatiy ,

operatint Officer of the Lake Charles Operettons of Beaumont. Tema'. Campany Cities Service Oil Ceapany Beaunent. Teaas Lake Charles. Loutliene

.h0NN W. BARTON (1970) CHAllLC5 P. MAR $ NIP. JR. (1957) BISMARK A. 5f tliedQElt (.14)

President of Jack's President and Director of Perteer. Steinhagen '

Cookie Company tapital Cit Oil Ceapsey Baton Rouge. Loutstena hton Rouge. Louisiana y Press teousent. Tenet .

SETHW.-00RS4NOT(1970) J05tPH R. MURPHY (1970) OLIVER P. STOCitfELL (1969)

Chairman of the Board Senior Vice President Mauber of the law fire of and President of First of the Company 5tockwell St. Dizier.

National tank in Conroe '

Beaumont. Texas Stevert & Vicce11to.

Conroe. Temas com Je1 for the Company's Lake therles Divisten Lake Charles. Leutstone EDWihW.HIAM(1959) DINJAMIN D. ORGAIN (1963) FRED V. WIL'iell (1964)

Registered Investment Adviser Member of the law fien of Investments Boston. Massachusetts Orgain. Sell & Tucker. Port Arthur. ,Temas general co m sel for the Company Beaumont. Temas FLOYDR.SMllH(1965)

WILLIAN PresidentH. LLBLANC.

of Baton JR. (1974) ly Rouge Supp Chairman of the Board of Company. lac. .

Directors and Principal Baton llouge. Loutstana Executige Officer of the Company Beaumont. Texas A,jvjfpry Directors J0eelJ.PORR15001(1957) GLENN t. RICHARD (1)6% (1h1440 N. TAU 5516 (1944)

Retired Chairman of the Retired Chairman of the Board President of Taussig Corpo.

Beard ef the Company of the Company retten teaumont. Temas 8causent, Tcsas Lake Charles. Leutstene

() Date elected to Board .

Page 2-

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Page 3

*..** *: ' ?.E'* *&:.': ??

m _m ~ . .w.e o,,r-s .

GULF STATES UTILITIES COMPANY SLM4ARY OF FINANCIAL PROGRESS (Thousarnds of Dollars) .

\

l of

• l of S of 6 of gg ,,,,j.lf,L h ItI L _ h 1971 h . 1M_ hth OsttAtla$ EvtINEli (1ectett .. I '1 *MS St $79.82t 33 $98.?!? 13 $ 63.463

• 33 I tes tant i el . . . . . . . . . . . . . . . . . . . .

St.6H 19 46.000 19 40.000 19 37.601 19 i Ceanortle t . . . . . . . . . . . . . . . . . . . . . M 3 I nses tri a1. . . . . . . . . . . . . . . . . . . . . M.t31 M 77.M1 33 08.332 33 43.394 16.400 6 16.203 6 14.637 6 10.961 6 4 Deter.......................... to leta l t iec tric . . . . . . . . . . . . . . . 3EM6 pl its,7e6 91 190.006 91 176.319 6 6 7 18.4M 14.978 6- 13.746 13.463 4 Steen Pro htts................. 7.237 6

3 6 .878 3 6.987 3 6.0fc 3 7 6es............................

3W.6t1 210.M0 100 194.0W 100 8 total twerettag tennues..... 100 940.018 100 SPtAatIllG tEPEN$ts:

9 fuel for poner 8eneretten........ etJto tg eg,Me 3, 42,M7 g 3g,gg8 30 .

10 Durenesed Peuer . . . . .. . . . . . . .. . ... 4.88' 2 4.4?S # 1. 5 74 If f.8848 If 11 tes Purthesed for Resele......... 3.30I 1 I.ll3 4 1.082 1 1

!?.877 1

28.526 8 30.873 9 9 9 18 nelectos ans unees .. .. . . .. . .. . . . . t,174 19.4,00 g, ge 18N

,ggi g 13 teotopees' penstens and benef tts.. 3.161 1 g 14 ten te 1 s . . . . . . . . . . . . . . . . . . . . . . . . . 1.886 f.3e3 g 1.078 g,ieg g 1.900 i g 1,.03,,4 g g It ' trenosortetten tests............. 7. gee 7,gg,53 4 8,006 4 16 Otter eporettag Espenses......... 3 6.839 3 17 1 rtestag t rees . . . . . . . . . . . . . . . . . . . 1.842 1.962 1 . 1.638 1 1.est i 16 pther as te* . . . . . . . . . . . .'. . . . l.441 2 1.814 1 5.250 3 E.123 3 total Operetten end statn.

It tenance. . . . . . . . . . . . . . . . . . . . . . . IM.388 of 93.064 33 31.743 M 77, egg 40 M tepret tet t en . . . . . . . . . . . . . . . . . . . . . M .784 lt 33.006 14 39.986 14 t$.91 13 21 teertisetten et Property Lees.... 1M 1Astit federet incomes 14. ige 22 Curren t . . . . . . . . . . . . . . . . . . . . . . . . 21.478 7 27.544 9 16.H6 8 7 6.779 6.864 2 S.887 2 4.933 3 23 tef erred . . . . . . . . . . . . . ~. . . . . . . . . . 2 Annettratten M68 to tef orments . . . . . of . . . Peter

. . . . . . . .veers'...

. 2048 feed 2738 26 State Insames I 36 Current . . . . . . . . . . . . . . . . . . . . . . . . 480 1,180 1 1.047 l.004 206 377 74 .

27 teferred . . . . . . . . . . . . . . . . . . . . . . .

38 Other t hen Insene . . . . . . . . . . .. . . .. 18.!!8 6 17.211 7 14.884 7 13.M1 7 investment Creetts:

1.M1 1.sge 1 1.917 1 3.670 t to soferred . . . . . . . . . . . . . . . . . . . . . . . 1 assettsetten of Peter voors' 30 Deforments . . . . . . . . . . . . . . . . . . . . . 78b8 Stif 4510 3079 31 Total 1ones................. 47.659 16 44.218 30 M.OM 19 M.307 19 Dispoststen of Utility Plant... 106 fed 40 3t T0fAL Optentits t38EEI6L5 33 AN0 TAtti . . . . . . . . . . . . . . . . . . . . . . 117.768 76 176.404 73 IM.fl4 ft IM.W3  ?!

M GPERAt la6 luesE . . . . . . . . . . . . . . . . . 70.863 ft 64.M4 ft H.900 N 64.4H 38 35 afER letSE #9 OtBuCT10ml...... 744 tt 76 13t ALLeumCE FOR PUW6 U6t9 OWelnG M CON 1790CT IS . . . . . . . . . . . . . . . . . . . 10.000 3 4.726 4 6.96 3 8 .006 6 37 . thApit OtF05 luftE31 CMAAltl... 41.677 28 73.183 31 66.478 31 $3.637 M leftetti centats: 11 30 Interest en Leng.1ere Debt..... 3s.043 10 N.900 11 24.888 12 21.721 amortisetten of Preatum. Disseunt 30 and tapense en 9et...... .... 364 3tf 389 4?(

40 Other laterest Essense......... t.get i 1.010 1 f.816 1 f.986 2

4) Total laterest Chorges....... 31.500 11 27.956 13 27.463 13 M.63p 13 42 Ett lut0E . . . . . . . . . . . . . . . . . . . . . . . 90.177 17 46.144 19 M.WD 18 34.900 N 4 43 PEfthE0 DIYlENO6 PAID......... 6 .7 30 2 4.600 t 4.004 2 4.34 2 44 INCIE APPLitaALt 70 C0500 St0CE 43,447 15 40,510 17 M.9P% 16 M.914 18 45 Camp DIVIItse6 P410.. ....... ... 26.102 10 N.169 11 26.000 it 22.740 12 46 AgatD 10 E14IE 0 (AARIN06....... $ll,M6 $ $ 13.943 6 $ 9.910 4 5 12.174 4 47 (Amins5 Pts AvtRast SNAst". ... $ 1.70 79 $ 1.99 30 $ 1.46 t#9 $ 1.49 80 40 93VIEuB6 Pit C8801 SNMt " . ... $ l.10 49 $ 1.e4 m 8 1.04 80 $ .98 44 49 pte Cluf PAT GUT........ .... ... 66 66 71 64 .

50 Avtanet SMAES WTltaelut" ... 25.647 25.$47 23.981 23.431 e

seneses ces nevre Peter years restated fe. 2.for.1 caemon spilt in Itsy 1985 tenetes percentese increase over Previews peer f)

( tecrease .

.Page 4

- . ~ ,

?

m n .- u _ - . n . , ,- . < . . . , ,,~~.,.-..w.w..

GULF STATES UTILITIES COMPANY

SUMMARY

OF FINANCIAL PROGRESS (Thousands F Dollers)

Asp. Amuel Aug. Annuel Aug. Aname)

et t of t of eme note own een Mme new test . g Xh 1863 h lift e left IMt * .ItF3 1984 - 1973 LlM

$ te.at) 33 8 U .tes M $ M.gf M lt.M 11.38 9.M i .

36.436 10 M.433 3D 23.ama 31 14.11 81.45 9.18 {.

M.47 3 08.000 M 33.713 M M.it 13.48 11.44 g.g63 6 6.7N l 6.gM S 14.61 13.98 18.05 4 .

Its.ee? W 147.071 Og of.get B 14.41 18.25 10.48 6 13.306 .

7 18.343 0 e,get a 't .M 8.M 7.7s - 6 6.348 3 6.483 3 4.385 4 7.06 8.M l.R - 7 103.140 let IM.407 19 140.779 100 14.M 11.85 14.11 8 36.338 19 89.940 le 17,3e 16 IB.M 88.08 14. 5  %

as .

.736 3 m . 18 9 48. S le 1 1 -!.30 1 1 &77 I t1.41 14. 5 7.5 11 16lges$8 9 1 6.695 10 13.fil 12 S.11 7. 6.ts it 1.56 1 '.57F 1 1.tM 1 6.38 6 4.48 13 set 1 000 486 .15 8. 9.M le 1.70s 1 1.008 1 1.1M 1 S.M 7.15 7.25 Il 7.100 4 6.96 4 4.3 4 (4.15) 2 51 8.1% le 1.478 1 1.383 1 att 1 3.88 6.5 f.ts 17 3.996 2 3.M1 I t.itt 2 2.N 4.06 9.M 10 ,

71.943 30 06.Me se .

4t.986 le 5 .05 16.15 18.18 19 23.876 il 88.187 13 14.718 13 11.88 18 15 9M N tot let . 21 18.087 le it.437 11 18.63t 13 14. 5 3.1% l.98 92 4.477 2 4.e46 3 3,313 .3 11.38 13.M 7.5 23 3eef 300f - agg (1.45) .75 .38 De M

est $18 4gg (18 8 ) 2 15 5.M 85

. . n 18.019 7 11,304 7 3.u?  ? 11.08 9.M B.M N 4.43e 2 t.788 t 1.103 1 (IF.M) (18.ml 3.1s to seu 21W (M.OE) (39.78) + ap 38.405 il M.204 ff R 003 23 9.48 S.08 8 05 31 M

IM.tes M 183.383 M 88.746 76 15.M lt.as M.gg 33 40.274 37 48.004 N N.#3 36 9.M . 11. 5 9.75 M ist les IM 78.15 36.m . M 6.000 3 4.783 3 886 1 4.4% 16.M B.08 38 M.306 30 46.963 M W eee M s.M 11.75 11. 5 37 17.676 18 13.4M S 8.est 9 9.M 16.M 18.m 30 tad e6f 270 19.08 14.M . as 2.9M 1 98 1 em ) .3s M.tg M.3 g a M tel 11 14.300 9 9.M3 9 0.05 17.85 13. 3 el M.712 19 M.703 19 ,10.577 17 0.85 8.95 S.E 4R 4.m4 8 4.005 t t.4M i 18.18 . 10.05 ' 10.08 43 38.888 17 N stt 17 17.183 16 7.M t.78 9.3 44 30.019 it 19.102 13 11.619 10 7.35 7.M 9.M 46 8 9.ses 5 8 9.437 8 8 6.4e4 s s.es le.ts le.g 46 8 1.as s 8 , 1.30 m 8 .et 30 4.es l.ts 7.es 47 .

$ .e4 79 8 .3 7p 8 .e6 as 3.as 4.es F.g 4e 98 80 88 (.M) (.M) (.95) M 32.147 ft.031 N.747 f.95 3.08 4.11 to s

_ . . fl _ f ' . . . Y. .__ O & Y ah _ _aN? Y $_ k .Y W 0 . $ _ U _______

__.____n c - - ,--...-c.,.--- c e .

.a -

GULF STATES UTILITIES COMPANY COMPARATIVE BALWCE SHEETS (Thousands of Dollars) .

__1973 1972 1971' 1970 g -

PLMT MD OTHER INVE$ TENTS:

Utility and other plant:

Electric utility plant. -

at or19tnal cost'................. 81.307.877 $1,207.649 $1.102.136 $1.017.012 Steam products plant, at cost..... 52.833 52.754 52.185 52.072 Gas utili ty plant, at cost. . . . . . . . 19.975 1 8.82'

'8.044 17.506 Tota 1......................... 1.3so. m 1.E v.EZU l.1"I.365 1.085.590 Less: Accumulated provision for depmci ati on. . . . . . . . . . . . . . . . . . . 292.977 261.872 231.607 207.064 Total plant less accumulated provision for depreciation... *i.087.708 1.017.352 940.758 879.526 Investment in and advances to sub-sidi ary company, a t equi ty . . . . . . . 20.937 2.583

.Nonut111ty property and investments 1.020 1.012 1.240 1.232 Total plant and other invest-m nts......................... 1.109.665 1.020.947 941.998 880.758 CURRENT A$5ETS....................... 51.414 86.261 35.230 35.183 DEFERRED DEBITS AND OTHER ASSETS..... I 1.752 1.661 1.830 TOTAL A55ETS.......... . . . _

51.105.960 3 vis.usy 3 917.771 LIA8!LITIES CAPITAL STOCK AND RETAINED EARNINGS: .

Preferred stock. cumulative. $100 p4r............................... $ ' 17.5 Xi 8 '17.500 $ 82.500 $ 82.500

, . Common stock..without par value.... 187.3 x 187.580 - 157.5st 147.300 Premium on preferred s tocks . . . . . . . . 655 -655 600 600 Retai ned earni n0 s. . . . . . . . . . . . . . . . . . '54.550 139.354- l$.406 115.490 Common equity.................... m .73 arr.5as ;r 3.5ss rs3.390 Total capital' stock and retained earnings. ..................... 460.291 445.089 396.086 345.890 LONG-TEM DEST:

First Nort9 ate bonds............... 519.000 469.000 469.000 434.000 Debentures......................... 11.12 i

• . il0 IN i?5 11.2 4 Total long-tern debt............ Er '.1r , e . i o or .; ;is ses r o Total Capt tal t ration. . . . . . . su i.41 , - 0 l' .. LS 57 W 61 79' .1< 0 CulWLENT LIA81LITIES..................

E l.88J 4. . .3 3 :. 16 sa.as 4 DEFERRED CRE0!TS..................... 21.075 18.219 15.811 14.580 OPE RATING ESE RVES. . . . . . . . . . . . . . . . . . . 1.771 1.715 1.710 1.718 CONTR!8LRIONS IN A!D OF CONSTRUCTION. 3.829 3.320 2.772 2.426 ACCtMR.ATED DEFERRED INCOME TAXES.... 63.717 K 514 $0.519 45.523 TOTAL LIA81LITIES.... M M $ 978.889 3 917.771 t 3 Decr m e .

Page 6 wn-mmm.mmmmm mm-mm-----smm,m--__

e- - .ma. .,rmnamw -

GULF STATEi. UTILITIES COMPANY COMPARATIVE BALANCE SHEETS (Thousands of Dollars)

Avg. Annual Avg. Annual Avg. Annual Growth Rate . Growth Rate Growth Rate 1969 1968 1963 1971 1973 1969 - 1973 1964 - 1973

$913.320 $797.571 $507.039 8.8% 10.4% 9.9%

51,426 49,639 40,205 .Ss 1.3% 2.8%

17.083 16.550 13,077 4.5% 3.85 3.7%

981,829 863,760 561,'21 8.31 9.8% 9.4%

185.561 167.524 99.899 12.31 11.8I II 4%

796,268 696,236 461,222 7.35 9.35 9.0%

1.078 1.163 789 (6.15) (2.65) 2.6%

797,346 697.399 462,011 8.0% 9.75 9.25 29,792 28,432 18,175 13.55 12.65 11.0%

1.502 2.196 742 12.75 3.65 -

13.4%

5828.640 57zB.027 5480.928 8.2% 9.8% 9.2%

9

$ 82.500 $ 82.500 $ 62,500 12.55 7.31 6.55 119,083 119,053 88.829 8.45 9.5% 7.8s 600 600 557 3.05 1.85- 1.6%

103.366 931557_ 56.177 10.25 10.65 10.7%

ZZ3.049 213.240 145.563 9.25 10.05 8.9%

305.549 295.740 ,J&aL3, 10.05 9.35 8.3%

374,000 324,000 204,000 6.15 9.9% 9. 8%

11.125 12.000 (3.55) (3,35) (7.95) 355.4z5- 336.000 5.95 9.55. 8.85 691 .' 74 631.743 7.75 9.4% 8.6% g 8'1,517 46,9Z3 , 10.45 12.35 15.9%

11.745 9,668 3.137 13.15 16.9% 21.0%

1,201 1.229 702 1.05 7.6% 9.75 2,141 1,788 454 16.45 16.55 23.85 40.862 36.679 22.351 11.95 11,75 11.01 5828.640 $728.027 $480.926 8.25 9.85 9.25

'In 7wvTmMur"%mM Wv vmT.mww.aT.ws. rwrva r cw.es um a av a .y:.wwnnmusw e

e, , .

GULF STATES UTILITIES COMPANY CAPITALIZATION .

urim sian am EtAint0 t&mial .

Yti. ?l,19P3 hjid]

CSIWI $10tf ** . Wilheut ger Welte ** Authertaos. 40.000.000 theres +.

totstenfine. 86 447.330 shores ( 70.241 Shoressne rs ) . . . . . . . . . . . .. . . . . . . $107.679.725 $107.579.775 '

139.364.811 ETAltte Eltbilk ..g... ..........o........ .... ........ . ........ M toget ceuma statt one rot atmos sereinet . . . . . . . . . . . . . . . . . . . . . . . . .. .. M 1326.934.1 4 Petit 00tB $10Cs =0ensistive.1100 per value..Authertaed. 3.000.000 shares = tutstandtag. 4.175.000 theres (I.072 Shamesners). .

itse redusetten orttes of eli prelDered stest issues ta the egerogate. mere lue.407. lit et Seeenner 31, 1973.

Sne.es .

54.30 Dtviesad ........ ............................ $ ?.000.000 .5 7.000.000

$4.40 Olvident' ... ..u 100.000 ............................ 12.000.000 12.000 000

$4.40 Dtvleund. ~

1000 norset .... ... 00.0W ........ ................... 6.000.000 4.000.000

• • $4.44 Dtviesad ........ M.000 .. ......................... l.000.000 5.000.000

$4.90 Ditlesad ........ 00.m ........ ..... ............ l.000.000 l.000.000 94.64 Dtvidshd* . .. . . . . 100.000 .. ................ ........ 10.000.000 10.000.000

$$.00 Dttteend ........ fl.000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.900.000 7.900.WO

$5.00 Divleend' . . . . . . . . 100.000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.000.000 10.000.000

$6.00 Dieteend ' .. . ..... 300.000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.000.000 20.000.000

$7.06 Dietesad ........ ............................

1stal preferred steek ....... ,,,,,,,,,,,,,,,,,,,, . , ,

80811481 GN P90Ft00E 0 $1tC05 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . W $ 665.136 total sepitet stock ead rotolaed aerolaps ... ......... ...... .... L,4W.aIU9EE M

. Lem.TElst 8001 .

F1051 IO910Att SWW6 ** Authertaed, $1.000.000.000 principal eumontt Stettet und f reeviseenats for 1974 eWreeste $6.45,30. The f m ar easects to 6ettify sult escutrearets by certifyleg property eedittens to the trustee.

M SL 1976' . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 17.000.000* l 27.000.000

• I3t/Os 9 esedue Aertl ner 1. I . 19 70* . . . . . . . . . . . . . . . . . . . . . . . .II.000.000 . . . . . . . . . . . . . . . 12.000.000....

t 3/48 age Ossenber 1. 1979' . . . . . . . . . . . . . . . . . . . . . . . . . . .'. u . . . . . . . . .. 10.000.000 10.000.000 t 'ntes ese June 1. 1900* . . u . . o . . . . . .. . o . .. . . . u n. n u .o . . o n. . 13.000.000 13.000.000 3 3/05 eue assener 1. ItSt r . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.000.000 10.000.000

• 3 1/8 due Beesumer 1. 190f' . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.000.000 10.000.000 3 3/00 aus Desseer 1. 1993* . . . . . . . . . . . . . . . . . . . n . . . u .. . . . . . . . . . . . . 10.000.Wh 10.000.000 4 1/45 ese Septeuter 1. 1985 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . u . . . . . . 16.0 5 .000 16.000.000 4 7/05 our este0er 1 19 17.08.000 '.7.N0.000 4 S ese may 4 . 19b. ..87 . . . ... .. ... .. .. ... .. .. ... .. .. . .. .. ... .. .. ... .. .. . .. ..

. . .. ... .. .. ... .. .. . . . . . 30.000.000

......... 30.tDB.000 4 3/es eue January 1. 1900 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40.000.000 le .000 a

6 1/45 A eue mmear 1. lege . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . 46.000.000 16 .000 1000............................u......u...... 17.0 3 .000 17 000 4 t/g aus 4 4/m dueJu)y any 1,1000 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.000.M8 ... 17.000,000 6 1 ese Jasmery 1 1906......................u.................. W.80.000 30.000.W80 61/05 aus February 1997......................................... 5.000.C00 ' N.auo.mo al.000.03 fl.000.000 6 n/05 ese Peteuery6 3/1000.......................................

05 A due Ortster I .1908 . . . . . . . . . . . . . . . o .40.ND.08 . . . . . . . . . . . . . . . . . . . .W.000.000 7 t /45 due Asse 1. 1900 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.030.000 m .mo

- 0 1/W & aue Osteer 1. 1000 . . . . . . n . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . 86 NS 000 m 000 0 t/B sue february 11 8He ......u................................. 3.03.9 3 .05

? 7/W A eue Geesubor 8000....................................... N.019.0N at .000 7 1/05 ese besember 1. $003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5. . . . . . 06,0m.000 0 1/3 ese Aueust 1. 2003 ..ononu n n a nouou..o.n....n...

1stel ti rot sortte00 hence . . . . u . . . o . . . . . . . . . . . . . . . . . . . . . . . . . . pe, 6

$18.000.000 priae4 pet amount 00rueffm05 4 t/m ese estater Ostherteed.1901 1 .. . .. . . . .. .... . . . . . . . .. .. . . .. . . .... . . .. . . . I 10.121 23 3 10.000.000 Total lent-tere Sett (ensleding tortten eue within one peer) ..... g p+ g tetet sept tei t aatten . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lateg,Eg g

$10CE 1000WE0 Atta15 AND 0861510005 .

Trensfer Atents: Invistroes t the Americea Nattenal tent of Beaumont. Flest locortty Rottonal Senk of beesssent.

Dessent tones Beaument.1enes

1. the Chase ashetten Bene, hou Teet. 8. T. f tinaefecturers Olsever 1rvst tegeny.

/ the First liettene) Dean of ptsego, Chttete.111tnett Ilar tort, b. T.

/ terthere Trust Canoeny. Chttege. Illinets e ustes enWort stest (scheats. Inc. y tates for vs.se preferred and $4.00 preferred.19ap l

.e usted on non vort. menest and pacific Cosit siset series Lachen)es / For Camune Stect enly

• tsc1setag $1.000.000 in treasurp p' O 6/W ese meren 1. 3004. 660.000.000 et included

• te eBowe figures Page 8' .

x

• • , GilLF STATES UTILITIES COMPANY FINANCINGS SINCE OCTOBER,1944

. tone usa een.

emee.,ee=,

. ,pe See tr.te Wm.t team !iuster m., ines.

Jan. . wee irt.tw $18 Se  : 3.410.600 Jan., not 876.479 16.ltet 4.100.050 eise,.1999 Pts.6rn ' #3 910

• 6.Op.ust

+

esp. '960 44.491 f t .Hf 1.100.gm 4pe. . It'd IM.tl6 M Of 6.08.m esp. W55 701.04? 5 9ee.4 40146 0 .

June.196 314 .6 /s 14 95 8.Wh.e00 lept . , f 9'm 180 .8 % N .01 1 106.810 June. It%f IWS.elN af M e llt.03 ans,. tun te0.Onn at til 10,et.ene step. MM #90.009 01 40 ll,4ft ABC Jene, see 6 All.el* t.9ee.1 60llt . .v.

.ien . M* HD.psJ 36. 4 4 II AM.ItB star. Men' 10.173.664 4 fee.1 Milt *4 sob .1966 1.400.INm Fl .61 10.794.850 m

I ,400.fwl 3 . lM Jt.fil.ep let., a .l

. w .l.l p.. y . l.

':tltatiMest awesole

0. . . ii .ee e,in emessi WM - *. dt. O! bt:1 tsL20n Is 5mmer la a0 in.Det. liOO.wi  : 3.eso.s u a.

i 4., neiL., nos 4.30 m.one ie0.m i As.se

• . t na e ao m.e00 wi et 4.eet .em e...,. we e .r0 m.are lee.e000 e.004 ms Julp, itV e 48 90.800 100.WO l Alf.995 Bet., Itut i fl0 76.Su0 100.6004 . f.69 Mi Joe,, 99 9 S.es 100.000 let. 40 4 .0 4 .000 Oc t. , 1963 4.67 100.000 000.40 40.043.N0 July.1968 6 88 700.9 % 100.fl3 30.04t A00 1972 7% l# llPl le)Leinetate bee .

