ML20073D167
| ML20073D167 | |
| Person / Time | |
|---|---|
| Site: | Waterford  |
| Issue date: | 12/31/1990 |
| From: | NEW ORLEANS PUBLIC SERVICE CO. |
| To: | |
| Shared Package | |
| ML20073D148 | List: |
| References | |
| NUDOCS 9104260198 | |
| Download: ML20073D167 (38) | |
Text
eans Pugg s tvice 1"C II
@NOPSI
ItFCENT DINEl.OPSIENTS NOPSI Prudence Disallowance in the midst of production of this Annual Report, the louisiana Fourth Circuit Court of Appeal tendered a decision in connection with appeals from the February 4,1955 resolution of the New Orleans City Council regarding retail rates of New Orleans Public Sersice Inc. The February 4 Resolution required NOPSI to w rite off, and oot recoser from its retail electric customers, $135 million of its previously deferred costs related to Grand Gulf 1. This w rite off, w hich was recorded in 19h7, was in addition to $51 inillion of Gratul Gulf I related costs originally absorbed and not recovered by NOPSI. In late 1959, a state Civil District Purt affirmed the February 4 liesolution, denying petitions of NOPSI (which claimed the February 4 hesolution should be userturned) and of the Alliance for Affordable Energy,Inc. (which asserted that the February 4 Resolution should be amended to order a significantly greater disallowance).
On appeal, the Fourth Circuit issued a decision on April 4.1991, that rejected NOPSI's federal preemption claims and affirmed the findings of the Council, embodied in the February 4 Resolution, that NOPSI had imprudently incurred approxiinately $177 million of Grand Gulf 1 selated costs.
Iloweser, the Fourth Circuit concluded that the Council acted contrary to law and public policy w ben, in weighing the effect of its ruling upon NOPSra financial condition. it decided to disallow only a portion of the Grand Gulf I related costs found imprudent. The Fourth Circuit purported to amend the February 4 Resolution to disallow the recosery by NOPSI from its retail electric customers of any costs found to have been imprudently incurred, including an additional $290 inillion not previously disallow ed.
NOPSIintends to vigorod contest the Fourth Circuit's deelston. The ruling is subject to further discretionary review in the Louisiana courts. In related proceedings before federal courts, NOPSI has petitioned the United States Supreme Court for a writ of certiorari seeking a review oflower federal court rulings that rejected NOPSPs facial preemption claims and stay ed the remaining portions of the federal proceedings. A ruling from the United States Supreme Court on whether to review the decisions staying federal court proceedings is expected as early as the middle of April 1991, The ultimate outcome of these sarious federal and state court proceedings cannot be predicted.
Entergy Corporation end NOPSI are in the process of assessing the potential impact of the Fourth Circuit decision upon NOPSI and the Entergy System as a whole. Iloweser, if the Fourth Circuit decision were ultimately sustained NOPSPs earnings, liquidity, and financial condition would be materially adsersely affected and NOPSI could be rendered inschent.
NOPSI has been advised by its independent auditars, Deloitte & Tombe, that their report on NOPSI s financial statements included herein and in NOPSfs Annual Report on Form 10-K for the fheal > car ended December 31,1990, would, if issued as of the date hereof, include an explanatory paragraph making reference to this uncertainty, Supplementary informatlun The recent deselopments described abuse and the information in the Annual Report should be considered together with information included in reports fded by NOPSI with the Securities and Exchange Conunission, including its Annual lleport on Form 10-K for the year ended December 31.
1990. Filings updating information herein for material des elopments will be made from time to time, Copies of any such reports filed with the SEC may be obtained without charge by calling System insestor Relations at 1-600 292 99M April 6,1991 1
.+
NEW Oilli:ANS PL'Ill,1C SEitVICE INC, y
New Orleans Public Service Inc. (NOPSI) senes the City of New Orleans (Cit)), a land area of approtirnately 200 square iniles. Natural gas is provided for the entire City, w hile electricity is supplied to all areas of the City except Algiers, the 15th Ward of the City.
NOPSI is a wholly owned r,ubsidiary of Entergy Corporation. the publie utility holding coinpany for the Entergy Systein. For the past 42 years, the Entergy Systein has been the leading electric energy supplier to a 91,000. square.inile region along the low er reaches of the Nilssissippi llher.
The Spteni s vast network of interconnected transtnission and distribution lines and dhersified grid of fossil fuel and nuclear generating plants provides electricity to Inote than 1.7 inillion retail custorners in Arkansas, Louisiana. Alistissippi, and hiissouri, lleadquartered in New Orleans, Louisiana. Entergy Corporation includes four retail operating cornpanies: NOPSI, Arkansas Power & Light, Louisiana Pow er A Light, and hiississippi Power & Light.
Systein Energy llesources, Inc., a nuclear generating subsidiary of Entergy, has a WA interest in the Grand Gulf Nuclear Station. Another subsidiary, Etitergy Ser ices. Inc., prmides various technical, adtninistrative, and corporate services to Entergy Corporation and the S) stern colnpanies.
A new subsidiary, Entergy Operations, was forined on June 6.1990, and is responsible for operating the Systein's four nuclear units. Entergy Power, a wholesale generator that purchased Arkansas Power &
Light's interest in the Independence 2 and lliteliie 2 generating units and will sell the capacity and energy from these units outside the Entergy S stein, was fornied as a subsidiary of Entergy Corpora-i tion on August 25,1990.
TAllLE OF CONTEN'l S LaE Definitions 2
lleport of hlanagernent 4
Audit Corninittee Chairinan's Letter 5
hlanagernent's financial Discussion and Analysis 6
Independent Auditols' fleport,
11 f
financial Staternents.
12 Notes to Financial Staternents.
17 Record of Progress.
34 Directors and Officers 36 1
m
i m
rp NEW Ollt.EANS PUllLIC SERYlCE INC.
del'INITIONS 1,
Certain abbreviations or acronyms used in NOPSI hinnagement's Financial Discussion and i
Analpis Financial Statements, and Notes to Financial Statements include the following:
1950 Settlement Agreement Agreement, effective March 25.19N6 between NOPSI and the Counell regarding NOPSl's Grand Gulf I related rate issues 1949 Settlement Agreement An agreement between the Council and NOPSI, eficetive July 21, 1959, that settled certain local retail rate issnes regarding Grand Gulf 1 Allowaner for funds Used During Construction AFUDC 15th Waid of the City of New Orleans. Louisiana Algiers AP&l.....
Arkansas Power & Light Company City of New Orleans or City New Orleans. Louisiana Council..
Council of the City of New Orleans, lamisiana United States Court of Appeals for the District of Columbia Circuit D. C. Circuit.
United States District Court for the Eastern District of Louisiana District Court Entergy Corporation, the public utility holding company for the Entergy.
Entergy System Entergy System or Sptem, Entergy Corporation and its various direct and indirect subsidiaries Financial Accounting Standards lioard FASil..
February 4 Ilesolutte.n or The Council's rebruary 4.1955 resolution disallowing $135 million flesolution.,
of previously deferred Grand Gulf 1.related costs FERC..
Federal Energy Regulatory Commission FEHC Settlement Settlement offer filed with the FERC on June 9,1959 by AP&L.
LP&L. hlPkl. System Energy and NOPSI and approved by the FERC on July 21.1959. to settle, among other things, certain then-pending Grand Gulf Station related issues, litigation and rate mat.
ters Fifth Circuit...
United States Court of Appeals for the Fifth Circuit Ft.urth Circuit.
Fourth Circuit Court of Appeal for the State of Louisiana General and Refunding htortgage Bonds issued and issuable under G&R Bonds.
NOPSPs C&R hjortgage NOPSI's hlortgage and Deed of Trust, dated as of hiay 1.1957, as C&R Mortgage.
supplemc ted Grand Gulf 1....,,
Unit No I of the Grand Gulf Station Grand Gulf 2......
Unit No. 2 of the Grand Gulf Station Grund Gulf Station.
Grand Gulf Steam Electric Generating Station (nuclear)
June 13 Deelsion.
The FERC's June 13 1955 decision allocating Crand Gulf I costs among the System operating companies KWil..
Kilowatt ilour(s)
LP&L Louisiana Power & Light Company hlP&L....
hilssissippi Power & Light Company NOPSI New Orleans Public Service Inc.
2
I 1
NEW OlllIANS PUl!LIC SEllVICE INC.
DEriNITIONS - (Concluded)
Project Olive tiranch..
The System's 1959 effort to settle certain outstanding l$ sues and litigation involving System Energy. the System operating compa-nies. and the Grand Gulf Station and to stabilire retail rates in the System's service area which culminated in the FEllC Settlement and related state and local settlements j
Ilesolution or February 4 Ilesolution.
The Council's February 4,19% iesolution disallowing $135 inillion of previously deferred Grand Gulf 1 related costs SEC.
Securities and Exchange Commission
- SFAS, Statement of Financial Accounting Standards promulgated by the FASil State Court.,.
Civil District Court for the Parish of Orleans. Louisiana System Energy............ System Energy liesources, Inc.
System operating companies.
AP&L. LP&L. hlP&L. and NOPSI. colleethcly System or Entergy System.... Entergy Corporation and its various direct and indirect subsidiaries Unit Power Sales Agreement Agreement, dated as of June 10.19S2. as amended, among the System operating companies and System Energy, relating to the sale of capacity and energy from System Energy's share of Grand Gulf 1.
I l
1 3
l NEW ORI.EANS ITilLIC SI:lWICE INC.
ItEPORT OF hlANAGENIFNT The inanagernent of New Orleans Public Senice Inc. has prepared and is responsible for the financial staternents and related fuiancial infortnation included in this Annual lleport. The financial staternents are based on generally accepted accounting principles. Firiancial inforination included elsewhere in this report is consistent with the financial statements.
To rneet its responsibilities with respect to financial infortnation, ruanagement inaintains and enforces a systern ofinternal accounting controls that is designed to provide reasonable assurance, on a cost effective basis, as to the integrity, objectivity, and reliability of the financial records and as to the protection of assets. This systein includes conununication through written policies and procedures, an employee Code of Conduct, and an organizational structure that provides for appropriate division of responsibility and the training of personnel. This system is also tested by a coinprehensive internal audit prograin.
The independent public accountants provide an objective assessment of the degree to which inanagemerit meets its responsibility for fairness of financial reporting. They regularly evaluate the system of internal accounting (outrols and perform such tests and other procedures as they deern necessary to reach and express an opinion on the fairness of the financial statements.
hlanagelnent belieses that these policies and procedures provide reasonable assurance that NOPSI's operations are carried out with a high standard of business conduct.
l 8/0d AM
/
Jerry L hjaulden Donald E. hjeiners Chainnan of the lioard and l' resident and Chief shecuth e Oficer Chief Operating Oficer 4%/h hl.11. hjeLetchie Senior Vice l' resident-Accounting b Finance 4
NEW Ollt.EANS PUllLIC SEllYICE INC, AUDIT CONihitTTEE CilAllul AN's 1.1:1TEll The New Orleans Public Service Inc. Audit Conunittee of the lioard of Directors is comprised of three directors who are not ofilcers of NOPSI: Charles C. Teamer, Sr. (Chairman). Ilrooke 11. Duncan, and John 11. Smallpage. The committee held four meetings during 1990.
The Audit Committee oversees NOPSI's financial reporting process on behalf of the lloard of Directors and provides reasonable assurance to the lloard that sullicient operating, accounting and financial controls are in existence and are adequately resiewed by programs of internal and etternal audits. The Chairman of the committee meets with NOPSI inanagement and NOPSI's independent public accountants on a quarterly basis for the review and os ersight of the quarterly financial reporting process.
The Audit Committee discussed with NOPSI's internal auditor and the independent public accountants (Deloitte ac Touche) the oseridl scope and specific plans for their respectise audits, as well as NOPSI's financial statements and the adequacy of NOPSI's internal controls, The committee met separately with NOPS!'s internal auditor and independent public acerauntants, without manage-inent present, to discuss the results of the audits, the evaluations of NOPSI's internal controls and the overall quality of NOPSI's financial reporting. The meetings were designed to facilitate and encourage any private communication between the ecmmittee and the internal auditor or independent public accountants.
j A
j Charles C, Teamer, St.
Chairman, Audit Comunitter 5
NEW ORI EANS PUllLIC SElWICE INC.
hlANAGL\\ LENT'S FINANCIAL DISCUSSION AND ANALY5th 11ESULTS OF OPERATIONS Listed in the table below are certain significant factors affecting results of operations for which changes have occurred between the years 1990 and 1959. and 1959 and 1955. The principal reasons for the significant changes from period to period are discussed following the table.
