ML20043F215

Mississippi Power & Light Co 1989 Annual Rept.

ML20043F215
Person / Time
Site:	Grand Gulf
Issue date:	12/31/1989
From:	Maulden J MISSISSIPPI POWER & LIGHT CO.
To:
Shared Package
ML20043F209	List: ML20043F206 ML20043F210 ML20043F215
References
NUDOCS 9006140259
Download: ML20043F215 (51)

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i Our c(nvr illmtration tamixilites innovation -

ideas that ilhuninate new t horirons. The 9mixil alvi j signifies ek etricity- a ,

brea!.through tec hnokgy  ;

that bas inade [xmible .

innch of the progiew of the last eentury.

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For nuist of that century,'

Alississippi Power & l.ight Gunpany has supplied -

electricity to the gx ople aiui

- bminesses of hiississippi. A subsidiary of Enteigy Girgxiration, hlP&l. forim part of the four state hiiddle

. South Electric Sntem.

For a descriptioii of the  ;

Onnpany's business and a inap of the Systen6 senice area,we the imide ]

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PIBfME NWNLENTS l Aliurniffs l'uver W l.ugint Company 1989 1988 1987 Total operating revenues (tlu>mands) . $ 709.746 $ 683,547 $ 620,836 Total operating expemes (thomands) $ 597.502 $ 570,229 $ 520,416 l'uci expeme (thomands) . $ 91,505 $ 99,125 $ 91,619 Puschasedl eer expense (thomands) $ 370,646 $ 395,978 $ 401,636 Rate delenal net of secoveries (thomands) $ (72,256) $ (125,293) $ (182,739)

Operating ha orne (thomands) $ 112,244 $ 113,318 $ 100,420 AFl!!)G (thousuuls) . $ 1,724 $ 1,681 $ 498 Net inroine (thomands)- $ 12.419 $ 52,886 $ 51,767 Net utility plant at Seat-end (thomands)- $ 790,011 $ 783.962 $ 778,821 Comtruc tion expenditures (thousuuls) . $ 51,663 $ 42,613 $ 38,420 Retail (mtomer s at > car end 347,242 339,998 336,780 Retail ener gy sales (nunkw h) 8,807 8,552 8,217 Peak load (inegawatts)- 2,100 2,062 2,037 CONitNTS

!Hjonnance flighlights  !

Chainnan's/l'unident's istler 2 Year in lin ine 4 Alburciations and Tenin S liep<wt of Alanagement 10 A tulil Gnn mitter Chainnan 's I.rtter i1 Ala nagemen t 's l'i no n cial I)isnmion and Analyis 12 Independent Auditors'fleport ]S l'inancial Statnnents ]9 Notes to financial Statements 23 llennd ofl'uogrns 1985 19S9 43  !

OJJiten,1)icidon Ibiraton,  !

I'lant Alanagen 45 l lhnd ofIlisrctens, Adeiwry l>irecton 46 Stockholder Information 18 Gnnpany 1bescription inside back <<hrr i

CR&lRR&ll'S/PRESSENT'8 LEfftIt hiiohuppi1%rr & light Comlwn Slajoi steps taken in 19S9 hase alxiut $155 inillion Icw lot Gratul gisen alp &l.a tornjn tilise edge. Gulf I between now atul 1998 Today,we see a Ienewett spifit While the settleinent haci a atnotig the tuenthers of the $1P&l. significant negalis e itnpa( t oli the tearn, a bohi new itnage in the Conipany's 1989 eas nings, we believe coturnunit),alul an itupt oscal the Iesohition of coltain t egulatotY linancialouthiot fot out Cornpany battleswhk h h,ne plagued alp &l, Ist's look at a icw of SIP &lls aiul the hiichtle South Electsic Sptein inajor acc oltiplishinettts dutitig 1989, lot ahuost a dcrade was well wor th the yeat in whit h wejoitned the the pt it c.

( kutipatiy as t hait tnati ;uul ln esidelit. followilig the announ( etnetit of l'tugtiestionably, the inost la\ot- the settletucut . Etitet gv ( kirl Hit'atiott able at hics ements steintned fioitt the sit n L I ose apin oxiinately $6 per shat e b) ) cal etul 1989. Additionally,the iate leveh established by the l'iojet t

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j succewes in the legulatot) aint l

l},k j9 financial atenas duting 1989, we h ele E Ni able to luin out attentiott to bettei k

'"# bl}; 4 selYtng otti clotoinct s alul innpl&

Inentitig ln ograins to genet ate the highest t etttrn }x swilsle of t )out' investtuent.

• Jg $1 Pkl. tt atnlated this ietu enthusiastn it110 action ing by tuaklwed jnri l Alaulden,3fahurill. linnn sesen strung contntittnents to otti (tolotticis for the 1990* \ia uit suarwof Pnject Olise tiranch A extetnise adver tisin ;rainpaign.

joint ellort with our p,n ent coinpany- These ( onuniu nctits at e spotlighted Enteigs Corpmation -and the other in the Year in Review set tion of the operating companics within the t cport.

Alhhlte South Electric Sptein, the in line with our strong conunit-ln oject iesohed most of the ment to make customer senic e our Cmupany's outstatuling litigation first and foiemost priority, M PkL and iegulaton iwuct icoiganiecd its Customei Senices Specifically, Pnjet t Olise tiranch Deparunent to focus entirely ujmn resulted in the cancellation of Gratul the necch of customers. Man Leting Gulf 2,substantially reduced our and aica deselopment functions, scheduled rate inricase last Octohet. pieviously uf uler the Customet and will iesult in our customet s paying Senices Department, r ecently wet e cawigned under a newly ricated 2

4 O hla:Leting and Area Developincut include signilitantly upgraded tele- meaunes iuhe inncased puuhu thity Department. pluine amweiing c apabihties. This we hase ahead) cali/cd by shi! ting to This organi/ational< hange h nitu ept will be expanded Onnpany- a *unitired'or smaller uew nim ept built upon twolusic strategiet One wide in 1991. in the highly latuir intemhc area of N totontinue getting<lmes to out Jmt as prmiding better senic e to Cne nunu uttion and inaintenatu e.

n1tomers understaruling their wants our ontomer s will be a priorny in and needs and finding irmovathe lirJO, strengthening out ah rady ,

appr oa( bcs to sening thern. 'I he uu t ewfulina Leting ethnis will be of A othes hiniih upon tlu onlibility aml njual im;xntatu e. [O seumnesof our Leyalliesarulallof itnenue awn iated with sales to .

Q our employees to im icase sales arul actail ontoiners im rcased appiosi- M imo let shat e, A devastating i< e Mor in hit out mately $-12.5 million or 7.0 peu ent in 1989 over the pin eding Scar, Sales to f[~%(

mmt demel> populated aica- indmtrial nntomers iinicased 6.3 -A/  %

C A dditionally, the men olmlitanJac Lum - during peu ent, arrotmting for more than 55 Qiminny has initiated several pay-for-li br uary 19N9,caming lengthy percent of the lotalimicasc in tetail ju rfonnam e pr ogiaim and estah-mitages for many nntomers We hine energv salet thhed an elaborate awanh pr ognarn to ought to meet head.on the nitic iun StarLeting goah for lirJOareeven honor employees who contrihate given uu eganting oui ability to mm e ambitiom. To meet them, mmt in advancing the goah of NIP &l.

r estore power quic Lly during an SIP &l willwarL toinaintain and and the hiichtle South 1;lcoric System.

eincigenry, inacasc energy salcuhiough a unicty Thesc in ogr aim iewar d ex tr aonlinary In an ellor t to in nent local of programutrategically dnigned for emplo)en for extraonlinar) cih>rts-tiertrical out,iges NIP &l. upgraded i nidential, t onunea rial and indmtrial the elloris we at N!Pkt.want to ituightvof.way maintenanre in ogram omtomer s. exemphly-and will be a major f actor during 1989, and with ontinue to lleganting our < ommitment to in the futm e suu ew of our Onnpany.

make u ec trinuning amt trec icmoval bn ome more intohed in the Allof our an omplishments a priority in 1990. < onununities we sene, h!P&l i during 1989 inteitwine los a single Additionally, seni< c to natomen buihling unpicredented c oalitiom icuilt: buihling a solid financialIuture will be ernanced following the with state gmer tunent and bminew for N!P&l It iu ewin ding to be able to unnpleti.m of mor e than 100 miles of gioups that are helping a cate new gke you a pmithe r eport.

inunm6 ion linn during 1989. Joht We know that our futiue h tied in 1990, we are inating a nunmit-Includal un e two major pr oject- to the giowth of the Mate; and when it inent to build on thh momentmn.

the Ilex ilrows: to Pit kem romenion grows so ran we. Thank you for your umfidem e in and the N10Adann to Indianola line, hlP&l. helped c reate 2,951 new MPkl Yom unppu inaknour in 1990, the Gimpany aim jobsin untetn Aliwiwippiin 1999, commitment easier and contritnites intetuh to briter equip its emplo)ces and,in 1990. we plan to c ontinne gt cally to our surrest to do theirjobs in the most pnxtuttise thesc ell <n ts. To acunnplish this we manne: Inssibic. Plam < all for spend-ing at least $3.5 million on new inu Ls will help rommunitiencuer prepare for indmuy, actively seek indmtrial g  !

and equipmeni as a meanuinnne. pimpn4s bennne mon imumahe in /[/ Mat ing pnuluohity and impuning senic e out ielatiomhip with existing unnpa- JenyI Mauhlen to customers nics and expand our einphasis upon Chainnan and Chief I'.xecutive Ollk er Another major impiovement impnning education.

beitig c oonlinated hv ous- Custoiner (bst coiittolisanodu area that Senices Department willle a the way williccche stiong emphash in the Om. Compeny n,,mmmiramad+ i990s,anaateysiepiowaniachining ,

nntomes s, siat ting w~ith the imtalla- thk will be galiiing die optimtisii Mic hael 11. Beritis

- tion of a 21 hour2.430556e-4 days <br />0.00583 hours <br />3.472222e-5 weeks <br />7.9905e-6 months <br /> omtomer senices benefits ft om impr oved wo:L rules President and Chief Operating Officer n nter in the Central Division that will which were a part of a new tiu ee-year j labor cointi;ict ap;iroved iri 1989. Ari example of Ihese c ost< ontiol 3

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locuuhuitig l989 switc hed froin i f acing regulator) and finant ial N

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strategies aitned at inct easing the - I

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the 1990s.

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aint a new ]nesident and ( hiet i oper ating oltu er, hiichael it liemis. , la I the C(unpany niade suong and {,rd Q.NQ4.uU.m . m-,,:::: ,_ %4ggggyg spe(ihr public (onunittnents to i addresu ustomes needs and to illart <vntnamittunng los9 tu nnhb MIVI 's strano rlatm stations te rrourr eiun abelots ta nurt impr ow the (ommunities it senes. /*"I 'le'* *l' 'N 'h' I 9%

These commitmenti, air:

• Stabilization ol iates; ha at and state i cgulaton. Resulting The wiite.olllaused a redu( tion

• Imin med senice and main.

tenaru e of in sptem; hom this histo ic pro _ jet t was the of approximatch $28 million in

• To lia ten and to iespond to irsolution of most of SIP &l.'s out- 1989 net inc ome and williesuh in customers; standing litig.aion and r egulatoiy NIP &l.custome:s pa,ing alunit $155

• To help ining new and better iwues whic h plagued the Company million less foi Grand Gull I benscen jobs to western hiissiwippi; loi neady a decade. now and 1998.

• To expand its parinenhip with in addition to inricased education and indusur; a c intomei giu ulwill and impimed r egu-imohement; and

• Inci cased ( onununity ()i laton relations the Olhe Ih atu h imestment will mean a steadier, nun e

• Supciior performance. J 4 piedictable giowth nue tor N!P&l.