. Det. steel penet -

im wm .ama_ munu -

an,, no / 6 l e.e u m lat.W.eso top is4  % tv.at 000 ape. , 1948 8 1 ese 1978 If .sh.000 809.788 li.146.40 Dec., l949 7 3 t. e.c 1979 10.MS.mo lef .18005 l$Jte 900 dess.1940 .' l 4. ewe h5 13.000.000 100 Mll 132.He ene.,19$1 1 Isu ene 1998 90.000.000 tot. Its le.ilem

,, l947 e liv' ese 1987 40.000.00D 100,1 4 10 All

., 19s3 3 lett eue 1983 10.000.000 le t.300M t$.D.2 000 tapt., 9016 4 lite ese 4th 16.000.W0 000 .8 S Il M tat.,1963 4 f/de ese 9907 18.4 0.080 te .6 tes 19 JS Inny,1940 4 I eve teet N.000.000 101.0008 S.M3.03 Jan.,1949 414' ese 109 19.000.000 lel .eSt .'06.9 9 Dec., 89te 6 is41 ese its tal 96. set.as let 62 . 08 5 July. 460 8 Pru' ese 1980 87.800.000 Ig. leget Isil$. gen my.1962 4 3/Pt ese 1988 II.M.Nfl 19.98 18. IN.S den.,190s 6

• ee 406 30.000.000 100.100004 2.W1.900 feb., M67 6 3/8 ese 8988 M.tet.no ist 44 M.40.6 fot., lete 6 6 4' ese 1990 76. 4 0.000 let. Wit 88.987.800 set., Stet 6 $/44 due 198 (4) 9.W.#0 tel 185 4 else., lett 8 lies ese itse it.eII.000 100 etes M.t tapt., feet 81/et ese 1990 (e) 2%.0 9 .800 96.40ps $4 pe., 9970 e l/n ese feet 2 .0 9 .000 et 894 S .In Ops., 4 70 7 fle' ese 303 (A) B.4S A00 40.496 M m me.,1981 9 t/.'t ese 351 Jh.W.NB W.006 86.010. 3 0 Out.,197) 0119 Gus 3#3 W.W.S 98.7648 a0.007.9 he.,1974 0l/W GuoISS M N.left M

400setete .

Pe.en gel ec*4e teggeren N A18 h D M 4.a. ,1980 3 4 ese 4900 $1%.100.000 900 SPl il M kl., BW1 4 l/>f One Stel M 100.1016 I '1 twei Emm ag,,3 taneetate tsumma llest $8 76.470.W0 Pmwe've Statt .Mt.301.W tetel I wttp 5f05.027.692 fint sletteege tones 9001.004.161

$mentem 30.0RT.W lotal est it i I ioni i

e ,ra.r.w. co...i. .e. e0 .se m.. e n." Page 9 0 1 ,. rees . Di.ti

~ '

f ~'

.1 .

= / . -

)

GULF STATES UTILITIES Cow MtY

~

ELECTRIC OPEMTING REVENUES " =

(Thousands of Dollars) a 4, 4

1 'i

,C

. tm -

1

• w y j -j E, d M M M de Een ag. M E M E .m' f ~

i .

-r Total

% 1 1  % Uectric

$- w w w . < e,ereu., s r Total Commercle1 Total Industrial Total 9ther Tgtal nevenues Incegese g M 9eeldentle) 6.2 29.1 19'S 996.356 38.8 $55.689 21.2 599.231 37.8 $16.458 $262.895 '

19T2 36.1~ 46.808 21.3 TT.981 35.5 15.203 T.S 218.M6 14.8 ,

79.43E 36.1 48.899 21.5 68.322 35.0 12.63T 6.6 190.585 S.T i 1971 GBJET 6.6 19M 63.463 36.2 3T.591 21.4 63.398 35.2 ' N.961 6.2 ITS.31's h 1909 35.4 M.43E 21.5 99.36T 36.1 9.063 6.0 M4.48T 11.4 W .821 1988 38.3 32.433 22.0 52.858 35.8 8.736 5.9 147.621 11.9

53. 9 8' 8.9 1967 4T.613 35.2 29.562 22.4 46.088 35.4 T 988 6.0 131.953 1986 48.305 35.6 27.229 22.5 42.865 35.2 6.986 5.T 121.196 9.0 1985 35.2 25.933 22.5 39.796 35.T 6.225 5.6 111.229 8.4 40.205 5.2 1984 3T.932 36.5 23.339 22.7 36.996 35.2 5.715 5.6 102.652 1963 35.428 J6.3 23.363 23.9 33.713 ,34.6 5.064 5.2 97.568 6.3

}

i y Aug. M 1

• Greuth ante 12.91 14.11 16.11 14.5e 14.4%

1971 - 1973 j As,. misset . .

it; Growth asee 1989 - 1973 11.31 11.41 13.41 13.54 12.T1 4-1 Aug. Amenal ..

5 sconta note 10.41 j 1964 - 1973 9.9E 9.15 11.45 32.5;

,1

• I

_m __.ww., - m - -. v.=.wm a.w m n r.wanswnn.u C- .

9.

GULF STATES UTILITIES COMPANY _

GROWTH IN ELECTRIC INDUSTRIAL REVENUES AND KWH SALES KWH Revenues . Per Cent Sales Per Cent Year . (Thousehds) Increase (Thousands) Increase 1973

$99,231 27.3 11,001,560 5.6 1972 77,941 . .

14.1 10,415.986 11.1 1971 68,322 7.8 9.371.114 7.7 1970 63,394 6.8 8,698,045 7.4 1969 59,367 12.3 8,098,285 14.6 1968 52.858 13.2 7,066.849 15.3 1967 46,688 9,4 6.129.205 6.6 1966 42,665 7.5 5,749.839 9.5 1965 39,706 10.0 5,249,407 13.2 1964 36,096 7.1 4.637,833 11.7 1963 33,713 9.3 4.151,722 12.8 Avg. Annual -

Growth Rate 1971 - 1973 16.1% 8.2%

Avg. Annual Growth Rate 1969 - 1973 13.4% 9.3%

Avg. Annual ,

Growth Rate 1964 - 1973 11.4% 10.2%

resvumrwommewacsweea mxomrmmmmmumamnuem memamm-m_.

. . . . . . . . I g ..

.. -- i

i. GULF STATES UTla.tTIES COMPAftY i b .

~j to ELECTRIC REVENUES FROM INDUSTRIAL CUSTOMERS i Pf .(Thousands of Dollars)

y. .

t 4- '

j t

o

$ l 1 ,

Y .

y

~

} -

i 1973 - 1968 1963 . p.g Annual Growth aste_ g

," . . J c ~ ~-

11 ,e-ye=r ten- yeer j

's  %  %

'  % 1964-1973_

i of Total. Revenue of Total 1999-1973 3 Type of Industr1+ Revenue of Total Revenue j .75 i 1.71 $ 983 2.85 2.eE e

$ 1.912 1.05 $ 915 16.61 13.9E 1 Cement 27.133 51.3 15.006 47.1 <

58.493 ' 58.9 4.3 6.4% . 3.5% l e Chasicals and Allied Products 2.1 1.506 2.9 1.462 011 Fields 2.05a 4.3 12.31 14.65 a i

5.677 5.7 3.182 6.0 1.459 2.9E I

} Paper and Allied Products 3.074 5.8 2.757 8.2 3.75

' Pettw1een hefining and Related Industry 3.600 3.7 10.7 8.01 11.41 10.7 7.236 13.7 3.603 Pfpeline Peuptag 10.639

.8 326 1.0 9.9E 0.15 l

],. .7 444 Se3t Itining 71 3 122 .4 6.25 (.95) l Sand and Grevel 112 .1 83 .2

.9 10.31 9.61 y 760 .8 466 .9 304 6.75 3 Shipbuildint 1.3 791 1.5 669 2.0 10.21 4

Steel 1.298 7.2 2,843 8.4 10.95 8.51

• 6.409 6.5 3.818 14.81 9 75 Synthetic Rubber 9.9

/}

q Other 8.398 8.5 4.210 8.0 _

3.339  ;

100.05 13.45 11.45  :

'. 100.05 $52 E 100.01 $33.713

1. Total Industrial Revenues $99.231 .

. i j

fi I 5 .b a

2 8 I i T j 3 1 3 3 t .

5 $

4 . A

s.  :

a n 1 . 0 3 -

.t 4

4 3

i i . :*

3 1

=_~ w n- ~ _ - . . ._

p F ..: . GULF STATES UTILITIES COMPANY INDUSTRIAL CUSTOMERS (ELECTRIC)

Cement. Petroleum Refining and Related Industry Alpha Portland Cement Co. American Petrofina Ideal Cement Co., Baton Rouge Gulf 011 Corp.

Shell 011 Co.

Chemicals and Allied Products Union Texas Pet. Div., A111egl Chemical Corp.

L Union 76 -

Allied Chemical Corp.

Cities Service Oil Co. Pioeline Pumpin2 Columbian Carbon Co.

• Continental 011 Co. Allied Chem. Corp. .

-Cosmar. Inc., Colonial Pipe Line Co.

Dow Chemical Co. Dixie Pipe Line Exxon' Chem. Co. U.S.A.. Explomr Pipeline Co.

E. I. DuPont Co.- Gulf Refining Co.

Foster Grant Co. Inc. Exxon Pipeline Co.

Big Three Incorporated Mobil Pipe Line Co. '

Geigy Chemical Company Plantation Pipe Line Co..

W. R. Grace & Co. - Davison Div. Texas Eastern Transmission Corp.

Gulf 011 Corp. Texas Pipeline Co.

Liquid Air. Inc. West Texas Gulf Pipe Line Co.

Hercules Powder Co. BASF Wyandotte Inc.

Houston Chemical Co.

Jefferson Chemical Co. Salt Minino Kaiser Aluminum and Chemical Co.

Koch Chemical Co. . International-Salt Co.

KoppersCo.,Inc.(ARCO) Jefferson Island Salt Co.

Mobil Chemical Co. Morton Salt Co.

Monochem Inc.

'Olin Chemical Corp. Shipbuildino Phillips Chemical Co.

Pittsburg Plate Glass Industries Beaumont Shipyard of Bethlehem Steel Sid Richardson Cart >on Levingston Shipbuilding Co.

A. Schulman. Inc. - Cabot Corp.

Shell Chem. Co. .

ggg1 Stauffer Chemical Uniroyal Chem. Co. American Bridge Div.. U. S. Steel Corp.

Vulcan Chem.- Co. Stupp Corp.

BASF Wyandotte Chemical Corp.

Synthetic Rubber Grain Handlino -

Cargill. Inc. B. F. Goodrich. Inc.

Copolyaar Paper and' Wood Products ' Finstone Tire & Rubber Co. '

Goodyear Tire & Rubber Co.

Champion Papers. Inc. Noches Butane Pmducts Co.

Crown Zellerback Corp.

EasTex. Incorporated South Central Bell Tel. Co. I Georgia Pacific Corporation Owens-Illinois Mill Equitable Bag Co.

Kirby Lumber Co.

-Louisiana Pacific Corp.

1 Page 13-

s .

a L

GULF STATES UTILITIES COMPANY INCOME APPLICABLE TO CO M ON STOCK (Thousands of Dollars)

% Increase Over Year Amount Previous Year Dividends TI7T 447

$43,118 7.2 DW 26,569 1972 40, 16.0 1971 34,925 - 25,009 1970 34,914 14.0 22,740 1969 30,628 7.0 20,819 1968 28,619 16,0 ,

19,182 '

1967 24,668 3.6 17,013 -

1966 23,803 13.6 16,183 .

1965 20,958 13.5 14.731 1964 18,466 8.0 12,863 1963 17,103 3.4 11,619 GULF STATES UTILITIES COMPANY COMMON STOCK EARNINGS AND DIVIDEND DATA Earnings' '% Increase Over Dividends Paid  %-Paid Year Per Share~ Previous Year Per Share Out TIT 3 $1.70 6.9 51.10 65%

1972 1.59 8.9 1.04- 655 1971 1.46 (2.0) 1.04 715, 1970 1,49 8.0 .98 665 1969 1.38 6.2 .94 685 1968 1.30 9.2 .88 68f 1967 1.19 3.5 .82 695 1966 1.15 13.9 .78 68%

1965 1.01 13.5 .71 70%.

1964 .89 8.5 .62 70%

1963 .82 2.5 .56 68%-

( ) Decrease -

age 14L a.w_, m = ,m o unr-- w,~2.,- .m-,.v er 3 - ere m a y .w . r , ..m.m- .w

.. .. . 7 GULF-STATES UfILITIES C0fFAftY jj TOTAL PUUIT If8VESTMEllT ,

- 2 s

k a

a Steam .

Electric  % Gas  % Products  % Total  %  % of )

$ Inc. Depreciation Plant Year Plant Inc.- Plant Inc. Plant Inc.- Plant g j

$1,307,877

• 8.3 $19,975 6.1 $52.833 .1 '$1.380.685 7.9 $292,977 21.2 1973

-18,821 .4.3 52,754 1.1 1,279,224 9.1 261.872 20.5 1 1972 1,207,649 - 9.6 1971 1,102,136 8.4 18,044 3.1 52,185 .2 1,172,365 7.9 231,607 19.8 l i.

R 1970 1,017,012 11.4 17,506 2.5 52,072 1.3 1,086,590 10.7 207.064 19.1 l 1%9 913.320 14.5 17.083 3.2 51,426 3.6 981,829 13.7 185,561 18.9 -i 3 863,7C< 15.7 167,524 19.4 e 1968 797.571 15.6 16,550 4.3 49.639 22.0 689,934 13.4 15,870 3.8 40,696 .5 746,500 12.4 150,323 20.1 1967 1966 608,307 9.3 15.289 3.5 40,493 .3 664,089 8.6 134,149 20.2 1%5 556,504 6.5 14,766 3.3 '40,394 .4 611,664 6.0 123,750 20.2 5 522,491 3.0 14,296 3.0 40,229 .1 577,u16 2.8 113,098 19.6 i l

1964 1963 507.039 5.6 13,877 3.8 - 40,205 1.7 561,121 5.2 99,899 17.8 j i i y '

1 Avg. Annua 1

- Growth Rate l

8.8% 4.5% .5%

8.3% . 12.3% ,  ;

h 1971 - 1973 i.

@ Avg. Annual

• j Growth Rate 9.8% 11.8%

l j 1 % 9 - 1973 10.4% 3.8%

1.3%

b ~

1 3 Avg. Annual 1 Growth Rate 11.4%

3.7% 2.8% 9.4%

Q- 1964 - 1973 9.9% f.

H I 2

j Table in thousands of dollars l o

I li I h5 .

- - .- - m m,. . - - ,. . ,,,. - ._ -

1 F

_.- GULF STATES UTILITIES COMPANY SUM MRY OF OPERATIONS GROWTH 197? 1971 1970 g _ Je7A ,

tttC1 kit M0 ifLAN P4000C15 OtPAatstelf t C us tomers I hestdoette) . 4 . .... ....... 389.29t M0.380 330.416 319.3t%

! Coswrtce) ................ 41.906 41.144 40.171 39.251 3 Industree) .... ........... 6.115 S.370 4.446 g606 433 1.W1 1.320  %.324 4 Ott'er . . . . . . ............

6 1stel . . . . . . . . . H8.317 300.010 377.t27 364.H6 Ettemettteaurteles(7housands!........ 3.846.3bt 3.000.309 .

'6 besteential . . . . . . . . . . . . . . . . . 3.730.037 3.132.933 7 Camertce) ................. 2.l?9.N1 f.300.471 . 2.114.009 1.983.079 8 Industriot .. . . . . . . . . ....... 11.001.M0 10.416.906 9.371.114 4.000.M6 9 other , . . . . . . . . . . . . . . . . . . . 1.619.670 l.719.349 1.e0t.000 1.338.437 '

10 letal Utt11ty . . . . . . . . . . . . . . . 18.031.936 10.062.061 16.101.tM 14.Ste.610

= 11 Steen Proeucts ............... t.80.38f 8.40#.9#1 t .480.W3 f 12 fetal System ....... ....... 31.712.308 , N .064.902 18.522.219 1).304.767 806.377 (loctric Customer Osten Aversee Etteuett Heer Use 13 Per testeenttet Customer . . ........ .10.019 10.671 9.646 9.064 Averece nevenue Per nesteenttet 14 Custener . Dellers . . .......... 164.91 236.66 211.67 2 9 .67 Averese bewonee Per Ettewette pour . Cents:

15 *testeential .. . .. . . . . . 2.4% t.13 f.19 2.22 16 Camersten . .,.......... 3.16 1.M 1.93 1.95 17 Ineustrial . . . . . .. ....... .90 .76 .73 73 OAl 0(PARTeth11 .

It Co tamers . . . . . . . . . . ....... 71.064 70.W7 69.1M 67.328 natural fees Perchased-.

It M . C Att Feet . . ....... . . . . 9. net.531 9.000.473 8.75.51 9.607.70s to Sales . M Cutts Feet ...... . . . . 9.114.942 9.441.612 4.95 418 9.209.457 21 Notn . Miles ......... .. . . 1.019 9 79 M9 937 CApePitl1V.10A0 AND M5tPVll (6ttemetts):

Genereting cepettitty at time of

!! pees need (1) . . , . . . ......,. 4.564,000 4.166.000 4.166.000 . 3.626.000

. Capettitty purchased from les toyhurn and 101eso send Den and Cejm Uectric Pemer

• 23 Casserettw. lac, enthout merws . . . . . 160.000 004.000 98.000 98.000 tetel Capettitty et tme of poet 24' lead ................,.. 4.732.000 4.59.000 4.263. 5 0 3.723.000 Poet 1eed inclustat interrvPttble il leed (1) ............ . . . . 3.790.100 3.002.M0 3.306.000 3.039.400 Plus Pouer sales wit > reserves 26 to other utility tystems .. . . . 0 0 1W.W0 1W 000 tesst laterrvetitle lead et tlne of 27 poet teet s . ............. 20.000 30.000 30.000 37.600 Purchased pee r vith m erves tactustne TVA Olverstty 28 !asorchente . . . 4 ........ 215.000 215.000 216.000 216.000 teed for untch roofrves are-29 provided ............ . . 3.546.500 3.M7.0W 3.130.400 2.006.000 30- Capettitty in tatoes of tend ........ 1.186.500 1.011.100 1.113.000 436.800 tess: Scheduled antatenance At item 31 of Peak teed . . . . . . . . . . . . 0 0 176.000 M6.WO 32 heterve Capettltty . ........... 1.106.000 1.011,.140 937.000 000.t00 33 Pertent reserves . . .. . . . 33 2 30 20 M Annual Lead fetter ... . . . . . 64.05 64.M 98.25 48.4%

Output 35 net m.auh tenereted . . . . . . . . . 21.000.607

• 21.201.658 30.643.077 19.300.614 36 Not Purchased and Interchenges .. . . . 917.9W lit.l?$ 93.Ne# 1. M 3306

, 37 Totet .......... . . .  ?!.006.499 11.ml .233 19.063.018 10.230.276 25CELLAnt005:

30 Steen Sales . Militens of Pounds ...... 25.?!3 24.64J 23.M3 24.168 nesteum Steen Semand . m .

39 Pounes Per neur . . . . . . . . . . . . . . 3.309 3.309 3.103 3,371 tiectric time . Pole Milest '

tranentssten (69.000 Volts and 40 over) . . . . . . . . . . . . . . . . . . 3.667 3.641 3.999 3.287 Otstribetten (M.600 Volts and

• el Undee ) .......... ...... 16.337 15.019 14.666 14.303 Underground Construction ..

of Miles of Soute . .. ... . 671 $Pl 409 3pg e.- gu.

(1) Eacludes leed served by and copd. titty of the 70.$00 tile ett stem-eiectris instaliesion sainte ned end opereted by the ladustrial Chestcels Divisten of Allied Chamital Corporetten f Desetes red figure I

() Detrosse Page 16 w.-wa . - m mum - memmm - - m m m _ .s.. _ ...,_m. _ . _ _ _

___ __ . - - . _ ,_ _ , . . , s . .) u . . .. m. .

ll j f- ,

p

^ c3 ;

GULF STATES UTILITIES COMPANY SUlHARY OF OPERATIONS GROWTH

. 5 Act. Aene l Avt. Annual Act. Aamsel

$ lescosee ereuen tote trenth nets tesett note itE 1988 ' IMP 1973 1972 1971 1973 1M9 1973 1984 1973 h 313.W1 307.057 360 M6 2.5 ,3.0L

• 2.63 2.M 1 3.987 37.934 33.607 t.0 2.5 f.1% f.38 2 4.386 4.674 3.700 (0.3) 7.98 4.41 4.P5 3 1.271 1.230 . 187 3.0 2.78 3. M 4.6E 4 MB.tal M0.7M 307.880 2.4 3.M , 2.68 2.65 5 f.406 Mt 3.319.f40 1.4N.336

• l.t 9.M 10.M 10.M i 1.700.400 1.004.433 1.0t0.404 8,4 10.38 10.0% 9.7% 7

. 8.NG.306 7.ftes.000 4.161.722 5.6 8.25 9.31 10.25 8 1.88t.307 1.069 MS $51.400 (11.6) 4. M 7.58 10.75 9

. 13.705.004 It.0M.006 7.1N.912 4.) 8.31 9.41 10.21 le 4.304.000 2.P16.M1 1.618.798 10.7 6.55 5.4% 6.6. 11 14.133.fM 14.200.636 3.tet.7m S.) 4.15 8.81 9.45 12 0.80f 7.Hf $.200 3.3 6.25 7.2 7.61 13 193.M 176.03 132.62 12.5 8.?8 8.41 7.75 14 8.24 3.31 3.$2 9.9 3.31 1.21 i

.35) il 1.N t.0t f.it 10.2 3.68 1.45 L.65) 16

.73 .76 .01 N.0 7.25 3.75 1.18 17 66.004 06.121 57.107 1.8 2.25 1.78 2.M 14 9.NI.000 9.012.506 8.190.1H 4.9 i 48 (.25) 1.M 19 8.ON.181 9.884.433 7.403.066 8.0 i

.N)) . I.es to 917 Set 7e6 4.1 J.B t.9n t.95 11 3.046.000 f.476.II0 1.961.000 9.8 0.05 13.05 4.08 22 98.000 St.EB0 0 (17.6) 19.78 N.48

• 23 3.143.080 3.H7.000 1.961.000 8.6 8.M IL41

• 9.fS #4 2.000.000 8.H4.000 1.631.4e9 5.3 7.65 4.21 9.u M N.000 0 0 . . . . M 0 0 0 (t7.8) (8.88) * . 27 814.0B0 38.000 0 . .

(6.15) . 30 9.8N.000 2.289.000 1.131.400 S.9 7.95 9.43 4.7s it 467,400 #88.000 489.000 17.3 18.85 M.5 10. 5 30 0 0 0 . (30.N) . . 31 487.400 384.800 429.600 17.3 21.M 31.98 9.68 32 17 12 N 10.0 14.53 N.15 .75 33 08.41 67.45 00.35 .31 45 .13 M

(.1) 17,337.898 14.943.316 9.1 M 3tl 3,9 4.M 7.95 g,3g 35 388.4888 187 987 57.063 76 ,7 . 37.35 M .95 36 17.00t.8?0 18.131 .303 9.161.078 4.6 7.05 8.45 9,as 37 M.384 N.47f ,

N.701 4.4 8.15 .38 1.5 38 3.143 3.357 3.480 2.4 .M .

(.13) 39 3.006 3.933 2.315 ,y 3.75 4.43 3.3 40 14.015 13.Mt 11.784 3.1 f.45 3.ts 2.75 41 348  !?4 88 16.7 18.N 19.H tt.lt 42 1

Page 17 i

. . - mm

. . _ . - m. _ .

~'

2 ..

- . 7,, .

p.v..g - - .

E' .

GULF STATES UTILITIES CopFNEY- .

~

ELECTRIC OPERATIf0G REVENUES. KIL0td4TT-HOURS SOLD Af8D ELECTRIC PLANT ~

(Thousands)- '

i Electric Opera--  % Increase Over Kilowatt-Hours  % Increase Over Electric .%-Increase Over

-l Year ting Revenues Previous Year Sold Previous Year Plant Previous Year- .- i

$262,695 20.1 18.831,936 4.3 $1,307,877 8.3 1 1973 -1,207.649 9.6 - -i 1972 218,766 14.8 18.062,061 12.2 8.7 16.101,296 8.6 1,102,136 8.4 l 1971 > 190.585 1,017.012- 11.4

,, 1970 175,319 6.6 14,820,610- 7.6  :

164,487 11.4 .13,768,594 14.3 913,320 14.5 3'1969 797,571 15.6 j 1968 147,621 11.9 12,044,585 15.0  ;

j'1967- 131,953 8.9 10.475,406 8.0 689.934 13.4 'i 121,196 9.0 9.696.543 10.4 608,307 9.3 -!

s 1966.- .

556,504 6.5 l j 1%5 111,229 8.4 8.796,912 11.7 .

102,652 5.2 7,966,788 10.3 522,491 ~3.0 i 5 1964 5.6 i 6.3 7.129.912 10.3 507,039 1963 97.568 '

j i

i Avg. Annual .

Growth Rate -l 1971 - 1973 14.4% 8.3% 8.8% j Avg. Annual l' Growth Rate ~

10.4%-

1969 - 1973 12.2% -

9.4% ,

l i

- Avg. Annual i Growth Rate -

10.2" 9.9%

1964 - 1973 10.4% - .

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Page 20

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GULF $TATES UTILITIES CO WANY

["' .

ADDITLGl$ OF GENERAT NG CAPABILITY

[ *, , Thousands of K' lowatts)

\

Tt.tel by

}ggggg g {21 M M D$ W.'2 E 121 8E$ Dl.J M A*!

!' Boehoe Statsee . . 4, y

- (Qement,1 ease)..... * -

.(60.$)( .gf . . . . .

last01eae Stattene no.1 ans me. t -

( tesse nesse , 14. ) . . . . . .' . . . . . . . 66)e n.

Riverette stetten ' . . . . . . . . 4,

- (labe dearles.1a.)... .

(86)*

aar s. anseec steuse *

._ . gg}g g (labe Charles,14.)... * . . . . . .

330 Clues slee station . . . . . . ggg 3 ,q ,

( Retes Reage , la. ) . . . . too . Sao a.aama Seeues . . . 8g (0penge,Seese)....... . -

. b60 *

(10)s . .

levio creek staues . .