1990 ss 1949 1949 st 1944 Intrease/
Increase /
Description 199a 1949 ID44 (Dettrase)
( De< t rase)
(Dollart in \\lillions)
Net income...
$ 27.5 $ 14.5 4 15.5
$ 13.0 90
$ (4.3)
(23)
Electric operating revenues.... $397.3 $350.5 $361.5
$ 16.5 4
$ 19.0 5
Fuel and fuel-related expenses...
$ 44.0 $ 35.6 $ 50.9
$ 5.4 14
$ (12.3)
(24)
Purchased pow er......
$176.3 $220.6 $206.6
$(44.3)
(20)
$ 14.0 7
Other operation expense......
$ 72.4 $ 54.9 $ $3.5 8 17.5 32
$(25.6)
(34)
Taxes other than income taxes.
$ 25.7 $ 26.7 $ 23.0
$ (1.0)
(1)
$ 3.7 16 Grand Gulf I expenses recovered /(deferred) - net.
$ 6.7 $(18.2) $ (60.5)
$ 24.9 137
$ 42.3 70 income taxes.......
$ 17.4 $ 10.0 $ 9.4
$ 6.8 64
$ 1.2 13 hilscellaneous income - net
$ 5.6 $ 2.5
$ 3.1 124
$ 2.5 Electric revenues:
Residential.,.............
$141.9 $134.0 $125.4 5 7.9 6
$ h.6 7
Commercial................
162,6 155.0 150.4 4.6 3
7.6 5
Industrial...........
27.0 25.2 22 9 1.6 7
2.3 10 Governmental.,.
53.5 51.5 46.9 2.0 4
2.6 5
Total retall...,.
355.0 368.7 317.6 16.3 4
21.1 6
Sales for resale......
b.4 6.0 h.2 0.4 5
(0.2) 2 Other..
3.9 3.8 5.6 0.1 3
(1.8)
(32)
Tot al....,......
$397.3 $350.5 $361.'i
$3 4
$ 19.0 5
Electric energy sales:
(hlillions of KWil)
Residential........
1.903 1.630 1.615 73 4
15 1
Commercial.......
2.054 2,035 2.051 19 I
(10)
(1)
Industrial........
530 490 446 40 8'
44 10 Governmental...
846 837
- h..
9 1
(5)
(1)
Total retail.
5.333 5.192 5.154
, _ l41 3
38 i
Sales for resale.
294 254 301
___10 4
(17)
(6)
Total...
5,627 5.476 5.455 151 3
21
- Over 1,000%
Net income Net income increased in 1990 primarily as a result of recording in 1959 the $15.5 million effect of the 1959 Settlernent Agreement. partially offset by the gain in 1959 of $8.4 million recorded in connection with the 1959 settlement of NOPSl's pension plan. Absent the effects on 1959 net income of the two nonrecurring items mentioned above,1990 net income increased by $5.9 million as 6
NEW OllifANS PUlli.lO $EllVICE ING, M ANAGENIENT'S FINANCI Al, DISCU$% ION AND ANAIJ$lh - (Continued) compared to 1999, due primarily to increased operating resenues and imseellaneous income - net.
The decrease in 1959 net income was also attributable to the two nonrecurring items mentioned above.
These and other factors affecting the changes in net income are discussed below.
Electric Operating flesenues Electric operating revenues increased during 1990 primardy as a result of increases in base rates due to implementation of the fifth year of NOPSI's phase in plan, and increased energf sales, partially offset by a decrease in the amount of recovery of fuel and fuel related purchased power costs through the fuel adjustment clause. In 1959, the incream in electric operating resenues was due to increased rates resulting from implementation of the fourth year of NOPSl's phase-in plan, slightly lucreased energy sales, and an inercase in the amount of recos ery of fuel and fuel related purchased power costs through the fuel adjustment clause.
Fuel and Fuel related Espenses Fuel and fuel related expenses increased in 1990 primarily due to an increase in the volume of NOPSI's gas fired generation as a result of increased energy sales in 1990 as compared to 1959. The decrease in fuel and fuel related expenws for 1959 was primarily caused by a decrease in the volume of electric generation ru a result of scheduled and unscheduled outages at certain of NOPSI's generating units in 1959.
Purchased Power The changes in purchased power expenses in 1990 and 1989, as compared to the prior years, were primarily attributable to the recording in December 1959 of $193 million of future estimated losses in connection with the 1959 Settlement Agreement, partially offset by a reduction of 1959 costs due to the application of the $S.5 million credit by System Energy to NOPSPs Grand Gulf I bill pursuant to the FEllC Settlement, Also contributing to the change in purchased power in 1990 as compared to 1959 was the amortization of the liability recorded in 1990 in connection with the 1959 Settlement Agreement which totaled $15.1 million (this amortization was offset by a like amount of deferred Grand Gulf 1 related costs, as discussed below), lower System Energy resenue requirements, and a decrease in the volume of energy purchased from certain System operating companies.
Other Operation Expense Other operation expense increased in 1990, and decreased in 1959 primarily as a result of recording in January 1959 approximately $15.5 million as a reduction to pension expense to reflect the before tax gain in connection with the settlement of NOPSI's pension plan. Additionally, the 1989 decrease is a result of costs incurred in 19hh in connection with a one-time voluntary early retirement program effective June 30,1958.
Taxes Other Than income Taxes Taxes other than income taxes increased in 1959 primarily due to $1.5 million of excise taxes incurred in connection with the settlement of NOPSPs pension plan, as well as a $1.2 million increase in real and personal property taxes due to property tax rate increases.
Grand Gulf 1 Expenses Itecovered/ Deferred - Net In 1990, NOPSI recorded a net recovery of $63 million of previously deferred Grand Gulf 1 related expenses, which recos ery represents a $21.9 million change from 1959 when NOPSI recorded 7
~
NEW Ollt.I'AN$ PUllt.lG SEltYlCI: INC.
%l ANAGl'.\\ll:NT'S l'INANCI A1. DISCU$$10N ANI) AN AI AhlS - (Continued) a net defeiral of $15.2 inilhon. The change frorn deferral to recoser> was due priinarily to impleinentation in April 1990 of the fifth scar of NOPSI's pha.se in plan. The rate increase ussoelated with the phase in plan allowed NOPSI to recoser a larger portion of its Grand Gulf l related costs through base rates and thus to defer a lesser ainuunt of such costs. Also contributing to this change was the arnortiration in 1959 of $15.1 tuillion (an increase of 65.9 inillion oser the prior year) to record the effect of ternporarily absorbing lb4 of NOPSI's I'l: llc-allocated shar" of Grand Gulf 1-related costs in accordance with the 1959 Settleinent Agreement. Although such tunortiration was offset by a like reduction in purchased power in 1990, the tunortiration recorded in 1989 was not fully oliset by a similar decrease in purchased pow er and had a negatis e linpact of $15.5 inillion on net incorne in 1989.
Grand Gulf i expenses deferred decreased in 19h9 primarily due to the secording of the 1959 Settlerneut Agreement, which (1) inosided for an 65.5 niillion credit applied by Systein Energy to NOPSl's Grand Gulf I bill pursuant to the terms of the FEllC Settlement, which reduced by Sh.5 million the amount of future Grand Gulf 1 related costs timt would otherwise base been deferred by NOPSI under the presently effectise phase in plan and (2) resulted in a 66.2 milhon reduction in the amount of the deferral relating to the 15% absorbed portion of NOPSI s FEllC allocated share of Grand Gulf 1 related costs. Additionally. the decrease was the result of the implementation in Aguil 1949 of the fourth annual rate increase in accordance with the phase-in prosisions of the 1956 Settlement Agreement as redmed by the flesolution. This rate increase allowed NOPSI to recover a larger portion of its Grand Gulf l related costs thronth base rates and thus to defer a lesser amount of such costs, inenne Tases Total ineoine tases increased in 1990 primarily as a result of a similar increase in pre tax book income resulting from various factors as discussed abuse. The increase in total incoine tases for 1959 was due principally to the reinstatement of $2 6 tuillion of state accuinulated deferred income tases, partially offset by a decrease due to a reduction in pre tas income.
Nilscellaneous incorne - Net hliscellaneous income - net increased in 1990 due primarily to increased interest income from higher temporary cash imestment balances. In 19$9 miscellaneous imoine - net increased primarily as a result of a decrease in expenses related to the Council s consideration of the imoluntary suunicipali7ation of NOPSI's electric and gas utihty properties and operations.
lletall Energy hales The increase in electric energy sales in 1940 resulted primarily from increased residential sales due to w armer than normal w cather conditmns and to a general upw ard trend in as erage usage, as well as increased industrial sales to chemical manufactmers. lietail electric energy sales increased in 19s9 primarily due to an increase in industrial sales to chemical manufacturers.
i 8
NEW Ollt.EANS PUllt.lC SEILVICE INC, hl ANAGENIENT'S FINANCI Al. D15CUhhlON AND ANAIJhth - (Continued)
I'IN ANCI Al, CONDITION General NOPSPs financial condition innprosed significantly in 1990 as cotupated to 1959 as esidenced by an increase in net income of $13.0 million, and an increase in cash equivalents of $35.3 million from 1959.
NOPSI s liquidity Ims impros ed significantly due,in part, to the increasing les el of cash recovery under the rate phase in plan for Grand Gulf I costs. Additionally, NOPSPs ratio of common equity to total capitalization has increased from 22.07r as of December 31,1959, to 27.2% as of December 31,1990.
1 iquidit)
NOPSPs primary ensh requirernents for 1990 included, among other things, payments to System Energy for Grand Gulf I capacity and energy, and construction expenditures. NOPSI s cash needs for 1990 were satisfied with the use of internally generated funds, reflecting in part increased rates resulting from the innplementation in April 1990 of the fifth year of NOPSrs phase in plan and the positive effects of cash conservation measures maintained in effect by NOPSI.
At December 31,1990, NOPSI s cash equivalents totaled $73.7 million, an increase of $35.3 million from December 31,1959. Net cash flow provided by operating activities totaled $55.4 million for 1990.
As detailed in the Statements of Cash Flows, cash flow from operating aethities was affected by a number of factors representative of normal operations. Factors of an unusual and nonrecurring nature were not significant. In 1990, i nesting activities resulted in a net cash outflow of $16.1 million, primarily due to construction expenditures Financing activities for 1990 :esulted in a net cash outflow of $4.0 million due to preferred stock sinking fund redemptions of $1.5 million and regularly scheduled preferred stock dividends of $2.5 million.
Capital and Refinancing Requirements Constructiou expenditures for NOPSI are estimated to be $24.3, $20.3, and $27.4 millien for the years 1991,1992, and 1993, respeethely, Pursuant to its phase-in plan, during 1991-1993. NOPSI will be collecting in rates a portion of the Grand Gulf 1 related costs incurred but not collected in previous years These collections constitute cash available to satisfy, among other things, construction expenditure requirements. In addition to the above capital requirements. NOPSI will require
$71.1 million during the period 1991-1993 to meet long term debt maturities and to satisfy sinking fund requirements, it is anticipated that the foregoing estimates will not be materially impacted by the ultimate outcome oflitigation of the February 4 Resolution. It is expected that the abose capital and refmancing requirements during the period 1991-1993 will be satisfied from internally generated funds and cash on hand. The ability of NOPSI to elTect any external financing at this time is constrained, as discussed below under Capital Resources.
Capital Resources NOPSrs G&R hlortgage and Restatement of Articles of incorporatien, as amended, provide for the issuance of G&R Bonds and preferred stock, respeethely. NOPSI's minimum earnings coverage requirements for issuing C&R Hands and preferred stock are 2.0 times annual bond interest require-ments (with respect to bonds outstanding under both the C&R hiortgage and NOPSI's 1944 hlortgage and Deed of Trust) and 1.5 times annual interest and preferred dividend requirements, respeethely, on a pro forma basis, llowever. NOPSrs G&R hlortgage further restricts the amount of C&R Bonds issuable thereunder by application of certain property and/or accounting tests, depending upon the type of bonds to be issued. Based upon bond and preferred stock earnings emerages of 2.89 and 1.58 for the twelve months ended December 31, 1990, and available fundable property additions of 9
NEW OllLEANS PL'IlLIC hEltVICE ING, MAN AGINENT'S FINANCIAL DISCUhSION AND ANALY$1S - (Concluded)
$69.7 million. at December 31,1990, NOPSI would has e been able to issue approximately $45 inillion of additional G6cil Bonds or $73 million of additional preferred sto(L. The issuance by NOPSI of senior securities (whether G6cil Bonds or preferred stock), howner, would require certain regulatory approvals, including approval from the SEC. The SEC has historically required that the issuer of such securities have a ratio of common equity (including retained earnings) to total capitalization plus short term indebtedness of at least approximately 30% on a pro forma basis, in light of NOPS!'s low common equity ratio,27.2% of total capitalization at December 31,1990,it is unlikely that NOPSI could obtain the requisite regulatory approvals for such Gnancing at this time. Similarly, pursuant to an order issued by the SEC in December,1990 NOPSI is precluded irom elTecting any short-term borrowings at this time (see Note 4 of NOPSI's Notes to Financial Statements, " Lines of Credit and lletated Borrowings," for further discussion of NOPSI short. term borrowings).