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STABILl1Atl0N Of Rafts [ Q Rc(ogniting that a stabilization h

g g s A s part of du-IMPkOVID SERVICE AND MAINTINANCE To meet the commitment of of s ates is net ew.u) to be competithe in the emhing electiic utilin indusnx, Othe lirain h agiecment between improved senice and maintenance.

alp &l. van Led extensh ely d'using ' hlP&l., the Sliwiwippi Public Senis e the Company began a long tenu 1989 toward at hieving this objecthe. Conuniwion and the Niiwiwippi rtimenation ol its elecuical giid during Shu h of the Coinpanfs anen. attorney generaliollice, alp &l.wiole 1989 to ennu e added irliability.

tion wm directed toward Podet t Olhe oli S60 million of previomly defeited 1)uring the year, nun e than IW lirain h,a cmuponent of a settlement Giand Gull 1-iciated cma iccoided miles of nansmiwinn lines were between 1:nterp Cin poration and in on the books as an awet. The completed in oider to better tramport ope:ating subsidiaries, the Federal Coinpany also(onunitted not to seek elecu icity imin its point of generation Energy Regulator) Conuniwinn and new general nite incicases tin ough to c usunners in the $1P&l. senice 1991, but will be allowed to continue at ca; about 500 defective poles wer e phasing in inri cases ah cad) author-ired as part of the Grand Gull I rate moderation plan.

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repaiicd or icplaced; o>minn-tion madet seginentation umlies aml  ;* '

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' began o i sis new sid>statioin: and mistonier f < u us giotip inectings.113

} impimemenn were m,ule to older listening to rmtomers. alp &l.will j distribution linn w hic h iaLe ein tiiritv imin m e < ustomen' peu eption of' i

into hornn and hminewn. the Compan) and in employees. n 5 f

'I he unnpany alvi took Meps to The inula will be used to detennine k j canut e rcliable cic( tric wnic e and whether a permanent (mtomer  ;

piompt intonation of senit e duiing achiun) panel will be deseloped. N l

, an emetgencv, A majoi patt of this A -Itac L to liasin* training V '

ongoing efho imohesinacawd program focusing on ( mtomer j spending leveh Iof tire itinnming and t clatiom alvi will be lautu hed in !!FJO

tice iemoul to pinent mam local Ior new rmtomer wni(e emplo)ecs, eln tfiral otit tges. and Iof all existilly cinplo)ces and I hu thermore, budgeted for I!MJO supenison with diin t untome is S15 million to be mnt in pun hav ies[unnihility. The goalis im any ing new inn Ls and equil unent rustomer(ontact hv an $1P&l. "

l 1%pertatiom aic that ihne pun haws, empimee to be au omicom and togethet uith the equipment and infor matise m powihle. Inonatu<r<Iin Iwr, a unhlr tennung took hought in 1989, uilt inuh in In!#"aton willenhanar AllVI:unnv>atment in(icased pr oilurtivity and impimed to brlp th uurmle tuluft slhanan arullo wnit e to nistomen. P_

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LISTIN AND RESPOND TO CU$f0MER$ ,!

A firm ucp towanlimpioving notomes to mnunicatiom will he I]M NEW AND BITTER J0t$

( her the pet Llace years the opening of a 21-hout < miomer NIP &l/s nationall) s erogni/ed 1:ncrgy seni(cu entei in the Cential Disision. ,4, - he Compant alv, Plm Prognun has been instnunental Thiu ont ept, w hi< h will inthule hau!ncloped and begun field teving in hiinging nune than 15,000 indus-significandy impnned iclephone a new publir uinununit ations sptem u ialjobs to untern Sliwiwippi, amweiing rapabilities will be that will use umuncu ial radio to im luding 2,911 in 1989. %i Ling with expanded Compam-wide in 1991, c onununicate with ruuomen in the communities waie gmernment an,,

l'.if orts alvi will be made ment of a major outage. hminew leadet s the unnpam is through public opinion snnns, ronunitted to helping hiing nen nun ejobs to in wnite as ca in the next five scan.

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P ogram will be implemented in 1990 i

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entiept enem ial expern in dneloping s e ideas Ior new hminewes.

il NIP &l.aho will(onlinne in frr 4a k , indmit ial dnelopment and recruiting pt ogram.

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AllVI. is a compan3 oj esjenrounirmplovrs, sno h as liv memien of this orw, wlw uvrk as a tram to maintain tjunhts snvier Ibrougiumt the Ctanjuuny 's 4 5<ounti vn, ire arra.

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• r o r a s a rs -v e tt is s e. g' u s, g ju t e ' \ ll'J { s i *vit steroll rin o-[ of,nwsol effor t r lIlgli % ID H d (llii}ii n;I t ali'. .nlllIl lal H H ali d s u li n li ii'i i'llih u t til i nii PARTNER $ NIP WITN EDUCATION illaci n - .unturaknessniuicini and iln ni.nl n, ilu- \buissipp: l b lu AND INDUSTRY nudicinani s edin anon licsigned o n in lp cluinn.nc .n!.ih illa-

\11%I long lus icahn d ih.n lii .n bli ess du do ip iut pu d > ci a, s .n n t n i su rneihen uin Lphn c nnlosiv ul expansn an n do ci ik huked h ni. t he ( .t in p.un n .n i , lei annu us skills. t he \nn nu.ned I c n o n.g to quahts ,ihn ation .nni n will 1 hi ni es piogi.nu w hn h u nohes I ali, o an in n a p.o inci ship u n h c ononni o , du ci t us erb o is ai the s pr i ulh n ann d \11'.vl priv enin ! \l Pa l \lasioippi licha t iin nunum thici nup o pninlans niennhed bs sin ming innth gi.u k tudents t h.n du ( , ,lleg, an.1 i n n iir < np.oan,in cdni anona! leadei as tai ing iin.n c thn nuke n das icganhna

\ln,iwippi s i t u, .cn inal s sicni - edni .o n in w ill du ci t h atici i ihen tutno I hi ( < iinjians s licsu sf i il n a nonal, !! o i n 1 on shilt li .o o n g to

,a__ .Ci_+.1u -a-.-Aw._ a. & A.h 4444 dd e + d w s pe .@ ..4.d.4.Whas.hm.eheni-da*.n.eina.e-4 e s.M me mb ui -Am 4 4 55""4-5.Jm am ma .e..ei.m-AmF-ee.6434- dum_e_ma'-=mdm6Amn.w. w m aqu-4 -- J ama em s u- ia a us.w _ i,.m _me 0 0 WW4MGMi1Q3 Dtuing 1990, N1P&l.willwu L j with the othe Emergy Girporation

]g companies to design aiulimplement a g['] #

total quality imprmement pn x cw for aii cmphyees sidan thc hhadic Somh p .j Electric Sptein. These ellorts are e{(A,.dJ quipped } with a ,

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{ expe(ted to pnwhue innpimements in y#

lxith quality and pnulucthity.

clawn om of eight tumputers, the 24hwa van awius stmlents in eight in midition, the Company lun counties. It emplop the Centee intngluced four im enthe iuy plans w w hit h will temu d employees ion wiltware utilizing eight interarthe .

learning strategies for aduht Soll.

outuamling perfonnainc.

TeamSharing, the incentive waic piogiums in: hule acading,

• mathematics and language arts which program foi exempt amlimn exempt can be taught in short perimh of time employees.will pionmte teamwo:L on a Company aml Spirm level, without teachet vipervision, I Employees will hase gicater employ.

h!P&l.will continue its panicipa.

e, mem mobilitywithin AIP&l.and tion in the Principle of Alphabet Entergy, % hen a greater-than usual ,

I itemcv Svuem (pal.S) in mopera-A'# ##' ** *""i0 '"I"f*"I '"a u'Itann need miscs within the SsMem,imli-  !

tion with Enterge Corpnution,

'" 'I""#F "'O I"'"I"[/hnli to Ar/p impn'w viduah hom the variou operating la< kson State l'nhetsity and the "" " 'D b"* *""# " '"/ ""I" """I mmpanies will be sent to awist

-lac Lum Enterprise Center. pal.S was pnyntinin winn Alauiu,ppi- .

designed f.orfuncu.onally illiterate tempnanly, adults who have acading and writing Two other programs m e tailored for executhes and mar Leting person- l skilk below a sixth-giade kwel. , ,

un;n owng the nuuketability of nel. Another program, specified in a The pr ogram,w hic h can

( onununities mul huluurial pr open ties new, tin ec.) car labor contract, ofici s incicase the menige uudent's icading level by thice grades in 20 weeks I""cueni Aliwiwippi. To accomplish financial incentives for all bargaining thisobjecthe, alp &Ewillcontinue to unit emplo>ces.

allows one tutor to teach 16 people at inale asailable its mnununity deselop-one time to s cad by mmbining the laten interacthe ridemikc technoloMy nu nt lu ulew onah to min entratc on g. u m ru w w

em;cis9n.p cgese;opnu1aa ommunity jf and an innovathe tem hing method.

support of exiuing industry, desclop- f ji Still another program to t e(cive continued emphasis in the 1990s k

""'nt of public indtbuial pmpen) and L1 nuu Leting of buildings and sites nip &l/s Scienc e Scicen Repins, a sciics of audimisual p esentations h!P&L aho will(ontinue to oIIer nunching grants to loc..I coimuunity

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giving s< lumh a monthly program on Scici cc and le( hnicaliwuet M lnHent organi/atioth foi their ,4 ,  %, he (',ompany hag specific pn jects and pogrann and iwued an iinitation to cuuomet s, via p uside highquality training pn* cxtenske advenising, to watt h AIP&l.

COAMBUNITY INVOLVEMENT gnuns foi conunnnh) deu loinnent andjudge how wellit meets its mm-The cm ncisioneof MP&I/s volunteen and piofewinnah. mitments. The oiler is indicative of husiness philosophy during the 19%

will be community intohement. Mus em er, the Onnluny is the Company's (onlideme in its em oumguig us employees to set the abilits to perfonn beuer than eser SIP &l/s priman objecthe 'm its '

uandaid in their communities for belolc in its hhtory.

community desclopment prognun dedicateda hir senic c. MP&l.Luous that anything icw will be to enhance the Company's wouldn't be enough.

cronomit deselopment emphasis by ~

$UPERIOR PERf 0RMANCE MP&l/s sesenth conunitment is to performance that will transform its other f.onnnitments liom mere wonh into actions.

i l-i w_ _ . _ _ _ __ _ . _ _ . __ _ . . . _ . _ . _ _ _ _ _ __ _ _ _ _ _ _ _ ____ o

i ABBetVlAfl0008 ABS 78958 . .

Alminippi1%m W light G,mpay iInolorder en Reheering An outer iwue<l by the SIPSC on

[(k;{ .

j Septembc 16,1985, with r espect b.... ,, m to the Conipany's Grinul Gull

/ (.] l relaic(I sate iwues 8 i

,a ; 6 ../ i w bineviations anct terms usect in the SSR Bonds General anct Refuncling Stortgage financial section of this report inclucle: lionds iwurd anti issuable utuler the Conipany's G&R hioitgage APUDC Allowante los futuls l%cd During dated as of l'ebruary 1,1988, as Construction amended AP&L Ar kansas Power & l.ight Cannpany SSR Mortgage General suul Ref unding hlortgage established by the Cannpany Avellebility ellective l'ebi uary 1,1988, to Agreement Agreement. dated as of June 21, [novide for iwuances of G&R 1974, as amended, among Sptem lionds Energy and the Sptem operating c ompanics, aint the awignments Grand Self 1 Unit No. I of the Grand Gulf i thereof Station D. C. Cir< wit United States Court of Appeals Grand Self 2 Unit No. 2 of the Grand Gulf for the District of Cohunbia Station Cir cuit 6 tend Swif Stellen Grand Gulf Steam 1;lec tric District Covet llnited States District Court for Generating Station (nuclear) the Eastern District of 1.ouisiana l$t$ independence Steam Elec tric Genciating Station (c oal)

Entergy Services 1.titergy Services, Inc.