-(Seeres,Sasse)....... . . . . . .

• 86$ 365 5J0 eau . Antes moetent (betesneuge,Ia.).... . . . . . 7,.e * * * . 76**

9etal by Teer a. . . . . . . ,'"15U "TW7 "")WT 3 "'Tf6 .

""WT *W T 7 @

9stal cepebutty

- at sea er fear..... 8,181 t,op$ t,474.$ t,475 3,#5 3,MS 3,430 b A)$ 4 41) 6,3M

......... . ..... ...teheMe4 Casabut ty . ........ .... ......+. . .+

total tr last11R LE!! 1211 AE!' E RMiet.

moense suties (Pa===mt,9eese)..... . . . . hff tastetene s attoes so. 1 aos so. e (antesnouse,ta.).... .. (12)e . '(37)s se$

tiverette Stettes (labe dharlee,14.)... . .

. . 0 ne s. seleen su tten (labe merles,1a.)... . (u)$ (rr)# . . 861 W1use Oles 94etten (asten nouse,14.).... - 5se! (38)# . 1,968 sentes sution (oveess , 9eene). . . . . . . 300L . 6801 . 1,930 sente onen swues . .

(ooeroe , Stone) . . . . . . . .. . 330 v a alt e amentest -

(ans sensi,14.).... . . . . 76ee 9stal ny roare....... ~5W - 85 N ~7W) @

9etal some M ed Gegebutty at aos et soar......... S,164 5,43 6,o58 6,oet

• R&verstee putten moA4 to Pattehurgh Plate Glass Ceepeay; however, the Omgang retalmed use et eueh generettag espetuity untu Jesuery 1,1967 es esserottaa esereted, estatatsee een fuelse by AMied for see asalmelvoly en Auted's syntaa. stase the outpet et snese generstere es set serve cult states vtutstes Deepear eastemero, it te not esented as ese easebuttr.

-( aseseese.

Statisa unite were pe.seted.

Suties matte were re ested; espeetty teest sa estiasted stese requiremente.

• d Unite #1 eso $t were retired.

a otetten unit #3 wee re. rotes.

Gebe M ed ta. service estesi j 1 Berly 1R 43 4 I

. [ Ret odotuen eue to es.reues of an estattes wait by $4,000 kw to Apru,1MS, and the edetties of e 900,000 kw

.st la es,wemer, ins

. I as,wener, in . ,

m - m x m m .m n- - n,wn n e n n en n ~ e n n a. - _ _ ge Pa 21

f Gut.F STATEC If, _iTIES COfPANY

• * =

M WINTER AMD SUMER PEAK LOADS W1 ster Lood As (

Wkter - Per Cent sammer Per Cent A Per Cent Of Yeer PeekLoad(W), Increase Peek toed (W) Increase Summer Load i.

1973 2.861,000 10.5 3,781,700 5.0 75.7 l 1972 2,589,800 13.1 3,002.700 9.7- 71.9 1971 2,290,000 4.0 3.205,000 8.1 69.7

,' 1970 2,201.100 10.1 3,039.400 6.6 72.4 1969 1,999,400 10.0 2.850.600 11.6 70.1 1968 1.017.700 12.7 7,554,000 11.1 71.2 1967 1,612.400 9.5 2.299,600 12.2 70.1

1986 1,472,300 10.7 2,049,000 11.8

• 71.9 L *

!- 1965 1,329.900 13.7 1,832,000 7.0 72.f  ;

5 1964 1,169.700 3.2 1,712.100 11.8 60.3 i .

1963 1.133,200 , 8.5 1,531,400 7.9 -

74.0 i

• E n

j l Avg. Amount *

. ereuth Rate 7.35 131 1973 . 11.85 3

Avg. Ammuni -

erames asse 8.25 -

,Iggg . Igg 9.0g t

.Aug. Annual 4 J.

Grough Rete

• 1963 - 1973 9.75 9.55 p 5essner Peak Leed en August 21, 1973. Winter Peak Loed on Decenter 20, 1973.

a

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.....s. . .. .. . ..

GULF STATES .LITIES COWANY {

SUlmER AIR CONDITIONING REQUIRDENTS i;

i E

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[

- 0 Average daily temperature minus 65 degrees equals cooling degree days. f b

c

- Actual cooling degree days. Normal was 2,420 cooling degree days. $

m

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--GULF STATES UTILITIES COMPANY RESIDENTIAL COOLING. AND HEATING KWH USE PER CUST0tER 7 L_  :-

~ . - -

4 , i i i , l ,,, .

!  :  : - - 1X Kl_._.

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Maximum Month's KWH Maximum Month's KWH Use of Cooling Period  % Use of Heating Period 5 Year (May-October) Increase (November-April) Increase 4

1973 859 2.9 119 98.3 1972 835 5.3 60 (22'.1) 1971 793 (2.1) 77 (18.9) 1970. 810 (3.7) 95 13.1 1969 841 31.2 84 (10.6) 1968 641 12.7 94 14.0 1967 '

569 0.4 83 30.8 1966 567 .

20.1 63 76.3 1965' 472 3.7 36 (102.8) 1964 455 5.1 73 33.7 1963 433 (5.6) 55 (10.4) 1 Table in kilowatt-hours

'( ) Decrease Table pitpared eliminating kilowatt-hour base use per residential customer Page 24 m_, m .mm -, m ..

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GULF STATES UTILITIES CODFANY

, ELECTRIC DEPARTMENT FUEL ECONOMY DATA ei .= , 6.a -

84. 9 6.Uu 7

19.0 w --

e

[* tb 18.wo [ 3.44

!?.0M  :

l A.60 14.000 [ 3 80

/: I

- 3.#

1 45.000 8

14.0e6 3.00

. .f I l n..a I  !

S t.000 --.. 3.40 , ,

l' '" 5 E****L .f.",$ .

- - - - - - . - - - - . - - - - - - --- - -s -

t so,oso * -- / " ~

E

_g;g a.co 4.o00 . -

4.ao 6 000 - 1.ao 6.cou 3.so

. I I t i t 1 i I

%3 t t ave a s*> a w, a*r swe aw, apre ama avra ayrs awe awk'

seu Per run e.=mt.4

• • ** ** R181s Per m SW Omnmted Feel test Fuel test OTW Per Cost of Fuel est est (thevaanes het teneretten Bet 301 per milites STU -

g of collees) 138 (theuseets.) M isamen) 1973 $ 01.324 N.4M.1N 10.5M 37.M 3.98 1972 47.088 19.816.918 10.48B at.M t.37 1971 41.1N 19.800.308 10.386 N9 t.13 1970 38.1N 17.874.986 10.434 N.48 2.13 1988 33.997 16.906.375 10.4R7 N 43 t.13 1968 N.752 13.IN.N3 10.303 N.M t.13 iM7 N.350 11.000.479 10.400 30.41 2.13 1966 22.577 10.012.M1 10.BM 30.11 8.13 1986 19.400 9.M1.43t M.800 M.35 1.90 .

1964 It.SN B.700.15 M.tel 19.38 f.11

. IM3 16.600 7.448.548 11.984 19.M t.13 Ave. Annust sessen note 1971 1973 20.75 4.65 .35 28.75 23.25 .

Ave. Aneust 6 teeth hate 1888 1973 23.11 8.6s .35 13.11 13.35 Avg. Annual trowen aats IM4 - 1973 '17.08 10.05 (.95) F.(5 6.05 i i

t } useresse.

i

.. . . ..... ._._ - 99d_

...v_.--

e

• GULF STATES UTILITIES COMPANY ELECTRIC RESIDENTIAL APPLIANCE DATA Ave nse No.'er Hemse Per Cent No. of Numet Per Cent Annual KWH

• stith Applianeet Saturetien* With App 1&ence htumt$en Censumption

,,,,,it n 73 12 11 73 it-El M ,

It-31 M - Per Anal 1&nte 115,868 41.02 -1,300 hanses 134.827 38.6 ,

Dryers 188.889 36.9 65,045 23 03 1,140 Air Cenettiening 264.414 75 7 N.A. N.A. 6,000 9.4 9,437 3 34 7,000 Heatins 32.933 60.078 17.3 FT,370 9 69- 4,000 Water Lisetore Preettree p.A. 3,400 nefstgereters 349.407 69.4 N.A.

173,$98 49.7 111.686 39.52 1,000 Food Preesers color M 1evielene 193.857(e) M.5 N.A. N.A. 540 Ettek and 18614e Televittene 293,896(a) .

4.1 N.A. N.A. 360 total hievielene 339,177 95 1 345,158 94.00 served - 349,292.

6 . 10.s19.

Avenge Annual Use

• KWH

• en 1973 appliance eseusetten earvey.

(4 Allows for hence having teth toler and black and white sets.

W. .

• This data met available for prior years.

l

.m.. .. i MB GM.a a i n= , , , , , , , , , a-i j i.-

' tune toen temp taas l-

.e s

m 3 egg ,

1850 I

1963 39 3 3MI lgh 3985 3s.6 3907 3910 39 1 39 9 Ifr3 Ifit . IPt 19 3PS ,

Page 26 )

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e: .

o -

GULF STATES UTILITIES COMPANY g NDNTHLY RESIDENTI AL SERVICE RATES Texas Louisiana Net Rate Per Kwbr* Net Rate Per Kwbr*

May- Nov.- May- Nov.-

. Oct. Aoril Oc t ._ . Aoril First 40 Kwbr Used Per Month 5.504 5.504 5.554 5.554 Next 60 Kwhr Used Per Month 4.554 4.554 4.574 4.574 Next 300 Kwhr Used Per Month 2.604 2.604 2.604 2.604 *

'Next 200 Kwbr Used Per Month 2.35t 2.35t 2.384 2.384 Additional Kwhr Used Per Month 1.704 1.354 1.734 1.364 Minimum Monthly Charge $1.25 $1.25

' When customers have a standard electric water heater in mgular use, the following monthly final blocks become effective after the first 150 Kwbr, which are billed at the above rates.

Texas Louisiana .

Final Net Rate Per Kwbr* Net Rate Per Kwhr

• Tank Caoacity Block In Final Block In Final Block 30 to 70 gallons 400 Kwbr 1.354 1.364 71 gallons or over 600 Kwhr 1.354 1.364 Two or more water '

heaters 600 Kwbr 1.354 1.364 One hundred percent of kilowatt-hour sales are covered by fuel adjustment clauses.

l

• Plus applicable fuel and tax adjustments Page 27

m. mn m - ,: , -i,~. - - . .

e. x a= -~==-~~&

e '

S 4

t

. CONDEN8ED FINANCIAL STATEMENTS AUGUR 1974 Figuves appearing in this report home been teien tvem tfie booie

. of the Company. All flewee esperted are eutiset to such eduse-vients es the annual audit ter independent ecoewetents sney aSectees to be nea==ary. . The Company, in pubitshing the intorneselon een-toined herein, does not snele er intend to make any vepsementellen m.wwer as to the value of the emets er any of them aficsun in the tam eheet.

l Additional copies of thie soport may be caesined from the afflee of the Cornpony POST OFFICE BOX 3951, beaut 40NT, TEXAS 77704 1'

kekki d I $.$N _A #Ih IO_ _I d Od a'E UC.k . OY 8 m $

m._,-.__r.__,-..m.w..,,m,,.,.x..,.,.m,..,m... , , , . , , . . ,

o s Gulf States Utilities Company Comparative Bolense Sheet ,

(Thousands of Dollers)

.y.

ASSET 6 Aeust 31. to7e Aueust 31, te73 incresee U.ility and other plant. et ori tinel cost: 8 38,203 Electric utility 96ent .................. 81,081.279 81,043,076-Steem products plant 62,000 $2.744 64 19,164 743 Gas utility plant . . . . . . . . . . . . . . . . . . . . . . 19A07 .

1.114,984 3,010 T otal . . . . . . . . . . . . . . . . . . . . . . . . 1.163AS4 286,603 3B.229 LAes: Accumulated provision for depreciation . . . . 323A22 Total plant less soeumulated provision for deprecietion . . . . . . . . . . . . . . . . . . . 030,172 829,391 781' 320.262 224,464 96,808 Construetion vuork in progress, et cost ......,,

1.100,434 1.063.846 96,609 Total utility and other plant ..........

Other property and investments:

Other property and invoetments, et cost . . . . . . . . 1.036 940 96 investment in and edweness to autnidiory company.

- et seulty . . . . . . . . . . . . . . . . . . , . . . . 17.767 17.236 621 Total other property and' investments .... 18.792 18.176 616 Current essets:

Cash ............................ 6.317 4.617 1A00 Spee6el deposits . . . . . . . . . . . . . . . . . . . . . . 284 370 86*

Temporary seeh irwestments .............. 1,500 0 1.600 Aeoounts resolvsble. lees occumulated provision for -

uneellectibles .................... 44A04 31,302 13A12-Meterials and supplies ......... ........ 4.464 6.366 1.005 Fuelstook ........................ 22.450 6.432 16A27 Propey ments . . . . . . . . . . . . . . . . . . . . . . . . 3.403 3D30 373 Total current' essets . . . . . . . . . . . . . . . . 86.321 60.297 36.024 Deferred debits:

Unemonised oebt expense . . . . . . . . . . . . . . . . 1.077 948 129 Other .... .. . . .. . . .. .... . . . . . . .. . . 1 AES - 2,100 302' Total deferred debits ..... ........ 2,936 3,100 173*

$1,267,482 ph,1,gl,426 , g LIABILITIES Capitalization:

Capital stock and retained earnings:

8 107,500 8 187.600 $ 0-Common stock ........... ........

16820 146.667 9A33 Retained earnines ....,..............

Totet . . . . . . . . . . . . . . . . . . . . . . . . 343A70 334,137 9A33 Preferred stock .................... 117.500 117,500 0 Premium on preferred stocks . . . . . . . . . . . . 866 086 0-Totes capital stock and roteined earnings . . . . 482,125 482.292 9A33

- Long4erm debt:

First mortgees bonds .................. 679,000 $19.000 00,000 Debentures ........................ 10,126 10A00 376' Unemortized premium, discount on debt ...... SCO 882 362' Total long term debt .............. 650226 630.382 90.263 Total capiteliastion . . . . . . . . . . . . . . 1.061.750 982.064 80.006 Current liabilities:

Notes payetne:

Bank.......................... 17,642 9.113 8.629 Other . . . . . . . . ................. 22,406 0- 22.406

1. .ccounts payeble .................... 24.296 9.079 16,216 Custemors' deposite . . . . . . . . . . . . . . . . . . . . 2A83 2AB3

• 300 Temos scorued ...................... 17,696 20A13 , 2.917' interest escrued . . . . . . . . . . . . . . . . . . . . . . 6.666 6.418 238 Dividende declared . . . . . . . . . . . . . . . . . . 8A36 SA36 0.'

. Other current liabilities . . . . . . . . . . . . . . . . . . 11210 3.434 8.176 Total current liabilities . . . . . . . . . . . . . . 112.103 80.076 62.027 Deterred credits:

Investment tax credit ........... ...... 21.633 19,134 2.499 Accumuleted deferred income taxes . . . . . . . . . . 98.700 80,891 8,078 Other ............................ 1,442 1,161 2B1 Total deferred credits . ,. ......... 91 A44 80A86 10A68 Operating reserves ....... .......'..... 1.786 1,710 76 81,267.482 g 8132.066

'

• Deeresse Mc tA2 +anttW.s'.M:v n :L:*q a m v y m m..w.a ?r . n c v . vmn a ,n,_,,

- :-r.-ir-rnwarw wnm:.caer v a..w cc.:m.% .r.w .m w i

.e 4

Launcione end Tomas OrgentrW under the Lans of Tomas y Comparative income testement (Thousandsof Demare) 2-.

EiWit Monthe 9W Twelve Monthe Ended A ueust M Agust 31

, Operating tevenues:

1Ef E' M .

E E '"8'eens Electric ~ . . . . . . . . . . . . . . . . . . 8224.#1 8167AB1 . 808A10 $319A04 8247A21 872.483 i steem products . . -. . . . . . . . . . . . 16,335 11A87 4A18 23.107 17.211 BAB6

,- .Ges'.................... 4.003 5.138 26' __ GAOL 7.221 228' Total operating revenums .. 245,700 1M,788 80.983 38BA04 271.43 78.151 Operating empenses:

. Puol .................... 101,417 4SA37 82.900 15.73D GBA16 80A14 Purchseed power .;.......... 2A22 3.172 300* 4 ADO 6,230 63D'

~ Ges purehesed o f' r reeste ' . . . . . . . . 2.144 2,071 93 3A55 2A86 480 Other osserations ............ '21.400 19,307 2.182 31.794 28.711 3.0B3 Maintenance . . . . . . . . . . . . . . . . 9.213 8,383 830 14.348 12A15 2.331 Depreciation . . . . . . . . . . . . . . . . 29A26 23,721 8.105 41ABB 34A24 SAGS Tones:

income:

Current .............. 12.904 14,336 1.491' 20.877 24A52 3.375' Deferred . net .......... 5,237 4A73- See 7,204 SAB1 573 investment credit deferred not . 1,908 2.389 413' 15 - 2.797 2.G37' Other . . .. .. . . . . .. .. .. . . 11.545 12,178 823* 17Aos 17A13 300*

teess3 1sses 201,1 #

Totel operating enpenses .. seas 7 _277

_ A30 78.375 Operating ineome ........,... 47.20s 48.0e0 1.116 72AS4 70,308 1.778 Other ineone (deductionst. not .. . . . 27s 142 138 776 216 541 Allowenes for funds imod during ^

sonstruction .............. 7A38 7,100' 648 10.717 10A80 128 income leefore laterest eherges ,... 55.322 53A22 1300 83.877 81.112 . 2A05 laterest eherges:

interest on long term debt . . . . . . . . 22,988 18.145 4A43 33.3 7 27.132 6,256 Other.................... 3.992 2343 M __M M M Total interest cheeps .... 26.900 20.488 8.492 37A92 29.757 8.25 Not income ................ 28,342 32A34 4.882' a15.35 51.385 5,770*

preferred dividends . . . . . . . . . . . . 4,487 4.487 0- 6,7 2 6A24 20s

income applientde to common stock . 8 23A86 8 28,447 8 4As2* 8 30AW 8 44A31 8 537e*

mammmmmmum - summmanum - emummenen mesammas Average someon eheres outstanding . 25,547 25.547 4- 25,547 asA47 4 Earnings per everage common share . $ .93 8 1.11 ' 8 18' S 1.52 8 1.75 8 .23'

' Deeresse Note: Other income (deductions) . not for 1974 and the current 12 months includes results of the Company's subeldiary. Veribus Corpore:lon.

et equity.

WY WA" %".R$] + =y 9e

o.

- - . m - - - - - - . - w . - - - .n -

f s' .

p .

Gulf SMaas Utilities CompOny -

y (Thousands of Dolters)

CAPITAL STOCK -

Common stock, without per velue; authorized 40,000.000 shares; ousten6ng 25.547,328 shares.

Preferred stock, cumuletive $100 per; outhorised 3,000.000 shores; outstoneng 1.175,000 shares as follows:

130,000 shares 84.40 evleiend entitled upon sedemption to $108 per share ..................... 8 12.000 00.000 shores 84.00 evidend, entitled upon redemption to $105 per share ..................... 5,000 80,0D0 shares $4A0 evidend.1848 Series. entitled upon sedempoon to $103 per shore ............. 6,000 70,000 sharee $4.30 evidend.entotted upon vedemption to $102.818 per shore . . . . . . . . . . . . . . . . . . . 7.000 80.000 shares 84A4 evidend, enthied upon redemption to $103.75 per share ..............., .. 5,000 78.000 shares 88.00 evidend. entitled won eeugmption to $104.35 per share ................... 7.000 100.000 shems 852 e8vidend, onetted upon redempelon to $106.83 por share . . . . . . . . . . . . . . . . . . . 10.000 100,000 shares 84.53 evidend. enthled upon sedempelon to $108.57 per ehere ................... 10,000 300.000 shares 98.08 evidenet, entitled upon redemption to $105.34 per ehere .

prior to.luly 1.1977.and therseher to $103.34 per shes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.000 30.000 sheses 87.88 evidend. enthied upon sedempelen to $108.38 por ehere pfler to Septenter 1,1977, then until Sepeoneser 1,1982 to $108.80 per shore, then enes Sepeusdier 1.1987 to $103.80 per share, and theseofter to

. $101.80 per shore ...................................................... 3.000 M

LONG T8flM 089T

, Piset teertgers Sends:

3 BM Earles ese 1938 4eueluem8 81.000 in sessory) ................................. $ 27.000 SE 8eriss elue 1978 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.000 3 3M 8eries dise 1918 . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.000 33 M 8eriesdue1880 ................,................................... .13.000 33M 8erise dde 1981 ................................................... 10.000 31/85 8erins due 1982 .......................a.......................... 10.000 33M 8erton ese 1883 ................................................... 10.000 41/45 8ertos ese 1888 ................................................... 15.000 4 7/8E 8ertes chse 1987 ................................................... . 17.000 4E 8eries due 193 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2D,000 4 3/4E 8eriss elue 18E8 ..................._................................ 10,000 5 1/45 8eries A dus 1988 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ~ 16.000 4 7JWE terten dse 18td0 ................................................... 17.000 4 3/95 0erien clue 1982 ................................................... 17.000 .

SE teries due 1988 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.000 5 3/8E Oories clue 1997. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.000 8 5ABE 8eries due 1908 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.000 8 3/45 8eries A due 1988 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40.000 71/4E 8eriss ese 1988 ................................................... E,000 81/WE 8eries A dus 1988 . . . . . . . . .......................................... 3.000-81125 8eries due 2000 ................................................... 30,000 7 7/8E 8er'l es A due 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000 71/3E 8eries due 2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000 8 1/2E Series dus 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000 8 8/95 Beries due 2004 (leeued Mereh,1974) ..................................... 60.000 ocheniures. .

~

4 5/WE due 1981 ....................................................... g Thomas A. Pace.

Treasurer

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M GULF STATES-UTIllTIES' COMPANY-- ,

i STATEMENTS OFLCHANGES IN FINANCIAL POSITION  ;

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. i Tears

.Mll II?! .Ull Illi 1911

. Funds from Opersticas:

met inseme ............................. $ 50.177.1M $ 66.167.636 $ M.000.230 $ 30.900.410 $ 34.711.lf3 .

Items not effecting verting capitel Supreciation ......................... 36.703.M7 33.606.217 29.906.520 - 26.001.33,7 '23.275.663 Annetisetten of less on sole of presorty ........................... 136.613 tot.440 Seferred Federet income tes .. not ... 4.494.404 5.777.741 4.9tl.M9 4.000.462 4.103.723 Deferred State income ten ............ 206.084  !?7.336 74.503 Inves mant ten treet' .. not ......... 872.783 1.2m.734 1.488.237 f.163.434 Funds fein Operettens . . . . . . . . . . . . . . yJ. gas.org . W .111.5s3 75.377.E7s . . et,554.751 -  :

1 Sole of First ametgage bands ................... 60.000.000 -36.064.906 36.000.000 . . 00.000.000 50.000.000 )

Prsferred stott ........................

tesuma steet ........................... 40.800.000 30.217.000 H.266.710 (29.000.000) - M.311 0la crease .. not(escrease)innotespayable.....

g(30.7M.362) g g g(17.230.446) g.18 funds for: -

- Oress plant edel ties . . . . . . . . . . . . . . . . . .  :$107.833.019 $111.314.414 $91.904.125 8110.906.304 $123.387.963 Otviesnes .............................. 34.038.061 31.219.171 80.33.221 28.834.301 84.9 3 .400 3 3 375.000 378.000 376.000 enttroment

, e.of.la,ng.

n.es ants tere .............

debt ........... (47..M.000 '000) .7.9 .75.000 000 .

in, eses .. en. s osi.,er, cespany ..............................

i.resse ( re..) in rting ,itei

(.) ....................................

(e)- iofrease (.s.re.se n n - ts g ag m g working capital (eacludie0 notes . I L- ' payeele end tagerery eash --

' i 1

- Investments). are as folloust Accennes resetveble ................. $ 6 144.31 , 8 8.306.M1 8 (630.462) $ t.05.56 - $ 8.130.006  ;

-Inventertes ......................... 1 36.704 610,6M 110.436 900.010 (143,106 f uel s eset .. . . . . . . . . . . . . . . . . . . . . . . . . 7,n7,117 470.347 1.90.693 lit (3.706 fuel procesusatt .................... F M.0M ' l 381.884 Other Orepageants ................... Lg ,ets -

(7M.330) s.709 169.400 aps,gg3 Accounts payable. trade ............. (7 116.MO (2OR.621L 1.205.0s4 .(1,7gg.044) J .ee.s64h Accrued tones ....................... 790.904g 478.030, i 1 $M.371 g.730.033 l

' .747.380L ~1 in (1.M0.610J (30.036c 400.670) (1.312.419) J.1.200.5791-Acc r,ued.nt . tere..st ................... ,

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To request copies of Annual Reports, Quarterly or Interim Reports. '

Monthly Condensed Financial Statements, or other miscellaneous 'information .

. l about Gulf States Utilities Company, ;j please phone or write to .

1 R. bl. Jackson Secretary  ;

-1 Area Code: 713-838-6631 j P; 0. Box 2951- l Beaumont Texas 77704 l

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. i Prepam d by . .;

Corporate and Finance Department

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-September 27, 1974 '

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DOTE TORiver Fl!.E:- Gulf States Eend Station, Units 1 Utilities Company & 2, Dkt! flos. 50

1. l _ Blue. Ilills Station, Units 1 t, 2, Dkt. Nos. 50'510A & 50-511 A On today's date-I had a' telephone conversation with Frederick H. Ritts,

Attorney, 600 New,llampshire Avenue. H.W., Washington, D.C. 'Mr. Ritts - '

, f represents the Sam Rayburn Dam Electric Co-up (Sam's Dam). ?He advised

• L. that in late, August 1974_ et the conclusion of a hearing befor'e the _

(Federal- Power Comission attorneys .for Gulf States advised etlyat the pro-posed Blue Hills. Nuclear-Units = had'been-postponed for atileast two years g

m foi tinancial reasons. *

, States would-oppose acceThey also advised that '"for the present" Gulf L: are not located in Texas. 'ss by Sam's Dam to River Bend because the units .

iMr.jRitts advised that his- clients /are in alrahidly growing area and .

were depending upon access to the Blue Hills Nuclear Units for assistance 1

?inithe future. Sam's Dam has retained the engineering fim of Sanderson -

and Porter of'!!ew York City for a feasibility study. Mr.. Ritts . requested '

L:to Gulf States' River Bend Units.a

! meeting with OGC to discuss this matter and g- to ex We agreed to meetLin y office on LMonday, October 21, 1974 at 11:00 a.m.