ACCOUNTING 155U05 5FAS No. 96 in December 19S7, the FASB issued SFAS No. 96, " Accounting for income Taxes," which was scheduled to be effeeth e for years beginning after Deceinber 15,19%. The FASB subsequently issued statement numbers 100 and 103, w hich delay the effective date of SFAS No. 96 to fiscal years beginning after December 15,1991. The FASB is expected to issue a new exposure draft in the second quarter of 199L This exposure draft may further delay the elTective date and siinplify the implementation of SFAS No. 96.
Based on a preliminary study, NOPSI expects that the adoption of SFAS No. 96. In its present form, would result in a net increase in accumulated deferred income taxes with a corresponding increase in assets, it is not expected that results of operations for NOPS1 would be significantly impacted by the adoption of SFAS No. 96 in its present form (see Note 3 of NOPSI's Notes to Financial Statements.
" income Taxes").
SFAS No.106 In December 199U, the FASB issued SFAS No.100," Employers' Accounting for Postretirement Benefits Other Than Pensions," which is generally efTective for fiscal years beginning after Decem-ber 15,1992. The new standard requires a change in accounting requirements for postretirement benefits other than pensions from a cash method to an accrual method. The impact of this new standard has not been fully determined, but the change likely will result in significantly greater expense being recognized for provisicn of these benefits. The effect of the increased benefit expense on net income could be reduced to the extent such increased costs are recoscred through rates or through the recording of a regulatory asset to be recovered in the future NOPSI plans to adopt this statement in 1993.
10
INDITENDENT AUDi'lO!!S' ilEPOllT To the Shaicholders and the lloard of Directors of New Orleans Public Servlee Inc.
We base audited the accornpanying balance sheets of New Orleans Public Service Inc. (NOPSI) as of Deceinber 31,1990 and 1959 and the related staternents ofincorne, coturnon shareholder's equity and cash nows for each of the three years in the period ended Decernber 31.1990. These financial staternet.ts ate the r(sponsibility of NOPSI's inanatenient. Our responsibility is to express an opinion on these finaricial staternents based on our audits.
We conducted our audits 11 accordatice with getierally accepted auditing standards. Those standards require that we plan and perfortn the audit to obtain reasonable assurance about whether the financial staternetits are free of enaterial inisstaternent. An audit includes exatnining, on a test basis, esidence supporting the atuounts and disclosures in the financial staternents. An audit also includes assessing the accounting principles used and significant estiniates inade by inanagernent, as well as esaluating the o',crall financial staternent presentatioti. We beliese that our audits provide a reasonable basis for our opinion.
In out opinion, such financial statenients present fairly, iti all tnaterial respects, the financial position of NOPSI at Deeetnber 31,1990 and 1959. and the results of its operations and its ensh Hows for each of the three years in the period ended Decernher 31, 1990 in conforrnity with generally accepted accountitig principles.
A f
Deloitte & Touche New Oileans, Louisiana l'ebruary 15,1991 11
NEW Oill.I'ANS PUllt.lO SEIWICI' INC.
IIAlANCE $1100'lS ASSETS December 31,
, 1990 IM9 (in 'I humands)
Utility Plant (Note 1):
Electric......
$ 132,160 $427,147 Property under capital leases - electric 1.565 2.101 Natural gas...
100,356 97,675 Property under capital leases - natural gas..
799 000 Construction work in progress 12.552 6.15')
Total.
547.732 534.176 Less - accumulated depreciation.....
257,990 274.401 Utility plant - net...
259.742 259.775 Other Imestment:
imestment in subsidiary company - at equity (Note 7) 3.259 3.259 Current Assets:
Cash equivalents (Note 9):
Temporary imestments - at cost, which approximates market:
Associated companies (Note 4).
2.027 1,530 Other........
71.699 33.550 Total cash equivalents.
73.726 35,350 Special deposits......
29 23 Accounts and notes receivable; Customer and other (less allowance for doubtful accounts of (in thousands) 81,350 in 1990 and 1959).
40,436 40.656 Associated companies (Note 10) 959 2,059 Accumulated deferred income taxes (Note 3).
4,744 17,023
~
Materials and supplies-at average cost.
9.324 8.261 Deferred Grand Gulf I expenses (Notes 1 and 2) 21.02S 1,975 Prepayments and other......
1,649 _ 7.251 Total 151,695 i t 2,658 Deferred Debits:
Deferred Grand Gulf I expenses (Notes I and 2) 159.123 164.835 Other...
3.264 3,724 Total..
__162.3s7 185.559
- TOTAL, 6577.253 $564,251 See Notes to Financial Statements.
12
NEW Ollt.EANS l'UllLIC SElWICE INC.
IIALANCE $1100'l$
CAPITALIZATION AND LIABILITIES Daember at, jimo IM9 (In 'I homando Capitaliration:
Common stock. $4 par value, authorized 10,000,000 shares, issued and outstanding 6.435.900 shares (Note 5).
$ 67,735 $ 67,735 Paid in capital (Note 5) 2.076 2.076 lletnined earnings subsequent to the elimination of the accumulated defielt of $13.552.000 on November 30.19% (Note 5) 33.9 t h 6,883 Total common shareholder's equity..
103.731 78,696 Preferred stock. net of premium without sinking fund (Note 5) 20.117 20.117 Preferred stock. net of expense with sinking fund (Note 5).
9,050 10,505 Long term debt (Note 6) 231.964 245.376 Total 364,662 357,691 Other Noncurrent Liabilities:
Accumulated provision for property insurance 13,755 12,922 Accumulated pro ision for injuries and damages..
2,395 2,436 Ohhgations under capital leases l.h25 2.169 i
Total 17.9J5 17,527 Current Liabilities:
Currently maturing long-term debt (Note 6) 16.400 Accounts payable:
Associated companies (Note 10) 19.608 25.223 Other.
22,967 21.957 Customer deposits 13.171 13,15l Taxes accrued.
1.299 1,491 Interest accrued 6,646 6.600 Dividends declared (Note 5).
5.059 5.117 19h9 Settlement Agreement -liability to customers (Note 2) 4.637 14.95h Deferred electric fuel and resale gas costs.
3,159 1,179 Obligations ur. der capital leases 639 833 Other.
1.406 2,979 Total.
97.101 95.538 Deferred Credits:
Accumulated deferred income taxes (Note 3).
63 994 58.903 Accumulated deferred investment tax credits (Note 3) 13.630 13,643 19$9 Settlement Agreement -liability to customers (Note 2) 4,761 Pension obligation - associated company (Notes I and 6) 16.013 13.031 Other.
3,6 t h 2.954 Total 97,255 93,492 Commitments and Contingencies (Notes 2 and 7)
TOTAL
$577 2h3 $564.251 See Notes to Financial Statements.
13
l l
l NEW OR1 EANS PUllLIC SEIWICE INC.
SI'ATEMENTS OF INCOME l'or the Years 1.nded Dnember 31, 1990 1949
_1944 (in Thouund0 Operating Revenues (Note 1):
$397,303
$350.542
$361.544 Elect ric....................
57.943 9(L367 91.553 Natural gas............
Tot al...........
485.246 470,909 453.397 Operating Expenses:
Operation (Note 10):
Fuel and fuel related expenses (Note 1)..........
44.025 38.583 50,942 176.276 220.605 200,617 Purchased power (Note 7).........
Gas purchased for resale (Note 1).................
61,716 62.687 62,661 Other operation expenses (Note 8) 72.373 54.900 83.513 17.565 19,897 17,796 Maintenance 15.524 15,546 15,355 Depreciation............
25.659 26.673 23.004 Taxes other than income taxes.......
Income tax expense (benefit) (Note 3)....
17,421 2.595 (11,161)
Rate deferrals (Notes 1, and 2):
Grand Gulf I expenses deferred..
(10,337)
(34,041)
(60,523)
Crand Gulf I expenses recovered...............
16.997 15,663 Income tax expense (benefit) (Note 3)...
(2.629) 7,133 20,576 To t al...............
434,895 430,661 408.792 50.351 40.248 44,605 Opo. ting income.....
Other income:
Allowance for equity funds used during construction 59 28 110 (Note 1).......
5,621 2.477 16 Miscellaneous - net (2.637)
(660)
(6)
Income tax expense (Note 3)...
Tot al..............
3,043 1,645 126 Interest Charges:
Interest on long. term debt.............................
24.472 24,472 24,290 1.410 3,001 1,687 Other interest - net........
Allowance for borrowed funds used during construetton (30)
(44)
_ (21_8)
(Note 1).............,...........
Tot al..................
25,852 27.429 25,959 Netincome..............................................
27,542 14,464 16,772 Preferred Stock Dividend Requirements...,...........
2,462 2.675 2,772 Earnings Applicable to Common Stock..
$ 25,080
_$ 11,789
$ 16,000 See Notes to Financial Statements.
14
o NEW OllLEANS PUllLIC SERVICE INC.
STATEhlENTS Ol' COhlhlON SilAREllOLDEll'S EQUITY iktnined Common l'ald in 1:arsiing WL ppjtal (Defic 6t)
'I ctal fin Thouunds)
Il ALANCE DECEhtilEll 31,14S7..
4 64.359
$(33,678) $ 50.681 Net incoine for January through Novcinber 1958 21,656 21,656 Dividends declared Preferred stock.
(2.078)
(2.078) 248 248 Capital stock expense 11AlaNCE NOVEh1 DER 30,1958 llEFORE QUASI.HEORGANIZATION..
54.359 (13.852) 70.507 (16,624) _2.772 133)h2 QUASI. REORGANIZATION (Note 5).
IIALANCE NOVEhti1ER 30.1985 APTER QUASI. REORGANIZATION..
67,735 2.772 70,507 Net loss for December 19$$..,
(2.654)
(2.684)
Dividends declared:
(694)
Preferred stock..........
(694)
~
ITALANCE DECEht!!ER 31.195S 67.735 2,078 (2,654) 66,929 Net incorne for 1959....
14.464 14,464 Dividends declared:
Preferred stock..
(2,675)
(2,675)
Capital stock expense...
(22)
,(27)
II ALANCE DECEhtilER 31,1989...
67.735 2.076 6.883 76,696 Net income for 1990.
27.542 27,542 Dividends declared:
Preferred stock (2,462)
(2,462)
(45)
(45)
Capital stock expense.
BALANCE DECEhtilER 31,1990 (Note 5).
$ 67.735
$2.078
$ 33.918 $103.731 See Notes to Financial Statements.
15
NEW ORLEANS PUllilC SERYlCE INC.
STATEMENTS OF CASil FLOWS l'or the ican F.nded December 31, 1990 1D%9 1D%%
(In 1 houwmds)
Operating Activities:
Net income....
$ 27,542
$ 14.464
$ 18,772 Noncash items included in net income:
Depreciation 15.524 15,546 15.355 Deferred income taxes and ime9mant tax credits - net..
17.157 9,740 17.16$
Hate deferrals - net...
6,660 (15,155)
(60.523)
Allowance for equity funds used during construction.
(59)
(25)
(116)
Provision for estimated losses..
3.161 3.242 2.239 Net pension expense..
2.952 2.372 2,764 Changes in working capital:
fleceivables..............
(1,018)
(7.552)
(13.765)
Accounts payable...................
(4.005) 2.941 2,394 Deferred electric fuel and resale gas costs..
1,950 (1,112)
(127)
Tases and interest accrued.
(166) 1,754 (4,150)
Other current assets and liabilities.........
2.956 (213)
(3.655) 1989 Settlement Agreement............
(15.112) 19,749 Other.....
1.117 1,063 5,744 Net cash provided (used) by operating activities...
55.449
_ 43.508 (17.673)
Insesting Activities:
Iteduction of investment in subsidiary..
8,119 Construction expenditures..
(16.142)
(15.160)
(17,209)
A"owance for equity funds used during construction....
59 28 116 Net cash i; sed in investing activities (16,083)
(!5.132)
(8,974)
Financing Activities:
Issuance of general and refunding mortgage bcnds.