1885 2 Unit No. 2 of ISF.S ,

fAFB Financial Accounting l Standaids hoard June 13 Deelslen The FERC'sJune 13,1985 decision allocating Graml Gulf I costs FIRC federal Encigy Regulatory arnong the Sptem opeiating ,

Connulwion (ompanies  !

ftRC Settlement Settlement olles filed with Avne 24 Deelslen The decision of the l'nited the FERC on June 9,1989 by the States Supr eme Com t iwurd on Onupany, AP&l., l.Pkl., NOPSI aml June 21,1988, allirming the Sptem Enrigy and appimed by the Company's right to re(mer its FERC on July 21,1989, to settic, Grand Gull 1 iciated (mis among other things,<crtain then pemling Gratut Gulf Station.related LP&L 1.ouisiana Power & l.ight Gunpany iwues, litigation arul other iate matten s MKWN hiegawatt llour s l

l

?ifth Circult United States Court of Appeals MMKWN 1,000 hiegawatt Ilours )

for the Fif th Cin uit R

l

Money Peel Sptem hioney Pool w hic h allows $ystem Aliddle South 1:le(tric System certain Sptem companies to comprised of Entergy Corporation lxu row from, os lend to,(crtain and itwariom direct and other Spiem (orupanies indirect subsidiaries MP&L or System operating Compeer hiiwiwippi Power & l.ight sempenlos hlP&l., AP&l., l.P&l. and Gim iny NOPSI, collet tively CPSC hiio'ssippi 6 ,blic Servic e United linited Gas Pipe 1.ine Cornpany Conn.*iwion Unit Powet il0 PSI New Orleans Public Servi (e inc, Seles Agreement Agreement, dated as of June 10, 1982, as arnended, among the Roelleestion Sptem opes ating companies and Agtoement 1981 agreement, superseded,in part, Sptem 1:ncrgy,irlating to the sale by thejune 13 Decision, among the of capacity and energs hom Sptem oper ating c ompanies and Sptem 1:ncign share of Grand Spiem Energy Iclating to the sale Gull I of capacity and energy of the Grand Gulf Station '

Revised Plan The Company's Grand Gulf f 1 selated rate phase-in plan, j originally approved by the AIPSC in the Final Oider on Rehearing, I as inodified by the NIPSC order inued September '.'9,1988, to bring sm h plan into compliame with the acquitements of SFAS No. 92

$$C Securities and 1:xchange l Commiwinn System Agreement Agierment, eficctiveJanuarT I, 1983, as inodified by theJune 1:1 Decision, among the System operating companies relating to the sharing of generating o

capacity and other power s esources i System Snorgy Sptem 1.nergy Remur ces, Inc.

$fA$ Statement of financial ,

At couming Standar ds proinulgated by the FASin 1

$fl System fueh,Inc.

a 9

REPORT OF MANA6884ENT nuhuppaw wt tupay pew com ,

j (asb l lows, in Umformit) wktb generally ad epled accoWlt' ing principles Theii audit is c ondm ted in auoidaine

]

with generally auepted atuliting standaids amt inchules

[b; smh procedures beliesed by them to be sullicient to

G j provide reasonable awurance that the financial statements j aie flee of inaterial miwtateinent. No material inter nal

. 8 %. he ,nanagement of Sliwiwippi p(mer & control weaknewes weie reixirted to management by the 1.ight Compan) is iesponsible for the pieparation, indepciulent auditotuhiring 1989. The repor t of integrity and objecthity of the financial uatements as independent auditors does imt liinit management's well as all othen information omtained in this aimual iespmnibility for infoimation c ontained in the financial reinn t. The financial statements hase been prepaird in statements and chewhere in this annual icport.

conformity with generally accepted auonnting prin- The lloaid of Diin tons puisnes itunersight s esluimi-ciples and necewaiily sellect amounts based on manage- bitity 16: icixirted financial infor mation through its Audit inent's bnt estimatn andjudgments with appropiiate Coimnittee. This committee, whit h i unnposed entitely comideration ghen to materiality. The financial inforina- of outside diiertois,inects periodically with financial tion induded chewhere in thh annual ieport k comie management, the internal auditm s and the independent tent with that in the financial statements. auditors to make inquin as to the inanner in which the To meet its inpomibilitin with respect to finamial inpomibilitin of cat h aic being div haiged. The information, management maintaim and enimcn a independent auditors and the internal amlit statt base s34em ofinternal annunting c ontroh dnigned to anew to the Amlit Committee without management's provide acasonable anurance that tramactions ate pinence to licely dhcuw internal anounting contiol, executed in accordam e with management authoritation auditing and financialicporting matteis.

according to estahlkhed gxdicies and procedmes, that The management of hi;wiwippi powei & Iight the financial uateinents air piepared in acroidam e with Company in ognites its inpomibility for c onducting the generally auepted aconmting principles and the Companis aff ait s anording to the highest standards of Uniform System of Anounts picscribed by the FERC personal aiul corporate conduct. To enham e the and that the awets of the Company aic propedy Companfs internal accounting control enviionment, safeguarded against low, manage nent has a Code of Conduct which emphasizes W omcept of icasonable awurance is based on the the Company's conunitment to the highest standards of secognition that the cmt of maintaining a sptem of integrits and f airness. hianagement belinn that its internal accounting contioh shouhl not eu ced the policin and prm eduin, im luding its sptem of internal benefits expected to be deri ed from the spiem. ac counting controh, prmide icasonable awurance that hiiwiwippi power & l.ight Company betines that its the Company's operatiom aic carried out in confbrmity sptem ofinternal accounting c onnok, augmented by a with thne standaids.

comprehemhe internal audit f unction, appropiiately l balances the cmt/ benefit relatiomhip. The sptem of internal accounting conn oh aho im ludn the selection and training of qualified personnel, an organizational e n u m e d,ai p m vid n fm app m pd.ne d a rgadon a

[

authoiity and segregation ot icspomihilities and the Jerry 1.. Slaulden ntablishment and conununication of written auounting Chairman of the lloaid &

hminen policin and piocedmn duoughout the Chief Executive Officer organization.

The Companis independent auditms Deloitte A /

Touche, are engaged to provide an independent awess- /

ment of the degice to whic h management meets its respomihility for f airnew of financialicporting and to 7 sender an opinion as to whethei sm h financial state- G.A.Gotl ments pinent f airly, in all mateiial inpec ts, the Senior Vice president &

Coinpanis financial pmition, t esults of operatium and Chief Financial Ollicer 10

fE y h'

[ ' W; .

[

= 60NT C0mmimE CNAIRMAN'S LimR Mininippi1* var & l.ight Cmnpany The Audit Committee discuwed with the Company's

+

i internal auditors and the independent auditors the

[j$

overall scope and specific plans for their tespective T audits, as well as the Company's financial statements and f the adequacy of the Company's internal controls.

The conunittee also met with the Company's d{j A,.he Miwissippi Power & l.ight Company independent auditors, without management present, to i LAudit Committee of the lloard of Directors is comprised discuw the results of their audits, their evaluations of the of fise directors, wno are not officers of the Company: Company's internal controls, and the overall quality of hJ Frank R. Day (Chairman), James 11. C;unphell, John O. the Company's financial reporting. The meetings were 1:mmerichJr., Robert E. Kennington 11, and Dr. Walter designed to f acilitate any priva* communication with Washington. The committee met regularly during 1989. the conunittee desired by the internal auditors or The Audit Committee oversees the Company's independent auditors.

(  ; financial ieporting process on behalf of the lloard of

^

i Directors in fulfilling its respomihility, the committee recommended to the lloard of Directors, subject to g

stockholders approval,'he selection of the Company's Frank R. Day independent auditors 1)eloitte & Touche. Chairman, Audit Conunittee 1

M E.

L E

E 11 t

g;4 I

RANA 8EARENT'8 flNANCIAL DISCUS $10N AND ANALYS15 Miuinippil'uw Wlight Company y

kd d 1W% g n  % 1 u j MA S

.Q ' i % l

. .dlEw YA ESULTS OF OPERAfl0NS l

1.isted in the table below are those signi6 cant factors a allecting resuhs of operations for which changes have  !

occurted between the years 1989 and 1988, and 1988  !

and 1987. The principal reasons for the significant f changes hom period to period aie discussed following {

~

the table.

1989 to 1988 1988 to 1987 incr ease ar l'ercent increasc or Percent Description 1989 1988 1987 (Decicase) Change (Deucase) Change Ilhllan in AhllwnD Net income. $12.4 $52.9 $51.8 S(40.5) (76.6) St.1 2.2  !

Operating revenue 709.7 '683.5 620.8 26.2 3.8 62.7 10.1 }

Fuel expense . 91.5 99.1 94.6 (7.6) (7.7) 4.5 4.7 l

Purchased power expense . 370.6 396.0 404.6 (25.4) _ (6.4) (8.6) (2.1) l Other operation expense 86.7 77.9 69.8 8.8 11.3 8.1 11.6 i 35.5 28.4 4.4 2.7 9.6 i Maintenance expense 31.1 14.1 Rate deferral- net of recmeries (72.3) (125.3) (182.7) 53.0 42.3 57.4 31.4 >>

Income taxes . (9.8) 26.0 42.7 (35.8) (137.7) (l&7) (39.1) }

interest expense 68.6 63.5 49.9 5.1 8.0 13.6 27.3 Retail energy sales (nunkwh) 8,807 8,552 8,217 255 3.0 335 4.1 The decrease in the Company's 1989 net income as customers increased 6.3 percent in 1989 as compared to 1 compared to 1988 was due primarily to the September 1988 due primarily to various marketing incentise plans  !

.1989 $60 million write-oIIof previously deferred Gnuut which stimulate growth within the industrial sector. This l Gulf I related costs which had been recorded on the increase in indmtrial sales accounted for over 55 percent l books as an asset (See Note 2 of Notes to Financial of the total increase in retail energy sales. Revenue from. j Statements " Rate and Regulatory Mauers" for sales for resale to associated companies decreased j additional details). This write off caused a reduction of approximately S15.3 million in 1989 as compared to j approximately $32.8 million in 1989 net income and in 1988 due to changes in generation requirements among -

the December 31,1989 retained earnings balance. The the System operating companies. Revenue as..ociated  ;

' increase in the Company's 1988 net income as compared with the mmsmission of electricity for others (" wheel- l to 1987 was due to a number of factors as discussed ing") decreased by approximately S.9 million in 1989 as j helow, compared to 1988 due to a reduction in the amount of l

Revenue associated with sales to retail customers electricity transported through the Company's transmis- g 8

increased approximately $42.5 million or 7.0 percent in sion lines for a non-associated company.

1989 as compared to 1988. Approximately $39.4 milliori Revenue associated with sales to retail customers of this resenue increase was due to scheduled rate increased approximately $49.1 million or 8.8 percent in f

l phase-in plan increases of 5.3 percent and 1.3 perrot 1988 as compared to 1987, despite the ef fects of a 1988  !

that were implemented effective October 1,1988 - reduction of $12.4 million resulting irom an income tax f October 1,1989, respectively. The t emaining $3.1 adjustment rider placed in elfcct inJanuary 1988. The (

million of the 1989 increase in revenue associated with 4.1 percent increase in 1988 retail energy sales to these  ;

retali ctntomers was due to the increase in retail customens accounted for approximately S7.5 million of l energy sales. Megawatt-hour sales to industrial the increase, net of the ef fects of the income tax

{

12 0

t

, n i

L adjustment rider mentioned above, while approximately The increase in other operating expense in 1988 as

' $38.3 inillion of this increase wm due to higher rates -

. compared to 1987 was due primarily to costs incurred chilled to customers pursdant to the rate phase-in ' throughout 1988 'as compared to only the last quarter of - _;

.-increases implemented in October 1987 and October , 1987 in connection with the daily sale of the Company's -

s 1988.- Additionally, sevenue billed to retail customers. billed customer accounts receivable, to increases in sales l*

.during 1988 under the Company's fuel adjustment expenses and to increases in various administrative andt Eclause,less ciedits recorded un$ l er miscellaneous rate general expenses.

% _ riders, increated by approximately $3.3 million over The iecrease in 1989 maintenance expense as y

< 1987.: In 1988,' revenue from sales for resale increased compared to.1988 was due primarily to a $1.5 million L tippioximately $12.5 million as compated to 1987.- increase in boiler maintenance at the Company's 'r j Approximately $1.6 million of this increase was due to - . generating stations and a $3.0 million increase in .,

, higher sales to non associated companieuvhile _ maintenance on distributimi property. The increase inf  ;!

approximately $7.9 million of the increase was due to 1988 maintenance expense as compared to 1987 was due .

. changes iii generation requirements among the System primarily to the r~esumption of the necessary' [

operating companies. ._ inaintenance work on distribution property which had 1 Fuel expense associated with gas-fired generation been postponed in previous years.

= decreased in 1989 by approximately $3.9 million due to The 1989 decrease in income taxes waulue ,

ilower gavihed generation requirements than in 1988. primarily to the September 1989 $60 million write-off of _

Coal-Gred generation decicased in 1989 causing a previously deferred Gnual Gulf I related costs which had _  :}

creduction of approximately $2.5 million'in coal cost at -

been recorded on the Company's hools as an asset. This l 1 ISES. In 1989, fuel oil costs decreased approximately - write off reduced income taxes by approximately $27,2 .