Mr. Ritts. advised that he would:

have:a' representative from Sanderson and Porter present at'the' meeting end that he anticipated the reeeting to-last no longer then an hour. ,

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L .c Benjamin H. Vogler Assistant Antitrust Couns'el for AEC Regulatory Staff j

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bvi  : NEW ISSUE <

in the opinion of bond counsel, interest on the Bonds is exempt under existing statutes, regulations, court decisions and rulings, from all present Federal income taxes.except under certain conditions as explained under the caption " Tax. Exemption" herein, and under the provisions of Loulslana statuscs, Interest on the Bonds is exempt from all taxation in the State of Louisiana.

OFFICIAL STATEMENT

$20,000,000 INDUSTRIAL DEVELOPMENT BOARD OF ,THE -

PARISH OF CALCASIEU, INC. (LOUISIANA)

. POLLUTION CONTROL REVEN,UE BONDS

. (Gulf States Utilities Company Project)

. Series 1974 Payable, except to the extent payable from Bond proceeds, solely from and secured by a pledge of subrentals derived from the sublease of the Project by the Board to, and an unconditional guaranty of the payment of principal of, premium, if any, and Interest on the Bonds by, GULF STATES UTILITIES COMPANY Dated: December 1,1974 Due: December 1, as shown below

- The Bonds will be issuable as' coupon bonds in the denomination of $5,000 each, registrable as to principal only, and as fully registered bonds without coupons in the denominations of $5,000 and any.

integral multiple thereof. Principal and semi' annual interest (June 1 and December 1, commencing June 1,1975) will be payable-on the coupon Bonds at the principal omce of Hibetnia National Bank in New Orleans, located in New Orleans, Louisiana, as Trustee, or at the option of the holder at the principal omce of Irving Trust Company, located in New York, New York, as Paying Agent'and on the fully registered Bonds at the principal omcc of the Trustee.

The Bonds will be subject to redemption prior to maturity as more fully described herein.

MATURITY SCHEDULE

$ 3,000,000 6% % TERM BONDS DUE DECEMBER 1,1984 5 3,000,000 7%% ' TERM BONDS DUE DECEMBER 1,1989

$14,000,000 7% % TERM BONDS DUE DECEMBER 1,2004 PRICE 100%

(Plus Accrued Interest from December 1,1974)

The Bonds are offered, subject to prior sale, when, as and if issued by the Industrial Development .

Board of the Parish of Calcasieu, Inc. and accepted by the Underwriter named below, subject to the approval of legality by Foley Judell Beck Bewley & Landwehr, as bond counsel, and approval of certain legal matters by Kutak Rock Cohen Campbell Garfinkle & Woodward, as counsel for the Underwriter,-

and certain other conditions. It is expected that delivery of the Bonds will be made at the offices of Blyth

, Eastman Dillon & Co. Incorporated on or about December 20,1974, in New York, New York.

BLYTH EASTMAN DILLON & CO.

November 18, 1974 ineo ,oe m d g

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s No penas has'been antherleed to gitt any letorsmados er to asake any representedens other-than these contalmed la this OdBclel Statement la coensedom with the esers usade bereby and,11 gives or saade, such laterusation' or representadoes meet not be rolled apes as havlag been antherhed by the Indesedal I%. '. - ' Board of the Parish d Caleados, Ime., Galf States Utgines Company er the Underwdter. Neither tho' delivery W this Oscial Stateassat mer any sale bersuader shaE ander

• any elecenastances create any laplication that there has been no change la the aEales of the Industdal I% . * ,

^ Board et the Parish d Calesalen, Inc. er Galf States Utilities Company slace the date-hereet. His OiBelal Statsenest does not constitute an efer or solicitados as any jarlseletloa la which seek oSer er soucitados is not anchorised, or la which the person analdag such efer or seBeltaties is not gamind to de so or to any person to whose it is asiewtel to make sach efer er solleitation. The laterenden set forth herels has been ehtalmed trem the Indesedal C.. '--~ ' Board d the Parish et r'h, Inc., Golf States Utilities Comepony and other soareas which'are believed to be reitable but it is not geamsteed as to acesrecy or cosapistesses by, and is not to be constreed as a reg by, the Underwdter.-.

CONTENTS OF OFFICIAL STATEMENT

?!!g!.

. Introductory Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 .

, The Board . . . . ., . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 The Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . '4 Ths Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 s

The G uaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 The Equipment Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 The Sublease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 The Easement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 ...s The Indentu re . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Tax Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Approval of Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Appendix 2

_ . _ _ . . _ ~ - -

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1. x ,

.8 OFFICIAL STATEMENT

$20,000,000 .

INDUSTRIAL DEVELOPMENT BOARD OF THE PARISH OF CALCASIEU, INC. (LOUISIANA)

- POLLUTION CONTROL REVENUE BONDS (Golf States Utilities Cosr.pany Project)

Series 1974 INFRODUCTORY STATEM'RF This OScial Statement is provided to furnish information in connection with the sale by the ladustrial Develcoment Board of the Parish of Calcasieu, Inc. (the " Board"), of its Pollution Control Revesue Bonds (Gulf States Utilities Company Project) Series 1974 in the aggregate principal amount of $20,000,000 (the " Bonds"), to be issued pursuant to an Indenture of Trust and Pledge dated as of December 1,-1974- (the " Indenture") between the Board and Hibernia National Bank in New Orleans (the ' Trustee"). The Bonds are being issued to provide funds for the cost of acquiring, improving and equipping a project (the " Project"), which consists of air and water pollution control facilities (the " Leased Equipment") at the Roy S. Nelson electric generating plant (the " Plant") of Gulf States Utilities Company (the " Company") and easement interests in certain lands upon which the ,

pollution control facilities will be lccated (the " Project Site").

Pursuant to an Equipnient Lease dated as of December 1,1974 (the " Equipment Lease") between the Board had the Company, the Company will lease the Leased Equipment to the Board, Pursuant to a Sublease Agreement dated as of December 1,1974 (the " Sublease") between the Board and the

• Company, the Board will sublesse the Project to the Company. Pursuant to an Easement Agreement

~ dated as.of December l','1974 (the " Easement") the Company has granted to the Board the right to maintain the Leased Equipment on the Project Site during the term of the Equipment Lease..

The Bonds will be secured solely by a pledge of the subrentals derived by the Board from the

• Company pursuant to the Sublease. The subrentals payable by the Company pursuant to the Sublease will be suscient' to pay the principal of, premium, if any, and interest on the Bonds together with

• related expenses of the Trustee, any paying agent and the Board. In addition, pursuant to a Guaranty Agreement dated as of December 1,1974 (the " Guaranty"), the Company has unconditionally gu'ar-anteed the payment of the principal of, premium, if any, and interest on the Bonds. The Bonds will not be secured by a mortgage of, or security interest in, the Project. The Project, the Equipment Lease, the Sublesse (except the obligation of the Company to pay subrentals and other amounts required under the Sublease), the Indenture and the Easement are subject to the rights, including the right to take possession of the Project, of the trustee and first mortgage bondholders under the Indenture of Mortgage dated September 1,1926 from the Company to Chase National Bank of the City of New York, as trustee, as such indenture has been supplemented, modified or amended and as it may be

supplemented, modified or amended in the future (the " Company's Mortgage").

Brief descriptions of the Board, the Project, the Bonds, the Guaranty, the Equipment lease, the Sublease, the Easement and the Indenture are included in this OEcial Statement and a brief description of the Company, including its financial statements, is attached hereto as an Appendix. All references

- herein to the ' Guaranty, the Equipment Lease, the Sublease, t.he Easement and the Indenture are qual! Sed in their entirety by references to such documents, and references herein to the Bonds are qualified in their entirety by reference to the forms thereof included in the Indenture and the informat'on with respect thereto included in the aforesaid documents, copies of all of which are available for inspec-tion in the omce of the Trustec.

3

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d THE BOARD t

. The Board was incorporated on August 2,1972, following application to end approval of the Police Jury of the Parish of Calcasieu, Louisiana. The Board is a public corporation and instrumentality of the Parish of Calcasieu, Louisiana, organized and existing under the laws of the State of Imuisiana.

Pursuant to the provisions of Chapter 7. Title 51 of the Loulslana Revised Statutes, as amended by -

Act -103 of the Regular Session of the Legislature of Louisiana for the year 1972 (the "Act"), the

- Board is authorized to issue the Bopds, to acquire a leasehold interest in the' Leased Equipment from the Company, to acquire -certain interests in the Project Sl:e from the Company, to sublesse the Project to the Company and to secure the Bonds by a pledge of the subrentals to be received by.

the Board from the Company pursuant to the Sublease. To accomplish such actions, the Board is authorized to enter into the Indenture, the Equipment Lease, the Easement and Sublesse.

1HE PROJECT ,.

The Plant is located in Calcasieu Parish, Louisiana, and is comprised of four units with a total generating capability of 899,000 kilowatts. The units were originally designed to burn natural gas as the primary fuel and No. 2 fuel oil on an emergency basis, Units Nos.1, 2, and 3 are being converted to buta No. 2 fuel oil on a continuous basis. Unit No. 4 is being converted to burn No. 6 fuel oil on a continuous basis. This conversion will require the installation of oil storage facilities, pumping and tmnsferring facilities, burning facilities, control equipment, and certain pollution control equipment, including the Project. The Project will consist of the air and water pollution control equipment described below, ne air pollution control equipment includes an electrostatic precipitator for Unit No. 4 which is designed to remove 95.0% of the particulate matter from the boiler flue gas and an ash disposal systern which includes all equipment to remove, transfer, store and dispose of the ash collected by the precipitator.

After collection by the precipitator, the ash lu transported by a pneumatic conveying sy' stem to storage silos. The silo is an ash storage facility with a capacity of four days of ash production. The silo will be so constructed to allow removal of the ash by truck. The. ash will be disposed of in an ash-disposal area located on the site of the Plant. Disposal will include' compacting the ash and

' covering it with dirt. Tue disposal area will be designed such that rain water runoff will be trapped and retained before release.

The air pollution control equipment also includes a system of ducts to he used to transfer the flue gas from the boiler to the precipitator. The, system will include steel plate work,' insulation.

- and support steel. Monitoring equipment will be installed to continuously monitor the flue gas for content of oxides of sulphur and nitrogen and opacity. The equipment will include stack sensors, trans-mitters, and recording equipment.'The air pollution control equipment also includes certain electrical, equipment and mechanical equipment related to the above listed items.

The Air Control Commission of the State of Louisiana has certified that the above portion of the

' Project, as designed, is in furtherance of the purpose of abaticg or contr' o lling atmospheric pollutants or contaminants.

The water pollution control equipment includes a waste water treating facility equipped to neutralize acid or' basic solutions. The facility will consist of storage basins, associated pumps., piping.

a chemical additive system, sludge removal system, and electrical and control systems. Waste water treated in this facility will include air heater wash water, furnace fireside wash water, boiler acid cleaning waste water, demineralizer waste water and other waste water as required. Water treated by this facility will be discharged into an existing holding basin and then into the Houston River.

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amrxesmwnci.n.mumam,w.v;m.a.xwym m.w:nw The water pollution control equipment also includes an oily waste collecting system, which is designql to treat rain water runoff from areas where fuel oil is handled of stored. All runoff in

-diked areas will be retained and inspected before release through an oil-water separator. The system will' consist of retainment basins, separator pump pits, sump pumps, oil detectors and annunciators, electrical facilities to serve the sump pumps, and controls, piping and valvc4.

The Stream Control Commission of 1.ouisiana,has certified that the above portion of the Project, as designed, la in furtherance of the purpose of abating or controlling water pollution.

r= BONDS The Bonds will be issued as coupon bonds in the denomination of $5,000 each, registrable as

. to principal only, and as fully registered bonds without coupons in denominations, of $5,000 and

~

any integral multiple thereof. The coupon Bonds will be dated as of December 1,1974, and will bear interest from that date at the rates and will mature in the amounts arnd on the dates set forth on the cover page of this OfBcial Statement. The fully registered Bonds will be dated as of June 1 or December 1, next preceding their date of issue, or if issued on a June 1 or December 1, as of

'such date, and shall bear > interest from their date at the same rates and with the same maturities as the coupon Bonds. Interest on the Bonds will be payable semiannually on June 1 and December 1 of each year, commencing June 1,1975. Principal of, premium, if any, and interest on the coupon Bonds _are payable at the principal office of the Trustee, or at the option of the holder at the principal ofBce of Irving Trust Company located in New York, New York, as Paying Agent. Principal of and premium, if any, on the fully registered Bonds are payable at the principal office of the Trustee, and interest on the fully registered Bonds shall be paid by check or draft drawn upon the Trustee and mailed to the registered owner thereof. Cor Bonds and fully registered Bonds may be trans-ferred or exchanged without cost, except for t - . or other governmental charge and a charge not to exceed $2.00 for each Bond exchanged frc' any Bondholder requesting any such exchange for a second time with respect to Bonds previously issued in exchange to such Bondholder.

Security. The Bonds, together with interest thereon, are not general obligations of the Board but are limited obligations payable solely from and secured by a pledge of subrentals and other amounts derived from the subleasing of the Project and other moneys held by the Trustee for that purpose. The Board shall not be obligated to pay the Bonds not the laterest thereon except from such subrentals and other amounts payable under the Sublease. Neither the Parish of Calcasieu nor the State of Louisiana nor any political subdivision thereof shall be obligated to pay the principal of the Bonds, the interest thereon or other costs incident thereto except from the subrentals and other amounts pledged therefor. Neither the faith and credit of the Board nor the taxing power of the Parish of Calcasieu or the State of Louisiana or any political subdivision thereof is pledged to the payment of the principal of or the interest on the Bonds. The Bonds and the coupons attached to the coupon Bonds shall not con-stitute an indebtedness.of the Parish of Calcasieu, Louisiana, within the meaning of any constitutional or statutory provision whatsoever. The Project does not constitute any part of the security for the Bonds. .

Redemption. The Bonds are non callable for u.wption prior to December 1,1984, except as described below:

Extraordinary Optional Redemptions: The Bonds may be redeemed by the Board in whole, but not in part, on any date at the principal amount thereof plus accrued interest to the redemp-tion date upon the exercise by the Company of its option to prepay all subrentals due or to become due from it pursuant to the Sublease if: -

(a) in the reasonable judgment of the Company, unreasonable burdens or regulations or excessive liabilities shall have been imposed upon the Board or the Company with respect 5

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• to the Project or the operation thereof, including without limitation, Federal, state or other L ad valorem property, income or other taxes not being imposed on the date of the Sublease;-

(b) the Project or a portion thereof or other property used in connection with the:

Project shall have been damaged or destroyed to such an extent that the Company deems it not practicable and desirable to rebuild, repair and restore the Project;

.- (c) there is a condemnation of all or substantially all of the Project or a taking by eminent domain of such use or control of the Project or other property used in c,onnection with the Project so as to render the Project unsatisfactory to the Company for its intended use; .

(d) la the reasonable judgment of the Company any changes in ecomic conditions, or the existence, application, or change of any existing or future.iaws, or any governmental or regulatory regulations, orders, ordinances, guidelines, licenses, or permits applicable to.the

• Company or any of its operations or properties make it advisable to reorganize the Company-

- and incident thereto, the Company undertakes either to (1) redeem any one or more series, ,

or portions thereof, of any bond issued under the Company's Mortgage, under provisions thereof permitting such redemption, or (ii) assign the Sublesse or sublet the Project and the Company deems it necessary or appropriate to be released from primary liability when  :

not otherwise permitted under the Sublease, or (iii) dispose of property including the Project or any portion thereof or merge or consolidate with another corporation in a manner not l i

permitted under the Sublease; or ,

(e) changes-in the economic availability of raw materials, operating supplies, fuel or other energy sources or supplies, or facilities necessary for the operation of the Project or any other property of the Company with which it conducts its operations at the site of the Project or such technological or other changes shall have occurred which the Company cannot reasonably. overcome or control and which in the Company's reasonable judgment render the i Project or any other property of the Company with which it conducts its operations at the site of the Project uneconomic for such purposes. .

Extraordinary Mandatory Redemption: The Bonds shall be redeemed by the Board in  :

- whole, but not in part, on any date at the principal amount thereof plus accrued interest to the  ;

redemption date if as a result of any changes in the Constitution of the State of Louisiana or '

the Constitution of the United States of America or of legislative or administrative action (whether 4 state or Federal) or of final decree, judgment or order of any court or administrative body '

(whether state or Federal), the Sublease shall have become void or unenforceable or impossible of performance in accordance with the intent and purpose of the parties as expressed in the Sublease. -

Optional Redemption: The Bonds which mature after December 1,1984 are also subject to redemption prior to maturity on or after December 1,1984, in whole on any date or in part in inverse order of maturity (less than all such Bonds of a single maturity to be selected by lot) on i any interest payment date at the redemption prices (expressed as percentrges of principal amount) as set forth in the table below plus accrued interest to the redemption date:

Redempden Deens Redemption (Detes loclushe) Price December 1,1984 thru November 3D,1985 . . . . . . . . . . . . . . . . . . 103 % .

December 1,1985 thru November 30,1986 .................. 102 %

December 1,1986 thru November 30,1987.................. 102 December 1,1987 thru November 30,1988 .................. 101M December 1,1988 thru November 30,1989 .................. 101 December 1,1989 thru November 30,1990.................. 100%

December 1,1990 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 6

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- Sinking Fund Redemption - The Bonds which mature on December 1, 2004 are also subject to redemption by lot, pursuant to the terms of a mandatory sink g fund provided in the Indenture, on each December 1 on and after December 1,1995, at the principal amount thereof plus accrued laterest to the redemption date as follows:

Pr emelpel Doesunbe 1 Primetpal Desseber 1 of Ihe Year A ===="re of the Year A meset 1995 - $450,000 2000 660,000 1996 480,000 2001 710,000 1997 525,000 2002 770,000 1998 570,000 2003 830,000 1999 605,000 2004 8,400,000*

• Final Maturity

- The principal amount of the Bonds which mature on December 1, 2004 to be redeemed pur-

. suant to the sinking fund, shall be reduced by the principal amount of any such Bonds theretofore

' redeemed (otherwise than through operation of the sinking fund) or otherwise acquirsd, delivered to the Trustee and cancelled which have not theretofore been applied as a credit against any sinking fund requirement.

No further interest shall accrue on the principal of any Bonds called for redemption after the redemption date if payment therefor has been duly provided. All coupons for interest thereon maturing abbsequent to such date shall be void.' Upon certain terms and condidons TaAAad in the Indenture, the Bonds or any portion thereof shall be deemed'to be paid and the pledge of subrentals'made in

'- .the Indenture for the security of such Bonds may be discharged prior to the maturity or redemption thereof upon the making of provision for the payment through the deposit with the Trustee in the manner set forth ir. the Indenture of cash or securities sufBeient to provide amounts (including interest on such securities) to pay when due (at maturity, upon-redemption or otherwise) the principal of, premium, if any, and interest on such Bonds. See "The Indenture-Discharge of Lien" herein.

Adetional Roads. So long as the Sublease is in effect, and there is no default under the Sublease, Equipment I.4ase or the Indenture, one or more series of Additional Bonds may be authenticated and delivered for the purpose of completing the Project, or providing substitutions, additions, modifications or

! r m .ts to the Project, or providing additional air or water pollution control facilities at the Plant, all as authorized by the Act, or to refcad Bonds then outstanding. Such Additional Bonds shall be payable solely from the subrentals and other amounts derived from the subleasing of the Project. Except as to any. difference in the date, the maturity or maturities, the rate or rates of interest or the provisions for redemption and sinking fund, if any, such Additional Bonds shall rank part persu and be equally and ratably secured under the Indenture with the Bonds and all other series of Additional Bon:Is, if any, without preference, priority or distinction of any Bonds or Additional Bonds or coupons over any other thereof. Prior to the-issuance of such Additional Bonds the Company must have unconditionally guaranteed payment of the principal of, premium, if any, and interest on such Additional Bonds.

Rights of First Mortgage Trustee and Bondholders. The rights of the Board with respect to the Project are at all times subject and subordinate to the rights, including the right to take possession of the Project, of the trustee or bondholders of the first mortgage bonds of the Company issued and 7

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- outstanding or to.' be issued under .the Company's Mortgage. The exercise _ of such right shall not terminate the obligations of the Company to pay subrentals under the Sublease.

, THE GUARANTY Pursuant _ to the terms of the Guaranty, the Company. will unconditionally guarantee to tho' Trustee for_ the bernSt of the holders of the Bonds and of the laterest coupons appertaining to t'se coupon Bonds (i) the full and prompt payment of the principal of and premium, if any, on any Bond when and as the same shall become due, whether at the stated maturity thereof, by acceleration,

_ call for redemption or otherwise, and (ii) the full and prompt payment of any interest on any Bond when and as the same shall become due. The Guaranty will remain in effect until the entire principal of,

'.,_ premium, if any, and interest on the Bonds shall have been paid in full or provided for in accordance with the Indenture.

Orgain, Bell & Tucker, counsel for the Company, will pass on the due authorization, execution and

• validity of the Guaranty. Relying on such' opinion with regard to the validity of the Guaranty, it will- ,

be the opinion of Foley Judell Beck Bewley & Landwehr, acting.as bond counsel, that in a bankruptcy or reorganization- proceeding with respect to the Company under the Federal Bankruptcy Act, a claim against the Company arising under the Guaranty, if timely filed, would rank as that of a general unsecured creditor and, although there are no cases directly in point, based on relevant legal principles such a chim would not be subject to the provisions of such Act limiting claims for damagen resulting-from the rejection of a. lease of realty.

THE EQUIPMENT LEASE Pursuant to the terms of the Equipment lease, the Company agrees to purchase, acquire, con-struct and install the Leased Equipment and to lease it to the Board. The following is a summary of certain provisions of the Equipment Lease.

Ismaeace of the Bonds. The Company agrees to purchase, acquire, construct and install as part _of the Project on .the Project Site the Leased Equipment in accordance with plans and specia-cations, and as from time to time prior to completion chall be specined by the Company in writing to the Board and the Trustee. The Leased Equipment will be owned by the Company and will be subject to the Equipment Lease. The Company has agreed to use its best efforts to cause the purchase, acquisition, construction and installation' to be completed by December 1,1977, but if for any reason the Project is not completed by thr.t date, there will be no resulting liability on the part of the Company ane' = diminution in or postponement of the rental payments required eder the Equipment Lease.

The Board is issuing the Bonds to provide funds for the purchase, acquisition, construction and lastallahn of the Project (the " Cost of Construction"), including capitalized interest on the Bonds and expenses in_ connection with the issuance and sale of the Bonds, through its rental payments made pursuant to the terms of the Equipment Lease, and will deposit the proceeds with the Trustee.

- An amount equal to the accrued interest, if any, to be paid by the purchasers of th'e Bonds will be deposited la the Bond Fund. The balance of the funds received from the sale of the Bonds will be deposited in the Construction Fund. Pursuant to the terms of the Indenture, the Board has authorized and directed the Trustee to make payments from the Construction Fund to pay the rentals required a under the Equipment Lease. Upon receipt of a certi$cate evidencing the completion of the Project, the Trustee will-transfer all moneys remaining in the Construction Fund to the Bond Fund, except -

any amount retained by the Trustee for any rental to be paid by the Board not then due and pay-able, and any amount that the Company shall have directed the Trustee to use to purchase Bonds in the open market for the purpose of cancellation. In any event, the amount transferred into the

' Bond Fund shall not exceed in the aggregate 8% of the amount of the proceeds (excluding accrued interest) received by the Board from the sale of the Bonds.

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If the moneys in the Construction Fund available for payment of the Board's rental payments are not sufficient to pay the Cost of Construction in full, the Company agrees to complete the

- Project and to pay the balance of such Cost of Construction in excess of the moneys available in the Construction Fund without any reimbursement from the Board, the Trustee or the holders of any of the Bonds.

Tens of Equipment Lease and Rental. The Equipment Lease shall be for a term of thirty years and one day, commencing as of December 1,1974, and ending on December 2, 2004, unless sooner terminated. The Board agrees to pay to the Company as rental for the use of the Leased Equipment an amount equal to the lesser of (a) the total amount of the proceeds (less accrued interest on the Bonds received at the time of the issuance and delivery of the Bonds) from the sale of the Bonds or (b) the total Cost of Construction. Upon payment in full of all the Bonds (or provision for payment having been made in accordance with the provisions of the Indenture) and all fees and charges of the Trustee, and all other liabilities of the Company accrued under the Equipment lease and the Sublease, the Company shall be entitled to terminate th' e Equipment lease prior to the end of the term thereof upon written notice to the Board and the Trustee accompanied by a payment from the Company to the Board of $100.

Assignment, Sublessing, Mortgaging and Selling. Except for subleasing the Project to the Company under the Sublease and the assignment to the Trustee of the subrentals and any other amounts payable to the Board under the Sublease, the Board agrees that it will not assign the Equipment Lease, nor sublease, mortgage, sell, assign, transfer, convey, or encumber the Project or its interest therein, in whole or in part. Any assignment, pledge or grant by the Board to the Trustec pursuant to the Indenture of the subrentals or other moneys under the Sublease shall be subject and subordinate to the Equipment Lease and the Sublease.

Defmalt. The Equipment Lease provides that an " event of default" shall have occurred if the Board fails to observe and perform any covenant, condition or agreement under the Equipment Lease to be observed or performed for a period of thirty days after written notice shall have been given to the Board and the Trustee by the Company, unless extended.by the agreement of the Company.

If the failure stated in the notice cannot be corrected within the applicable period, the Company and the Trustee will consent to an extension of time if corrective action is instituted by the Board or the Trustee within the applicable period and diligently pursued until the default is corrected.