40,000 Redemption of preferred stock...
(1.500)
(750)
Dividends paid on comu.on stock..........
(1,544)
Dividends paid on preferred stock.
(2.520)
(4,782)
(693)
Net cash provided (used) by financing activities......
(4,020)
(5,532) 37,763 Net increase in cash and cash equiva'ents....
35,346 23,144 10,916 Cash and cash equivalents at beginning of year..
35,350 12,236 1,320 Cash and cash equivalents at end of year (Note 9)...
$ 73,726
$ 35,350
$j2,236 See Notes to Financial Statements.
16 k
NEW ORLEANS PUBLIC SERVICE INC.
NOTES TO FINANCIAL STATE.\\lENTS NOTE 1, SU.Nih1ARY OF SIGNIFICANT ACCOUNTING POLICIES liegtdution NOPSI is subject tu ngulation by the Council and the FERC and maintains its accounts in accordance with the Unifor n System of Accounts prescribed by them, lleeenues and Deferred Fuel Costs NOPSI recognizes electric and gas revenues as billed to its customers on a cycle billing basis.
Revenue for energy and gas delivered but not billed at the end of the fiscal period is not accrued.
The rate schedules of NOPSI include electric fuel adjustment and city gate gas cost adjustment clauses under which fuel costs are billed to customers. NOPSI defers under/over recoveries of electric fuel and purchased gas costs through operation of the electric fuel adjustment and city gate gas cost adjustment clauses until these costs / credits are reDected in billings to customers.
Utility Plant and Depreciation
- Utility plant is stated at original cost. The cost of additions to utility plant includes contracted work, direct labor, mateiials, allocable overheads, and AFUDC. The costs of units of property retired are removed from utility plant, and such costs plus removal costs less salvage are charged to accumulated depreciation. hiaintenance and repairs of property and replacement ofitems determined to be less than units of property are charged to operating expenses. Principally all of the utility plant is subject to the liens of NOPSPs two separate mortgages and deeds of trust.
Depreciation is computed on the straight hne basis at rates based on the estimated service lives of the various classes of property. Depreciation provided on average depreciable property was 3.17% in 1990,3.16% in 1959 and 3.06% in 1958.
Postretirement Benefits NOPSI provides postretirement benefit plans covering substantially all employees. NOPSI is a participating employer in a defined benefit pension plan sponsored by an associated company. NOPSI has adopted a pension expense allocation policy such that pension expense recorded on NOPSPs books is substantially the same as the expense that would have been recorded if NOPSI had maintained a separate defined benefit pension plan. Pension costs are funded in accordance with guidelines established by the Employee Retirement income Security Act of 1971, as amended, and the Internal Revenue Code of 1956, as amended. The costs of postretirement health care and life insurance benefit plans are recorded on a cash basis. (See NOPSI's Note 8, "Postretirement Benefits," for additional information with respect to postretirement benefits.)
Income Taxes NOPSI joins its parent and affiliates in the filing of a consolidated federal income tax return.
Pursuant to an intra System income tax allocation agreement, income taxes are allocated to NOPSI in proportion to its comribution to the consolidated taxable income, in accordance with SEC regula-tions, no System company is required to pay more income taxes ihan it would have paid had a separate inecme tax return been filed by it.
- Deferred income taxes are recorded based on differences between book and taxable income to the extent permitted by the regulatory bodies for ratemaking purposes. Investment tax credits allocated to NOPSI are deferred and amortized based upon the average useful life of the related property in a 17
l NEW ORLEANS PUBLIC SElWICE INC.
l NOTES TO FINANCIAL STATEMENTS - (Continued) manner consistent with ratemaking treatment. In addition, NOPSI files a separate state income tax return.
Allou'ancefor Funds Used During Construction To the extent that NOPSI is not permitted by its regulatory body to recover in current rates the carrying costs of funds used for construction. NOPSI capitalizes, as an appropriate cost of utility plant, AFUDC, which is calculated and recorded as provided by the regulatory system of accounts. Under this utility industry practice, conttruction work in progress on the balance sheet is charged and the income statament is credited for the approximate net composite interest cost of borrowed funds and a reasonable return on the equity funds used for construction. This procedure is intended to remove from the income statement the effect of the cost of financing the construction program and effectively results in treating the AFUDC charges in the same manner as construction labor and material costs in that each is capitallred rather than expensed. As noncash items, these credits to the income statement have no effect on current cash Dows. After the property is placed in service, the AFUDC charged to construction costs is recoverable from customers through depreciation provisions included in rates charged for utility service. The composite AFUDC rates for NOPSI were 11.0% for 1990 and 1989, and 10.3% for 1958.
Bate Defmals The Council approved a rate phase in plan for NOPSI in order to reduce the immediate effect on ratepayers of the inclusion in rates of the costs of capacity and energy from Grand Gulf 1. Under this plan, certain costs are deferred in the early years of commercial operation and collected in later years from customers, By deferring these costs to the future when they will be collected through increased rates billed to customers, the impact of the costs associated with the phase-in plan on the income statement has been largely removed. Because the actual collection of resenues to recover the deferred amount will not occur until the future, NOPSI records a deferred asset representing the amount of the deferrals and, at the same time, incurs additional capitcl requirements to finance this deferral. During periods when deferred costs are recosered, revenue collections will exceed, to the extent of such current recovery, current cash requirements for Grand Gulf I costs. Recovery of previously deferred amounts does not increase net income because the related deferred costs are concurrently amortized as a component of expense.'Ihe carrying charges associated with financing the deferral are recovered currently (see NOPSPs Ncite 2, " Rate and Regulatory Matters" for a discussion of the Council's Resolution disallowing the recove y of $135 million of previously deferred Grand Gulf 1 related costs and a revised phase-in plan),
Other Noncurrent Liabilities it is the policy of NOPSI to provide for uninsured property risks and for claims for injuries and damages through charges to operating expenses on an accrual basis. Such expenses have been allowed for ratemaking purposes, Reclassifications Certain reclassifications of previously reported amounts have been made to conform to current classifications.
NOTE 2. RATE AND REGULATORY MATTERS On March 20,1966, the Council offered NOPSI permanent rate relief of approximately $'26 million on an annual basis for bills rendered on and during the first year after April 9,1956 with further 16
NEW OHLEANS PUBLIC SERVICE INC.
NOTES TO FINANCIAL STATEMENTS - (Continued) scheduled increases annually until Grand Gulf 1-related cosa, are being fully recovered on a current basis and previously deferred amounts have been fully recovered, subject to NOPSI's acceptance of a proposed 1986 Settlement Agreement with respect to NOPSI's May 17,1955 application for an electric rate increase. On March 25,1956, NOPSI accepted in writing the March 20,1986 settlement offer from the Council. The 1986 Settlement Agreement permitted NOPSI to recover currently from its retail electric customers a portion ofits Grand Gulf I-related costs and to defer G future recovery through a phase-in plan a portion of these costs.
On April 2,19S7, o. the npplication of NOPSI and ir accordance with the terms of the 1956 Settlement Agreement, the Counut adopted a resolution further implementing the 19S6 Settlement Agreement by approving tariffs filed by NOPSI providing a scheduled increase in base ti.es for electric service of $29.4 million annually for bills rendered on and after April 9,1967. Further,in accordance with the 1956 Settlement Agreement, the resolution also provided that carrying charges on the deferred costs be accrued at a 14.7% rate beginning April 9,1957.
Under the terms of the 1956 Settlement Agreement, the parties thereto agreed that the legal rights of the City, the Council, and NOPSI, as the case may be, regarding (1) potential municipalization of NOPSI (see NOPSI's Note 7 "Comeltments and Contingencies - Potential Municipaligtion"), and (2) investigation into the prudence af NOPSI's involvement in Grand Gulf I (discussed below) were
..at affee 1 On February 4,1958, the Council, in concluding its prudence inquiry, which was vigorously contested by NOPSI, adopted the Resolution that required NOPSI to write off and not recover from its reiall electric customers $135 million of its previously c':ferred Grand Gulf 1-related costs in addition to the $51.2 million of such costs that NOPSI absorbed in connection with the 1956 Settlement Agreement. The Resolution also required a reduction in the rate increases scheduled to be implemented on April 9,1988 and each subsequer.t year as provided in the 1986 Settlement Agreement. The following is a co.nparison of the rate increases provided for in the 1986 Settlement Ag.eement to the rate ine-ases provided for in the Resolution, commencing in 1958; Rate increases Per 1986 EITective Settlement Rate Increases
\\pril 9 Agreement Per Resolution (Dollars in Milliens) 1988..,..
422.1
$16.6 19S9.
$214
$17.3 1990..
624.8
$18.1 1991 and thereafter 6% ef $439 4.5% of $420.7 compounded compounded annually
- annually *
- In each case unti' firond Gulf 1-related costs are being fully recovered on a current basis and the amounts previously deferred (nnder the Resolution,less the additional $135 million of disallowance) have been fully recovered, projected to be approximately August of 1994.
.u compliance with the Resolution and pending resolution of NOPSI's judicial appeals (see discussions below under the captions "Fixleral Court Proceedings" and " State Court Proceedings"),
NOPSI implemented revbed rate tariffs. effective April 9,1956, April 9,1989, and April 9,1990, reflecting the lower level of anrual increases as reflected in the table above.
19
NEW ORIEANS PUllt.lC SERYlCE INC, NOTES TO FINANCIAL, STATENIENTS - (Continued)
NOPSI believes that the Resolution is contrary to the evidence presented to the Council, llowever, NOPSI cannot predict the outcome of the federal and state court proceedings or whether the Resolution will ultimately be overturned by the courts.
In view of the fact that NOPSI was not able to obtain a court injunction staying enforcement of the Reso*ution, NOPSI was required by the terms of the Resolution and applicable generally accepted accounting principles to write off $135 million ofits previously deferred Grand Gulf 1 related costs and to reDeet that write off, net ofincome taxes, as a loss in 1957. Such write-off results in the further loss of the sceumulated carrying charges that would have been recoserable on the deferred amount so M
written off, which could amount to an additional $240 million over the period of the 1956 Settlement Agreement (of this amount, approximately $72 million is attributable to the period from the imposition of the disallowance through December 31,1990).
The February 4 Resolution continues to constrain NOPSPs ability, oser the near term, to raise funds from external souraes. Ilowever, even if there were no judicial reversal of the Resolution and assuming no catastrophic or other extraordinary event, NOPSI now estimates that its available cash resources should be sufficient to permit it to meet its projected cash requirements for the foreseeable future.
Federal Court Proceedings NOPSI filed a complaint in the District Court on February 9,1958 asking that the Council be prohibited from enforcing the Resolution and imposing the $135 million disallowance. On Niarch 10,1988, the District Court invoked the doctrine of abstention, declined to rule on NOPSPs request, and ordered the.t NOPSPs complaint be dismissed without prejudice, On hlarch 22,1955 NOPSI filed with the Fifth Circuit motions for injunction pending appeal and for expedited appeal. On April 6, 1958, the Fifth Circuit denied NOPSrs request for an injunction pending appeal, but granted NOPSPs motion to expedite the appeal. On July 26.1955, the Fifth Circuit affirmed the judgment of the District Court. On August 26,1958, NOPSI filed a petition for writ of certiorari with the United States Supreme Court asserting that abstention is not appropriate in this case. The United States Supreme Court granted NOPSPs petition for writ of certiorari and on June 19,1959, rendered a unanimous decision that the District Court erred in abstaining from exercising jurisdiction, reversed the judgment of the Fifth Circuit and remanded the case for further proceedings consistent with the opinion of the United States Supreme Court. On August 21,1989, the Fifth Circuit remanded the case to the District Court.
The District Court, on its own motion, issued an order dated January 3.1990, staying the District Court proceeding due in part to the progress of eoncurrent proceedings in state court (see " State Court Proceedings" discussed below). On January 19,1990, NOPSI filed with the District Court a Notice of Appeal appealing the District Court's stay order to the Fifth Circuit. On August 29,1990, the Fifth Circuit affirmed the District Court's January 3,1990 order, in affirming the District Court's order, the Fifth Circuit heH that (1) contrary to NOPSrs argument, the District Court properly determined that the Resolution was not " facially preempted" by the FERC-ordered allocation of 17% of the capacity and energy from Grand Gulf 1 to NOPSI, and (2) the C: strict Court did not abuse its discretion in staying the proceeding, because (a) there was 30 substantial federal issue remaining in the case (the Fifth Circuit stating that federal courts may not invalidate the Council's action on a suspicion that the Council members' motives were improper), (b) the state court proceeding had progressed further than the federal court proceeding. (c) the state courts are adequate to protect NOPSPs rights and (d) the stay of the District Court proceeding is appropriate to avoid piecemeal litigation.