$1.8 million due to lower avenige unit prices. Tlye million in.1989 as compared to 1988. Income taxes

~ increase in fuel expense m 1988 as compared to 1987 decreased in 1988 as compared to 1987 due to a

]

was also due to several factors, Fuel expense associated reduction in.1988 pre-tax book income and due to the witlyoll-fired generation increased by approximately . reduction in the federal corporate income tax rate from

' $19.:1 million due to higher oil-fired generatimi the 1987 blended rate of 10 percent to the 1988 rate of

requirements. Gas-fired generation _ decreased causing a 31 percetit, which was cilectiveJanuary 1,1988.

reduction of approxiniately $12.2 million in natural gas The increase in interest expense for 1989 as costs. Coal costs decreased by approximately $2.7 compared to 1988 reflects the additional G&R lionds ~

million due primarily to lower avenige unit prices of coal

~

outstanding during 1989 which were not outstanding <

! burned at ISES. ' during 1988, and hioney Pool honowings made by the. .$

l s

The decreases in 1989 purchased power expense as Compatiy during 1989 which were not made during

= compared to 1988 and in 1988 as compared to 1987 were 1988. These financings and Imrrowings were necessan 1due primarily to reduc _tions in capacity and energy to finance the capital requirements associated with the

' charges from System Energy for Grand Gulf 1.related Company's nue phase-in plan. The increase in' 1988 i Loosts. _ . . interest expense as compared to 1987 reflec ts the:

The_1989 lucrease in other operating expenses was interest on additional long terni debt issued to finance due to seseralifactorsl In September 1989, the Company the deferral of Grand Gulf 1-related costs. j

obtaisied SIPSC apprmal to establish varionioperating l 7 reserves and amortite previously deferred 1989 storm j

. damage expenditures. which resulted in an increase of

(

l: ; approximately $3.0 million in property insunmce and

injuries and damages expense.- (See Note 2 of Notes to

' ) Finimcial Statements " Rate and Regulatory hiatters" for ,

additional information concerning this matter). 1 Employeejiension and benefits expense increased approshnately $2.1 million due to higher insurance costs  ;

and a lower pension income credit as compared to 1988.  !

h!iscellaneous general office expenses also increased h) ,

approximately $2.5 million in 1989. In 1989, customer  !

, ' service and informational expenses and sales expenses

{

increased by tipproximatelyS.3 million and S.7 million. (

respectively, over 1988, reflecting th_e Company's hicreased emphasis on these areas of its business.

13 i

i

?

~

E 1 e

MANA0$5ENT'$ FINANCIAL DISCUS $40N AND ANALY$15 .

Miumipf>il'uw W l.ight Gomf>any a further discussion of the FERC Settlement and the hiississippi Settlement Agreement), The write-off of $60 -

} million of the Company's Grand Gulf I rate deferrals y j caused common stock equity to be reduced to 3" N approximately 31.6 percent of total capitali<ation as of i

,1 September 30,1989. Ilowever, the Company's cash h

WL INANCIAL CONDifl0N position and its ability to pay ongoing debt senice and to meet continuing preferred stock dividend and sinking fund requirements has not been matesially affected by ,

I A. General the write-off.

in connection with an effort, referred to by the L System as " Project Olive Branch", to settle certain B. Liquidity .

outstanding issues and litigation surrounding System Reference is made to the Statement of Cash Flows Energy and the Grand Gulf Station and to stabili/e retail for purposes of the following discunion.

. rates in the System senice area, onJune 9,1989, the During 1989, the Company experienced a net Company, the other System operating companies, and decrease of approximatel, $56.5 million in cash and cash System Energy Gled with the FERC an offer of settlement equivalents. Cash and cash equivalents incr eased by to resolve various FERC-related issues in a way that would approximately $31.8 million in 1988. The net dectease be beneficial to the System, its investors and its in cash and cash equivalents totaled approximately-customers. The ofter of settlement was subsequently $166.5 million in 1987.

supported by the FERC staff, state and local regulators Net cash provided by operating acthities totaled and ofncials and other interested parties and was approximately $A million in 1989, as compared to cash approved by the FERC onJuly 21,1989. used by operating acthities of approximately $9.2 million in connection with the FERC Settlement, as ofJune and $158 A million in 1988 and 1987, respectively, 16,1989, the Company and the MPSC, and, as orjune Under the terms of the Revised Plan,in 1989, the 26,1989, the Company and the Attorney General of the Company deferred aplu'oximately $72.3 million of State of Minissippi entered into separate, identical Grand Gulf 19 elated s osts for future recovery. This ,

settlement agreements, (called herein collectively the compares to $125.3 miilion and $182.7 million

" Mississippi Settlement Agreement") that resolved a deferred for future recovery in 1988 and 1987, number of retail rate matters affecting the Company. respectively. (See the table below and the textual  ;

Pursuant to the Mississippi Settlement Agreement, mr rial follouing the table).

i the Company filed onJuly 12,1989, (i) a Motion for inJanuary 1989, the Company repurchased all of its Modincation of Revised Rate Moderation Plan in MPSC outstanding customer accounts recchable for approxi-l Docket No. U-1620 and (ii) an application to establish a mately $32A million, utilizing primarily the proceeds storm damages reserve and other resenes and to amor- from the $30.0 million sale of common stock to Entergy tire 1989 storm damage expenditures in MPSC Docket Corporation in December 1988.

No. U-5383. On September 7,1989, and September 29, in 1989, construction expenditures (including 1989, the MPSC issued orders approving implementation AFUDC) totaled approximately $51.7 million, compared of the Mississippi Settlement Agreement by means of the to approximately $42.6 million and S38A million in 1988 write-off of $60 million of the Company's Gnmd Gulf I and 1987, respectively. ,

rate deferrah, the Company's establishment of operating Financing acthities produced a short-fall of $6.1  !

resen'es and the distribution to the Company's retail million in net cash flow in 1989. OnJune 7,1989, the  !

customers of a $16.5 million credit received from System Company issued and sold $100 million in four series of Energy pursuant to the FERC Settlement. The Company G&R Bonds in accordance with the provisions of the also agreed that it will seek no change in its present G&R Mortgage. OnJune I,1989, the Company retired general base rate and/or rider schedules through $30 million ofits 151/8 percent series first mortgage i December 31,1991, except, among other things, in the bonds dueJune 1,1990, prior to maturity. On October event of highly unusual or exceptional occurrences that 2,1989, the Company retired $35 million ofits 141/2 may hase the effect of causing substantial variations in percent series Orst mortgage bonds due October 1,2014, the Company's revenues or expenses, in which event, the prior to maturity. The Company paid a premium of Company may take such action as may be provided by approximately S 1.0 million in connection with the law with regard to its retail rates. (See Note 2 of Notes to redemption of this 141/2 percent series of first  ;

Financial Statements " Rate and Regulatory Matters" for mortgage bonds. In 1989, the Company redeemed 7,300 H

b b

..J E [ shares adits 12.00 percent series'6f picii rred stock and ' .The Company's principal financing r_equireme'nts 90 (K)0 shares ofits 10.16' percent series of preferred - continue tohe awociated with the defetied recovery of '

stock'(Sec Note 5 of Notes to Financial Stateinents . -

Grand Gulf I related costi ptirsuant'to the Grand Gulf I

? Preferred and Common Stock" for additional informa- rate phaw-in plau drdered by the AlPSC. During 1989, Jtion concerning these redemptions). The Company 1988 and 1987, Grand Gulf 1 related billings and paid approximately $l8.4 million in common stock deferrals were as follows:

> 4 dividends and ap[iroximately $12.5 million in preferred

? r,t6ck' dividends in 1989.' As of December 31.1989, the

".Cinnpany had $4.7 million in outstanding borrowings -

- n. from the Aloney Pool!

-L.#

For TheYears Ended December 31 - 1989- 1988 ~1987 :

I(In Ald!wnd m

i Billcd to the Company by System Energy. , $276.1- $308.3 $317.5 -

H PAdd: Carrying charges . . 55.9 50.8 40.3

4. css: Fuel ', , ~ . ,

29.2 .42.7 22.0 l

- l.ess: Flowback of excess deferred income taxes ,

7.9 2.0 --

I

-1 -

Suhtotal ;_ 294.9 314,4 335.8

, l.est Anmunts billed to the Company's customers 228,1- 188.8' 152.4 less: (Over)/Under collection of revenue .. (5.5) ~ 0.3 0.7 >

q j

Re deferral net 1 of recoveries' , .

$ 72.3 _ $125.3 - $,182,7 dicated in the above table, the amoums of - In December 1989, the agreement between the j off I related costs deferred for future recovery Company and AP&l. for the Cpmpany's purchase of = 1

gn decreasing with corresponding increases in AP&l/s capacity and energy from ISES 2 ended. j

? tue amoimts billed to the Company's customers. Ily' ileginning in 1990, due to the' expiration of this t!

cdefitring Grand Gulf 1 related costs that are not agreement, the Company's annual capacity charge liir, j (currently billed to customers to the future when they will F be collected through increased rates billed to customers, purchased power from ISES 2 will be eliminated, j

.resulting in a decrease of approximately $26.6 million l Lthe impact of the rate phase-in' plan has been removed as compared to 1989 charges?

'from the statement ofincome, Since the' actual

[ collection of revenues to recover these deferred costs will inot occur luntil the futtue, the ra'te phase-in plan does j

Dresult in addition'a l current capital requirements. {

' (See above under " Financial Condition . General" - l concerning the Company's $60 million write off of

. previously deli tred Grand Gulf I related costs.) . i 5 ,p

}f

.1 t i

1 L  ;

13 l -

t + +

K' t

MANAGEMENPS FINANCIAL DISCUS $10N AND ANALYS15 .

Miwmppi km W light Computy C. Capital and Refinendag Requirements The minimmu carnings coverage requireinents for e- Construction expenditures for the Gompany are the issuance of additional G&R lionds and preferied '

- estimated to be $52.5 mdlion, $58.4 miUion and $58.0 stock (uhich are not applicable in the case of certain million for the years 1990,1991 and 1992, respectively. refunding hond issues) are 2.0 times pro forma annual In addition to construction expenditures, the Company mortgage interest requirements and 1.5 times the pro will have capital requirements in 1990 of $ I1.2 million in forma annualinterest and preferred stock dividend connection with the phasing of a portion ofits Grand requirements,iespectively. For the Company's G&R ,

Gulf 1 related costs into retail rates. Pmsuant to its rate Ilonds and preferred stock, the earnings coverages and phase-in plan, the Company,in 1991-1992, will be issuable amounts based on an assumed annual interest collecting Grand Gulf l-related costs incuried but not and prefened stock dividend rate of 10 peicent were as collected in previous years. These collections constitute follows:

cash available to satisfy construction expenditm e requirements. Earnings Coverages in addition to the abme capital requirements, the 12 months Ended issuable Amount Company wiH icquire approximately $123.6 million 12/31/89 12/31/88 at 12/31/89 during 1990-1992 to meet long term debt maturitics and to satisfy sinking fund requirements. G&R lionds 1.92 2A5 None Prefen ed stock 1.02 1.51 None D. Capital Resourses The carnings coverage test is cunently the most The Company's present plan is to meet its above restrictive issuance test under the G&R Mortgage.

requirements principaHy through internally generated The Conipany's G&R Bond and preferred stock earnings

- funds, supplemented by short-term borrowings and the coverages at December 31,1989, were below levels issuance of such other securities as may be appropriate at nmuy to penuit the issuance of additional G&R the time. The Company may issue athlitional G&R

~

Bonds (except for certain refunding purposes) or Bonds, primarily in connection with a possible debt and preferred stock, due to the write-offin September 1989 preferred stock rennancing program. The Company of $@ suuuon of previously deferred Grand Gulf I costs plans to proceed, sul tject to receipt of necessary regulatory approval, with arrangements for the possible (See above under " Financial Condition") These cover-ages wiu continue to be affected by the wnte-off through carly redemption, purchase or other acquisition of all or Augun 1990, a portion of certain outstanding series of the Company's The Cmnpany is authoriicd through 1990 by the high-cost debt and preferred stock.