Remedies. Whenever an event of default shall have he,mened and be continuing, and if the Company shall pay to the Trustee all amounts which the Trustee is entitled to receive under the Sublease as assigned to the Trustee by the Board (which amounts shall be at least sufficient to redeem all Bonds then outstanding under the Indenture and to pay all expenses of the Trustee and any Paying Agent accrued and to accrue through final payment of the Bonds and all other liabilities of the Company accrued and to accrue under the Sublease), the Company may take possession of the Project and-upon thirty days notice to the Board and the Trustee terminate the Equipment Lease if such default is not remedied during such thirty day period.

Amendments, Changes and Modiacations. The Equipment Lease may not be effectively amended, changed, modified, altered or terminated without the written consent of the Trustee. Pursuant to the Indenture, the Trustee and the Board may, without the consent of or notice to the Bondholders, consent to certain amendments, changes or modifications of the Equipment Lease. Any other amendments, changes or modifications of the Equipment lease require the written approval or consent of the holders of not less than 60% in aggregate principal amount of the Bonds at the time outstanding. See "The Indenture - Amendments to Equipment Lease or Sublease" herein.

9

. - _ , ~ . . - - . - - - - - - - - - - - - - - -

THE SUBLEASE

- Pursuant to'the provisions of the Sublease, the Board will sublease the Project to the Company at subrentais sufRcient to pay the principal of, premium, if any, and interest on the Bonds together

. with related expenses. The following is a summary of certain provisions of the Sublease.

Tens of the Sablesse and Sabreatal. The term of the Sublesse shall commence as of December 4 - 1,1974, and shall end on December 1,,- 2004. or such earlier date as the Company may prepay its

.subrental payments.

The Company agrees to pay the Board as and for subrental and for the use of the Project on May 31 and November 30 of each year commencing May 31, 1975, amounts which, together with other moneys available therefor in the Bond Fund, will equal the amount of interest and principal, if any, gequired to be paid on the Bonds (whether at maturity, by sinking fund redemption or o,therwise) on the next succeeding June 1 or December 1. The Company also agrees to pay as additional subrental' the reasonable fees and expenses of the Trustee and any Paying Agent not theretofore provided for and authorized expenses of the Board related to the Project.

In the event the Company should fail to make any required payment, the obligation to make such payment shall continue until the amount in default shall have been paid, together with interest at a rate which shall be 1% above the lowest rate then cha:ged by the Trustee on loans made to prime corporate borrowers or the maximum rate permitted by Louisiana law, whichever is lesser.

Net Sablesse. The Sublease will be a " net sublease" and the Company unconditionally agrees to pay the subrentals to be paid by it during the term of the Sublease, free of any deductions, and without abatement, deduction or set o.ff.

Taxes and Other Governmental Charges. The Company agrees to pay all taxes, assessments and other governmental charges lawfully imposed upon the Project or any part thereof or upon income and pro 6ts from the Project, provided that the Company may contest the validity of such taxes, assess-ments and other charges in good faith, and permit such taxes, assessments and other charges to remain l unpaid during' the period of such contest unless by 'such nonpayment the lien of.the Indenture on the revenues of the Project would be materially endangered, or the Project or any material part thereof would be subject to loss or forfeiture.

Maintenamee,. Substitutions, Additions, ModlScations and Improvements. The Company agrees that at all times during the term of the Sublease it will, at its own expense, keep the Project'in good repair. The Company may make such substitutions, additions, modifications and improvements to the Project as the Company may deem to be desirable for its pollution control purposes, the cost of which substitutions, additions, modi 6 cations and improvements shall be paid by the Company, and any such changes shall be included under the terms of the Sublease as part of the Project. The Company agrees not to permit any lien to be established for labor or materials in connection therewith which might endanger the lien of the Indenture on the revenues of the Project or subject the Project or any material part thereof to loss or forfeiture.

,Inserance. The Company agrees to insure the Project in such amounts and against such loss or

' damage of the kinds and in the amounts required by the Company's Mortgage.

Dassage, Destruction and Condemnatloa. Unless the Company shall elect to prepay subrentals pursuant to the provisions of the Sublease (see paragraphs (b) and (c) under the caption "The Bonds-Redemption-Extraordinary Optional Redemptions"), if the Project or any portion thereof '

is destroyed in whole of in part or is damaged by fire or other casualty, or title to, or the temporary use of, the Project or any part thereof shall be taken under the exercise of the power of eminent i

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domain, the Company shall continue to be oblif;sted to make the subtental payments required under

the Sublesse; the Company may elect, but is not required, to repair, replace, restore, relocate or rebuild *

> the Project. Neither the Board, the Trustee or the holders of the Bonds shall have any interest in or claim to or otherwise he entitled to the net proceeds of any insurance proceeds or any condemnation award. ,

Assigassent Merger and Release of Obligations of the Cosspany. Subject to certain conditions the Company may assign the Sublease or resublease the Project without the necessity of obtaining the ,

consent of either the Board or the Trustee, but such assignment or resubletting, except in,the event

, of a consolidation, merger or disposition of assets permitted by the Sublease, Will not operate to relieve

. the Company of its primary liability under the Sublease. The Sublease provides that the Company may not consolidate with or merge into or dispose of all or substantially all of its assets to another corporation unless such other corporation shall be organized under the laws of one of the states of the United States of America, shall be qualined to do business in the State of Louisiana, and shall assume in writing all of the obligaticas of the Company under the Sublease.

Defaults. The Sublease provides that any one or more of the following events will constitute an

" event of default":

(1) failure by the Company to pay the subrentals required under the Sublesse for payment of interest, premium, if any, and principal on the Bonds at the time and in the manner specified in the Sublease and the continuation of such failure for a period of twenty-four hours; (2) failure by the Company to observe and perform any other covenant, condition or agree.

- ment under the Sublease and continuation of such failure for a period of thirty days after written notice shall have been given to the Company by the Board or the Trustee, unless extended by the Board and the Trustee (which extension shall be granted if the failure cannot r,casonably be corrected within such time and the Company is diligently pursuing corrective action) or unless such failuie occurs by reason of force majeure as defined in the Sublease; and (3) certain events of bankruptcy, dissolution, liquidation or reorganization by the Company.

Remedies. Upon the happening of an event of default, the Board may:

(1) by written notice to the Company, declare an amount equal to all amounts then due and payal,le on the Bonds then outstanding, whether by acceleration of maturity or otherwise, to be immediately due and payable;

• (2) have access to and inspect, examine and make copies of the books ar,d records and any and all accounts, data and income tax and other tax returns of the Company; and (3) take whatever action may appear necessary to enforce any of the Company's obligations under the Sublease.

Pursuant to the Sublease, the Board has waived any tien or privilege it may have to the property of the Company as a lessor under Louisiana law.

The Board has assigned its rights under the Sublease to the Trustee pursuant to the Indenture.

Option.to Prepay Sobrental. The Company shall have the option (i) to prepay all subrentals and upon such prepayment to terminate the Sublease, upon the occurrence of any of the events described in paragraphs (a), (b), (c), (d), or (e) under the caption "The Bonds-Redemption-Extraordinary Optional Redemptions" and (ii) on or after December 1,1984, to prepay all or a part of such subrentals, for the purpose of redeeming Bonds.

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Obugeden to Prepay Sabeoedait . The Company shall be obligated to' prepay all subrentals and upod such prepayment to terminate the Sublease upon the occurrence of the event described under the-  !

caption "The Bonds-Redemption-Extraordinary Mandatory Redemption". -

." "- ' Changes and Modtaestions. The Sublease may not be efectively amended, changed, maddad, akered or terminated without the written consent of the Trustee. Pursuant to the Indenture, the Trustee and the Board may, without the consent of the Bondholders, consent to certain amendments, changes.or modiacations of the Sublesse. Any oth're amendments, changes or modi 6 cations of the Sublease require the written gpproval or consent of the holders of not less than 60% in aggregate principal amount of the Bonds at the time outstanding. See "The Indenture - Amendments to Equipment Lasse or Sublesse."

11EE EASEMENT 1

The following is a summy of certain provisions of the Easement.

Pursuant to the haamant, the Company grants the Board for a period co-extensive with' the term of the Equipment Lease non-exclusive casements and rights-of way over the Project Site, for the purpose of granting the Board the right to have the Leased Equipment located on the Project Site.

The Company reserves the right to.use, occupy and possess the Project Site and to grant to third parties _ other easements, licenses or rights of-way in the nature of enseme'its with respect to the Project Site.

'ltc Easement is subject and subordinate to Permitted Encumbrances as de6ned in the Equipment Lease, including without limitation, the rights of the trustee and holders of the first mortgage bonds under the Company's Mortgage.

THE INDENIURE . .

The Indenture authorizes the issuance of $20,000,000 principal amount of Bonds to provide

- funds for the purchase, acquisition, construction and installation of the Project. The following is a summary of certain provisions of the Indenture.

Pledge and Security. Pursuant to the Indenture and the Sublesse, the subrental payments and other amounts payable by the Company to the Botrd under the Sublesse are to be remitted directly to the-Trustee .and deposited in the Bond Fund. Such subrental payments, suoicient in amount to insure the prompt payment of the principal of, premium, if any, and interest on the Bonds, are pledged to such payment. The Sublesse his also been assigned to the Trustee. '

Covenants of the Board. The Board covenants to pay (solely from subrentals derived from the i sublease of the Project to the Company) the principal of, premium, if any, and interest on each Bond j es it becomes due, and to perform other covenants as speci6ed in the Indenture, i A;;"- ^r of the Bond Fund. While any Bonds are outstanding, moneys in the Bond Fund shall be used for the payment of the principal of, premium, if any, and laterest on the Bonds and for the redemption of the Bonds prior to maturity.

W Pursuant. to provisions in the Equipment Lease, the Sublease and the Indenture, any moneys held as a part of a Construction Fund or the Bond Fund shall be invested or reinvested by the Trustee at the request of the Company in such of the following as are permitted by Louisiana law: (1) any bonds or other obligations of the United States which, as to principal and interest constitute direct obligations of the United States of America or are issued or g.saranteed by any person controlled or supervised by and acting as an instrumentality of the United States pursuant to authority granted by  ;

the Congress of the United States, (ii) interest bearing accounts, time deposits or certificates of deposit 12

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of banks or trust companies, including the Trustee, organland under the laws of the United States of America or any state thereof, which have combined capital and surplus of at least $10,000,000, (iii) obligations issued or guaranteed by any state of the United States or the District of Columbia, or any-political subdivision of any such state or District rated A or better by Standard & Poor's Corporation or Moody's Investors Service, Inc.,'(iv) commercial paper or Snance company _ paper rated prime, (v) bankers acceptances drawn on and accepted by commercial banks, or (vi) repurchase agreements 1 fully secured by any one or more of the foregoing.

The Trustee may make such invesanents through its own bond department. In making such investments, the Trustee may commingle money from the Construction Fund with money from the Bond Fund provided any such investments shall be deemed at all times a part of the fund for which -

they were made, and all protts and interest on auch investments shall accrue to such fund, and any losses will be charged to such fund. ,

The Company has made certain certi6 cations and representations in the Sublease which are latended to have the efect of causing the Bonds not to be classi6ed as arbitrage bonds within the -

meaning of Section-103(d)(2) of the Internal Revenue Code of 1954, as amended. In addidon, the Board and the Trustee have entered into certain covenants with each other which are intended to have the efect of causing the Bonds not to be classiAed as arbitrage bonds under, and have obligated themselves to comply throughout the term of the issue of the Bonds,with the requirements of Section 103(d) of the Internal Revenue Code of 1954, as amended, and any segulations promulgated thereunder.

Diseberge et Lies. The lien of the Indenture shall be discharged if:

' (1) the Board shall pay or cause to be paid to or for the holders and owners of the Bonds and coupons the principal, premium, if any, and interest due or to become due at the times and

, in the =nnar stipulated therein; and

. (2) the Board shall pay or cause to be paid to the Trustee, any Paying Agent and the Company all sums of money due or to become due according to the provisions of the Indenture.

Any Bond shah be d==d to be paid for such purpose when payment of the principal of and prem-lum, if any, on such Bond, plus interest thereon to the due date thereof (whether'such due date be by reason of maturity or upon rudemption as provided in the Indenture, or otherwise) either (a) shall have been made or caused to be made in accordance with the terms thereof, or (b) shan have been provided by irrevocably depositing with the Trustee, in trust and irrevocably set aside exclusively for such payment (i) moneys sufBeient to make such payment or (11) Governmental Obligations (as hereinafter de&ned) maturing as to principal and interest in such amount and at such times as will provide sufBcient moneys to make such payment and payment of all necessary and proper fees, com-pensation and expenses of the Trustee pertaining to the Bonds with respect to which such deposit

'shall have been made, and, except for the purposes of such payment, such Bond shall no longer be

, secured by ce entitled to the benents of the Indenture, provided, that no deposit under (b) above shall constitute such discharge and satisfaction until (1) proper notice of redemption of such Bonds shall have been given in accordance with the Indenture or, in the event said Bonds are not by their terms subject to redemption within the next s-~ ding 60 days, until the Company shall have given the Trustee on behalf of the Board irrevocable instructions to notify, as soon as practicable, the holders of the Bonds, in accordance with the Indenture, that the deposit required by (b) above has been made with the Trustee and that such Bonds are deemed to have been paid in accordance with the Indenture and stating the maturity or redemption date upon which moneys are to be available for the payment of the principal or redemption price, if applicable, on such Bonds, or (2) the maturity of such Bonds. " Governmental, ,

Obligations" shall mean any of the following which are non-callable and which at the time of invest-ment are legal investments under the laws of Louisiana for the moneys proposed to be invested therein:

(i) direct general obligations of, or obligations, the payment of the principal and interest of which are unconditionally guaranteed by the United States of America; (11) bonds, debentures or notes issued 13

my - m :y ~.e B

by any of the following Federal agencies: Bank for Cooperatives, Federal Land Banks, Federal Financing Bank, Federal Home lean Banks, Federal Home Loan Mortgage Corporation, or Federal National Mortgage' Association (including Participation Certificates); or (111) Public Housing Bonds, Temporary Notes, or Preliminary Loan Notes, fully secured by contracts with the United States.

Detaalt and Rennedles. Any' of the following events shall be an " event of default" under the -

Indenture: -

(1) default in the due and punctual payment of laterest on any Bond;'

(2) default in the due and punctual payment of the principal of, or premium, if,any, oa any

.." Bond, whether at the stated maturity 'thereof, or upon proceedings for redemption thereof, or 9pon the maturity thereof by declaration; (3) default in the' performance or observr.nce of any other of the covenants, agreements or conditions on the part of the Board in the Indenture or in the Bonds contained and failure to remedy the same after notice thereof pursuant to the Indenture; or (4) the occurrence of an event of default under the Sublease (see the caption '"I'he Sublesse-,

. Defaults"). .

Upon the occurrence of an event of default, the Trustee may, and upon the written request of the holders of not less than 25% in aggregate principal amount of the Bonds and any Additional Bonds then outstanding shall, by notice in writing delivered to the Board and to the Company, declare the principal of all Bonds then outstanding and the accrued interest thereon immediately due and payable.

Upon any declaration of acceleration, the Board and the Trustee shall immediately declare an amount equal to all amounts then due and payable on the Bonds to be immediately due and payable as liquidated damages in accordance with the provisions of the Sublease.

Gf

• Indestures. The Board and the Trustee may, without consent of, or notice to, any of the Bondholders, enter into supplemental indentures for any one or more of the following purposes:

(1) to cure any ambiguity or formal defect or omission in the Indenture:

(2) to grant to or confer upon the Trustee for the benefit of the Bondholders any additional

~

rights, remedies, powers or authority that may lawfully be granted to or conferred upon the Bondholders or the Trustee; , ,

(3) to evidence the appointment of a separate trustee or a co-trustee or the succession of a new trustee or Paying Agent; (4) to comply. with the requirements of the Indenture in the event of the issuance of Additional' Bonds; (5) to amend the Indenture to permit quali6 cation under the Trust indenture Act of 1939

• or other similar Federal statute hereafter in effect or to permit qualification of the Bonds for

. sale under the securities laws of any of the states of the United States, and to add to die Indenture other provisions as permitted by the Trust Indenture Act of 1939 or similar Federal statute; or (6) in connection with any other change in the Indenture which, in the judgment of the Trustee, is not to the prejudice of the Trustee or the Bondholders.

Exclusive of supplemental hidentures for the purposes set forth in the previous paragraph, the holders of not less than 60% in aggregate principal amount of the Bonds and any Additional Bonds 14 nNuanmer. ..m r c -, w a m. m.wo 1 u. w a._. w .n .

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then outstanding shall have the right to consent to and approve any supplemental indenture, except no supplemental Indenture shall permit:

(1) an extension of the maturity of the principal of, or the interest on, any Bond, or any sinking fund redemption requirement in connection therewith; or

' (2) a reduction in the principal amount of, or redemption premium on, any Bcad or the rate of interest, or sinking fund redemption requirements thereont or .

(3) a privilege or priority of any Bc,nd or Bonds over any other Bond or Bonds; or -

(4) a reduction in the aggregate principal amount of the Bonds required for consent to 4 - such supplemental indentures.

Any such supplemental indenture shall not become effective without the consent of the Company if the Company is not in default at the time.

Anneedsneats to Equipuneet Lease er Sablesse. Subject to the rights of the Srst mortgage trustee and bondholders (see caption "The Bonds-Rights of First Mortgage Trustee and Bondholders"),

neither the Equipment lease not the Sublease may be effectively amended, changed, modified, altered or terminated without the written consent of the Trustee. The Trustee and the Board shall, without the consent of the Bondholders, consent to any amendment, change or modification of the Equipment Lease or the Sublesse as may be required (i) by the provisions of the Equipment Lease, the Sublease or the Indenture,16cluding those required in connection with the issuance of Additional Bonds, (ii) for the purpose of curing any ambiguity or formal defect or omission, (iii) so as to more precisely identify the l' eased Equipment or substitute or add additional Leased Equipment or additional rights '

or interests in property acquired in accordance with the provisions of the Equipment. Lease or the Sublease, or (iv) in connection with any other change therein which, in the judgment of the Trustee, is not to the prejudice of the Trustee or the Bondholders. Except for the amendments, changes or moddications as provided in the preceding sentence, neither the Board nor the Tru:.w shall consent to any other amendment, change or modi 6 cation of the Equipment Lease or the Sublease -without publication of notice and,the written approval or consent of the holders of not less than 60% in aggregate principal amount of the Bonds and any Additional Bonds at the time outstanding.

TAX EXEMPTION-Generally, interest on obligations of a state or a political subdivision of a state is exempt from Federal income taxation. Section 103(c) of the Internal Revenue Code of 1954, as amended, however, provides that interest on any such obligation which is an " industrial development bond" shall not be exempt. An exception to this provision is created by Section 103(c)(4)(F) for issues of industrial development bonds where substantially all of the proceeds are used to provide air or water pollution control facilities, unless the holder of the bond is a substantial user of the facility or a "related person", as such term is defined in, the regulations of the Internal Revenue Service with respect to such Section.

In the opinion of Foley Judell Beck Bewley & Landwehr, bond counsel, based on existing statutes, ,

regulations, court decisions and rulings, the interest on the Bonds is exempt from all present Federal income tax (except that no opinion is expressed with respect to interest on Bonds for any period during which such Bond is held by a person who is a " substantial user" of the Project or any person considered to be related to such person within the meaning of Section 103(c)(6)(C) of the Internal Revenue Code of 1954, as amended). In the opinion of bond counsel, under the provisions of Louisiana statutes, interest on the Bonds is also exempt from all Louisiana taxes.

15 l

=-- -:~ ,= ==- = - = - - -

7 APPROVAL OF LEGAL PROCEEDINGS Legal matters incident to the authorization, issuance and sale by the Board of the Bonds, and ~

with regard to the tax-exempt status thereof as described under the heading " Tax Exemption", are subject to the unqualiAed approving opinion of Foley Judell Beck Bewley & Landwehr, bond counsel.-

u Copies of such opinion will be available at the time of the delivery.of the Bonds. Legal matters for the Company with respect to the application of Loulslana law will be passed upon by Taylor, Porter, I

- Brooks & Phillips and all other legal matters for the Company will be passed upon by its counsel, 11 Orgain, Bell & Tucker. Legal matters pertaining to the Board will be passed upon by its counsel, Stockwell, St. Dizier, Sievert & Viu:ellio. Certain legal matters will be passed upon for the Underwriter

< 4

, hy ,its counsel, Kutak Rock Cohen Campbell Garfinkle & Woodward.

This OfBcial Statement was duly approved, executed and delivered by the Board on November I 18,1994.

- i INDUSTRIAL DEVELOPMENT BOARD OF THE PARISH OF CALCASIEU, INC.

By /s/ FRANK M. SIMPSON

- President E

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APPENDIX n

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i GULF STATES UTILITIES COMP $NY De information contained herein as an Appendix to the OfEclal Statement has been obtained febe Gulf States Utilities Company.

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CAPITALIZATION The capitalization of th6 Company as of August 31,1974, and as adjusted to re8ect the guaranty related to the issuance of the Pollution Control Revenue Bonds (Gulf States Utilities Company Pro}ect)

Series 1974 (the Series 1974 Bonds) of the Industrial Development Board of the Parish of Calcasieu.

Inc., are as follows:

AssmetSt.1974 Adleseed Au6satsed Outsismens Etaelo Oueseandtag Ratio Ubomaands of Dollare)

Ims-Term Debt (see Balance Sheet):

. First Mortgage Bonds . . . . . . . . $1,000,000 . $ 579,000 $ 579,000 .

Debentures . . . . . . . . . . . . . . . . . 10,125 10,125 Unamortized Premium, Dbcount -

on Debt . . . . . . . . . . . . . . . . . 500 500 ,

Guaranty of the Series 1974 Bonds * . . . . . . . . . . . . . . . . . . 26,000 Less: Funds on deposit with Trustee . . . . . . . . . . . . . . (19.000)

Total Long. Term Debt . 589,625 56.0 % 590,625 56.1 %

Preferred Stock ($100 par value): 3,000,000'sh. I17.500 11.2% 117,500 - 11.2%

Common Stock (without par value): -

25,547,328 shares outstanding . . 40,000,000 sh. I87,580 187,580 Premium on Preferred Stock . . . . . 655 655 Retained Earnings . . . . . . . . . . . . . 156,390 156.390 Total Common Equity . . 344.es25 32.8 % 344,625 32.7 %

~ Total Capitalization . . - $1.051.750 ~ 100.0% $1,052.750 100.0 %

• Under the terms of the Indenture of Trust and Pledge, the proceeds from the issuance and sale of the Series 1974 Bonds will be deposited with the Trustee under such Indenture. Disbursements will be made by the Trustee to the Company as the pollution control facilities being financed from such proceeds are constructed. As such disbursements are made, the amount of funds on deposit with Trustee will be decreased. In the Company's accounts, the total amount of the Series 1974 Bonds outstanding less the funds on deposit with the Trustee will be reflected as a liability.

'A1

.I 1

GULF STATES UTILITIES COldPANY STATEMENTS OF INCOME

. The ' f statements of income for the years 1969 through 1973 have been examined by Coopers & I Lybrand,1 -

---t certi8ed public accountants, whose report appears hereinafter. The Statements should be  ;

read in conjunction with the other anancial statements and related notes included in this Appendix to the OfBelal

' Statement. The data for the twelve montt aded August 31,1974. (not examined by independant certi8ed public j accountants), in the opinion of the Compauf, re8ect all adjustments, consisting only of normal recurring accruals. ,

necessary for a fair statement of the results of operation.  !

1$ M onths

• 1974 Years Eaded h 31.

- 'A' r im im i9,i i,,. 9 m n, sir.s)

OPERATING REVENUES: *

............................. $ 319.504 8 252.695 $ 218.766 $ 190,585 $ 175.319 $ 164.487

.............. - 23.107 18,689 14.972 13.745 13.463 13,305

, Oes ................ ...............

............... 6.993 7.237 6.272 5,928 5,820 5,348 Total Operating Revenues . . . . . 349.604 288,621 240.010 ' 210,258 194.602 183,140 OPERATING EXPENSES AND TAXES (Notes O & H):

Fuel and Purchneed Power Note 2 .. 140.330 87.700 52,836 40,539 37,434 36.136 Other Operations . . . . . . . .(. . . . . . .). . . . 35.249 32.995 30,453 29.813 26,349 Ma'====

29.336 -

........................

• 14.346 13.515 10.575 11.390 10,840 9,077 Depreciation (Note A) & (Note 6) . .. . . . 41.889 35.784 33.606 29.906 25.801 23.276 Astortiastion of Property Loss . . . . . . . . . 136 $42 Taxes (Note Al & (Note 1): .

j Pederal laconie-Current ........................ 20,219 21.478 22.489 16,628 14,115 18,667 Deferred - Net . . . . . . . . . . . . . . . . . . 7.107 6.494 5.778 4.922 4.660 4,184 Investament Credit: -

i Deterred . . . . . . . . . . . . . . . . . . . . 1.161 1.361 1.800 1.917 3.569 2.439

' Amortisation of Prior Years' Defo ............... (1.001) (789) Cl7) (451) (387)

State Teenmaa.rments (285)  !

• Current . . . . . . . . . . . . . . . . . . . . . . . . . 458 680 1.097 1.044- 1.021 662 i' Deferred - Not . . . . . . . . . . . . . . . . . . -157 206 . 277 74 Other Thea Income . . . . . . . . . . . . . . . . . 17.605 18,228 17,217 14,870 13,336 12,819 Total Operatlag Expenses and Tames................... 277.520 217.652 175.611 150.652 139.861 133.866 3' OPERATING INCOME . . . . . . . . . . . . . . . . . . 72,084 70.969 64.399 59.606 54.741 49,274 OTHER INCOME-(DEDUCTIONS)-

NET (Note 3) /...... ................

776 640 (1) (30) 50 (18)  !

ALLOWANCE POR PUNDS USED 8 DURING CON 9TRUCT3ON (Note 4) .. . 10.717 10,068 8.725 6,896 8,846 6,050  !