On September 26,1990, NOPSI filed a petition for rehearing with the Fifth Circuit with respect to the Fifth Circuit s August 29,1990 decision. The Fifth Circuit derhd such petition for rehearing or.
October 17,1990. On January 15,1991, NOPSI filed a petition for writ of certiorari seeking review by 20
NEW ORLEANS PUllLIC SElWICE INC, NOTES TO l'INANCIAL STATEMENTS - (Continued) the United States Supreme Court. On February 11,1991, the United States and the FERC, represented by the Solicitor General, filed an amici curiae brief supporting NOPSPs petition. The matter is pending.
State Court Proceedings On February 4,1958, the Council and other parties filed in the State Court a petition for declaratory and injunctive relief seeking a judgment, among other things, declaring that the Resolution is valid and enforceable. Furthermore, a suit was filed in the State Court against the Council by the Alliance for Affordable Energy, Inc. and others on February 4,19% asking that the Resolution be amended to order a greater disallowance of Grand Gulf 1-related costs from NOPSPs electric rates, and by a subsequent pleading NOPSI was named as a party to this suit. On March 7,19%, NOPSI also filed a petition in the State Court seeking review of the Resolu4on. These three suits were consolidated in the State Court and a hearing on the merits of the case was held in the State Court on November 30, 1988. On July 21,1959, NOPSI filed a motion to stay all further State Court proceedings pending a determination of the matter in District Court. On August 30,1959, the State Court denied NOPSrs motion to stay the State Court proceedings and on November 15,1959, the State Court rendered a judgment in the consolidated cases described above in favor of the Council, afGrming the Resolution, and against the petitions of NOPSI and the Alliance for Affordable Energy, Inc.
On November 27,1959, NOPSI filed a motion for a new trial in the State Court, which was denied on January 10, 1990. On December 8,1959, the Alliance for Affordable Energy, Inc., jointly with others, filed a petition for appeal to the Fourth Circuit with respect to the State Court's November 15.
1989 judgment, On January 19, 1990, NOPSI filed with the State Court its Petition for Appeal to the Fourth Circuit of the State Court's November 15,1959 judgment. Oral argument before the Fourth Circuit was held on November 7,1990. The matter is pending.
Project Olive Brancis in connection with an effort, referred to by the Entergy System as " Project Olise Branch,' to settle outstanding issues and litigation involving System Energy and the Grand Gulf Station and to stabilize retail rates in the area served by the Entergy System, System Energy and the System operating companies filed with the FERC on June 9,1959 an offer of settlement to resolve certain FERC-related issues in a way that would be beneficial to the System, its investors and its enstomers. The offer of settlement was subsequeatly supported by the FERC staff, state and local regulators and officials, and other interested parties and was approved by the FERC on July 21,19h9.
The implementation of the FERC Settlement in the third quarter of 1959 resulted in, among other things, a $900 million pre-tax write off by System Energy of its investment in Grand Gulf 2 (construction on which had been suspended since September 1955) without seeking rate recovery from its customers, the System operating companies, including NOPSL Additionally, System Energy made a one time credit to the System operating companies' bills in an aggregate amount of $50 million, which was allocated among the System operating companies in accordance with their respective allocations of Grand Gulf I capacity and energy. NOPSPs share of this credit totaled $5.5 million.
While all parties to the FERC Settlement agreed not to pursue any prudence disallowance of Grand Gulf I construction costs and operating and maintenance expenses recorded through June V, 1969, the FERC Settlement, among other things, does not prejudice any party's right to seek disallowance of such costs recorded after that date or the right of the parties to seek future changes to the Unit Power Sales Agreement which are not inconsistent with the FERC Settlement, Additionally, the FERC Settlement does not prejudice further prosecution of htigation with respect to the Resolution.
21
NEW ORLEANS PUBLIC SEIWICE INC.
NOTES TO FINANCIAL STATEMENTS - (Continued)
In addition to settlement of FERC-related issues embodied in the FERC Settlement, on June 19, 1989, NOPSI and the Council entered into a separate settlement agreement, the 19S9 Settlement Agreement, addressing certain local retall rate issues involving Grand Gulf 1. Under the terms of the 1989 Settlement Agreement, NOPSI agreed to (1) temporarily absorb, and not recover from its retail ratepayers,18% of its FERC-allocated share of Grand Gulf 1-related costs, net of any sales of energy from the 18% absorbed portion to NOPS!'s raterayers at 4.6 cents per KWil, until such time as the present value savings to NOPSl's retail ratepayers shall total $23.5 million, projected to be approxi-mately hiny of 1991 (NOPSI would, however, be permitted to sell the energy from such portion to other parties at more than 4.6 cents per KWil) and (2) utilize an $8.5 million credit, applied by System Energy to NOPS!'s Grand Gulf I bill pursuant to the terms of the FERC Settlement, to reduce by $8.5 million the amount of future Grand Gulf 1-related costs that would have otherwise bevn deferred by NOPSI under the presently effective phase.in plan for Grand Gulf I related costs (such credit was reflected in System Energy's July 1959 bill to NOPSI which was rendered in August 1989). The 1989 Settlement Agreement became effectise on July 21,1959. The 1989 Settlement Agreement resulted in a reduction in 1959 net income of $15.5 million, of which $12.0 million was recorded in December of 1959, representing the remaining future years' impact of the temporary absorption of 16% of NOPSI's FERC-allocated share of Grand Gulf 1 related costs as described in (1) above. NOPSI does not believe that this agreement has had or will have a material adverse effect on projected cash flow or on NOPSI's ability to pay regularly scheduled debt service obligations and to meet continuing preferred stock dividend and sinking fund requirements.
NOPSI is a party to certain agreements concerning System Energy and the Grand Gulf Station.
(See NOPSI's Note 7, " Commitments and Contingencies.")
FERC's June 13 Decision The June 13 Decision allocating the capacity and energy from System Energy's share of Grand Gulf I and the costs associated therewith among the System operating companies was reaffirmed by the FERC in its November 30,1987 order. The challenges to this decision terminated on April 16,1990, when the United States Supreme Court denied a petition for writ of certiorari seeking review of the D.C. Circuit's affirmance of the November 30,1987 or.ler thereby ending the appeals process with respect to :he June 13 Decision.
Propcsed Negotiated Buy-out and Other Considerations On hlarch 29,1988, the Council proposed to Entergy Corporation to discuss a negotiated buy out of NOPSI (and of LP&L's electric distribution facilities in Algiers) by the City. Entergy Corporation responded by indicating a willingness to consider any alternatives that the Council might propose if they are in the best interests of Entergy's stockholders, customers, and employees. In early hiarch 1990. discussions by the City and Entergy culminated in a conceptual proposal setting forth terms and conditions of the negotiated buy out proposal. This proposal was the subject of public hearings by the Council in April 1990, and at a Council public meeting held on hiay 17.1990, the Counell voted against the adoption of a resolution to proceed with the buy-out proposal.
In July 1990, the Council adopted a resolution that provided a framework for further discussions and research concerning several issues ofinterest to the Council, NOPSI, and LP&L. Each of the three members of the Utility Committee of the Council was assigned specific areas of study: rate matters, including rate disparity, deferral collection and consolidation of LP&L and NOPSl; capacity matters, including least cost planning, and NOPSI's gas distribution properties; and socio-economic develop-ment, including industrial development. Each working group is meeting with NOPSI and LP&L and discussions are continuing with regard to all three areas of study.
22
NEW ORLEANS PUBLIC SElWICE INC.
NOTES TO FINANCI AL STATENIENTS - (Continued)
NOTL 3. INCOhlE TAXES income tax. expense (benefit) consists of the following:
I or the Yvan Ended December 31, 1990 19%9 19ss (In 'l houwnds)
Current:
l'ederal
$ 134
$ ;G4)
$ (6.565)
State....
913 (1.195)
Total.,
134 h49 (7.766)
Deferred - net:
Rate deferrals.
(2.745) 7.133 20,550 1959 Settlement Agreement 5,936 (7.757)
Loss carryforward utilization (provision) 16.920 15,100 (6,750)
Unbilled revenue.
(255)
(4.354)
(1,352)
Pension expense (1,396)
(2.41l)
(940)
Adjustment of prior years' tax provisions 512 559 Alternative minimum tax.
(457) 325 663 Liberalized depreciation.
(113)
(142) 761 Customer deposits.
(23)
(717) 4.964 RTA benefit expense accrual 173 1.210 (1.197)
Deferred fuel or gas costs.
(632) 490 150 Other.
162 (64)
(62)
Total...
17.370 9.295 17,406 Investment tax credit adjustments - net.
(75) 444 (237)
Total income tax expense
$17,429
$10.5%
$ 9.403 Charged to operations
$14,792
$ 9.726
$ 9,397 Charged to other income,
2,637 660 6
Total income tax expense..
$17.429
$10.5%
$ 9.403 Total income tax expense differs from the amount computed by applying the statutory federal income tax rate to income before taxes. The reasons for the differences are as follows (dollars in thousands):
l'or the Tean Ended December 31.
1990 19%9 19%%
% of
% of
% of Pre.Tas Pre Tas Pre. Tat Amount income Amount income A mount income Computed at statutory rate
$15.290 34.0
$ 6.516 34.0
$9,550 31.0 increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect.....
2.252 5.1 2.677 10.7 (791) (2.6)
Depreciation...
(377) (0 h)
(551) (2.2) 60 0.2 Nondeductible excise tax on pension termination 626 2.5 Investment tax credit amortization (627) ( 1.6)
(459) (2.0)
(237) (0.8)
Adjustment of prior years' tax provisions.
(617) (3.3) 163 0.6 Amortization of excess deferred income tax 376 0.6 376 1.5 441 1.6 Other - net..
685 1.5 246 1.0 167 0.6 Total income tax expense.
$17.429 38.8
$ 10.5%
42.2
$9.403 y 23
NEW OltLEANS PUllLIC SEllVICE ING, NOTES TO FINANCI AL STATEMENTS - (Continued)
The tax effect of the portion of the 1957 and 1955 federal net operating losses that is carried forward has been recorded as a reduction of deferred income taxes. These loss carryforwards totaling
$40.1 million at December 31,1990 are available to offset taxable income in future years and, if not utilired, will expire in the years 2002 and 2003. Unused investment tax credits at December 31,1990 amounted to $1.1 million after the 359 reduction required by the Tax Ileform Act of 1956. These credits may be applied against federal income tax liabilities in future years, if not used, they will expire in the years 1993 through 2002.
Cumulatise income tax tituing differences for which deferred income taxes have not been provided are $22.7 million, $23.5 million and $24.3 million as of the end of 1990, 1959 and IMS, respectively. The alternatise minimum tax credit at December 31,1990 is $0.6 million. This credit can be carried forward indefinitely and will reduce NOPSrs income tax liability in the future.
In December 1957, the FASil issued SFAS No, 96, " Accounting for income Taxes," which was scheduled to be effective for years beginning after December 15,19S5. The FASB subsequently issued statement numbers 100 and 103, which delay the effective date of SFAS No. 96 to fiscal years beginning after December 15,1991. The FASil is expected to issue a new exposure draft in the second quarter of 1991. This draft may further delay the effectis e date and simplify the implementation of SFAS No. 96.
SPAS No. 96 expands the requirement to record deferred income taxes for all temporary dilTerences that are reported in one year for financial reporting purposes and in a different year for tax purposes.
This will require the recognition of deferred tax balances for certain items not previously renected in the financial statements, such as a deferred tax liability relating to AFUDC, Under the liability method adopted by SFAS No. 96, deferred tax balances will be based on enacted tax laws at tax rates that are expected to be in effect when the temporary differences reserse.
It is expected that reductions in deferred taxes resulting from the lower corporate federal tax rates will be reDeeted as liabilities to customers since NOPSPs regulators may require any such savings to be passed on to ratepayers, lloweser, based on a preliminary study, NOPSI expects that the adoption of SFAS No. 96 in its present form would result in a net increase in accumulated deferred income taxes with a corresponding increase in assets. It is not expected that results of operations for NOPSI would be significantly impacted by the adoption of SFAS No. 96 in its present form.