SEC under the Public Utility iIolding Company Act of in February 1988, the Company established a G&R 12 to effect short-term borrowings in an aggregate Mortgage indenture to provide for issuances of G&R anumut omstandmg at one time of up to $100 million, Bonds. The G&R Mortgage constitutes a second 5"Y'ct to increase to a maximum of to percent of the mortgage lien on substantiaHy all of the physical Cmupanfs capitalization with furthet SEC approval. In properties and assets of the Company, subject and addition, the Company is subject to an SEC order that

- subordinate to the lien of the Company's Orst mmtgage indenture. The terms of the G&R Mortgage prohibit the prohibits incurrence of short term indebtedness if issuance of additional nrst mortgage bonds (including conunon smck equity (including retained earnings) is, m wuld become,less than 30 percent of the sum of refunding bonds) under the Company's Grst mortgage total capitalization plus short term indebtedness. The indentme, except for such Orst mortgage bonds as may hereafter be issued from time to time at the Company's Comp ny's G&R Mortgage also limits short-term borrowings to an aggregate amount not exceeding in -

option to the corporate trustee under the G&R geneml, the gn ater of 10 percent of capitalization or 50 Mortgage to provide additional security for the G&R percent of Grand Gulf 1-related rate deferrals available Bonds (See Note 6 of Notes to Financh'd Statements-

"1.ong-term Debt" for additional details of the G&R to support the issuance of G&R lionds. As of December 31,1989, the Company's short term borrowing authority Mortgage).

inJune 1989, the Company issued and sold $100

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million in aggregate principal amount of four series of G&R llonds in accordance with the provisions of the G&R Mortgage.

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As of December 31,1989, the Company had lines of - I. Aueenting issues

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i. ; credit with Aliwiwippi banks totaling $30.0 million, all of in December 1987, the FASil iwued SFAS No. 96, '

whkh were available at that date. These bank lines of " Accounting for income Taxes", which was scheduled to y credit have remained available to the Company during he effective for fiscal years lx giniting after December 15, (l 4 the first quarter of 1990.' 1988. The FASti subsequently iuued statement numbers The Company alm participates with certain other 100 and 103, which delay the efTective date of SFAS No.

6 S)ttem companies in the bloney Pool whereby those 96 to fiscal > cars beginning after December 15,1991.

System companies with available funds can lend those During this extension period, the FAsin will be hmds to other participating companies in the System considering vatious requests for amendments to I (other than Entergs Corporation) having short. term SFAS No. 96. J I

( horiowing needs. The availability of Aloney Pool funds liased on a preliminary study, the Company expects at any p,artionlar point in time may be limited. The that the adoption of SFAS No. 96 in its present form Company may bortow hom these sources subject to its would result in a net increase in accumulated maximum authorized lesel of short term borrowings. deferred income taxes with a corresponding increase in 3 The Company made use of short-term borrowings from assets. It is not expected that icmits of operations for i the N1oney Pool during 1989 with the largest balance the Company would be significantly impac ted by the .f L outstanding at a month end totaling $75.2 million. As of adoption of SFAS No. 96 in its present foim. (See Note l December 31,1989, the Company had $4.7 million in 3 of Notes to Financial Statements " income Taxes"),

outstanding horrowings from the hioney Pool. .

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Not in<oine on mutono gag, p.g.,,,q . Not of Recoverles un milhmn>

1989(CEE13 $ I2.4 1939I D 2 : 2 31$ 72,3 )

!98811%52l MMMEDi?EIlICf30lM35 S 53.9 j93g W i? M G C ,D E 2 ;21 $ 125.3 l 1937 C M I M E H5?I M EI M IE M id2DE1551.8 1937CI D 3 C CTl2 M L 2 2 2 W 3 $]82.7 b m-w-b m$ hasMNwS$UN5euiESkO~.S-ldd5MEJakeNan06.A,45sG.m 4 m,m 55r50 ,.

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INDEPENDENT AUB4 TOR $' REPORT Mnsi.uippi1%wr & l.ight Compan,s Deloitte&

To_ _u_c_he_ _ __ .. _ _ _

One Shell Square, Suite 3700 701 Poydras, Street New Orleans, Louisiana 70139-3700 To the Stockholders and the Board of Directors of An audit also includes assessing the accounting hiississippi Power & l.ight Company: principles used and significant estimates made by We have audited the balance sheets of hiiv.issippi management, as well as evaluating the overall financial Power & !.ight Company as of December 31,1989 and statement presentation. We believe that our audits 1988, and the related statements ofincome, of retained provide a reasonable basis for out opinion, carnings and of cash flows for each of the three years in in our opinion, such financial statements present the period ended December 31,1989. These financial fairly, in all material respects, the financial position of statements are the responsibility of the Company's the Company at December 31,1989 and 1988, and the management. Our rerponsiblity is to express an opinion tesults ofits operations and its cash flows for each of the on these financial statements based on our audits. three years in the period ended December 31,1989 in We conducted our audits in accordance with conformity with generally accepted accounting generally accepted auditing standards. Those standards principles.

require that we plan tmd perfotm the audit to obtain reasonable assunmce about whether the financial statements are free of material n isstatement. An audit mehules examining, on a test hasa, evidence supporting Afd / / ouMo the amounts and disclosures in the financial statements. l'ebruary 11,1990 18 4

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. STAT 8MENTS OF INCOME

. Aliniuippihnwr & Light Company \

Fu The Years Ended December 31 1989 1988 1987

~ " ' ~

an nouwneta .i N Op rating Revenues $709,746 $683,547 $620,836

i

- Opa rating Expenses:

h>cration: <

' Fuel 91,505 99,125 91,619 Ptirchased power. , 370,646 395,978 404,636  ;

a .Other 86,668 77,913 69,822 Alaintenance. 35,534 31,143 28,407 Deprec iation. . 37,226 35,915 35,151 Taxes other than income taxes 31,436 30,747 28,864 income taxes (Note 3) ~ (5,260) (20,916) (36,952)

Rate deferral: Ll Rate deferral- net ofiecoveries (Notes I and 2) (72,256) (125,293)- '(182,739)-  !

t- ' liicome taxes (Note 3) . 22,003 45,587 78,578; 1

. Total operating expenses 597,502 570,229 520,416 Operating Income 112,244 l i3,318 100,420  !

Oth:r Income and Deductions:

Allowance for equity funds used during construction . 787 859 il1- ,

Other - net. , . 1,410 3,602 2,339 4 income taxes (Note' 3) (652) (1,360) . (1,11l) n Rate deferral: . . .

Rate deferral writeoff (Note 2) (60,000) - -

Income taxes (Note 3) . 27,183

_ . ~ - -- . _ . _ - , - . .

] 9 Total (31,272) 3,101 1,239

. Interest Charges:

L ~1nterest on long-term debt . 65,320 61,946 47,073

. Other interest net . . , , 4,170 2,409 .3,306 ,,

Allowance for borrowed funds used during construction . (937) (822) -(487) 1 Total 68,553 63,533 49,892 1 1

N:t Income -

$ 12,419 $ 52,886 _ $ 51,767. 1 2,..__..

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STAftMENTS OF RETAINED EARNINOS .i For The Years E'nded December 31 1989 1988 1987

'f; tin noumado 'l

. R:ttined Earnings,, January I . $202,316 $178,438 $147,099 j

' Add: Net income 12,419 52,886 a1,767

~l Total - ,

214,737 231,324 198,866 l I

1

. Deduct:. .

1' Cash dividends:

Preferred stock < -12.074 12,499 12,679 Common stock . , 18,349 16,507 7,749

. Premium paid on preferred stock redemption 909 - -

j

. Preferred stock expense 119 -

l Total . .

31,/51 29,006 20,428 1

- Ret:.ined Earnings, December 31 (Note 7)

$183,286 $202,318 $178,fa

n. .

._.7;_.., .. ; = _. ._.

. 77 ....._ ..., ,_..,.; _ 7,  ;._.,. ..

$rr Noirs to fintsnrint Statemenh l9

BALANCE $NEETS hviniuippikm &' Light Onnpany -

'AS$ETS As of December 31 ' .

1989 1988 -

tin l'housands) -

Utility Plant Electric $i,238,184 $1,199,705 Construction work in progress 17,131 --16,743; Electric plant acquisition adjustments . 590 772 Total 1,255,905 1,217,220

1. css accumulated depreciation 465,894 ;433,258 Utilityhlant nei 790,011 .783,962-Other Property and Investments:

Investment in subsidiary company, at equity (Note 8) 5,531 5,531 Other 702- 702 Total 6,233 ' -6,233 Current Assets: .

Cash and special deposits . - 2,728' Tempontry investments at cost which approximates market:

Associated' companies (Note 4) 30,000 Other 3,574 27,380 Total cash and cash equintlents 3,574 60,108 1 Accounts receivable:

Customer and other less allowimce for doubtful accounts $81fi.000 in 1989, $0 in 1988 (Note 4) . 42,501 - 6,167-Associated companies 138 409 hiaterials and supplies - at aserage cost:

l'uel oil . 2,744 '

2,957 Other > 11,743 - 8,530 -

54,389 62,808 Rate deferral (Notes I and 2) .

Other 9,071' 8,592-Total -

124,160 - .

149,571-

' Deferred Debits:

- Rate deferral- net of recoveries (Notes I and 2) -625,618 . 610,402

' 1989 storm damage expenditutes (Note 2) l 4,650 -

Unamortired loss on reacquired debt 3,865: -

Other 11,170 - 4,981 Total '645,303 615,383 Total $1,565,707 - - $1,555,149 5ee Notes to Financial Statements.

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. . CAMTAUZAfl001 AllD UABILiflES =1989 1988

, y n :,, - ...+ -.-. ~ ~ - - , - _ . , - ..a-~~~. .

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(la Thannando 1 Capitalization: I Common stock, no par value (stated value $23 per shaie) authoriicd 15,000,000 shares: issued and outstanding L7,579,400 shares 1 ,

$ 174,326 $ 174,326.

Retained earnings (Note 7) . 183,286 202,318

e. .. -

. Total common shaichokler's equity 357,612 376,64i Preferred stock (Note 5): l'

.Without sinking fund. 38,077 38,077 With sinking fund 80,578 90,189 E

Isng term debt (Note 6). 602,986 568,071

- =.:.-... - -_- . . - _ _ .

u ,. .u. J gtal, __,,_, -

1,079,253 1,072,981

- Othir Noncurrent IJabilhies:

Obligations _under capital leases'- 5,577 6,066 4

Accunmlated provision for losses (Note 2) 1,860 -  ;

_ - _ . - . - . _ . _ _ . . _ .- __-_ :i

_ al _ _ , Total , , , _ , _ _ _ _ _ , , _ _ ,

7jl37 ,,JiO6{i _

Current Liabilities: ~

1

' Currently maturing long-term debt (Note 6)' . 335' 150 Notes payable:.

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Awociated companies (Note 4) . 4,700 - i

.. % 1Other , - 3,490 i b

J Accounts payable: .i Associated companles 34,743 37,907 Other ~,

23,372 15,352

' Customer deposits . . '18,490 17,931 l

. Taxes accrued . , 125,350 21,319 ilnterest accrued ' ._.

'23,735 18,990 .;

' Preferred dividends declared. - 2,74S 3,129 i

' Accumulated deferred income taces (Note 3) 24,969 - 28,509 l

Obligations imder capital leases ; 1,619 1,662 -(

_ Other . -

2,095 -12,472 T$tal '

162,151 163,911

' DEftrred Credits:

' Ace' mulated deferred income taxes'. net (Note 3) . ~

277,451 267,297 l

4 Acctmmlated deferred investment tax credits (Note 3) , 37,645 39,169 Other ,

1,770 5,695

. ' Total 316 t866 312,161 I Commitments and Contingencies (Note 8)

Total._, . _ _ . , _ _ _ _ _ , _ _ _ , .. __. _ _ __._,_ $ 1A6470i_ _ __$ 1,554149 _ _ .

Sr h., to Financhd Marwnss, i l

21 1

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STATE 8BENf8 Of CASN FLOWS -

Minioippi nnm W l.ight Onnpay For IheXears Engled December _31 _ _ ,_ _ _ 1989 _ _ _ __ lim 8 '1987 lin Thousand0 Operating Activities:

Net income $12,419 $52,886 $51,767 Noncash items included in net income:

Rate deferral net of recoveries (72,256) (125,293) (182,739)

Rate deferral- write-of1' (Note 2) 60,000 Depicciation' 37,226 35,945 35,151-Deferred income taxes (8,636) 27,242 43,741 investment tax credits net . , - (1,522 ) (1,933) (4,858)

Allowance for equity funds used during construction (787) (859) (11)

Changes in:

Accounts receivable (Note 4) (36,063) (2,321) 26,128 Materials and supplies (3,000) (413) 388 Accumulated provisions for losses . 1,860 (597) (3,154)

Accounts and notes payable 1,074 (6,055) 2,492 Customer deposits 559 901 1,038 Taxes accrued . 1,001 4,032 (142)

Income taxes receivable - - 38,133 Intetest accrued . 4,745 2,427 1,414 Other working capital accounts (864) 363 (1,222)

Proceeds from gas contract settlement . - 166 20,138 Ref unds to customers - gas contract settlement -

(1.1 18) (196,273)'

Other , , 4,669 5,490 9,612 Net cash flow provided (used) by operating activities 425 dl61) (158,397)-

Investing Activities:

Construc6, expcnditw es (51,663) (42,613) (38,420)

Allowan .e for equity funds used during construction . 787 859 11~

ProceeJs from ret'uction of investment in subsidiary company - 13,913 -

Net cash . low used bs investing activities (50,876)' . (27,841) -(38,409)

. Financing Activities:

Procteds froni issuance of:

Common stock , - 30,001 -

Preferred stock . -- - 35,000 First mortgage bonds .