INCOME BEFORE INTEREST CHARGES.. 83,577 81.677 73,123 66.472 63,637 55,306 INTEREST CHARGES:

laterest on ' 1 Debt . . . . . . . . . . . 33.387 28.543 26.969 24.685 21.721 17.675 Amortisation of Premium. Discount and Espense on Debt . . . . . . . . . . . . . . . . . . (10) (25) (32) (38) (47) (56)

Other Interest Expense . . . . . . . . . . . . . . . . 4,615 2,982 1.018 2,816 2,965 2.975  ;

Total latenet Charges . . . . . . . . 37,992 31.500 27,955 27.463 24,639 20,594 -

NET INCOME (Notes 6 & 7) . . . . . . . . . . . . . . 45.585 50.177 45.168 39.009 38.998 34.712 FREPannari DIVIDEND REQUIREMENTS 6,730 6,730 4,650 4.084 4,084 4,084 INCOME APPLICABLE TO COMMON i STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $_ 3 8,85 5 $ 43,447 $ 40.518 $ 34,925 $ 34.914' S 30,628  !

COMMON DIVIDENDS . . . . . . . . . . . . . . . . . $ 28,613 $ 28,102 $ 26,570 $ 25.009 $ 22,740 $ 20,818 AVERAGE COMMON SHARES OUT3TANDING . . . . . . . . . . . . . . . . . . . . . . 25.547.328 25.547.328 25.547.328 23,880,661 23.430,661 22,147.328 EARNINGS PER AVERAGE COMMON 'i

. SHARE.............................. 3l.52 $1.70 $ 1.59 $1.46 $ 1.49 $1.38 DIVIDENDS PER COMMON SHARE . . . . . . $1.12 $1.10 $13 $1.04 $ .98 $ .94 RATIO OF EARNINGS TO PIXED CH ARGES (Note 5 ) . . . . . . . . . . . . . . . . . . . 2,91 3.48 3.66 3.25 3.86 3.46:

' PRO FORMA RATIO OF EARNINGS TO FIXED CH ARGES (Note 5) . . . . . . . . ... 2.50 The notes to the Anancial statements and the notes on the following pages are iritegral parts of this statement, A-2 l

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93 GULF STATES UTILITIES COMPANY NOTES TO STATEMENTS OF INCOME (1) The provisions for Federal income tax for the twelve months ended' August 31,'1974, and the year 1973 are less than the amount obtained by using the 48% statutory rate primarily due to the following:'

. 1M4 (Umandited) 1973

' Tax expense at 48% of pre-tax income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 335,014

- $37,910 Decreases resulting from:

- Exclusions from taxable income of allowance for funds used during construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,144) (4,833)

Exclusions from taxable income of overhead costs capitalized . . . . . . . . (1,583) (1,269) .-

Exclusions from taxable income of excess of tax depreciation over book

' depreciation not normalized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,201 (725)

Other items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,129) (2,281)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $, 2 715 9 $28,802 -,

e Federal income taxes included in:

Operating expenses:

Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 20.219 $21,478 Deferred - net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,107 6,494 Investment' credit - net ... ............................. 160 572 Other income and deductions'-net .......................... (127) 258

$27,3$9 $28,802 (2) See," Business-Fuel Supply" for increases in cost of " Fuel and Purchased Power" during the twelve months ended August 31,1974, and the year 1973.

(3)' As of January 1,1973, in compliance with Federal Power Commission Order No. 469, the Company adopted the equity method of accounting for its investments in Varibus Corporation, a wholly .

owned subsidiary. The cumulative effect of the change to January 1,1973, of $143,000 has been charged to retained earnings.- Since the effect of the change on years prior to 1973 is not material, the statements of income for such prior years have not been restated. The undistributed earnings for 1973 of $141,000 and for the twelve months ended August 31,1974, of $73,000 are included in'Other Income and Deductions.

4 .(4) During the period January 1,1969, to December 31, 1973, the Company changed interest rates employed for the accrual,for the " Allowance for Funds Used During Construction" (ADC) as follows:

Effective in 1973 - 8% to 7% % _ per annum Effective in 1971 -7%% to _8% per annum Ef!ective in 1970 - 6% % . to 7% % per annum These changes d.ci e4 net income $671,000 in 1973 and increased net income for 1971 and 1970 by

$431,000 and $1,180,000, respectively.

Construction funds used are assumed to have been derived from capital sources in the same proportions er the average capitaEzation ratios for the respective years. On this basis, the ADC attributable to funds provided by common equity amounted to 9.7 % , 12.9 % , 13.7 % , 12.1 % ,15.1 % ,

and 12.2% of " Income Applicable to Common Stock" for the twelve months ended August 31,1974,

.and the years 1973,1972,1971,1970, and 1969, respectively. The amount of ADC varied from year to year depending principally upon the level of construction in progress and the cost of capital, thereby affecting the relationship between such allowance and net income.

(5) The ratio of earnings to fixed charges, i.e , the number of times fixed charges are covered by earnings, is determined by using as earnings the tiet income before income taxes, deferred income taxes.

Investment tax credits and fixed charges. Fixed charges consist of all interest charges, amortization of premium, discount, and expense on debt and one-third of all rentals charged to income.

The pro forma ratio of earnings to fixed charges for the twelve months ending August 31,1974, is 2.50 giving effect to the annual interest on the Series 1974 Bonds (at an assumed interest rate of 8% ):

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GUtX SVATES UTILITIES COMPANY NOTES TO 'IllE STATEMENTS OF INCOME-(Contimmed) g to the annual laterest on $60,000,000 of 8%% 6rst mortgage bonds imod in March,1974; to the annual interest on $$5,000,000 short term notes expected to be outstanding at the date of the sale of the Series 1974 Bondst and to the elimination of interest charges during such period on all short-term notes and the 8%% Arst mortgage, bonds issued in March,1974. A difference of 4% in the actual interest rate from the assumed rate on the Series 1974 Bonds would change the ratio of earnings to Anod charges approximately .0014.

See page A 27 of this Appendix to the Of5cial Statement.

(6)- Effective January 1,1974, the Company increased book depreciation rates on selected properties to re8ect revised estimates of the remaining service life of these properties and also adopted the practice of recognizing depreciation on new additions in the year in which they were placed in .

service rather than at the beginning of the following year. The effect of the two aforementioned changes reduced not income for the twelve months ended August 31,1974, by $1,160,000'and $1,405,000 respectively, and the related earnings per share by $.04 and $.06 respectively.

(7) See " Management's Discussion and Analysis of the Statements of income" for rate increases.

For the twelve months ended Septem'ber 30, 1974, operating revenues were $359,204,000, and n't income after deducting preferred stock dividend requirements was $40,880,000, or $1.60 per share c/ common stock (after the decrease of $.11 per share as a result of the changes in depreciation more fully described in Note 6 above). For the twelve months ended September 30,1973, operating revenues were $275,278,000 and net income after deducting preferred stock dividend requirements was

$44,523,000, or $1.74 per share of common stock. These amounts are unaudited but, in the ophion of the Company, include all adjustments, consisting only of normal recurring accruals, necesatv to a fair presentation thereof.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE STATEMENTS OF INCOME The Statements of Income resect the result of past operations and are not intended as any repre.

sentation as to results of operations for any future period. Future operations will necessarily be affected by various and diverse factors and developments, including possible changes in electric rates, business activity, taxes, labor contracts, fuel costs, environmental expenditures, the effects of various electricity conservation programs, and other matters, the nature and effect of which cannot now be determined.

Material 8actuations in revenue and expense items for the four most recent periods presented on the accompanying Statements of income are as follows:

Revemens Material increases in electric operating revenues have occurred in the three most recent twelve-month periods presented on the Statements of income. The principal components of the net increase in such revenues were increased consumption of energy, rue increases, and an increase in receipts under fuel adjustment clauses in the Company's rates recovering escalated fossil fuel costs, Effective March 15, 1973, the Louisiana Public Service Commission granted the Company an electric rate Lursee for all of its retail business in Louisiana amounting to approximately $4,400,000 on an annu; Wi, after income taxes, based on 1971 business. Increases in retail rates were placed in effect on June'1,- 1972, in Texas amounting to approximately $3,500,000 on an annual basis, after income taxes, based on 1971 business. Under effective orders of the FPC, the Company has -

been charging increased rates for wholesale service to most rural electric cooperatives, municipal resele systems, and other electric corporations trince mid 1973. See Business-Electric Rates" for wholesale rate increases placed in effect on August 13,1973, and rate increase applications filed in 1974.

The increase of $28,181,000 in electric operating revenues from 1971 to 1972 was principally attributable to increased kilowatt hour sales, coupled with the retail rate increase in Texas effective June 1,1972. Increases in fuel cost recovery accounted for 44% of the $43,929,000 increase in such revenues from 1972 to 1973, while the balance resulted from the retail rate increase in Texas A-4

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M2amT7CNNE,WiaWM. Par.m being in effect for the full year of 1973, the 1.ouisiana retail rate increase effective March 15, 19,73, an increase in wholesale rates effective August 13, 1973, and an increase in kilowatt hour sales. Electric operating revenues for the twelve months ended August 31,1974, reflected an increase of $56,809,000 owr such revenues for the calendar year 1973, including $47,110,000 increase in fuel cost recovery coupled with an increase in kilowatt hour sales.

Increases in fuel cost recovery are also reflected in steam operating revenues for the two most recent periods presented. Higher consumption made up 39% of the increase in such steam revenues from 1972 to 1973 and increases in fuel cost recovery accounted for the remainder, Steam revenues

. for the twelve months ended August 31, 1974, increased $4,418,000 over such revenues for 1973.

This increase was principally a result of increases in fuel cost recovery of $4,312,000. .

De increase of gas operating revenues of $965,000 for 1973 over 1972 was principally attributable to increases in purchased gas cost recovery of $$35,000 and the balance from increased sales.

%e operating revenues for any twelve-month period ref'ected on the Statements of Income are

, affected by an accounting lag experienced by the Company in charging out its actual fuel costs under its fuel adjustment clauses. For the twelve-month peri 6d ended August 31, 1974, the Statements of Income include as operating expenses $20.877,000 representing fuel costs actually incurred during the last two months of such period and not billed out under the fuel adjustment clauses during such twelve-month period. The comparable unbilled cost for the twelve month period ended December 31, 1973, was $11,383,000.

Espenses De increase of $12,296,000 for Fue  : Purchased Power from 1971 to 1972 was comprised of 11% from increased generation, 38" :n increased fuel cost and $1% from increased power purchases. Increases in 1973 and 1974 were , rimarily attributable to increased cost of fuel.

Maintenance expense for 1973 increased over 1972 by $2,940,000, principally attributable to -

ma}or maintenance at power plants and painting of substations and transmission towers.

Depreciation expense for 197.2 reflects an increase over 1971 of $3,700,000, of which $122,000 was due to adjustment in rates of depreciation for certain utility plant to reflect revised estimates of the remaining economic service lives with the *:mboce resulting from additional plant placed in service during the previous par. The increase in depreciation.ekpense for the twelve months ended August 31, 1974, was principally attributable to charges resulting from additional plant placed in service during the previous year, and $1.160,000 represented $tiditional charges recognizing shortened service lives of c&ctec properties, and $1,405,000 represented charges arising from a change in accounting to recognizc depreclation on platt in the year placed in service.

Tuseu W Federal lacome Tax Increase fot 1972 over 1971 was principally the result of increased revenues producing a corresponding increast in the net taxable income base.

Anowanse for Fansis U*td lhartag Camassenen The increene la Allowuce for Fur.ds Uset! During Construction for the yean 1972 and 1973 over the renpactive prefious years was primarily attributable to the construction of generating units at Sabite and Willow Glen power stations.

Sneerust therles Interest on 1.4tq4ero I4bt increased for the twelve months ended August 31,1974, as a result cd the issuance of $50,000,00011w tuortgage 'condi in August,1973, and $60.000,000 first mortgage bonds in Marcik 1974.

Other Interest Expense decreased from 197.1 to 1972 by $1,798.000, most of which was brought about by the lawance of $35,000,000 fint enor6 gage tends in November,1971, along with the issuance of 2,000,000 shnres of no-par common stock; thetelr;f rededag the neal for short term borrowings in 1972. The lacresse in such expense from 1972 to 1973 resulted from increased construction activities and increased interest rates. Such expense for the twelve months ende6 August 31, 1974, increased

$1,633,000 over 1973 because of incrwed shott term borrowings and : higher interest rates.

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Jmm.Wm'.7mmummvaWrxTns amaumm Tite C0htPANY Outf States Utilities Company (the Compgny) was incorporated August 25, 1925, under the laws of the State of Texas and is engaged pdncipally in the business of g.w. dug electric energy and transmitting, distributing and retailing such energy in a 28,000 square mile area in southeastern Texas and in south central Louisiana, extending a distance of over 350 miles along the Texas 44uisiana Coast including the principal cities of Baton Rouge and Lake Charles, Louisiana, and Beaumont, Port Arthur, Orange and Conroe, Texas._ The Company also sells electric energy at wholesale in this area to various municipalities and rural electric cooperatives. 'The Company's electric system is laterconnected, and interconnecdons with other utilities are maintained for the exchangs of power.

The Company also conducts a steam products business and sells natural gas in the Baton Rouge, Louisiana, area. ,

The Company's service area hi a major producer of oil, gas, sulphur, renned products, chemicals, petrochemicals, steel, oil tools and related manufacturing, processing and servicing activities. It is characterieed by a favorable year round climate and ready access to air, land and water tiansportation.

Paper, cement, building materials, cotton, rice and cattle are also important products of the service area.

The principal executive ofnces of the Company are located at 285 Liberty Avenue, Beaumont, Texas 77701; the telephone number is (713) 83C-6631. ,

BUSINESS WY For the 12-month period ended Au6ust 31,1974,91.4% of the Company's operating revenues were derived from the electric utility business,6.6% from the steam products business and 2.0% from the gas business. Of the electric operating revenues,57% were derived from within Loulslana and 43%

from within Texas. The gas and steam products businesses are conducted entirely in Louisiana. Additional information about the principal classes of service is provided under " Operating Statistics and Certain Dstalls of Revenues."

There are 21 rural electric cooperatives, sponsored by the Rural Electrincation Administration, 21 municipal electric systems, and five investor owned utilities operating within or adjacent to the service area of the Company. The operation and extension of these cooperatives, municipalities, and other utilities in certain areas tend to restrict expansion of the Company's system in such areas.

However, the Company is continuing to extend its service into areas around such municipalities, areas adjacent to such other utilities, and into rural areas.

The Company self generates substantially all of the electric energy it sells. The Company has laterconnection agreements with Central Louisiana Electric Company, Inc. and Louisiana Power &

Light Cornpany, which contain terms upon which the parties may provide each other energy, maintenance, and other types of electric service; however, the Company understands that the inter-connected companies are having their gas supplies curtailed and that the only power that can reasonably be expected from them is power to provide assistance during a period of equipment forced outages.

Through such interconnections, the Company also participates to the extent of 215,000 kilowatts in a .

diversity interchange with the Tennessee Valley Authority. The Company also has an interconnection arrangement with Houston Lighting & Power Company providing for emergency service only. The cities of Lafayette and Plaquemine, Louisiana, have entered into interconnection agreements with the Company which are subject to and still awaiting approval by the Federal Power Commission. The Company also has a power interconnection agreement with Cajun Electric Power Cooperative, Inc.

See " Business - Litigation."

Of the Company's steam products customers, Erxon Company, U.S.A., Ethyl Corporation, and ,

Uniroyal are being supplied pursuant to contracts which, pursuant to notice which has been given by the Company, will terminate in 1978,1976 and 1976, respectively. The specially designed steam.

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electric extraedon plant which has been supplying process steam and by-product electric energy as i

part of the requirements of these customers presently uses, natural gas, of w)lch 85% is being supplied by the customer, as primary boiler fuel. The Company proposes to negot:ste nhr contracts with those custaners to provide higher rates, and in connection therewhh expects to conalder whether or not to convert such plant to continuous oil burning as well as gas burning capability. The Company constructed and owns a specially-designed steam. electric extraction plant in Baton Rouge which furnishes the requirements of the Industrial Chemicals Division of Allied Chemical Corporation for process steam and electricity. Allied Chemical furnishes all the fuel for such plant. It is being operated and maintained by Allied under a twenty-year contract, which runs to February 1,1989, and under which Allied makes annual payments to the Company, including amounts sufficient to amortire the cost of such plant over the term of the contract.

- The Company distributes natural gas in Balon Rouge and its environs which have an estimated

^7 population of 230,000. Such gas is purchased under an agreement, expiring December 31,1975, with Mid 1.ouisiana Gas Company. ,

It is presently estimated that the Company's system peak load during 19.75 will reach 4,091,000 kilowatts, at which time the Company estimates it will have a generating reserve capacity of approxl.

mately 35%. During the periods 19651974 and 19701974, the Company's peak load grew at average annual growth rates of approximately 9.1% and 7.3%, respectively; however, the peak load in 1974 represented an increase of only 2.8% over 1973. The 1975 peak presently estimated, if reallred, will represent a 5% increase over 1974. The Company believes that the lower rate of load growth experi-enced in 1974 has been attributable principally to mild weather conditions, conservation programs, and the impact upon consumption levels of higher prices charged for electricity.

Constracelon Propas and Flamacing Plans Because of the lower level of load growth experienced in 1974 and revision of estimates by the L Company of its future load growth, previous plans for construction of generating units were revised in August,1974, resulting in' lower estimated construction expenditures through 1977. To meet the revised estimates of antic'9ted growth in system load, the Company has tentatively scheduled in the period 1975 through 198.,, the installation of four fossil fueled electric generating units with aggregate capability of approximately 2,140,000 kilowatts and four nuclear fusted units with aggregate capability of approx'mately 3,740,000 kilowatts. The Company's estimate of peak loads and its presently scheduled construction program, discussed below, may change because of load growth changes, construction and regulatory contingencies, and the effects of various programs which may be adopted or imposed to conserve electri:ity. The Company is keeping its construction plans as flexible as practicable with the intention of accommodating any changes that may develop.

The cost of new construction in 1975 is expected to be approximately $199,000,000. In 1975 the program is expected to consist of the following principal items:

Additional electric production plant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $164,000,000 Additional electric transmission and distribution facilities . . . . . . . . . , . . . . . . 32,000,000 Other additional electric improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000 Additional gas plant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I,200,000 Additional s team plant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 800,000 Total............................................ $199,000,000 The construction program presently contemplates the expenditure of approximately $600,000,000 during 1976 1977.

It is anticipated that in 1975 the Company will, in addition to funds internally generated, require prior to the end of 1975, approximately $130,000,000. The Company expects that such funds will be A8 4

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obtained from short-term bank loans and the issuance of commercial paper combined with permanent ,

Anancing, the form, nature, time, and extent of which have not yet been determined.

Total gross additions to the plant account of the Company during the period January 1.1969, to September 1,1974, amounted to $656,043,000 And during the same pniod totirements from the plant account amounted to $30,439,000. Gross additions during the period amounted to approximately 50% of total net plant at August 31,1974 The Company currently plans to construct four nuclear-fueled units with an aggregate capability of approximately 3,740,000 kilowatts. Two of such units will be installed in the River Bend Power Station, which will be located on the Mississippi River north of Baton Rouge, Louisiana, and two will 4

be located in Newton County, Texas, near Toledo Bend Reservoir. The Company has entered _into contracts or letters of intent relating to the constructing and equipping of such units, and actual con-struction of the Arnt nuclear fueled unit is expected to commence by mid 1975. The total cost of these four units (including fuel, allowances for funds used during construction, and environmental contro!

facilities) is presently estimated to be approximately $2.82 billion (of which $63,500,000 is expected to have been expended through December 31, 1974). In December,1973, the Company entered into a contract for the purchase of Svc million pounds of uranium concentrates which is a sufficient quantity to provide the initial core for the four units which are planned to go into service through 1985. The Company has also contracted for fabrication of the first core for the two units at River Bend and has contracted for enrichment for the fuel of the above four units.

Construction and operation of nuclear-fueled units are subject to regulation by appropriate governmental agencies, including the issuing of permits and licenses by the Nuclear Regulatory Commission which, as of February 9,1975, will become the successor to the Atomic Energy Commission (AEC) for regulatory purposes. In September,1973, the Company applied to the AEC for construction permits for the two River Bend nuclear fueled units to be built in Loulslana, and the Company has filed in the third quarter of 1974 its application for permits to construct the two nuclear-fueled units to be built in Texas. Although the Company expects to pursue such permits and licenses diligently, there can be no assurances at this time as to when the permits and licenses will be issued. If significant delay is experienced for'any reason in the licensing of any such nuclear units, the Company may incur substantial additional costs, including carrying charges, additional escalation of acquisition and con-struction costs, and cost of accelerating construction of other fossil or nuclear-fueled units to meet projected load prior to the completion date of any such delayed nuclear unit. The 1975 construction program includes approximately $64,000,000 for expenditures in connection with the planned nuclear.

fueled units. Expenditure of funds prior to 1975 in the tipproximate amount of $63,500,000 and expenor tures of such portions or all of the 1975 projected expenditures as may be necessary, as well as execution of contracts for the construction of such nuclear units at d the purchase of equipment and fuel therefor, prior to assurance that construction permits and operating and other related licenses will be obtained, has been deemed necessary by the Company to put it in a position to make application for the regulatory approvals required and to enable it to complete construction, once approval is obtained, withia the time necessary to meet presently estimated increased load.

In rasponse to requirements imposed by the AEC and the United States Department of Justice, the Company has agreed to accept certain conditions to the license which is issued granting access to the Louisiana units and expects to accept similar conditions with respect to its proposed Texas nuclear units.

The Company's proposed four nuclear units have been planned solely on the basis of the Company's own anticipated load requirement, and, based upon the amount of access presently expected to be requested by other parties pursuant to such conditions, it is not anticipated that such diversion will materially aftut the Company's ability to meetits anticipated load. See " Business-Litigation."

Of the four fossil-fueled units planned for co,nstruction through 1985, it is presently anticipated that one 480,000 kilowatt unit will be fueled with gas, but it will have a continuous oil burning as well as gas burning capability; onc $80,000 kilowatt unit will be fueled with oil, but will have the capability A9

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of burning gas on a limited basist and two units (with a combined capability of 1,080,000 ldlo-watts) will be fueled with coal. The total cost of the four fossil-fueled units (including allowance for funds used during construction and environmental control facilities) is presently estimated to be eri liitately $657 million (of which $95 million is expected to have been expended through December 31, 1974).

the Company has contracted for a supply of Afty mililon tons of low-sulphur Wyoming coal, which the Company presently expects to be sufficient to fuel the two coal-fired units for twenty years.

Feel Sapply All of the generating plants of thc Company (with the exception of Willow Glen Unit No. 4 which ,

unit'has been converted to born No. 6 fuel oil) are presently designed to use natural gas as primary

• boiler fuel and have the capability of using No. 2 oil as boiler fuel on a short term basis. Boiler gas is ,

provided in Texas under contracts tunning until 1985 with Exxon Company, U.S.A., and Texas Intra-state Gas Company. The Company has been rocciving gas needed in its Texas plants from these suppliers pursuant to such contracts and does not expect any,immediate material curtailment of such supply.

Gas deliveries from Texas Intrastate Gas Company, which only supplies one half of the requirements of one 265,000 kilowatt generating unit (which one-half represent 2.6% of the total generating capa-tility of the Company) may be subject to curtailment pursuant to priorities established by the Texas -

Railroad Commission. Boiler gas is provided in Louisiana under a contract running until 1981 with .

Monterey Pipeline Company and under a contract running until 1987 with United Gas Pipe Line Company (United) which contract has provisions for price redetermination in 1977 and 1982.

Additional gas is supplied to the Company la Loulslana by its wholly-owned subsidiary Varibus Corpora-tion (Varibus) (see below). United provides aos to the Company's Willow Glen (other than to Unit No. 4) and Roy S. Nelson power stations in Louhiana, which stations account for a total of 1,861,000 kilowatts of the Company's electric generating capability.

. Since November,1970, United has been delivering less gas than the Company would have'otherwise used under its centract with United. Such curtailments are expected to continue at increasingly severe levels and may be further affected by the Federal Power Commission (FPC) actions discussed here-after. There are numerous FPC proceedings and related court appeals now in various stages involving the Company, United, and other customers of United. Such proceedings have already resulted in approval by the FPC of curtailments to the Company based upon certain priorities of use. Current FPC orders provide that if it is necessary for the Company to avoid shedding firm c!cctric load, United is authorized to deliver additional gas to the Company to the extent required to avoid such load shedding, but'any such adslitional deliveries are to be offset against subsequent gas allotments from United. Key issues yet to be Anally determined in such proceedings are whether or not natural gas supplied by United for boiler fuel to large volume users, particularly for the. purpose of generation of electricity, will be ordered terminated by the FPC, or, if authorized to be continued, will be given sufficient priority to entitle the Company to obtain gas in adequate quantitles. The Company cannot at this time anticipate the final outcome of such proceedings or the overall impact thereof upon the operation of its generating units served by United. With respect to one court appeal related to ,the supply of gas from United, on November 8,1974, the U.S. Court of Appeals for the Fifth Circuit issued its opinion in the case styled State of Louisiana, Loulslana Municipal Association, and Parish of Cameron, et al. vs. Federal Power Commission, which directs the reimposition of a gas curtailment plan formerly in effect that gives the Company a higher priority for that portion of its gas requirements required to generate electricity to serve the Company's " domestic" electric customers. The actual impact of the opinion ,

on the Companys gas supply from Unhed cannot be determined at this time because it is dependent on future action taken'by the FPC after it gives consideration to this opinion and further possible court appeals.