NOTE 4. LINES OF CllEDIT AND llELATED llORHOWINGS Pursuant to an SEC order issued in December,1990, NOPSI is currently authorized, through November 30,1992. to effect short-term borrowings of up to an aggregate principal amount outstand-ing at any one time of $30 million, subject to increase to a maximum of $35 million with further SEC approval. However, unless specifically authorized by the SEC by supplemental order, NOPSI is prohibited from effecting any short-term borrowings if its common stock equity ratio (including retained earnings) is, or would thereby become, less than 30% of total capitalization plus short term indebtedness. The 30% ccmmon equity constraint is in effect through April 30, 1991, and may be elimmated, modified or extended through the period ending November 30,1992. A December 1958 order of the SEC had imposed a similar restriction on NOPSPs short term borrowings through December 31, 1990. As a result of the write.off of $135 million of previously deferred Grand Gulf I-related costs, NOPSPs ratio of common stock equity to total capitalization at December 31,1990, 1959, and 1955 was 27.2%,22.0% and 19.3%, respectively. Under these circumstances, NOPSI has been precluded from effecting any short term borrowings, and will continue to be so restricted unless the 30% common equity constraint is eliminated or modified, or until NOPSPs common equity ratio exceeds 30%.
NOPS! has participated with certain other companies of the Entergy System in a money pool arrangement (Money Pool) whereby those companies with asailable funds make short-term loans to 24
m NEW ORLEANS PUBl.lC SElWICE INC, NOTES TO FINANCIAL STATENIENTS - (Continued) other participating companies in the Systern (other than Entergy Corporation) having short-term borrowing requirements, thereby reducing the System's dependence upon external borrowings.
During the twelve months ended December 31,1990,1959, and 198h, due to the short term borrowing litnitations mentioned above, NOPSI had no short-term borrowings.
NOTE 5, PREl' ERRED STOCK AND CONT %10N SilAllEllOI. DER'S EQUITY Preferred stock at December 31,1990 and 1959 consisted of the following:
Shares Authorised gij g,rke and Oubtanding Amounts at l'er % hare at al December 31, December 31.
Deermber 31, 1990 IMD 1990 1M9 LINO (19 Thnmandt)
Cmnulative, $100 Par Value Without sinking fund:
4%% Preferred Stock 77,795 77,795
$ 7,760
$ 7,760
$ 105.00 4.36% Series 60,000 60.000 6J)00 6,000
$104.55 5.56% Series 60,000 00.000 6,000 6.000
$ 102.59 Premium 3'17 337
- Total, 107.795 197,795
$20.117
$20.117 With sinking fund:
15.44% Series 94A95 109A95
$ 9,450
$10,950
$107.72 Issuance expense.
(400)
(445)
Total,,
94A95 109A95
$ 9.050
$ 10,505 Cash sinking fund requirements for NOPSPs 15A4% Series Preferred Stock are $750,000 for each of the years 1991 through 1995. In addition, each year NOPSI has the non emnulative option to redeem additional amounts of its outstanding 15A4% Series Preferred Stock in accordance with its articles ofincorporation, and in 1990, NOPSI redeemed an additional $750J)00 of this Series. NOPSI is precluded howe ver, from redeeming such additional amounts ofits outstanding 15A4% Preferred Stock if the total amount of outstanding Rate Recovery hlortgage Bonds issued on the basis of the uncollected balance of deferred Grand Gulf l related costs e.sceeds 66h% of the balance of such deferred costs.
As of Decamber 31,1957, due to the write-off of $135 million of previously deferred Grand Gulf I-related costs in accordance with the Resolution, NOPSPs retained earnings were eliminated and NOPSI had an accumulated deficit of $33.7 million. As a result NOPSI was precluded from declaring or paying any dividends on preferred or common stock. Accordingly, prior to the elimination of the accumulated deficit in November 1985 (as discussed below). NOPSPs floard of Dircetors did not declare quarterly dividends on preferred stock ordinarily payable on April 1, July 1, and October 1, 1958 totaling approximately $2.1 million.
In order to facilitate the elimination of past arrearages and the declaration of preferred stock dYdends, NOPSI,in November 1988 after receiving regulatory and other requisite approvals, effected a recapitalization program pursuant to which NOPSI restructured its conunon stock accounts and eliminated the deficit as of November 30,1985. NOPSPs Restatement of Articles of incorporation was amended to reduce the par value ofits common stock from $10 per share to $4 per share. This enabled NOPSI to transfer approximately $16.6 million from common stock to paid in capital, a portion of which was then applied to eliminate the accumulated deficit (approximately $13.9 million as of l
25
NEW ORLEANS PUBl.lC SERVICE INC.
NOTES TO FINANCIAL STATENIENTS - (Continued)
November 30,1958 prior to the recapitali7ation). Also,in Nosember 1955, NOPSI's Board of Directors declared for payment on January 1,1989, the aforementioned preferred stock dividends in airears and the regular quarterly preferred dividend payable on January 1.1969. These dividends aggregating $2.6 million were paid as of January 1,1989. NOPSI remains current with respect to payment of preferred stock dividends and preferred stock sinking fund requirements.
The indentures relating to NOPSI's long term debt and provisions of the Restatement of Articles of incorporation, as amended, relating to NOPSI's preferred stock provide for restrictions on the declaration or payment of cash dividends on common stock. Under one of these restrictions, only retained earnings in excess of $24.2 million would be available for declaration of cash dividends on common stock Various other restrictions in NOPSI's governing instruments may also limit from time to time NOPSI's ability to declare or pay such cash dividends. Due to NOPSI's ongoing cash conservr. tion program and low common equity, NOPSI has not made any plans with respect to the declaration or payment of cash dividends on common stock. At December 31.1990, NOPSI had unpaid to Entergy Corporation $4.5 million of dividends on common stock related to 1955 declarations.
NOTE 6. LONG. TERN 1 DEBT Long-term debt at December 31,1990 and 1989 consisted of the following:
1990 1989 On Wusands)
Fiist htortgage Bonds:
5.000% Series due 1991
$ 15,000
$ 15,000 4.500% Series due 1992.
8,000 8,000 5.625% Series due 1996.
23.250 23,250 11.000% Series due 1996.
25.000 25,000 5.875% Series due 1997 12.000 12,000 10.000% Series due 2004.
35.000 35.000 9.500% Series due 2008,,
15.000 15.000 Total First hlortgage Bonds.
133.250
_133.250 General and Refunding hjortgage Bonds:
13.200% Series due 1991..
1.400 1,400 13.600% Series due 1993.
29,400 29,400 13.900% Series due 1995..
9,200 9,200 10.950% Series due 1997.
75.000 75.000 Total General and Refunding 51ortgage Bonds.
11 M 00 115.000 Unamortized premium and discount on long term debt - net 114 126 Total Long-Term Debt 248,364 248,376 Less-Amount due within one year.
16,400 Long-Term Debt Excluding Amount Due Within One Year. $231.964
$245.376 Under NOPSI's G&R hlortgage, C&R Bonds are issuable based upon 70% of bondable property additions or based upon 50% of accumulated deferred Grand Gulf 1 related costs. Further, the G&R htortgage precludes the issuance of any additional C&R Bonds if the total amount of outstanding Rate Recovery htortgage Bonds issued on the basis of the uncollected balance of deferred GraiA Gulf 1 related costs exceeds 66%% of the balance of such deferred costs. At December 31,1990, the total amount of Rate Recovery hiortgage Bonds outstanding aggregated $115 million, or approximately 63.6% of NOPSI's accumulated deferred Grand Gulf 1 related costs.
26
NEW ORI.EANS PUBl.lC SERVICE INC.
NOTES TO FINANCIAL STATENIENTS - (Continued)
At December 31,1990, the sinking fund requirements and maturities for long-term debt for the years 1991 through 1995 were as follows:
Sinking Fund Requiremenu h
Maturitics Cash' Other" (In Thouunds) 1991.
$16.400
$933 1992.
$ 8,000
$853 1993.
$29,400
$15.000
$853 1994..
$15,000
$853 1995..
$ 9,200
$15,000
$853
- General and Refunding hlortgage Bonds,10.950% Series due hiay 1,1997.
These sinking fund requirements may be satisfied by cash or by certification of property additions at the rate of 167% of such requirements.
NOTE 7. C05thilT5 TENTS AND CONTINGENCIES Capital Requirements and Financing NOPSI's construction program contemplates expenditures (including AFUDC) of approximately
$78.0 million during the period 1991 1993. Pursuant to its phase-in plan, during 1931-1993, NOPSI will be collecting in rates a portion of the Grand Gulf I costs incurred but not collected in previous years.
These collections constitute cash available to satisfy, among other things, construction expenditure requirements. In addition to the above capital requirements. NOPSI will require $71.1 million during the period 1991-1993 to meet long. term debt maturities and to satisfy sinking fund requirements. The foregoing estimates will not be materially affected by the ultimate outcome of litigation of the prudence disallowance. NOPSI plans to meet its capital and refinancing requirements during the period 19911993 with internally generated funds and cash on hand.
Prudence Disallottance The February 4 Resolution continues to constrain NOPSrs ability, over the near term, to raise funds from etternal sources, llowever, even if there were no judicial reversal of the February 4 Resolution and assuming no catastrophic or other extraordinary event, NOPSI now estimates that its available cash resources should be sufficient to permit it to meet its projected cash requirements for the foreseeable future.
NOPSI believes that the February 4 Reschition is contrary to the evidence presented to the g
Council. Ilowever, NOPSI cannot predict the outcome of the federal and state court proceedings or
==
whether the February 4 Resolution will ultimately be overturned by the courts (see NOPSI's Note 2,
" Rate and Regulatory Ntatters" for further information related to legal proceedings with respect to the February 4 Resolution).
Potential Munielpalitation NOPSI provides electric and gas service in the City of New Orleans pursuant to city ordinances, E
which state, among other things, that the City has a continuing option to purchase NOPSI's electric and gas utility properties.
27
1 h
NEW ORLEANS PUBLIC SERVICE INC, NOTES TO FINANCIAL STATEhlENTS - (Continued)
Unit Power Sales Agreement Pursuant to the allocation specified in the Unit Power Sales Agreement among System Energy and the System operating companies as ordered by the FERC in its June 13 Decision. System Energy sells to the System operating companies all ofits 90% share of the capacity and energy from Grand Gulf 1 in accordance with specified percentages (NOPSI.17%; AP&L. 36%; LP&L,14%; and hlP&L, 33%).
Charges under the Unit Power Sales Agreement, which are billed monthly, are based on System Energy's total cost of service, including System Energy's operating expenses depreciation, and capital
- L costs (including a return on common equity). NOPSI's monthly obligation for payments to System Energy for Grand Gulf I capacity and energy is approximately $11.5 million. The Unit Power Sales Agreement will remain in effect until terminated by the parties and approved by the FERC, which most likely would occur after Grand Gulf 1 is retired from service.
Acallability and Iteallocation Agreements The System operating companies are severally obligated, under the Availability-Agreement in accordance with stated percentages (NOPSI,24.7%: AP&L.17.1%; LP&L,26.9% and hlP&L,31.3%), to make payments or subordinated advances in amounts that, when added to any amounts received by System Energy under the Unit Power Sales Agreement or otherwise, are adequate to cover all of the operating expenses, including depreciation and interest charges, of System Energy. System Energy has, with the consent of the System operating companies, assigned its rights to payments and advances from the System operating companies to certain creditors as security for certain ofits indebtedness for borrowed money. Payments or advances under the Availability Agreement are only required to be made to the extent System Energy's receipts from all sources, including the Unit Power Sales Agreement approved by the FERC (of which NOPSPs share is 17%), are less than the amount required under the Availability Agreement.
In June 1989, System Energy and the System operating companies, with the prior consent of such creditors, amended the Availability Agreement so that the Grand Gulf 2 write off (discussed in NOPSl's Note 2, " Rate and Regulatory hiatters") would be amortized for Availability Agreement i
purposes over 27 years rather than in the month the write olf was recognized on System Energy's books. This amendment was made so that the write-off of Grand Gulf 2 in September 1989 would not cause a payment by the System operating companies to be required under the Availability Agreement.
Since commercial operation of Grand Gulf 1, payments under the Unit Power Sales Agreement (which include a return on equity) have exceeded the amounts payable umler the Availability Agreement (which does not provide for a return on equity). Accordingly, no payments have ever been required under the Availability Agreement.
If a System operating company other than NOPSI becomes unable in whole or in part to continue making payments to System Energy under the Unit Power Sales Agreement and if System Energy were -
+
unable to procure funds from other sources sufIlcient to cover any potential shortfall between the amount owing under the Availability Agreement and the amount of continuing payments under the l
Unit Power Sales Agreement plus other funds then available to System Energy, NOPSI could become subject to claims or demands by System Energy or its creditors for payments or advances under the Availability Agreement or the assignments thereof. The amount, if any, that NOPSI would become -
liable to pay or advance over and above amounts it currently pays under the Unit Power Sales l
Agreement for capacity and energy from Grand Gulf I would depend on a variety of factors (especially -
l the degree of any such shortfall and System Energy's access to other funds) NOPSI cannot predict whether any such claims or demands,if made and upheld, could be satisfled, if any such claims or demands were upheld, the holders of outstanding G&R Bonds conhl, subject to certain conditions, require redemption of their bonds at par, 28 q
l l,
- - - _ _ _ _ - -. _ _. _. _ _ _. _. _ _ _ _ _ _ _.. _ - - _ _ - _ =
.3&
l NEW OllLEANS PUllLU' SEllVICE ING.