- - 75,000 General and refunding bonds . 100,000 75,000 -

Retirement of preferred stock . s (9,730) (500) -,

Retirement of first mortgage bonds. (65,000) (60,00')) --- -

Retirement of other long term debt (325) (150) (100)

-1.oss on reacquisition of debt (4,018) - -

Premium paid on preferred stock redemption (909) - -

Funds held by first mortgage bond trustee , - 60,000 (60,000)'

Preferred dividends paid . (12,452). (12,529)- (11,825)

Common dividends paid . (18,349) (16,507) (7,749) =

- Change in short term borrowings . 4,700 (3,490) -

Net cash flow provided _(used) by financing activities (6,083) 71,825- 30,326 Net increase (decrease) in cash and cash equivalents . (56,534) 3't,820 (166,180)

Cash and cash equivalents at beginning of period. 60,108 25,288 191,768

.--Cash and cash equivalents at end of period $ 3,574 $60,108 S25,288 Supplemental Disclosures of Cash Flow Informatiosu Cash paid (received) during the' period for:

Interest $62,572 S58,101 S18,957 Income taxes . (11,223) (2,030) (36,819)

See Note, la Fenancitu .",'*Irmenh. 1 22 o

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,110T88 70 tillAllCIAL STATSMEllTS "

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2ininippi&n & l.ight Company i

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.l i, October 1,1998, in addition, the balance of deferred i n Grand Gulf 1-related costs as of September 30,1988, j a which were recorded pursuant to the Final Order on '

Rehearing, will also be collected by October I,1998.

1 (See Note 2 for additional detalk of the Revised Plan,

' 4"

= including modification thereof, and a write-off or $60 I

SUMMARY

Of $16111FICAlli ACCOUllfill6 POLICIES million of previously deferred Grand Gulf 1-related costs j in 1989.) l L Regeletles 1 Ily deferring costs to the futme when they will be j The Company is' subject to regulation by the hlPSC collected through increased rates billed to customers, -[

i and the FERC and maintains its accounts in accordance .the impact of the rate phase-in plan on the statement of ]

with the Uniform System of Accounts prescribed by ' income has been removed. Ilecause the actual collection l those agencies, of revenues to recover the deferred costs will not occur imtil the future, the Company secords a deferred asset B.Revenees (" Rate deferral- net of recoveries"), and incurs [

.The Company recoich revenues as billed to its - additional current capital requirements in order to l

$ customers on a cycle-billing basis. Revenue is not finance the deferral. The carging charges associated i Q(accrued for unbilled energy delivered at the end of the with the financing of the deferral are recovered currently l

. . fiscal period,' The rates of the Companyinclude fuel from customers. During periods when deferred costs are 4

. recovered, revenue collections will exceed, to the extent . t

'fl gidjustment

'q '

l below the base levels clausesallowed under in' the which fuel costs various rate aboveof or such recovery, current cash requirements for these j schedides are permitted to be billed or required to be costs.

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credited to customers. 1

(. .. . .

E. Pestretirement Benefits -l C. Utility Plant end Depresletlen . The companies of the System have various l

Utility plant is stated at original cost; The costs of postretirement benefit plans emering substantially all of i additionis -to utility plant include contracted services, their employees. The pension plan is noncontributmy j 4 direct labor, materials, allocated overheads and allow- and provides pension benefits that are based on l yances for borrowed and equity funds used during

. emphiyees' credited service and avauge enmpensation, j f construction.,The costs of units of liroperty retired are generally during the last live yeacs before rettiement.  ;

? removed ifrom utility' plant, and such costs plus remom! Pension costs have been funde t in accordance with- [

i costs, less sahnge, are charged to accuniutated deprecia- contribution guidelines established by the Employee y tion, Maintenance and repairs'of property and replace- Retirement Income Security Act of 197 l, as amended,

ment and renewal ofitems determined to be less than ' and the Internal Revenue Code of 1986, as amended. ,

units of property are charged to operating expenses. The costs of postretirement health care and insurance  ;

Substantially all of the utility plant is subject to the lien benefit plans are recorded on the cash basis.

(

> of the Company's first mortgage bond imlenture and the ^

second lien of the 'Co'mpany's G&R Mortgage bond

F. Income Temos indenturec The Companyjoins its parent and alliliates in the .

Depreciation is computed using the straight line

~l filing of a consolidated federalincome tax return.

method at rates based on the estimated senice lives of Pursuant to an intra-System income tax allocation q l the mrious classes of property, Depreciation provisions agreement, income taxes aie allocated to the Company on average depreciable property approximated 3.3 in proportion to its contribmion to the consolidated percent in 1989,1988 and 1987, taxable income. In accordance with SEC regulations, no

., . ., System company h required to pay more income taxes

. D7 tete Deferrels . _

than would have been paid had a separate income tax

! hi order to mitigate the immediate elTect u'pon return been filed. Deferred income taxes are provided f ratepayers of the inchision of all Grand Gulf 1 related for dif ferences between book and taxable income to the Ecosts in retail rates, the Revised Plan provides for a rate extent permitted by the Company's regulatory bodies (phase in plan under which p,ortions of the Company's for ratemaking purposes. Investment tax credits 4

-Grand Gtuf I-related costs wi'l be deferred through allocated to the Company have been deferred and are September 30/1992, and will then be collected by amorti/ed based upon the average usefullife of the Va , D

'9:

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NOTES TO FINANCIAL STATEMENTS Aliniaippihwr & Light Comfumy related property in a inanner consistent with ratemaking II. Statement of Cosh flows ucatment. In addition, the Company files a consolidated . The Company considers all highly liquid debt Mississippi state income tax return with certain other instruments purchased with a maturity of three months System companies. or less to be cash equivalents.

G. Allowente For funds Used During Constrv<tlen. l. 0ther Nonterrent Liebilities in accordance with the Uniform System of Accounts, in 1989, the Company was authoriied by the MPSC the Company capitali/es AFUDC as an appropriate cost to make provisions for uninsured property rists and for of utility plant. Under this utility industry practice, clahus for injuries and damages through charges to construction work in progress on the balance sheet is operating expense on an accrual basis. Accruals for charged and the statement ofincome is credited for the these risks have been allowed for ratemaking purposes approximate composite interest cost oflorrowed funds (See Lte 2). '

and for a reasonahic return on the eqmty funds used dnring construction, This procedure is intended to i remove the effect of the cost of financing the construc-tion program from the statement ofincome and resuhs in treating the AFUDC charges in the same manne as construction labor and material costs in that each is capitalized rather than expensed. As non< ash items, these credits to the statement of income have no effect  ;

on current cash earnings. After the property is placed in senice, the AFUDC charged to construction is recover-able from customers through depreciation provisions included in rates charged for utility senice, The effective -

composite AFUDC rates were 10.96 percent,12.38 percent and 7.09 percent for the years 1989,1988 and .

1987, respectively, 1

l l

l 24 l l

i

r related costs over the four annual periods commencing October 1,1988, with the total deferrah amounting to approximately $151 million in the first such annual period, and estimated to approximate $105 million, S68 million and $32 million for the subsequent annual perioch. These deferrals will then be recovered by the Company over the succeeding six-year period ending RATE AND REGULATORY MATTER $ September 30,1998, in accordance with the annual recovery schedule specified in the Revised Plan. The in November 198 l, the Company filed a Notice of Revised Plan further allows for the s ecovery by the Intent with the h!PSC to increase its retail rates, among Company of carrying charges on all deferred amounts .l other things, to meet its purchased power expenses on a current basis, in the event the Company is unable associated with capacity and energy from Grand Gulf 1. to finance for certain specified reasons all or any portion in September 1985, after extensive proceedings before ofits deferred costs on reasonable terms, after notice

' the h!PSC, the h!PSC issued the Final Order on Rehear- and possible hearing contesting the Company % inability ing, which allowed the Company an overall increase in to finance, such costs coukt be reduced and the amount I base rate revenue relating to Grand Gulf I of approxi- of costs currently recovered from customers would be mately $326.5 million for the prqjected test year over the increased accordingly. Further,in the event of further i base rates pieviously approved by the hlPSC. The Final changes to the accounting standard relating to deferral Order on Rehearing contained piovisions requiring the of costs for future collection, the Revised Plan permits Company to inventory and phase in certain portions of . the Company to apply to the AIPSC to consider the

, _ its Grand Gulf I allocation and to defer the related costs effect of such changes. i for future recovery. The Final Order on Rehearing was In connection with an efTort, referred to by the -

appealed by the hiississippi Attorney General, among System as

• Project Olive Branch", to settle certain -

_ others, and was reversed by the h!ississippi Supreme outstanding issues and litigation surrounding System Court; however, the United States Supreme Com t, in Energy and the Grand Gulf Station and to stabilize retail . i

' theJune 2-1 Decision, ictersed this ruling and aflirmed rates in the System senice area, onJtme 9,1989, the

- th'e Company's right to recoveiy ofIts FERG allocated Company, the other System operating companies, and ,

Grand _ Gulf 1 related costs. . System Energy filed with the FERC an ofter of settlement j Certain provisions of the Final Order on Rehearing ' to resolve various FERC related issues in a way that j for the deferral of Grand Gulf I related costs for future would be beneficial to the System, its investors and its a recovery did not comply with the accounting require- customers. The offer of settlement was subsequently

ments of SFAS No. 92, an accounting standard issued in supported by the FERC staff, state and local ' regulators g

]

August 1987, As a result, the rate phase-in plan in the . and ollicials and other interested parties and was Final Order on Rehearing was modined to comply with approved by the FERC onJuly 21,1989. x such requirements, and the Revised Plan became implementation of the terms of the FERC .i effective for_ hills rendered on and after October 1,1988. Settihment resuhed in, among other things, the

' The adoption of the Revised Plan did not elTect any following:

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change in the Company's Grand Gulf I revenue require- (1) System Energy canceled and wrote off in l ments, as established and fixed in the Final Order on September 1989 approximately S900 inillion of its  !

Rehearing, but only addressed the collection mechanism $926 million investment in Grand Gulf 2 (construction  !.

l . for the deferral and subsequent recovery of the on which had been suspended since September 1985) {

Company's Grand Gulf 1 related costs so as to bring the without seeking rate recovery from its customers, the [

Company's rate phase in plan into compliance with the System operating companies, including the Company. l t accounting requirements of SFAS No. 92. .

(2) System Energy also made a one-time credit to J The Revised Plan provides, amoiig other things, for the System operating companies' bilk in an aggregate  ;

Lthe recovery by. the Compny, in equal annual install- amount of $50 million which was allocated among the 5 ments over the ten year perioo 5cginning October 1, System operating companies in accordance with their d 1988, of all Grand Gulf I related co 's deferred through respective percentage allocations of Grand Gulf 1 September 30,1988, pursuant to the h,"d Order on capacity and energy. The Company's share of this Rehearing (approximately S&l8A millionJ. Additionally, credit totaled $16.5 million.

the Revised Plan provides that the Company will defer, in decreasing rmounts, a portion of its Grand Gulf 1

]

)

H I

25 l

NOTES TO FINANCIAL STATEMENTS .

Mminippiivar W l.ight Company While all parties to the FERC Settlement agreed not amortired its stonn damage resenes byjuly 1988. .

to pursue any prudence disallowance of Grand Gulf I Consequently, at the time of these 1989 storms, the construction costs and operating and maintenance Company had no storm damage resenes to which these expemes recorded throughJune 9,1989, the FERC costs could be applied, in the September 29,1989 Settlement will not prejmlice any party's right to seek order in Docket No. U-5383, the MPSC granted the disallowance of such costs recorded after that date or to Company's Resene Application. Under the September continue to appeal the FERC's orders with respect to the 29,1989 order, the Company was authorized to establish allocation of Grand Gulf I capacity arul energy and a storm damages resene, a property damages resenc, an related costs among the System operating companies or injuries and damages reserve and an automobile injuries

- the right of parties to scel future changes to the Unit and damages resene and is authoriicd to amortire 1989 Power Sales Agreement, (See Note 8B for details on the storm damage expenditures over the years 1989-1993. .