In an attempt to obtain gas to offset the crTect of existing gas curtailment, the Company has been purchasing gas on a temporary, interruptible basis and on a firm short term basis from several suppliers A-10  ;

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• - Because of the gas supply problem, the Company has adapted its new Willow Glen Unit No. 4 to a continuous ou burning as well as gas burning capabuity' The Company initiated a program to adapt all seven of its gas-Ared units (with appropriate emission control equipment) now served by United to enable them to have a continuous ou burning and gas burning capability but has recently temporarily deferred such conversion work with respect to Ave of such units. The cost of such program for all seven units is estimated to be approximately $75 million, including costs for environmental control and other related faculties, a portion of which is to be funded by proceeds from the issuance and sale of the Series 1974 Bonds. Fuel supply facilldes incidental to such conversion are expected to cost an addi-tional $16.9 million. It is estimated that the earliest this program can be completed is in 1,977. If such adaptation requires time beyond the date of termination of United's gas service, should the FPC 4!ti-mately so order, the Company would seek from the FPC a deferral of such termination. Through such a deferral or by obtaining alternate sources of fuel or power, the Company presently expects to be able to meet its electric service isquirements, but cannot presently be assured of the success of its esorts to do so. The Company has been purchasing fuel ou on the spot market as required, but has not yet been able to obtain long-term contracts on an acceptable basis for supply of No. 6 or other residual fuel oil to supply the existing plants which are being converted to continuous oil burning capability or future units planned to have such capabuity. See "Busmes - Litigation."

The Company continues efforts to explore the purchase of gas from other sources, and maintains storage plus the capability for using No. 2 fuel oil for short periods. It has been necessary at times to burn substantial quantities of No. 2 fuel oil in conjunction with ga: to meet load demand, and the Company expects increasing need to burn larger quantitles of such oil to meet future load demand.

To date, there has been no reduction or interruption in service to the Company's customers because of fuel supply shortages or fuel allocation rules heretofore promulgated by the Federal Energy Office.

However, the ability of the Company to avoid future interruptions and curtauments will depend upon the success of its efforts to continue to obtain necessary fuel to supplement its curtailed gas supply under then existing market conditions and applicable governmental allocation and rationlag programs.

For the twelve months ended August 31,1974, the system wide average fuel cost rose to 60.65( .

per mulion Btu from 20.44( per million Btu for the twelve month period ended August 31,1970. The alternative sources of purchased power and fuel discussed above are expected to result in higher costs, which cannot n6w be determined. In addition, an increase in the price of gas sold to the Company by United is an issue in the court proceedings referred to above. The Company's rate schedules and con-tracts, covering all kilowatt-hour sales, contain fuel adjustment provisions making automatic adjustments for increases and de' creases in fuel costs. See " Management's Discussion and Analysis of the Statements of Income."

After conversion to the capability of continuously using ou as fuel, the Company's equipment is expected to need more maintenance, repair, and restorative work than as presently operated. In addi- .

tion, more problems may be experienced with air pollution in using oil and coal as fuel than the

- Company presently experiences in using gas. See " Business-Environmental Matters."

The Company's subsidiary, Varibus, supplies and will continue to supply a portion of the Com-pany's fuel requirements and will be involved in programs to prospect for and develop fossil fuel resources. In addition, Varibus has entered into both firm and interruptible gas purchase contracts and gas transportation and exchange agreements which are expected to replace for the Company for short periods a portion of the gas' being curtailed by United, but which in one case imposes upon Varibus an obligation to repay such gas in kind at a later date.

A joint venture exploration program, in which Varibus and Public Service Company of Oklahoma (PSO) have been involved since September 1,1971, has resulted in the acquisition of leaseholds in A-11 l

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f, o over 400,000 acres at a cost to Varibus of approximately $4.75 million. The mineral leases' acquired are located in the southern portions of eastern Mississippi and western Alabama. Development and activiey are still in preliminary stages, except that a discovery has been made in Alabama in which Varibus owns a small percentage and production therefrom is expected during the Arst quarter of 1975, Varibus is involved in negotiations with two foreign investors for the exploration and development of other portions of such acreage in Mississippi and Alabama. One of the major provisions of the exploration agreement will be that Varibus and PhO will nave a call on all or a major portion of the production which may be obtained, Varibus' share of which may be either sold or exchanged to sup-

_ plement the fuel needs of the Company.

Elecede Rates The retail rates of the Company in Texas are subject to the jurisdiction of municiial l authorities, and as to all retail rates, including those in unincorporated towns and rural areas, a District Court of the State of Texas has authority to declare unlawful an extortionate or unreasonable rate. Texas does not have.a state utility regulatory body with jurisdiction over the rates of the Company.

In Louisiana (in which state the Company is duly quall6ed to do business as a foreign corporation),

a statute provides that the Louisiana Public Service Commission shall have jurisdiction over the retail rates and services of the Company. As of January 1,1975, provisions of a new Louisiana Constitution will come into effect which provide that such Commission may permit a proposed increase to be put into effect, in whole or part, under bond pending the Commission's decision and if suc*nCommission does not render a full decision on a proposed rate increase within twelve months after the effective filing date, the proposed rate increase may be put into effect if and as provided by law and subject to bond until Anal action by a court of last resort.

The FPC has jurisdiction of certain activities, including wholesale sales of electric energy in inter-state commerce, and the issuance of securities by the Company including the guaranty by the Company of the Series 1974 Bonds. Approval of such guaranty was granted by order of the FPC issued October 8, 1974.

Under effective orders of the FPC, the Company has been charging increased rates for wholesale service to most rural electric cooperatives, municipal resale systems, and other electric corporations since mid-1973. The Company estimates that such increase in the base rates will produce approximately

$1,800,000 at the 1973 level of use plus revenues from a fuel adjustment clause which recovers fuel costs above a level of 2.1 mills per kwh. Most collections of such rate increases are subject to refund pending final action by the FPC. Two wholesale customers have appealed the order of the FPC to the United States Court of Appeals for the District of Columbia, and if such appeals should result in reversal of the FPC orders as to such customers, approximately 74% of the increase in the rates could be lost pending further FPC action or termination of the existing contracts with such customers. A formal hearing was held before the FPC in September,1974, regarding such increase in rates but no final action has yet been taken by the FPC thereon. Through August 31,1974, approximately $4,700,000, including collections under fuel adjustment clauses and interest, was subject to being refunded depending on the outcome of the FPC and court proceedings.

The Company filed with the Louisiana Public Service Commission on October 3,1974, for an increase in electric rates to retail customers in Louisiana with demands in excess of 5,000 kilowatts.

The increase requested would produce additional revenues of approximately $6.033,000 based upon the test year 1974 level of business. Customers will receive a progressive increase beginning with loads in excess of 5,000 kilowatts and the percentage increase will vary from no increase at 5,000 kilowatts to approximately 10% or less for loads above 20,000 kilowatts. A similar increase amounting to approximately $4.000,000 of additional revenues based on the test year is expected to be made effective in Texas concurrently with the Louisiana increase. On October 22,1974, a hearing was held A 12 i.

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by the Loulalana Publie' Service Commission, on a motion by the Company to place the increase in

, eSect t=marumaly under bond, subject to refund if the proposed increase is not ultimately granted, but no action has been taken as yet.

Employen The Company has approximately 3,100 employees. Of these, about 2,300 operating personnel are represented by the laternational Brotherhood of Electrical Workets under a collective bargaining agreement which continues through July 5,1975. Among the provisions of the agreement is a 5% wage increase which became sRective on July 14,1974. ,

The Company and the Equal Employment Opportunity Commission (EEOC) met to conciliate 22' .

charass of alleged discrimination that had been Aled by employees. Conciliation agreements be-

tween the Company and the EEOC were reached on July 25,1974, providing for settlement of 18 of the charges. De conciliation agreements provide for amtmative action promotion programs for a class of approaimately 445 female employees.and 215 black and Spanish-surnamed employees, a change in matamity leave procedures, a change in rates of pay for two job class l6 cations, and a possible overtime differential award for an as yet undetermined class of black employees. The concillation agreements are presently in process of implementation and monetary liability for special payments provided thereunder cannot yet be determined.

De Company has received notice that there are at least eight additional charges of discrimination presently pending before the EEOC. These charges involve the Company's maternity leave procedures and practices that allegedly discriminate against the charging parties on the basis of race or sex.

The limits of the potential classes, the remedies to be sought, and the amount and materiality of monetary claims, if any, which may arise therefrom are not presently known.

A private class action was lustituted against the Company in a Federal district court in Texas on May 1,1974, in which Ave employees are denominated as representatives of a class of similarly situated employees at one of the Company's facilities. Because of alleged discrimination they seek: (1) injunctive relief, which !ncludes abolition of various employment practices in the area of testing, seniority, etc.

and changes in the union collective bargaining agreement; (2) a court-ordered comprehensive amrma.

tive action program; (3) a declaratory judgment; (4) back wages; and (5) costs and attorneys fees. The amount and materiality of monetary claims are not known at this time.

Lleigesies On July 24, 1973, the cities of Lafayette and Plaquemine, Louisiana (the Cities) Aled an action in United States District Court in the Eastern District of Louisiana, against the Company and other adjoining investor owned electric utilities, seeking treble damages and injunctive relief, alleging various anticompetitive activities in Louislana. In connection with the power interconnection agreements reach:d with the Cities on January 8,1974, they entered into agreements to release the Company from claims for any such prior acts or omissions, to dismiss as to the Company their civil actions described above, to withdraw various interventions pending in the various FPC proceedings of the Company, and to refrain from intervening in AEC proceedings of the Company based on any such prior acts or omissions. Such agreements by the Cities are, however, contingent upon acceptance by the FPC of the respective power interconnection agreements entered into by the Company with them without imposition by the FPC of conditions unacceptable either to the respective City or to the Company.

Such agreements are pending before the FPC at this time, in March,1971, the United States Department of Justice issued Civil Investigative Demands demanding that the Company and certain other investor-owned electric utility companies in Louisiana produce certain documents in the cobrse of an inquiry as to whether such companies may have been violating antitrust laws. No suit has been filed by the government alleging violations of the antitrust A-13

cuaw laws. Based upon consultation with the Justice Department and the staff of the AEC relative to the Company's applicadon for permits to construct nuclear generating units, the Company presently believes that such investigation has been resolved through agreements reached with the Justice Department as to conditions which may be imposed in the licenses for such nuclear units relating principally to coordina-tion efforts la the future with certain neighboring utilities and access to the nuclear units.

On August 5,1974, the Company Aled a $225 million damage suit in the Civil District Court for the Parish of Orleans, New Orleans, Louisiana, against United Gas Pipe Line Company alleging .

United's failure to fulill its contractual obligations to supply natural gas to the Company and reking to recover costs incurred by the Company in purchasing natural gas at higher prices from other sources and purchasinC more expensive fuel oil, constructing new facilities and converting generating;iscilities to handle and burn fuel oil, and covering future costs estimated to be incurred in the conversion to fuel oil operation. -

Eartromanement Mateses The application of Federal and state restrictions to protect the environment involves or may k involve review, certiAcation or issuance of permits by various state or Federal cuthorities (including the Administrator of the Environmental Protection Agency (EPA) and the. Corps of Engineers) with respect to construction of new facilities or modiacation of existing facilities and with respect to initial or continued operation of facilities. The Company believes that it is in substantial compliance with all presently applicable requirements, and is not involved in pending proceedings and does not know of any threatened proceeding in which the Company is or will be charged with material violation of such requirements. However, environmental restrictions, particularly in regard to emissions into -

the air and water, may increase the cost of operations of the Company's generating lastallations and may in the future require s.ubstantial investments in new equipment at existing installations and sub' -

stantial incressa in the costs of proposed new facilities. The Company believes that the capital expendi-tures and operating cost incurred in response to environmental considerations will be fully allowable for rate-making purposes. However, there can be no assurance that this will be the case. Other than (i) the aminalen control facilities necessary to meet emission regulations applicable to generating units i in Louhlana which are being adapted to a continuous oil burning capability (see " Business-Fuel Supply"), (ii) a hquid waste treatment facility for the existing units at Louisiana Station (approxi-mately $4 million), and (iii) backfitting of two large stations from once through operation to cooling towers which may be necessary under recently published guidelines of the EPA if applications for Section 316(a) exemptions under the Federal Water Pollution Control Act which the Company intends .

to Ble, are denied (approximately $10 million), the Company is not immediately faced with signi6 cant expenditures for environmental control facilities at its present units. However, substantial portions of the Company's construction program are expected to be for environmental control facilities.

A 14

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Management Th- oSicers and directors of the Company are as follows:

OFFICERS Floyd R. Smith . . . . . . . . . . . . . . . . . . . . Chairman of the Board of Directors .

Norman R. Lee . . . . . . . . . . . . . . . . . . . . President .

Samuel L. Adams . . . . . . . . . . . . . . . . . . Senior Vice President Joseph R. Murphy . . . . . . . . . . . . . . . . . . Senior Vice President Jerome M. Stokes . . . . . . . . . . . . . . . . . Senior Vice Presidant.

William E. Heaner, J r. . . . . . . . . . . . . . . . Vice President Joseph O. Robichau . . . . . . . . . . . . . . . . . Vice President ,

Robert E. White . . . . . . . . . . . . . . . . . . . Vice President '

Jasper F. Worthy . . . . . . . . . . . . . . . . . . . Vice President Robert W. Jackson . . . . . . . . . . . . . . . . . . Secretary Roy E. Eyler . . . . . . . . . . . . . . . . . . . . . . %ssistant Secretary Thomas A. Page . . . . . . . . . . . . . . . . . . . . l'reasurer J ames L. Braswell . . . . . . . . . . . . . . . . . . Con ;!Ir n Assistant Treasurer Ra y S. Pace . . . . . . . . . . . . . . . . . . . . . . . Assistan; s.casurer Hansford R. Rouse . . . . . . . . . . . . . . . . . Assistant Treasurer Robert L. Wynne, J r. . . . . . . . . . . . . . . . . Assistant Treasurer .

DIRECTORS '

Nomm Pdadpel Occupadoa Samuel L. Adams . . . . . . . . . . . . . . . . . . Senior Vice President and director of .he Com-pany, Beaumont, Texas.

J ohn W. Barton . . . . . . . . . . . . . . . . . . . . President, Jack's Cookie Company, biscuit and cracker manufacturer, and vice president of

. Louisiana Aircraft, Inc. aircraft distributors, Baton Rouge, Louisiana.

Seth W. Dorbandt . . . .............. Chairman of the board and president, First Na-tional Bank in Conroe, Conroe. Texas.

Edwin W. Hiam . . . . . . . . . . . . . . . . . . . . Registered investment adviser, Boston. Massa-chusetts.

' ' William H. LeBlanc, Jr. . . . . . . . . . . . . . President, Baton Rouge Supply Company, Inc.,

lumber and other buildmg matenals distri-butors, Baton Rouge, Lomslana.

- Norman R. Lee . . . . . . . . . . . . . . . . . . . . President and director of the Company, Beau-mont, Texas.

Charles P. Manship. J r. . . . . . . . . . . . . . . President and director, Capital City Pre'ss, news-p Joseph R. Murphy . . . . . . . . . . . . . . . . . . Sem, or aper publishers, Vice President Baton and Rouge, director of theLouisiana.

Com.

' pany, Beaumont, Texas.

Benjamin D. Orgain . . . . . . . . . . . . . . . . Member of Orgain, Bell & Tucker, general legal counsel for the Company. Beaumont, Texas.

Floyd R. Smith . . . . . .............. Chairman of the Board of Directors and director

. of the Company, Beaumont, Texas.

H arrell R. Smith . . . . . . . . . . . . . . . . . . . Retired general manager, Lake Charles Opera-tions. Cities Service Oil Company, petroleum refiners and petrochemical producers. Lake Charles. Louisiana.

Bismark A. Steinhagen . . . . . . . . . . . . . . Partner, Steinhagen Oil Company, petroleum pro-ducts distributors, Beaumont, Texas. .

Oliver P. Stockwell . . . . . . . . . . . . . . . . Member of Stockwell, St. Dizier. Sievert & Vic-cellio, legal counsel for the Company in the Lake Charles Division. Lake Charles. Lou-islana.

Fred V. Wilson . . . . . . . . . . . . . . . . . . . . Investments Port Arthur Texas.

A 15

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GULF STATES UTILITIES COMPANY OPERATING STATISTICS AND CERTAIN DETAILS OF REVENUES 12 bleeshe Years Ended December 31 AsseetSt.1974 1973 1973 1971 1970 1969 ELECTRIC AND STEAM PRODUCTS:

• Number of custonwes:

Residential . . . . . . . . . . . . . . . . . 353.298 349.292 340.360- 330,416 319.325 313.661 Commercial . . . . . . . . . . . . . . . . 42.628 41.986 41,144 40,171 39,251 38,907 ledustrial . . . . . . . . . . . . . . . . . . 5.652 5.606 6,115 5.320

• 4.466 4,396 Other . . . . . . . . . . . . . . . . . . . . 1.486 1.433 1:391 1.320 1.324 1.271 Total . . . . . . . . . . . . . 403.064 398.317 389.010 377.227 364.366 358,235 CAPABILITY, LOAD AND RESERVES (kilowatte)t Oomeratin8 capability at time of peak load ' . . . . . . . . . . . . . . . . . . . . . . . 4.564.000 4.564,000 4,155,000 4.155.000 3.625.000 3.045,000 Capability purchased from Sam Ray. .

aura and Toledo Bond Dams and

. Cajun Electric Power Cooperative.

Inc. without reserves . . . . . . . . . . . l43,000 108,000 204.000 98.000 98,000 98.000 Total capability at time of peak load 4,707.000 4.732.000 4.M 9.000 4.253.000 3,723.000 3,143.000 interru Peak load includin8 load' . . .... . . . . . . 3.895,800

. . . . . . . . . . .ptible 381.700 3.602.700 3.285.000 3.039.400 2.850.600 Plue: Power sales with reserves to other utility systems . . . . 100.000 100.000 50,000 Lees:

laterruptible load at time of peak load . . . . . . . . . 2.600 28,800 39.800 30.600 37.600 Purchased power with re.

serves includin8 TVA di.

versity interchan8e . . . . 215,000 215,000 215,000 215,000 215.000 215.000 Lead for which reserves are provided 3.678,200 3.537,900 _3.147.900 . 3.139,400 2.886.800 2.685.600 Capability la excess of load . . . . . . 1.028,800 1.194.100 1.011.100 1.113.600 836.200 . 457.400 Lees: Scheduled maintenance at time

• 126,000 of Phak load . . . . . . . . . . . . . . . . . 111.000 176.000 246.000 Reserve capability . . . . . . 917,800 1,068,100 1.011.100 937.600 590.200 457.400 percent reserves . . . . . . . . . . . . . . . . 25 30 30 30 20 17 Maximum demand ensam sold M pounds per hour . . . . . . . . . . . . . . 3.342 3.389 3.309 3.193 3.371 3.143 Output-not-kwhrs (thousands):

Generated . . . . . . . . . . . . . . . . . 22.323.578 21,t,90.507 21.281.658 20.643.077 19,290.514 17.337,296 Purchased and interchanted . . 863.968 917.992 519.575 (990.059) (1.060.239) (249,426)

Total . . . . . . . . . . . . , 23.187.546 22.808,499 21.801.233 19,653.018 18.230.275 17,087.870 Sales of electric rorty-kilowatt.

bours (thousands)t

• Reeldential ................ 3,832.030 3,730.837 3.546,355 3,132.933 2.860,259 2.665.542 Commercial .............. 2.673,046 2J79.961 2,380,471 2.114,689 1,923.879 1,782,460 Industrial . . . . . . . . . . . . . . . . . 11.272.518 11.001,560 10.415.986 9,371.114 8,698,045 8.098,285 Steam products . . . . . . . . . . . . . 2,881.636 2,880,362 2,602.921 2.420,923 2.384.767 2.364,660 Other sales . . . . . . . . . . . . . . . . 1.465,307 1.519.578 1.719.249 1.482.560 1.338,427. 1.222.307 Total Sales . . . . . . . . 22.124.537 21.712.298 20.664,982 18.522,219 17.205.377 16,133.254 Steam sales-millions of pounds . 24,793 25,723 24.543 23,943 24,162 24,394'

• Excludes load served by and capability of the 76,000 kilowatt steam-electric installation maintained and operated by the Industrial Chemicals Division of Allied Chemical Corporation.

A-16 I

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GUtE STATES UTILITIES COMPANY .

OPERATING STATISTICS AND CERTAIN DETAILS OF REVENUES-(Condneed) 12 Years Ended Deeeenber 31, August 31.1974 1973, 1972 1971 1970 1969 Electric line-pole miles:

Transmission (69.000 volts and over) ................... 3.668 3.667 3.641 3.589 3.287 3.085 Distribution (34.500 volts and under) .................. 15.549 15.337 15.019 14.655 14.303 14.015 '

Underground construction -

miles of route . . . . . . . . . . . . 801 671 575 489 399 349 Average annual use per customer:

Residential Kilowatt. hours ......... 10,930 10.819 10J71 9.645 9.044 8.602 Revenue per kilowatt hour

- cente . . . . . . . . . . . . . 2.71 2.45 2.23 2.19 2.22 2.24 ,

Commercial:

Kilowatt. hours . . . . . . . . . 63.393 62.120 58J62 53.275 49.291 46,395 Revenue per kilowatt.hout

- cents . . . . . . . . . . . . . 2.41 2.16 1.96 1.93 1.95 1.99 Industrial:

Knowatt. hours ......... l.995.842 1.830.542 1.740,058 1.849.440 1.9RO.880 1.801.220 Revenue per kilowatt.hout

- cents . . . . . . . 4 . . . . 1.14 .90 .75 .73 .7) .73 OAS: .

Number of customers . . . . . . . . . . . 71.659 71.854 70J97 69.124 67.322 66.694 Output-M cu. ft. of natural gas

, purchased ................... 8.233.907 9.502.531 9.060.473 8.788.881 9.607.794 9.291.090 Sales - M cu. f t. . . . . . . . . . . . . . . . 7.967.078 9.114.942 8.441.612 8.585.412 9.209.457 8.982,181 Maximum daily output- M cu. ft. 83.946 97.984 83.284 85,237 97.483 82.135 -

M ains -miles . . . . . . . . . . . . . . . . . . 1.042 1.019 979 949 917 917 OPERATINO REVENUES:

Electric and' steam products-Sales of electric enersy ,

Residential , . . . . . . . . . . . $103.833.77 6 $ 91.335.021 $ 79.021.925 $ 68,727.248 $ 63.463.435 $ 59.820.744

. Commercial . . . . . . . . . . . . 64.500.209 55.658.876 46,599.660 40.898.786 37.501.242 35.433.809 Induurial . . . . . . . . . . . . . 129,009.272 99.231.146 77.941.110 68.322.257 63.393J94 59.367.304

- Steam products . . . . . . . . . 20.087.246 15.777.138 12.073,611 10.829,047 10.547.052 10.510.620 Other .. .............. 19.496.594 14.229.267 13.132.964 11.223.230 10.321.501 9.460.839 Total sales of electric energy .......... 336.927.097 276.251.448 228,769.270 200,000.568 185.226.824 174.595.316 Other electric and steam products revenue . . . . . 3.729.167 3.175.407 3.011,430 2.374.949 1.609.196 1.227.423 Steam sales . . . . . . . . . . . . l.954.985 I.957.370 1.956.949 1.954.695 f .946.154 1.969.091 Total electric and steam products .. . 342.611.249 281.384.225 233,737.649 204.330,212 188.782.174 177.191.830 Gae -

Sales of gas:

Residential . . . . . . . . . . . . . 4.635.797 4.979.121 4.382.289 4.253.967 4.332.508 3.930.360 Commercial and Industrial 2.303.813 2.198.738 1.801.735 1.634.856 l.487.226 1.416.666 Total sales of 8as . .. 6.939.610 7.177.859 6.184.024 5.888,823 5.819.734 5.347.026 Other gas revenue . . . . . . . . . . . 52.850 58.92.2 87.956 38.767 510 899 Total gas . . . . . . . . . . 6.992.460 7.236.781 _ _ 6.271.980 5.927.590 5.820.244 5.347.925 TOTAL OPERATING REVENUES ... 3349.603.709 $288.621.006 3240.009.629 $210.257.802 $ 194.602.418 $ 183.139.755

'8) ELECTRIC AND STEAM PRODUCTS OPERATINO REVENUES- % OF ,

TOT A L . . . . . . . . . . . . . . . . . . . . . . . . . 98.0 97.5 97.4 97.2 97.0 97.1 OAS OPERATINO REVENUES- %

OF TOTAL . . . . . . . . . . . . . . . . . . . . 2.0 2.5 2.6 2.8 3.0 2.9 A 17

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UT11.!TY AND OTHER Pl. ANT *(includin8 intentibles) .

at or48taal osat (Note A):

. Blastric utility plant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,081.279 81.134.380 Steam predners plant . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,008 52.771

• One nellity plant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.907 $1.153.994 19,488 $1.226,639 Lees: Assassalated provioica for depresistion ...... 323,822 296.806 Total plant less accumulated provision for -

deprestation ......................... 830.173 929.833 CONSTRUCTION WORK IN PROGRESS, at cost (Note A) 320.262 154.046 Total utility and other plant . . . . . . . . . . . . . . 1.150,434 1,083,879 OTHER PROPERTY AND INVE!!TMENTS:

Invesuneet la and advances to subsidiary compney at equity ( Noes A ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.757 20.937 Other property and investments at cost . . . . . . . . . . . . 1.035 1.020 Total other property n'nd investmente . . . . . . 18,792 21.957 CURRENT ASSETS: .

Cash ( Note B ) . . . . . . . . . . . . . . ._ . . . . . . . . . . . . . . . . . . 6.317 3.801 .

Spesial deposite . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 284 , 355 Temporary cash investments . . . . . . . . . . . . . . . . . . . . . . 1.500 Accounts receivable:

Customere . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.946 28,924 Others.................................... 2.340 2.077 45.286 31.001 Lass: Accumulated provision for uncollectibles .. 382. 44.904 412 30JI9 Materials and supplies (lactudin8 cons'truction materials) at everage cost . . . . . . . . . . . . . . . . . . . . . 6.454 5.887 Fuel stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.459 9.035 Fuel propeyments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 337 359 Other prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.066 1.388 Total current assets . . . . . . . . . . . . . . . . . . . . . . 85.321 51.414 DEFERRED DEBITS: .

Unamortised debt expense (Note A) . . . . . . . . . . . . . . 1.077 1.016 Other .......*.................................. 1.858 1.341 Total deferred debits . . . . . . . . . . . . . . . . . . . . 2.935 2.357 M2 $1.159.607 The accompanying notes are an integral part of the financial statements.