NOTES TO FINANCIAL STATENIENTS - (Continued)
In November 1951, the System operating companies entered into a lleallocation Agreement, which would have allocated the capacity and energy available to System Energy from the Grand Gulf Station and the related costs to NOPSI, LP&L and blP&L. These companies thus agreed to as;ume all the responsibilities and obligations of AP&L with respect to the Grand Gulf Station under the Availability Agreement, with AP&L relinquishing its rights to the capacity and energy of the Gnual Gulf Station. Each of the System operating companies, including AP&L would base remained primarily liable to System Energy and its assignees for payments or advances muler the Availabihty Agreement and assigmnents thereof. AP&L was obligated to make its share of the payments or advances only if the other System operating companies were unable to meet their contractual obligations. Howeser, the FEllC's June 13 Decision allocating a portion of Grand Gulf I capacity and energy to AP&L supercedes the lleallocation Agreement insofar as it relates to Grand Gulf L llesponsibility for the Grand Gulf 2 amortization amounts described above has been allocated to NOPSI, LP&L and blP&L under the terms of the lleallocation Agreement. NOPSPs share of such amounts is 29.5%. AP&L is liable for its share of such amounts only if the other System operating companies are unable to meet their contractual obligations. No pay ments of any amortization amounts will be required as long as amounts paid to System Energy under the Unit Power Sales Agreement, together with other funds available to System Energy, exceed amounts required under the Availability Agreement, which is expected to be the case for the foreseeable future.
Simrcimider Litigation Entergy and certain other System companies (including NOPSI) and indisiduals were defendants in a consolidated purported class action suit filed in District Court in 19s5 by Entergy shareholders (purporting to represent classes that purchased Entergy common stock). On October 5.1990, the parties to the suit entered into a settlement agreement, subject to the approsal of the District Court, providing for, among other things, payment to the mernbers of the asserted plaintiff classes from an interest bearing $15.3 million Settlement Fund established by Entergy. On January 30,1991, the District Court entered an order and final judgment approving the settlement agreement and on January 31,1991, the suit was dismissed with prejudice. The time for filing appeals of this order expired with no such appeals being filed.
System Fuels NOPSI has a 13% interest in System Fuels, Inc. (System Fuels), a jointly owned subsidiary of the System operating companies. System Fuels operates on a non profit basis for the purpose of planning and implementing programs for the procurement of fuel supplies for all of the System operating companies and System Energy. Its costs are recovered primarily through charges for fuel delisered.
Fuel exploration and development activities of System Fuels base declined oser recent years and some fuel programs are being phased out or transferred to others. In this connection. certain charges and credits relating to System Fuels's investment in the fuel programs may be allocated to the System operating companies, including NOPSI Any such charges or credits allocated to NOPSI are not expected to significantly affect future results of operations.
The parent companies of System Fuels agreed to make loans to System Fuels to finance its fuel supply business imder a loan agreement dated January 4,1976, as amended through December 31, 1983. The rate of interest that is charged pursuant to this loan agreement is adjustable and is tied to the highest annual interest rate on outstanding short-term bank horrowings by NOPSI or to the prime commercial rate if NOPSI has no such short-term borrowings outstanding. At this time, no further loans may be made to System Fuels by the parent companies. At December 31.1990 and 1989. NOPSI had remaining loans outstanding to System Fuels of $3.3 million. The loans mature in 2005.
29
NEW ORLEANS PUBLIC SEIWICE INC, NOTES TO FINANCIAL STATEMENTS - (Continued)
System Fuels's parent companies (including NOPSI) have covenanted and agreed, severally in accordance with their respective shares of ownership of System Fuels's common stock, that they will take any and all action necessary to keep System Fuels in a sound financial condition and to place System Fuels in a posttion to discharge, and to cause System Fuels to discharge, its obligations under various long term leases by System Fuels of oil storage and handling facilities and coal hopper cars. At December 31,1990, the aggregate discounted value of these lease arrangements was $63 million.
Other Commitments and Contingencies Reference is made to NOPSI's Note 2, "flate and Regulatory Matters," for information with respect to the proposed negotiated buy out, the June 13 Decision, and other commitments and/or contingencies.
NOTE 6. POSTRETIREMENT HENEFITS Effective October 1,19S5, NOPSI terminated its defined benefit pension plan and as of that same date adopted, as a participating employer, a defined benefit pension plan sponsored by an associated company, This successor plan provides NOPSI employees with substantially the same benefit program with no loss of accrued benefit = as provided tmder the terminated plan. The pension plan, covering substantially all employees, is noncontributory and provides pension benefits that are based on the employees' credited service and average compensation, generally during the last five years before retirement. Pension costs are funded in accordance with guidelines established by the Employee Retirement income Security Act of 1974, as amended, and the Internal Revenue Code of 1956, as amended.
In January 19S9, the accumulated benefit obligation of the terminated plan was settled by purchasing annuity contracts. As a result, NOPSI recorded a nonrecurring settlement gain (reflected as a $15.5 million decrease to other operation expense), net of applicable taxes and adjustments, of approximately $8.4 million in the first quarter of 1959. In addition, on January 31,1959, NOPSI was refunded approximately $16.7 million (net of a 10% excise tax) from the terminated plan representing the funds in excess of amounts required to purchase the annmty contracts, pay certain plan participants a pro rata portion (approximately $1.3 million) of excess plan assets as required by law, and satisfy other related costs and expenses connected with the settlement.
At December 31, 1990, the projected benefit obligation and plan assets of the successor plan totaled $167.3 million (including approximately $16.9 million related to NOPSI employees) and $176.1 million, respectively. At December 31,1959, the projected benefit obligation and plan assets of the successor plan totaled $162.6 million (includmg approximately $14.1 million related to NOPSI employees) and $190.2 million, respectively, The significant actuarial assumptions used included a weighted average discount rate of 8.75% for 1990 and 8.5% for 1959 and a rate of increase in future compensation levels of 5.6% for valuin;; the projected benefit obligation for 1990 and 1989. An assumed, expected long-term rate of return on plan assets of 8.5% was used for 1990,1989 and 19SS.
30
c NEW ORIE.ANS PUBLIC SEIWICE INC.
NOTES TO FINANCIAL STATEMENTS - (Continued)
NOPSI's total 1990,1959, and 1958 pension expense was comprised of the following components:
1990' 19s9' 1988 (in Thousand0 Service cost - benefits earned during the period.
$1,769
$1,498
$ 1,510 Interest cost on projected benefit obligation.
1,255 931 7,795 Actual return on plan assets.
(9,277)
Net mnortization and deferral (43)
(57)
(3,415)
Early retirement program 5,512 Pension expense allocation from associated company 639 Nct pension expense
$2,951 82,372
$ 2.764 Pension expense for 1990 and 1959 represents NOPSI's allocated portion of the total pension expense (as calculated by an independent actuary) for the defined benefit pension plan sponsored by an associated company.
NOPSI also provides certain health care and life insurance benefits for retired employees.
Substantially all employees may become eligible for these benefits if they reach retirement age while still working for NOPSI. Any employee who retires after January 1,1991 will receive the same rates for benefits as active employees. Current retirees and any employees who retired prior to January 1,1991 will pay a reduced rate for their benefits. The cost of providing these benefits for retirees is not separable from the cost of providing benefits for active employees. The total cost of providing these benefits and the number of active employees and retirees for the last three fiscal years were as follows:
1990 1989 IDss Total cost of health care and life insurance (in thousands)
$4.625
$5,114
$7,452 Number of active employees 1,073 1,128 1,200 Number of retirees.
95'2 970 937 in December 1990, the FASB issued SFAS No.106, " Employers' Accounting for Postretirement Benefits Other Than Pensions," which is generally effective for Oscal years beginning after Decem-ber 15.1992. The new standard requires a change in accounting requirements for postretirement benefits other than pensions from a cash method to an accrual method. The impact of this new standard has not been fully determined, but the change likely will result in significantly greater expense being recognized for provision of these benefits. The effect of the increased benefit expense on net income could be reduced to the extent such increased costs are recovered through rates or through the recording of a regulatory asset to be recovered in the future, NOPSI plans to adopt this statement in 1993.
31
NEW ORLEANS PUBLIC SERVICE INC.
NOTES TO FINANCIAL STATENIENTS - (Continued)
NOTE 9. CASil AND CASil EQUIVALENTS For purposes of the Statements of Cash Flows, NOPSI considers all unrestricted highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. The mpplemental disclosures required by SFAS No. 95. "Statetnents of Cash Flows," are shown in the table below:
For the Years Ended December 31, 1990 19'i9 19 %
(In Thousands)
Cash Paid (Received) During the Period for:
Interest (net of amount capitalized of $155, $224. and
$293 in 1990,1959, and 1958, respectively).
$25.263
$25,425
$ 23,709 income taxes.
$ 100
$ 615
$ (1,046)
Noncash Investing and Financing:
Capital lease obligations incurred..
$ 459
$ 625
$ 1,573 NOTE 10. TRANSACTIONS WITil AFFILIATES NOPSI buys electricity from and/or sells electricity to the other operating subsidiaries of Entergy Corporation, including System Energy, under rate schedules filed with the FERC in addition. NOPSI purchases fuel from System Fuels and receives technical and advisory services from Entergy Services, Inc.
Operating revenues include revenues from sales to affiliates amounting to $0.6 million in 1990, $2.0 million in 1989, and $2.5 million in 19SS. Operating expenses include charges from affiliates for fuel costs, purchased power and related charges and technical and advisory services totaling $203.3 million in 1990, $208.6 million in 1959, and $220.6 million in 19SS.
NOTE 11. IlUSINESS SEGhlENT INFORNIATION As an operating public utility, NOPSI supplies electric and natural gas services in the City.
Segment information about NOPSI's operations is as follows (in thousands):
1990 1949 19 %
Electric Gas Electric Gas Electric Gas Operating revenues...
$397,303 $S7,943
$350,542 $90,367
$361,544 $91,653 Revenue from sales to unaffiliated customers.
$396,723 $S7,943
$375,566 $90,367
$3.W,001 $91,653 Operating income (loss) before income taxes '.
$ 68,460 $(3.317)
$ 45,267' $ 1,709
$ 57,309 $(3,307)
Operating income (loss)...
. $ 50,652 $ (301)
$ 37,438' $ 2,810
$ 45,643 $(1,038)
Net utility plant
$201,436 $58,307
$202,605 $56,970
$205,630 $54,493 Depreciation expense
$ 13.206 $ 2,618
$ 12.694 $ 2,852
$ 12.556 $ 2,829 Construction expenditures.
$ 12,086 $ 4,056
$ 10,103 $ 5,057
$ 12,911 $ 4,345
- Operating income (loss) before incorie taxes and operating income (loss) reflect a nonrecurring decrease of $25.7 million and $15.5 million, respectively, in connection with the 1989 Settlement Agreement.
32
NEW ORLEANS PUBLIC SElWICE INC.
NOTES TO l'INANCIAL STATE.SIENTS - (Concluded)
- 12. QUARTEltLY RESUI TS (UNAUDITED)
Unaudited operating results for the four quarters of 1990 and 1959 follow:
Operating Set Ouarter Operating income income l'.nded fles enues (Imu)
(I m )
(in Thousand0 1990:
h! arch
$112,720
$ 11,453
$ 5.765 June
$113,342
$11,704
$ 5,754 September..
$141,762
$ 16,713
$ 10,963 December..
$117,422
$ 10,451
$ 5,057 1989; blarch(1)..
$ 106_,661
$21,354
$ 15,426 June.
$ 113.025
$10,276
$ 3,441 September..
4139,345
$13,115
$ 6,036 December (2).
$111.555
$ (4,499)
$(10,439)
(1) The first quarter of 1989 includes an increase in operating income and net income of $5.4 million, net of tax, due to the nonrecurring gain recorded in January 1959 in connection with the settlement of NOPSI's pension plan (see NOPSI's Note 6, "Postretirement Benefits").