Unit Power Sales Agreement and the allocation of the The older provides,in part, as fcllows:

costs of capacity and energy from Grand Gulf I among a. that $5,813,000 shall be accepted as the amount the S) stem operating companies.) of the Company's 1989 storm damage expenditures in addition to settlement of FERG-related issues solely for the purposes of the five-year amortiration embodied in the FERC Settlement, as ofJune 16,1989, requested by the Company. This amount was charged to the Compan) and the MPSC and, as orjune 26,1989, deferred debits and 20 percent shall be amortized to the Company and the Attorney General of the State of expense in each of the years 1989-1993. ,

Mississippi entered into separate, identical settlement b. that the total amount in the storm damages agreements (called herein collectively the resene subaccount shall not at any time exceed  ;

" Mississippi Settlement Agreement") that resolved a S7,500,000; the total amount in the property damages' number of retail rate matters afTecting the Company, resene subaccount shall'uot at any time exceed Pursuant to the Mississippi Settlement Agreement, $100,000; the total amount in the injuries and damages the Company filed onJuly 12,1989, (i) a Motion for resene subaccount shall not at any time exceed Modification of Revised Rate Moderation Plan in MPSC $1,600,000; and the total amount in the automobile Docket No. U-1620 and (ii) an application to establish a injuries and damages reserve subaccount shall not at any storm damages resene and other reserves and to time excee i S100,000. .i amortire 1989 storm damage expenditures ("Resene c, that a maximum of $1,520,000 shall be provided }

Application") in MPSC Docket No. U-5383. On to the storm damages resene subaccount and the September 7,1989, and September 29,1989, the MPSC property damages reserve subaccount in any particular issued orders approving implementation of the calendar year. The mder also provides that a maximum Mississippi Settlement Agreement, as discussed below, of $310,000 shall be provided to the injuries and dam- .

Pursuant to the September 7,1989 order of the ages reserve subaccount and the automobile injuries and MPSC in Docket No. U-1620, the Company (i) wrote o0' damages reserve subaccount in any particular year, in September 1989, $60 million from the accuumlated in addition, the Company agreed that it will seek no -

rate deferral balance and (ii) distributed to its retail change in its present general base rate and/or rider l customers on October 21,1989, an amount equal to the schedules through December 31,1991t however, (i) the , 7

$16.5 million credit received from System Energy Company shall have the right to make filings for MPSC  !

pursuant to the FERC Settlement. This write-off caused approval of special contracts with manufacturers, or common stock equity to be reduced to approximately similar agreements, as incentives for industrial or 31.6 percent of total capitalization as of September 30, commercial development or retention and (ii) in the 1989. Ilowever, the Company's cash position and it.s event of highly unusual or exceptional occurrences that ability to pay ongoing debt service and to meet may hase the effect of causing substantial variations in .,

continuing preferred stock dividend and sinking fund revenues and expenses, the Company may take such .

requirements were not materially allected by the action as may be provided by law with regard to its retail write-o(T, rates. The MPSC and the Mississippi Attorney Generid in the first quarter of 1989, a sescre ice storm and several tornadoes caused extensive damage to much of the Company's distribution system. Pursuant to ajune 1985 order of the MPSC, the Company had completely i

26 i

f

greed that during this same time frame they will r.ot law and the 51PSC's rules. The Company's retail rate pursue any " single issue" rate case or adjustment to the phase-in plan embodied in the Final Order on Reheat.

Company's general base rate and/or rider schedules. In ing, as amended by the Revised Plan so as to bring the the event, however, that en examination of general base plan into compliance with the accounting requirements rate and/or rider schedules becomes necessan because of SFAS No. 92, will remain in effect, inclucting provi-of highly unmual or excepdonal occurrences that may sions regarding future annual rate adjustments, except as

have the effect of causing substantial variations in the it would be mod!Ged to take into account the $60 million Company's revenues or expenses, the hiPSC and the write-off of the Grand . Gulf I related rate deferrals.

hiississippi Attorney General agiced that such proceed- The Company is a party to certain agreements and

.ing shall consist of a ful_1 inquig into rate base, operating proceedings concerning System Energy and the Grand expenses, and charges of the Company as is provided by Gulf Station (See Note 8).  !

-I ilM0ME TAXE$

l Income tax expeme (credit) consisted of the following:

I.'or Theyears Endeg_ljecendier 31 _ _ _ _ _ _ _ _ _ _ _

1989 1988 1987 j 1

ttn muamm Current: jl Federhli $ 570- S' 571- -$ 3,725 State , ,

(200)- 151 129 TotalL 370 722- 3,851

~~ -

. Deferred inet:

' Rate deferrhl- net of recoveries 22,003 15,587 78,578 Rate deferral - write-off . (27,183) - -

}

1.ibendited depreciation .5,086 8,192 ; 5,827 1 Alternative minimum tax. - 1,013 (2,171)

Federal reclassification due to net operating loss carnionvard. (6,513) -(18,806) (21,852) u State reclassification due to net operating loss carryforward (1,033) (2,768) (3,86-1)

Unbilled revenue (1,691) . (6,851) (5,051)  ;

' Gas contract settle' ment. , - - 1,037 Engineering and design costs-delayed generating stations - - (6,173). j

~

.. Other. 695 575 710 +

_ . _Tot

. . . _al_. _ . _ . _ . . _ _ _ _ _ . . _ _ _ _ . _

(8,636) 2

. .__7,212__ 13,7 il l j

lnvestment' tax credit adjustments- net ' (1,522) - ( 1,933) (l,858)

_ , . . . . . . _ _. . _. _ _ . - ._.. ._. _ _ _ . . . _ ~ _ . _ . . _ _ . _ . . _ . _ . - _ _ _ _ _ _ _. .

.' Income tax expense

_ _ _ ]$(9,788)_ $26,03l_ _ ;12,737 S 4 Charged to operating expenses. $16,713 $21,671 S il,626 j

' Charged to other income and deductions. (26,531) 1,360 1,111 ';

^ Total income taxes $(9,788) $26,031 $ 12,737

-. n: ==~= = ==:=-- - == -

- == .========:===

27

N0ft$ TO FINANCIAL STAftMENTS . . .

Aliniuippi hwr & Light Company ,

Totalincome taxes differ from the amounts computed by applying the statutory federal income tax rate to income before taxes. The reasons for the dillerences are as follows:- j for The Years Ended December 31 1989 1988 1987 (Ikilan la Thmswndo

% of  % of  % of Pre-Tax .

Pre-Tax , Pre-Taxi  ;

Amount income Amount income Amount income  !

Computed at statutory rate . $ 895 34.0 $26,832 34.0 $37,802 40.0 ,

increases (dectcases) in tax resulting from:

Depreciation ; , 539 20.5 (1,269) (1.0) 1,563 1.7 State income taxes- net 105 4.0 2,572 3.3 2.969 3.1 Imestment tax credit amortization (1,653) (62.8) (1,645) (2.1) (1,979) (2.1)

Amortiration of excess deferred income taxes . (9,752) (370,7) (1,259) (1.6) - -

Gas contract settlement. - - - -

975 1.0 Other - net . 78 3,0 800 1,0 1,407 1.5 Totalincome taxes $(9,788) (372.0) $26,031 33.0 $12,737 45.2 i

The tax efTects of federal net operating tax losses 1991. During this extension period, the FASB will be J that are carried fonvard have been recorded as considering various requests for amendments to SFAS reductions of deferred income taxe's. These tax losses No. 96.

totaling $238.2 million are available to oiTset taxable . SFAS No. 96 expands the requirements to record i income in future years and,if not utillied, will expire in deferred income taxes foi all temporary differences that the years 2001 through 2001. .

are reported in one year for financial reporting The ahernative minimum tax (AMT) credit carry purposes and a different year for tax purp<wes. This will forward at December 31; 1989 is $.7 million. 'Ihis AMT require the recognition of deferred tax balances for credit has been recorded as a reduction of deferred _.

J certain items not previously tellected in the financial income taxes and can be carried forward indefinitely and . statements, such as a deferred tax liability relating to:

will reduce regular income tax in the future. AFUDC. Under the liability method adopted by SFAS Unused investment tax credits at December 31,1989 No. 96, deferred tax balances will be based on enacted -

amounted to $5.4 million after the 35 percent reduction tax laws at tax rates that are expected to be in effect required by the Tax Reform Act of 1986. These credits when the temporary differences reverse, may be applied against federalincome tax liabilities in . It is expected that reductions in deferred taxes f uture years. If not used, they will expire in years 1992 resulting from the lowe,r corporate federalincome tax through 200-1. rates will be reflected as liabilities to customers since the Cumulathe income tax timing differences for which Company's regulators may require any such savings to be ;

deferred income taxes have not been provided are $59.6 passed on to the ratepayers. Ilowever, based on a million, $71.8 million and $81.7 million in 1989,1988 preliminary study, the Company expects that the and 1987,iespectively.' _

adoption of SFAS No. 96 in its present form would result in December 1987, the FASil issued SFAS No. 96. in a net increase in accumulated deferred income taxes

" Accounting for Income Taxes", which was scheduled to with a corresponding increase in assets. It is not be effecthe for fiscal years beginning after December 15, expected that results of operations for the Company 1988. The FASB subsequendy issued statement num- would be significantly impacted by the adoption of SFAS bers 100 and 103, that delay the effectise date of SFAS No. 96 in its present form. >

No. 96 to fiscal years beginning after December 15, 1

28 I l

l

As of December 31,1989, the Company had lines of credit with Klississippi banks totaling $30 million, all of which were available at that date.

The Company also participates with certain other System companies in the hioney Pool whereby those System companies with available funds can lend those

$NORT itRM BORROWIN05 funds to other participating System companies (other AND LINES Of CREDli than Entergy Corpomtion) having short-term borrowing needs The availability of Money Pool funds at any The Company is authoriied thrmigh 1990 by the particular point in time may be limited. Th_e. Company

SEC undel.the Public Utility Itolding Company Act of may borrow from these sources subject to its maximum 1935 to cirect short t'erm borrowings in an aggregate authorized level of shurt term bortowings. The -

. aniount outstanding at one time of up to $100 million, Company made use of sliort-term borrowings from the subject to increase to a maximmn of 10 percent of the Money Pool during 1989 with the largest balance Conipany's capitalitation with further SEC approval. omstanding at a month-end totaling $75.2 million. As The Company's G&R Mortgage limits short-term horrow- of December 31,1989, the Company had $ l.7 million in ings to an aggregate amount not exceeding, in general, out. standing borrowings from the Money Pool.

the greater of 10 percent of capitalization or 50 percent in October 1987, the Company entered into an of Grand Gulf 1-related rate deferrals available to agreement for the daily sale ofits custo'mer accounts support the issuance of G&R Bonds (See Note 6). .in recchable. OnJanuary 30,' 1989, the Company.

addition, the Company is subject to an SEC order that terminated this agreement and repurchased all ofits prohibits incurrence of short term indebtedness if- outstanding customer accounts receivable for common stock equity (including retained earnings) is, approximately $32.4 million.

or 3vould become,less than 30 percent of the sum of The Company's short-term borrowings and appli-total capitalization plus short term indebtedness. As of cable interest rates (determined by dividing interest December 31,1989, the Company's short term borrow- expense by the average amount borrowed) were as ing authority was $100 million.- follows:

1989- 1988 1987 (lHlan in Wusando t Maximum borrowing:

Bank loans .

~

- ' $10,000 Associated companies $75,200 - 51,000 Year end borrowing . - $ 4,700 $3,490 -

Average borrowing:

Bank loans. -

.S 489 $ 4,535 Associated compan:es $10,660 - - 17,050

[ Average interest rate:

During the year -

Batik loans. -

H.55% 8.11%

Associated companies 9.59W -

6.87 %

At end of the year. 7.97 % 8.00 % -

29

- N0ft$ TO FINANCIAL STAftMENTS - -

Sliniuippi hner W l.ight Geompany 1

(

.\

PREFERRED AND COMMON STOCK 'l l' referred stock at December 31,1989 and 1988 1  ;

- consisted of the following:

i CLnTent - .$

Shares - Call l' rice ' l Authoriicd Shares Outstanding Amount Outstanding - l'er Share 1 at 12/31/89 at 12/31/89 at 12/31/88 at 12/31/89 at 12/31/88 at 12/31/89 N" "*"""'N Without sinking fund .