A-18 l

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GUIE STATES UTILITIES COMPANY

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LI A BILITIES August 31.1974 December 31,1973 veaudited)

CAPITALIZATION:

Capital stock and retained earnings:

Common stock, without par value (Note C) .... 5 187J80 $ 187.580 Retained earnings (Note D) . . . . . . . . . . . . . . . . . 156,390 $ 343.970 154.556 $ 342.136 Preferred stock (Note C) . . . . . . . . . . . . . . . . . . . . 117.3n0 117,300

- P,romium on preferred esock (Note C) . . . . . . . . . 635 635

, Total capital stock and retained earniass .. .. 462,123 460.291 Loos-term debt (Note E):

First mortgese bonds . . . . . . . . . . . . . . . . . . . . . . . . 379.000 319,000 Debentures ................................ 10,123 10.125 Unamortized premium, discount on debt (Note A) 500 589.625 835 529.960 Total ca pitallantion . . . . . . . . . . . . . . . . . . . . . 1.051,750 990.251 CURRENT LIABILITIES:

Debentures due within one year,less amount acquired for sinking fund purposes (Note E) . . . . . . . . . . . . . . 304 Notes payable (unsecured) (Note B): ,

Banks ............ .'.... .................. 17.642 -

21.963 Comunercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.483 40,127 20.482 42,445 Accounts payable. trade . . . . . . . . . . . . . . . . . . . . . . . . . . 31.684 18.981 Customers' deposits ............................ 2.983 2.746 Taxes accrued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17J96 6,117 Interset accrued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.656 8.330 Dividends declared . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.836 Payroll accrued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 695 786 Other ......................................... 3,526 3.978 Total current liabilities . . . . . . .'. . . . . . . . . . . . 112.103 83,887 DEFERRED CREDITS:

Investment tax credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.633 19,689 Accumulated deferred income tax . . . . . . . . . . . . . . . . . 68,769 63.717 Other ......................................... 1,442 292 Total deferred credits . . . . . . . . . . . . . . . . . . . . 91.844 83.698 OPERATING RESERVES . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.785 1,771

- $1.257,482 $1.159,607 The accompanying notes are an integral part of the financial statements.

A 19

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. I GULF STATES UTILITIES COMPANY g STATEMEN11i OF RETAINED EARNINGS la M eashs 1974 Year Beded December St.

. A"r" i.m m m 29,. 19 9 rn nas.fD n.rs)

BALANCE. be8innin8 of period. as pteviously reported . . . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . $ 146.14 8 $139.354. $125,406 SI15.490 $103.366 8 93J56 l.mest Cumulative effect of chan8e to equity smothod of accountin8 for investi.wnts

, (See Note 0) to Statements of income) . . ... 143 BALANCE, be8i nnin8 of period, as restated . . . .. . 146.148 139.211 125.406 115.490 103.366 93.556 ADDITIONS:

Not income . . . . . g . . . . . . . . . . . . . . . . . . . . . . . . _45.585 50.177 45.168 39.009 38.998 34.712 191.753 189.388 170.574 154.499 142.364 128.268 DEDUCTIONS:

• Capital stock expense 50 Cash divWads:

Preferred stock (at annual rates indicated below):

54,40 dividend . . . . . . . . . . . . . . . . . . . . 328 528 528 528 528 528

$4.50 dividend . . . . . . . . . . . . . . . . . . . . 225 225 225 223 ' 225 225

$4.40 divend - 1949 Series . . . . . . . 264 264 264 264 264 264 84.20 dividend . . . . . . . . . . . . . . . . . . . . 294 294 294 294 294 294

$4.44 dividend . . . . . . . . . . . . . . . . . . . . 222 222 222 222 222 222 85.00 dividend . . . . . . . . . . . . . . . . . . . . 375 375 375 375 375 375

. $5.08 dividend . . . . . . . . . . . . . . . . . . . . 508 508 508 . 308 508 508

$4J2 dividend . . . . . . . . . . . . . . . . . . . . 452 452 452 452 452 452

$6.08 dividend . . . . . . . . . . . . . . . . . . . . 1.216 1,216 1.216 ' !.2!6 1.216 -1.216

$7.56 dividend . . . . . . . . . . . . . . . . . . . . 2.646 2.646 566 Conunca stock . . . . . . . . . . . . . . . . . . . . . . . . . 28,6t3 28.102 26.570 25.009 22.740 , 20.818

, 35,343 34.832 31.220 29.093 26.874 24.902 BALANCE. end of period (Note D) . . . . . . . . . . . . $ 156.390 $154.556 $ 139.354 $ 125.406 1115.490 $103.366 The accompanying notes are an integral part of the financial statements.

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• t GULF STATES UTILITIES COMPANY  ?

STATEMENTS OF CHANCES IN FINANCIAL POSITION 12 Mesaba Emded August 31.1974 Years Raded December 31. .

(Unametted) 13 1972 1971 1300 g (Theseands et Dollare)

• FUNDS FROM OPERATIONS:

Not income (s) . . . . . . . . . . . . . . . . . . . . . $ 45J85 $ $0.177 $ 45.168 $ 39.009 $ 38.998 $ 34.712 Items not afeedn8 workias capital:

Depreciation . . . . . . . . . . . . . . . . . . . 41.889 35.784 33.606 29.906 25.801 23.276 Amortisation of loss on onle of property . . . . . . . . . . . . . . . . . . . . . 136 542 Deferred Federal income las-net 7.107 6.494 5.778 4.922 4.660 4.184 Deferred state income tat-not .. 157 206 277 74 Investment tan credit - not . . . . . . 160 572 1.283 1.466 3.182 2.154 Comunen stock equity component of allowance for funds used durin6 construction ................. (5.880) ,,

(5.590) (5,538) 14.208) (5.282) (3.741)

Funds from operations . . . . . . 89.0lf 87.643 80.574 71.169 67.495 61.127 FINANCING:

60.000 50.000 35.000- 60.000 50,000 First mort 8a8e bonds . . . . . . . . . . . . . . . .

Preferred stock . . . . . . . . . . . . . . . . . . . . . 35.0$$

Common stock . . . . . . . . . . . . . . . . . . . . 40.280 28.217 Notes payable . . . . . . . . . . . . . . . . . . . . . . 31.014 (30.796) 69.256 (29,001) (17.220), 26.311 INCREASE IN OTHER - NET (b) . . . . . . . 9.820 9.103 8.366 5.329 6.607 4.245 Total source of funds . . . . . . . i. . . . . . , . $189.852 5115.950 $193.251 $122.777 $145.099 1141.683 FUNDS FOR:

Gross plant additions (a) ............ $l39.193 $107.234 $111.314 $ 91.'994 $110.596 $123.328 Dividends ......................... 35.343 34.832 31.220 29.093 26.824 24.902 Retirement of lon8. term debt . . . . . . . . 375 375 375 375 375 375 l'tvestment in and advances to subsidiary company ........................ 930 18.355 2.482 Temporary caab investments . . . . . . . . . . l.500 (47.900) 47.900 177.341 112.8 % 193.291 121.462 137.795 148.605 INCREASE (DECREASE) IN WORKING CAPITAL AS DETAILED BELOW . . . . . 12.511 3.054 (40) 1.315 7.304 (6.922)

Total funds used . . . . . . . . . . . $189.852 $115.950 $193.251 $122277 $145.099 $141.683 INCREASE IDECREASE) IN WORKING \

CAPITAL (Encludin8 notes payable):

Accounta receivable . . . . . . . . . . . . . . . . . $ 13.512(c) $ 6.144 $ 5.305 $ (630) $ 2.565 $ 2,130 leventories . . . . . . . . . . . . . . . . . . . . . . . . 1.098 1.097 (610) 116 600 (142)

. Fuel stock . . . . . . . . . . . . . . . . . . . . . . . . . 16.827 7.797 (678) IJ30 1 (4)

Fuel prepayments . . . . . . . . . . . . . . . . . (33) (33) 392 Other prepayments . . . . . . . . . . . . . . . . . 406 (88) (775) 86 169 405

• Accounts payable . . . . . . . . . . . . . . . . . . . (15.114) (7.716) (2,033) 1.287 (1.796) (1.401)

Accrued taxes . . . . . . . . . . . . . . . . . . . . . . 2.917 (800) (473) 1.074 5.731 (4,747)

Accrued Interest . . . . . . . . ...... .. (238) (1.770) (21) (469) (1.312) (1.299)

Other- net ....................... (6,864) (1,577) (1.147) (1,679) _ l,346 (1.864)

$ 12.511 $ 3.054 $ (40) $ 1.315 $ 7,304 $ (6.922)

(a) includes allowance for funds used during construction. See Note 4 to Statements of Income.

(b) includes common stock equity compenent of allowance for funds used during construction.

(c) Increase due principally to seasonal kilowatt hour usage and fuel clause adjustment.

The accompanying notes are an integral part of the Snancial statements.

A 21 i

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• 9 .

e GULF STATES UTILITIES COMPANY .

NOTES TO FINANCIAL STATEMENT 3 r (Infeemetion relatlag to dates after December 31,1973, is unnedited.) ,

(A). The major accounting policies of Gulf States Utilities Company are outlined below. These l policies are pasented to assist the reader in evaluating the Anancial statements and other data presented in this statement.

The r.ccounting records of the Company are maintained in accordance with tne Uniform System  ;

of Accounts prescribed by the FPC and the Louisiana l'ublic Service Commission. In accordance with  ;

changes required by the FPC in 1974, certain 1973 amounts have been restated to maintain com- '

parability between the two years.

• Utility and other plaht is stated at original cost when 6rst dedicated to public service and the amounts shown do not purport to represent reproduction costs or current value. Costs'of repairs and. . -

minor replacements are charged to expense as incurred. The recorded cost of depreciable utility plant l retired and cost of removal, less salvage, are charged to accumulated provision for depreciation. At  !

August 31, 1974, certain electric utility plant approximating $85,500,000 has been included in con- ,

struction work in progress which had been included in utility and other plant at December 31, 1973.

The capitalized cost of utility and other plant includes an allowance for the cost of funds used during constructica.

The provision for depreciation is computed using the straight line method at rates which will ,

amortire the unrecovered cost of depreciable plant over the estimated remaining service life. The l

provisions for depreciation for the twelve months ended August 31, 1974, and the years 1969 through i 1973 were equivalent to average percentages of depreciable plant as follows: Electric - 3.2%, Steam Products - 3.8% and Gas - 2.9%.

The Company's investment 'in Varibus Corporation, a wholly-owned subsidiary, is accounted for on the equity basis. See Note (3) to Statements of Income.

1 No specific provision has been made for amortization of intangibles.

For income tax purposes, the Company has adopted accelerated methods of computing depreciation for eligible property. Pursuant to regulatory commluion order, amounts equal to the reductions in income taxes arising from the use of accelerated depreciation rather than straight line tax depreciation are '  ;

charged to income and concurrently credited to accumulated deferred income taxes. Upon expiration .

of the periods of tax deferment, the amounts accumulated are used to offset the provision for income I taxes in amounts equivalent to the related increases in such taxes.

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i Amounts equal to the reductions in Federal income taxes resulting from investment tax credits i are charged to income and concurrently credited to deferred credits. These credits are being amortized over the estimated useful lives of the related properties.  !

. Unamortized premium, discount and expense on bonds and debentures are being amortized I 3

L ratably over the lives of the respective issues, i (B) The Company had agreements with several banks providing for borrowing up to $51,080,000 at December 31,1973, and $67,080,000 at October 1,1974, at the prime commercial lending rate in 4 effect from time to time without payment of a commitment fee. These agreements will terminate De. I cember 31, 1974, or within the following quarter. The Company maintains non segregated worldng i

cash balances which generally average, over the life of the agreements, cpproximately 10% of the l -- line of credit. ,

! l In addition, at October 1,1974, the Company had agreements with several banks providing for l borrowing of up to $31,000,000 at 115% of the prime commercial lending rate in effect from time to j time with payment of a commitment fee of 5% of the prime lending rate on the line of credit.

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p s-GULF STATES UTILITIES COMPANY NOTES TO FINANCIAL STATEME!G5-(Connamed)

'the welghted average interest rate of the aggregate si. ort term borrowings was 9.8% and 12.0%

at December 31,1973, and August 31,1974, respectively. The maximum aggregate short-term borrowings outstandleg at any one time (notes payable to banks and to holders of commercial' paper) were

$73,300,000 for the twelve months ended December 31,1973, and $83,624,000 for the twelve inonths ended August 31, 1974. The average monthly short term borrowings during 1973 approximated

$36,700,000 and the average. Laterest cost was approximately 7.1%. For the twelve months ended August 31, 1974, the average monthly short term borrowings approximated $43,400,000 and the

- sverage interest cost was 10.1%. Average monthly short term borrowings represent the sum of the ending monthly borrowings outstanding divided by 12 and the average interest rate is determined by dividing accrued interest during the year by this average.

(C) Common Stock, without par value; authorized 40,000,000 shares; outstanding, 25,547,328 shares.' The Company in November 1971, sold 2,000,000 additional shares for an aggregate of

$40,280,000; and in February 1970, sold 1,400,000 additional shares for an aggregate of $28,217,000.

Preferred Stock, $100 par, cumulative; authorized 3,000,000 shares; outstanding 1,175,000 shares, as follows:

120,000 shares $4.40 dividend, entided upon redemption to $108 per share . . * $ 12,000,000 50,000 shares $4.50 dividend, entitled upon redemption to $105 per share . . 5,000,000 60,000 shares $4.40 dividend,1949 series, entitled upon redemption to $103 per share ............................................ 6,000,000 70,000 shares $4.20 dividend, entitled upon redemption to $102.818 per share 7,000,000 50,000 shares $4.44 dividend, entitled upon redemption to $103.75 per share 5,000,000 75,000 shares $5,00 dividend,, entitled upon redemption to $104.25 per share 7,500,000 100,000 shares $5.08 dividend, entitled upon redemption to $104.63 per share 10,000,000 100,000 shares $4.52 dividend, entitled upon redemption to $103.57 per share 10,000,000 200,000 shares $6.08 dividend entided upon redemption to $105.34 per share prior to July 1,1977, and thereafter to $103.34 per share . . . . 20,000,000 -

350,000 shares $7.56 dividend, entitled upon redemption to $108.36 per share prior to September 1,1977, then until September 1,1982 to

$106.80 per share, then until September 1,1987 to $103.80 share, and thereafter to $101.80 per share . . . . . . . . . . , . ... . . .per 35,000.000

$117,500.000 In September,1972, the Company sold 350,000 additional shares of $7.56 Dividend Preferred Stock $100 par value, for an aggregate of $35,055,000.

'the . redemption and liquidation prices of all preferred stock issues, in the aggregate, were

$124,408,000 at December 31,1973, and August 31,1974.

Premium on Preferred Stock increased $55,000 in September,1972, as a result of the sale of 350,000 shares of $7.56 Dividend Preferred Stock, $100 par value.

No shares are reserved for officers and employees or for options, warrants, conversions and other rights.

(D) Certain limitations on the payment of cash dividends on common stock are contained in the Company's Articles of incorporation and indentures, the most restrictive presently being that contained in the Articles of Incorporation, which provides generally that no cash dividends shall be paid except out of earnings accumulated after May 31,1958, plus $28,262,988; provided, however, that such dividends are limited to 75% of "available net income" if the " common stock equity" (excluding premium on A 23

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, GULF'5TATES UTILITIES COMPANY NOTES TO FINANCIAL STATEMEN!b (Coodseos) proformd stock) falls below 25% of " total capitalization" (excluding premium on preferred stock).

Under this provision, wtained earnings unrestricted as to cash dividends on common stock amounted to $112,320,591 at December 31,1973, and $94,927.846 at August 31, 1974.

(E) First mortgage bonds comprise:

• 2%% Series, due May 1,1976 (excloding $1,000,000 in treasury) . . . . . $ 27,000,000 3 . % Series, due April 1, 1978 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000,000' ,

2% % Series, due December 1, 1979 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . y 10,000,000 2% % Series, due June 1, 19 80 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , 13,000,000 3% % Series, due November 1, 1981 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000,000 3% % Series, glue December 1, 1982 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000,000 3M % Series, due December 1, 1983 .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 10,000,000 4% % Series, due September 1, 1986 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000,000 4% % Series, due October 1, 1987 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,000,000 4 % Series, due May 1, 19 88 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000,000 4% % Series, due January 1, 1989 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.000,000 5% % Series A, due December 1, 1989 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,000,000 4% % Series, due July 1, 1990 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,000,000 4% % Series, due May 1, 1992 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,000,000

$ % Series, due January 1,' 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000,000 5 % % Senes, due February 1, 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,000,000 6% % Setles, due February 1, 199 8 . . . . . . . . . . . . . . . _ . . . . . . . . . . . . . . . 25,000,000 6% % Series A, due October 1, 199 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000,000 7 % % Series, due March 1, 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000,000 3 8% % Series A, 'due September 1, 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000,000 .

? 8M % Series, due February 1, 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000,000 h 7% % Series A, due December 1, 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.000,000 .

7 % % Series, due November 1, 2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 35,000,000 8 % % Series, due August 1, 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50.000.000

. TOTAL December 3 1, 19 7 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $19,000,000 8 M % Series, due March 1, 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.000.000 TOTAL August 31, 19 7 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . $579.000.000 .

The Company's mortgage contains sinidng fund provisions which require generally that the Company make semi. annual cash deposits with the trustos equivalent to % of 1% of the greatest aggregate principal .

amount of the 2%% Series Arst mortgage bonds due May 1,1976, authenticated and delivered and annual cash deposits equal to 1.2% of the greatest aggregate principal amount of first mortgage bonds subsequently authenticated and delivered; or, in lieu thereof in each instance, to apply property additions or reacquired Ars( mortgage bonds to that purpose. The Company has satisned the mortgage require-ments in past years by certifying to the trustee "available net additions."

The debentures bear interest at 4% % and are due October 1,1981. The trust indenture requires annual redemption for sinking fund purposes of $375,000 principal amount through 1980.

Aggregate sinking fund requirements of first mortgage bonds and debentures outstanding, for each of the five years subsequent to December 31, 1973, are as follows:

1974 ........................................... 56,488,000 1975 ........................................... 6,559,000 1976 ........................................... 6,279,000 1977 ........................................... 6,279,000 1978 ........................................... 6,135,000 A 24 .

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GULF STATES UTILITIES COMPANY '

NOTES 10 FINANCIAL STATEMENTS-(r'a-stemad)

The Company's 2%% Series of first mortgage bonds amounting to $28,000,000 are due May 1, 1976, and the Company's 3% Series of first mortgage bonds amounting to $12,000,000 are due April 1, 1978.

(F) The construction program involves expenditures of approximately $174,000.000 in 1974 and

$199,000,000 in 1975. See ," Business-Construction Program and Financing Plans." In that connec-tion, the Company has incurred substantial commitments for equipment. .

See " Business-Construction Program and Financing Plans" for a description of recent commit.

ments to purchase coal and uranium concentrates.

See " Business ' Employees' and ' Litigation'" for pending litigation.

(G) The Company has a contributory pension plan covering all employees between the ages of 30 and 65 years who have had one year of continuous service. The Company's policy is to fund pension co8t accrued. Since 1969 the aggregate cost actuarial method of funding the plan has been used. Uiider this method, unfunded past service cost is not separately identi6ed.

The cost of the plan charged to income and to construction and other accounts for the years 1969 1973 and the twelve months ended August 31, 1974, are as follows:

12 Menshe 1

Years Decemk 31.

(Unaudleedi 1973- ,1972 ,197,,1, y 196,9 Char 8ed to income . . . . . . . . . . . . . $ 1.248,021 $ 1.146,831 $ 1.255,441 $ 1,277.185 $ 1.205.059 $ 1.019,906 Charged to construction ans other accounts . . . . . . . . . . . 488,094 , 487.396 531,064 539.733 469,060, 448,897 Total . . . . . . . . . . . . . . . . $ 1,736,115 $, l.634,227 $ 1,786,505 $ 1,816,918 $ 1,674,119 $ 1,468,803 .

In connection with recent Employee Retirement income Security Act of 1974 pension reform legislation enacted by Congress, the Company does not believe at this time that it will materially aficct future net income.

(H) SUPPLEMENTAaY Paor:T ANo Loss INronMATloN:

The amounts of maintenance, repairs and depreciation, other than those shown in the statements of income, and the amounts of royalties, advertising costs, and research and development costs have been omitted as each is less than one percent of total revenue and sales. Taxes, other than Federal and state income taxes, are set forth by classes as follows:

12 Mondia Ended 31. Years Ended Decesiber 31.

g (Unsedited) 1973 1972 1971 1970 1969 Real estate and property . . . . . . . . $ 8,663.506 $ 8.696,041 $ 9.030.733 $ 8.548,263 $ 7.877.807 $ 7,678.805 Orces receipts . . . . . . . . . . . . . . . 4.123.715 3.537,941 4,311.855 3,908.805 3.524.568 3,299.143 Payroll . . . . . . . . . . . . . . . . . . . . . . . 1.337.768 1.281.769 972.098 872.905 708.979 717.462 Street rental . . . . . . . . . . . . . . . . . . 921,919 836,775 743,150 605,043 644,464 $91.111 Other . . . . . . . . . . . . . . . . . . . . . . . . 2,557,485 1,875,354 2,159,121 844,637 580,047 532,640 Total . . . . . . . . . . . . . . . . $ 17,6n4.3 93 $ 18,227,880 $17,216,957 $14,869,655, $13.335,865 $12.819,163 Tames, other than income, were also char 8ed to various other accounts (stores and transporta-tion expense clearina, construc-tion, etc.) in the amounts of . $ l.579,377 $ 1.620,442 3 808,622 $ 658,843 $ 614,838 $ 487,740-Rents char 8ed to income' . . . . . $ 1,910,969 $ l.764355 $ 1.803.787 $ 1.774,609 $ 1,764,774 $ 1,598,044

• The Company's lease agreements at December 31, 1973, and August 31, 1974, generally ,do not coetain options to extend the lease terms or to purchase the leased properties. The present value, as of December 31, 1973, and August 31, 1974, of minimum lease commitments is less than five percent of long-term debt and shareholders' equity. The effect on net income if all financing leases were to be capitalized is less than three percent of the average net income for the most recent three years and therefore is not significan,t. .

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REPORT OF INDEPENDENT CER't1FIED PUBEJC ACCOUNTANT 3 To Outt STATES UTILITIES COMPANY:

We have examined the balance sheet of Outr STATES UTILmts COMPANY as of December 31,1973 '

and the related statements of income (page A 2), retained earnings and changes in financial position for the years 1969 through 1973. Our examinatich was made in accord.nce with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.

In our opinion the Annacial sbtements referred to above present fairly the Anancial position of '

Oulf States Utilition Company at December 31,1973, and the results of its operations and changes in Anancial poshion for the years 1969 through 1973, in conformity with generally accepted accounting principles applied on a consistent basia.

COOPERS & LYBRAND 4

Houston, Texas November 1,1974 0

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GUtX STATE 5 UTILITIES COMPANY STA'IEMENTS OF COMPUTATION OF NUMBER OF TIMES FfKED CHARGEb EARNED n .

II h Yeare head December St.

Aasent31.1974 1973 1973 1971 1M9 1969 Not lacesse . . . . . . . . . . . . . . . . . . . . . $45.585,485 $ $0.177.196 $ 45.167.636 $ 39,009,238 8 38,998,410 $ 34.711.$23 laeosos tases . . . . . . . . . . . . . . . . . . . . 28.101.389 29.431.036 30.923,638 24.133.796 22.979,379 23.666.285 Earnings before lesome tanos .. 73.686.874 79,608.232 76.091.274 63.143.034 61.977.789 60.377.808 Fined charges. ,

. Intenet as bonds . . . . . . . . . . . . . 32.910.625 28.055,000 ' 26,461.250 24,164.375 21.182.604 17.116,981 Interent on debestures . . . . . . . . . 476.123 488.186 307.520 $21.082 538,010 $$8.496 Other internet . . . . . . . . . . . . . . . 4.615.008 1982.037 1,018.103 2.815,653 1965,046 2.973.791 Amer *atian of premium, dia '

cosas and espesse on debt ... (10.304) (25.270) (31,773) (38,070) (46.981) ($$ 511)

Rentals (one-third of all rentals charged to la-ae) . . . . . . . . . 636,990 $88,085 601.262 $91.336 $88.238 532,681 To'st 8aed charges . . . . . . . 38,628,442 32,088.038 28.356.362, 28.054.578 25,226.937 21.126.438 Earnings before income tasas and Aned charges .. $112.315.316 $111.696.270 $104,647,636 8 91.197.612 $ 87.204.726 $ 81.504.246 Number of times Aned charges are covered by earnings before income tanes and Amed charges . . . . . . . . . . 2.91 3.48

- _ 3_.66 - _3.25 _3.46 3 _.86 Number of times Axed charges are covered by earnings (before income taxes and fixed charges) for the twelve months ended August 31,1974, adjusted to reflect annual interest requirements of the Series 1974 Bonds, the issuance of $60,000,000 of 8% % Arzt mortgage bonds in March,1974. annual interest on short term notes of

$55,000,000 expected to be outstanding at the sale date of the Series 1974 Bonds and to eliminate interest charges for the 8%% Arst mortgage bonds and short term notes.

Fixed charges for the twelve months ended August 31. 1974, above . . . . . . . . . . . . . . . . . . . . . . $ 38.628.442 Add- Annual laterest charges on $20.000,000 of Series 1974 Bonds to be leeued, assumed laternet rate of 8 % . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.600.000 Annual laterest charges on $60,000.000 of 8%% Arzt mortgass bonds issued in March,1974 5.175.000 Annualinterest on short-term notes totallina $55.000,000 at an nesumed rate of 11% expected

, to be outstandin8 at the date of sale of the Series 1974 Bonds . . . . . . . . . . . . . . . . . . . . . . 6.050.000 Total additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . g LAes-Interest cuasulative to August 31.1974, on $60,000.000 of 8%% Artt mortgage bonds on the books ..................................................................... $ 1199.375 Interest on short. term notes for the twelve months ended August 31.1974 ................ 4.374.484 Total eliminations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.573.859 Plaed charges adjusted . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 44,379,583 (before income taLxes and Axed charges) for the twelve months ended August 31. 1974, as a ........................................................................ $112.313,316 Number of times adjusted Axed charges are covered by earnings before income tames and fixed charsee.......................................................................... g

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