(2) The fourth quarter of 1959 reflects a decrease in operating income and net income of $12 million, net of tax, in connection with the recognition of the nonrecurring effect of the 1959 Settlement Agreement (see NOPSI's Note 2, " Rate and llegulatory hiatters - Project Olive Branch").
Additionally, operating loss and net loss for the quarter ended December 31, 1959 reflect the recognition of 32.6 million due to reinstatement of state accumulated deferred income taxes i..
November 1989.
The business of NOPSI is subject to seasonal fluctuations with peak periods occurring during the summer momhs for electric and during the winter months for gas. Accordingly, earnings information for any interim period should not be considered as a basis for estimating the results of operations for a full year.
1 33 1
NEW Ol(LEANS PUllI.IC SEftVICE INC.
RECO!!D OF PflOGRIM 19so-1990 1990 1999 1945 1987 1956 1993 1984 19%3 1992 1991 1990 (Dollars in husands) 8485 200 $ 470.900 $453 #c $416.000 $428 Arm; $ 4209W) $ 448. 800 $ 423.400 $ 457.7tw) $438.900 $348.500 Selected Financial Data:
ISAM) $ 14.400 $ 8.400 $ 9.000 $ 103)0 $ 6.700
$ (27.700 Operating resceues...
$ 27.500 $ 143n 8 14No $(49 000) $ 423NO
$1
$127.700 $129.100 $ 135.100 $14 8.IOO $l41.I(w)
Net income (loss) (1)....
tung term obhgations (2)
$2429W) $ 261,100 $262.0fo $221N M SI46.7tn
$577.300 $564.300 $50fi.9 n $424.GO $460.540 $346.900 $3599 9 $345.200 $345.000 $345.3rM $131/KU Total assets.
Capitahratmn-Preferred stock (including premium and issuance egense):
$ 20.100 $ 20.!00 $ 20.100 $ 20.100 $ 20.100 $ 20.100 $ 20.100 $ 20.100 $ 20.100 $ 20.100 $ 20.100 With sinkimt fund.....
9.100 10.500 II;2m II.5:n 133 m 13.300 13.300 14.600 14.600 14 fiW) 149)C Wthout sinking fumi.
debt).......
232A00 248 400 248 400 208.400 111 #10 114.44M II 4.400 114.51m 120 S #)
I26 500 126.500 long-term debt (excludmg currently maturing Common stock ami psid in cemtal.
69 800 69.400 69NiG 84.400 81400 64.400 59 400 59.4 0 59.400 59 &M) 59.# 4 33.9f n 8.9M (2.900) (33.700) 21 3)O
(!7/00) 10.100 10.000 7M)O 10.310 13.100 Retained carmngs.
Total capita'iration.
$3649 0 $357.700 $ 346.G10 $290.700 $272.400 $2I53 M $217.3M $21%#e $222.400 $230.9eo $233.709 Utihty plant..........
$543 5 5 b3 54t5) $51'I5 $w7910 5Es.iid $2iiTilI) $46395 E4fd5i5 E5iiEd 54Wil5 $WiW5 Less - accumulated depreciation.
2M 000 274.400 260.800 249.5m 237.9 0 227.000 214f40 199# 6 196.100 183.#w) 171.300 Net utihty plant
$259300 $259910 $260S M $258.li3U $248.500 $249.600 $249.40U $250.7tM $ 254.700 $253.200 $252.700 Residential..
$141.900 $134 000 $125300 $116.900 $118.100 $107.900 $10').200 $ 97.800 $107.100 $106910 $ 84.300 E!cetric Reenues:
162# 6 158 000 150.#m 134.280 1319M 120 S)0 1210W 104.3to 109.100 105 000 82 3 #)
27 000 25.200 22.900 20.100 22.900 25.1:M 35.400 36.400 40 N30 41.100 34.800 1
Commercial.
f Gosernmental.
53.500 51.500 4SA00 43.900 414W 42.500 44Gw) 41.100 43.3tM 39920 29320 I
Industri.*1.....
3ss.0W 3 % 700 3479 0 3111to 316.310 296.000 312 310 279 600 3tn.Ni 2923W) 231.*W) 8.400 8 000 8.200 7970 5.100 14 2m 59:0 4300 34310 45910 3630 Total reta-l.
39u) 3310 5300 5.100 4.700 496 4Se 3310 2.3rn 2.209 2.000 Sales for resale Other.
Total
$397.300 $3803)0 $36tSWJ $324.0m $326.lfn $315.000 $322.100 $247.3 e $337.100 $340.5m $269 fiOO 1.903 I A30 IAIS 1,840 1.908 t A33 I722 1.643 1.~00 1.706 1.685 Electric Energy Sales (Nlillions of KWII).
2.054 2h35 2 051 1.983 1.990 1.939 IA55 IfG4 1.631 1.622 1.571 ResKlential..
530 4W 446 414 444 496 670 728 756 823 581 Commercial.
846 837 h42 816 804 809 786 762 756
~23 6'3 P
Industrial....
~~
Goverr. mental.
5.333 5.192 5.154 Sm3 5.146 5.077 5.033 4.787 4s43 4.874 4.810 294 284 301 3W 196 133 118 91 6s8 891 9 39 Total retad.
Sales for resale.
5.627 5.476 5.4 15 5.362 5.344 5.410 5.151 4.88 5.531 5.765 5.719 Total Hesidential..
170.~55 170.148 172.390 1745)I
?76.014 177.968 l~9 487 178.0%5 177.720 176.192 174.791 Number of Electric Customers - ( At December 31):
Commercial.
17 fig 9 17.490 172#6 17.946 18.217 18.339 18.454 18.296 IS.UW 17.936 17.797 646 850 860 899 949 1.007 1.096 I;223 1949 IN95 1.132 Governmental.
1.781 3.703 J,660 1.639 1.642 1.638 1.602 1,5M 1.554 1.548 1 552 Industrial.....
Total retail customers.
191.221 190.191 192,~ 46 194. % 5 196 A21 198.952 201.039 194.198 198.422 196.77I 195.272 1
I I
I I
I I
I I
I Sales for resale.
Total eustomers.
191.222 190.192 192.747 194.686 196A22 195.953 20t.040 199.199 198.423 196.7~2 195.273 i
)
)
i Residential..
$ 47AM $ 495fM $ 50.7m $ 48No S 54.700 $ 533i0 $ 67A10 $ 68.400 $ 58.~00 $ 449W) $ 37 330 l
Cas Revenues:
Commercial.
16.500 16 Mut 17.UU 16.400 19.100 18.600 2190 25.100 22 N30 17B M 13.200 Industrial.....
6.400 7950 79Wf 7310 7.400 9.f W)0 12.28N) 13.900 I4SkJ 15.400 14.~00 Governmental.
14.200 15.100 14 A)0 14.200 20.100 23.300 23.W e 27$ M 23.500 18A00 12.100 l
Total retail.
% 700 89 200 90.700 MGM 101.300 104.100 1243N) 134Rio 119 310 96310 77.200 l
Other.
1.200 1.200 IDW)
L300 1.4 m ISw) 2300 ISM I.200 1.900 1.70')
Total
$ $7.900 $ 90.400 $ 91.900 $ 87.900 $ 102.700 $105 GIO $126.400 $136.100 $120,~00 $ 9%400 $ 78.900 l
8500 6.9t O 9 910 10 000 93M 9.500 11.300 10.900 10 600 11.3r 0 11.600 I
Gas Energy Sales (Nlillions of Cubic Feet):
3.300 3.300 3S)0 3 210 390 3 600 4.000 42w 4.400 4930 4.~00 Haskiential..
29)0 2SM 2500 2.3n I.9810 1.9M 2NIO 2.~00 2.900 4EM 6.300 Commercial.
2.900 3.000 3.300 3310 4.100 4.700 4 # 10 4.700 4.700 5.100 59 4 Industrial.....
Gmernmental.
1734 17.900 18.900 19.500 19.100 1930 22.~00 22.5fo 229)0 25.200 27.600 Total 146.300 146DM 148MM 151.100 151700 156 S10 159 3)0 160A00 162.400 163.300 163.900 Number of Gas Customers - (At December 31):
- 11. 14 IIBO II A)O 3 1 # 10 3
lieskiential..
9.400 9.400 99M 10 30 10.500 1090
!!.100 300 300 300 3fm 400 400 400 400 400 500 5fio Commercial.
500 500 500 500 500 500 500 500 500 500 500 Industrial.....
Governmental.
Total.
156S10 156.200 159Se 162.I00 165.100 168.200 171.500 1739 0 174.910 1 5.9W 176S c (See notes on Jhllotring page)
(1) 1959 reflects the recording of the $1') million, after tas effect of the 1959 Settlernent Agreetnent.
1957 reflects the write-off of $72.9 millieti, after tat of previously deferred Grand Gulf 1-related costs.1986 includes $15.9 million of deferred Grand Gulf 1-related costs after tat applicable to 1955.
(2) locludes long term debt (excluding currently maturing debt), preferred stock with sinking fund, and non current capital lease obligations. Prior to 19s6. capital lease obligations were not required to be recorded as assets and liabilities on the balance sheet.
35
NEW OllLEANs PUBLIC $ElWICE INC.
DillECI'Olts AND OITICEllS
]
DillECTolls OITICEllS James \\l. Cain Jerry I. Niaulden (B)
N. J. Briley Vice Ch.urman.
Chairman of the Board and Anistant Secretar) and Entergs Corporation Chief Esecutise Omcer Auistant Trecurer Donald E. Nicinen Cary J. Dudenhefer Brooke 11. Duncan ( A)
President and Assistant Secretary p,esident, The Foster Companb inc.
Chief Operating Oflicer John J. Cordaro Trumfer Agent and Registrar Jack L Aing Group Vice President -
for Preferred Stuk lhecuth e Vice President -
External Affair 5 Bank of N!antreal Trust Company Operations.
1:ntergs Senices. Inc.
- 5. G. Cunningham, J r.
77 Water Street Senior Vice President -
New York. New York 10005 loscph J. Archs, Jr.
Rates & Regulator) Affairs (212) 701 7667
' Chairman and Chief Esecutne Ollicer, Donald llunter Corporate Trmtce
) l Krebs & Sons, Inc.
for Mnt Mormage Bonds E dwin 1.upherger fenyr e e en -
oud Operahns The Bank of New York Chairnon and Chief Ewoutne Otheer.
N1,11. NicLetchie 101 Barcla) Street Entergy Corporation Senior Vice President -
21st Picor Jern L Ntaulden (B)
Attounting & Finance New York. New York 1036 Chairinan and Chief t,secutive Officer, 1.W5R-tm lhmuas j. M right New Orleans Pubhc Senier inc, Arkansas Power & Light Company, I*Y.c'nnal and Refunding Bonds b""i"'
," I' '
'"I-Custoinn semce I.w(
louisiana Power & Light Company, and Bank of N!ontreal Trust Company Niississippi Power & Light Company J. D. Bruno 77 Water Street Vice President -
Group President.
New York. New York 10005 Entergy Corporation and Dniuon Nianager (212) M lat a Entergv Senices. Ine-John D, Enin S3 stem Executne ~ Distribution and V ce hesident -
Cuuomer Senice, Starket ng Corporute Addren New Orleans Puhuc suske Inc.
- Entergy Corporatmn Richard C. Guthrie 317 Baronne Street Donald F. Nlcinen Vice Presulent -
New Orleans Loutuana 70112 President and Chif Operating Officer.
Puhhc Affairs New Orleaas Pubbe Senice Inc., and Dorothy J. W. kl>ce NOPSI s 1990 Annual Report to the Louisiana Power & Light Compan)
Vice President -
Secunties and Eschange Commission Pubhe Relations juhn B. Lnallpage ( A) on f mm 10.K (including fuyancial Chairman and Secretar).
T. O. Lind uatement schedules) is avadable to Dono an NIarine, Inc.
Vice President -
any stockholder without charge.
ReEul2'00 0,0"""y' Sto(kholden can obtain a copy by Charles C. Teamer, Sr. ( A)
Vice President for Fi. cal Alfairs, Secretary and Assinant g g,, 9, Trmurn Odbrd Unnenih insestor Relations Department
. y g,, y how Orkans Pubhc Senice Inc.
Vice President --
P.O. Bos 60160 Transminion Niail Umt C.0760 Donald R. Wells New Orleans, LA 70160 Vice President -
Telephone 0,Wl-M7-M39 lluman Resources & Administratmn N!. A. Caruso To request a copy of the 1990 Entergy Treasurer Corporation Annual Report. call or write to:
Enterg) Corporation System investor Belations P.O. Bos 61005 New Orleans. LA 70161 1 229260 (A) Niember of Amht Committee (B) Elected Ellectisc 2/ll01 36
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