- ($100 per share): .

-=

1.36 % Series . 60,000 59,920 .59,920 $ 5,992 $ 5,992 $ ' 103.86 ,

4.56 % Series . . 44,476 43,888 43,888 4,389 4,389 . 107.00- .,

4.92 % Series . 100,000' 100,000 100,000 10,000 '10,000 ' 102.88 > -l 7.44 % Series :

9,16 % Series .

, 100,000' 75,000 I00,000 -

75,000 100,000 75,000 10,000 7,500 10,000 7,500 '

~.102.81 j 101.06- j l'remium . , 196 1961 l Total . 379,476 - 378,808 378,808 $38,077 . $38,077 0

= - - - .- .

.- _ . - . - .- .- a ..-.

- With sinking fund q

($100 per share):* . _ .

j 9,00 % Series , ,

= 350,000 350,000 350,000 $35,000 $35,000 .' 109.00 '. M

' 9.76 % Series - D 350,000; 350,000 ~ 350,000 35,000 35,000 (107,607

• 12.00 % Series . , , 87,700. 87,700 95,000 8,770 9,500: 109.00 [

16.I6 % Series . 60,000 60,000 150,000 6,000 15,000- . I I 2,12 '  ;

. Discount (4,192). (l,311) -

i

~ Total 847,7h0 847,700- 915,i500 _

$80,578 $90,189

- . - - . ._. - - - - , - - . - 1y i-Unissued , 375,000' l i

>-( t Total 1,602,176 1

';J

-

• These series are to be retired in full through the

- operation of sinking funds in accordance with the. j following schedule. .j l

s

,z

^ 30' 1

1 -

.--.__._________._i1

n ,a

• Y'- < g

. .v L

p3  ?

V[', '

Nurnber of I)ollars V Series . ' Redemption Dates Shares per Year ' per Year y .

, (In */Aounands)

L 9.00% July _l,1991 and eachJuly I thereafter through 1995 , 70,000 $7,000 p, 19.76% l :Januaif 1; 1993 and eachJanuary I thereafter through 1997. 70,000 7,000

• 12.00 0 .

Match 1 1988 and each March I thereafter through 2007-

, , 5,000 500 0 + ;16.16%j s November 1,1989 and cucli. November 1 thereaf ter through 2008 - 7,500 750" p - -

4 p.y

) - . . , . _.

MM '

.hi addition to the sinking furyl requirements , The Company did not sell any of its prefened stock :

identined in the above schedule, the Company has the during 1989 or 1988, in 1987, the Company sold n6n cumulative option with respect to the 12.00 percent 350,000 sharca of its 9 76 percent series of preferred ,

land 10.16 percent series to redeem up to an additional- stock totaling $35.0 million.

~

g slike amount of said shares each year conimericing in the _ ~

in the Grst quarter of 1990, the Gmnpany redeemed ^

' Orst year'of redem[ition for such series, 10,000 shmes of its 12.00 percent series of preferred ~

4 -In 1989,' the Company redeemed 7,300 shares ofits . stock, therchy exercising its option to double the

- 12.00 percent series of preferred stock.uiid 15.000 shares niimher of shares redeemed in accordance with the

' 16 fits J6.16 percent series of preferred stock, therehy. sinking fund. > 1 y Jexercising its opthm to increase the number of shares . .The Company plans to proceed, subject tc.Nccipt of L

> redeemed in accordance with the sinking fund, in 1989, necessary regtilatory approval, with arrangements for the the Gothpanyaim ifdeemed an additional 75,000 sinires? -

possible early redemli tion, purchase or other acquisitionL ffits,16,16 percent preferred stock pursuant to'an - of all or a portion of certain outstanding series of the . ,

(6ptional non-sinking hmd 'redemption!. In coimecti6n - Company's high divideryl rate preferred stock. The w ,with this redemption, the Conipany' paid ii[nymium of series of the Company's $100 par value preferred stock m '

1$909,000, which was cha'rged to retained earnings.1 heing considered for acquisition include, but 'niay not he^

There ivere no sales of cominon stock td Entergy" ' limited to, the 12.00 percent series and the 1616 percent i Corporation in~1989 or 1987;jin 1988, the Conip my .

- series, isold 1,30-Irl00 shares ofits cdmmon stock to.Entergy; 4

n Corporation fdr $30.0 n illionl: .

1 1

a' a f ,

S. 3)

(. ;1 b #

n, '

i

.j (

^" , .,

4

.I r >

( k 1 ,

, .s

?

p , ,

_ (h 3 #

y;'

i i

'I

$f(

\

[

> 1 Fu a

?$ ,' ' ' , ' .

3, [

m 1 y 1

NOTES TO HNANCIAL STAT 88 BENTS ,

i Aliniuippi Powr & Light Company -

. j LONG TER84 DEBT 1; lxmg-term debt at December 31,1989 and 1988 condsted of the following: , 'j i

As of December 31 1989- 1988 As of December 31 1989 1988 _

tin *lhouwnds) (in Thoumndo {

First Mortgage Bonds: Pollution Control Revenue Brads:

151/8 % Series due 1990. - $30,000 71/4 % to 81/2 %

12 I/4 % Series due 1992,  ; $30,000 30,000 due 1990 to 1995. .$ 1,100 $ 1,250{ '

14.40 % Series due 1992. 75,000 75,000 . 71/2 % due 1990 to 2's04 9,310 9,400 i 4 5/8 % Series due 1995.- 20,000 20,000 81/2 % due 2004. 8,490 8,575 51/8 % Series due 1996. 25,000 25,000 91/2 % due 2012 * . 10,000 10,000 6 3/8 % Series due 1996, 10,000 10,000- 9 % due 2013 10,000 '0,000 9 5/8 % Series due 1999. 20,000 20,000 91/2 % due 2014. 10,000- 10,000 L 4 91/4 % Series duc 2000. -17,500 17,500 I

'7 3/4 % Series due 2002. 15,000 15,000- Total Pollution Control  ;

7 3/4 % Series due 2003. 30,000 30,000 Revenue Bonds ' 48,900 49,225  ;

81/4 % Series due 2003. - 20,000 20,000 l 9 7/8 % Series due 200-1. 25,000 25,000 Unamortized premium on debt . '557- 609 ,

10 7/8 % Series duc 2005. 25,000 25,000: Unamortized discount on debt (3,636) (4,113)  !

141/2 % Series duc 2014. - 35,000 - -i

- 9 5/8 % Series due 2016. 70,000 70,000' ' Total long term debt , 603,321 568,221  ;

1.ess amoimt due within one year 335 150= 1

. Total First Mortgage Bonds 382,500 447,500~ q 1.ong term debt excluding amount 1 General and Refmiding Bonds: due within one year ' $602,986 $568,071 -  ;

14.65 % Series due 1993. 55,000 55,000 11.11 % Series due 1994. 18,000 --

11.14. % Series due 1995. 10,000 -

• This series of pollution control revenue bonds . l 14.95 % Series due 1995 20,000 20,000 reaches its next fixed interest rate date onJuly 1,1991. -s 11.18 % Series due 1996. 26,000 -

The holders of these Ixmds will liave the right to have 11.20 % Series duc 1997. 46,000 -

their bo'nds repurchased by the Company on the above ] '

6xed rate date.' The intent of the Company will be to Total General and Refunding Bonds 175,000- 75,000 remarket these bonds onJuly 1,1991.

32

c f:

I At December 31,1989, the sinking fund require- OnJune 7,1989, the Company issued and sold $100 ments and maturities for long-term debt for years 1990 nullion in aggiegate principal amount of four series of through 199-1 were as follows: G&R llonch in accordance with the provisions of the G&R Mortgage, Year Sinking fund ** Maturities OnJune 1,1989, the Company retired $30 million gu mamao ofits 151/8 percent series first mortgage bondy due June 1,1990, prior to maturity. This retirement was

.1990- $2,037 $ 335 accomplished through the utilization of funds borrowed 1991 2,037 10,200 on a short term basis from the Money Pool. These 1992 2,037 105,210 Money Pool funds were repaid using a portion of the 1993 1,987 55,230 proceeds from theJune 7,1989 sale of G&R llonds.

199-1 1,987 18,250 On October 2,1989, the Company retised $35 million ofits 1-11/2 percent series first mortgage bonds

• • Sinking fund requirements may be satisfied by due October 1,2011, prior to maturhy. This retirement

- ' certification of property additions at the rate of 167 was accomplished through the utilization of a portion of

. percent of property additions. the proceeds from the above sale of G&R Bonds.

The Company plans to proceed, subject to receipt of .

In February 1988, the Company established a G&R necessary :egulatory approval, with ammgements for the  !

hjortgage to provide for the issuance of GkR llonds. possible redemption purchase or other acqtiisition of all  !

1The G&R Mortgage constitutes a second mortgage lien or a portion of certain outstanding series of the -

on substantially all of the physical properties arid assets Company's high interest rate first mortgage bonds. -The

'of the Company, subject and subordinate to the lien of series of the Company's first mortgage bonds being -l the Company's first mortgage indentme, The terms of considered for acquisition inchide, but may not be- -

l the G&R Mortgage pmhibit the issuance of additional limhed to, the 121/ l percent series due May 1,1992.

- first mortgage bonds (including for refunding purposes) under the Company's first mortgage mdenture, except 1 for such first mortgage bonds as may hereafter be issued j from time to time at the Company's option to the corporate trustee under the G&R Mortgage to provide 4

. additional security for the Compands G&R Bonds.

Under the terms of the G&R Mortgage indenture,

.the Company may issue G&R Bonds in an aggregate

~

l principal amount not exceeding 70 percent of property additions since December 31,1987, plus up to 50

. percent of the cumulative balance of deferred Grand Gulf 1-related costs recorded as an asset on the books of RETAINED EARNINGS the Company, provided that the maximum amount of G&R Bonds issuable against cumulative deferred Grand The Company's bond indentures relating to long- )

- Gulf 1 related costs may not exceed $ l00 million. The . term debt provide Sr restrictions on the payment of j G&R Mortgage also contains an earning, coverage tcst cash dividends on common stock As of December 31, j

- requiring a minimum earnings c oveiage (except for 1989, approximately S 10.7 million of retained earnmgs certain refunding issues) of twice the pro-forma annual were free from such restrictions, l bond interest charges for the issuance of additional G&R The Company's 1989 net income and December 31, q

lionds. As a result of the Mississippi Settlement 1989 retained earnings balance were reduced by [

Agreement and the related write-off of $60 million of approximately $32.8 million as a result of the 560 million .j previously deferred Grand Gu',f I-related costs, at wri t e-off of previously deferred Grand Gulf I related  !

December 31,1989, the Company's carnings coverages costs pursuant to the Mississippi Settlement Agreement  !

under the G&R Mortgage fell below the 2.0 times level (See Note 2).

' necessary to permit the issuance of additional G&R i lionds (except for certain refunding purposes). This j coverage will continue to be allected by the write of f j through August 1990. (

i 33 l-L '

d

-o I

1107E5 TO FINANCIAL STATEMENT $ .

MinimppiIw &l. igm Cwpmy The series of the Company's $100 par value preferred stock being considered for iedemption or acquisition include, but may not be limited to, the 12.00 percent series and the 16.16 percent series.

B. Unit Power Sales Agreeenent ,

COMMITMENTS AND CONTINGENCIES and Centroversies Conceining Grand Golf I  !

Pursuant to the allocation speci6cd in the Unit Power Sales Agreement among System Energy and the A. Capitel Regelresnents and Finenting System operating wmpanies as ordesed by the FERC in Construction expenditures for the Company are itsjune 13 Decision, System Energy sells to the System estimated to be $52.5 million, $58A million and S58.0 operating companies all ofits 90 percent share of the million for the yeats 1990,1991 and 1992, respectively, capacity and energy from Grand Gulf I in acroidance in addition to construction expenditures, the Company with speci6ed percentages (the Company,33 percent; will have capital requirements in 1990 of S 11,2 million in AP&L,36 percent; LP&l,11 percent; and NOPSI,17 connection with the phasing of a portion ofits Grand .

percent). Charges under the Unit Power Sales Gulf 1-related costs imo retail rates. Pursuant to its rate Agreement are based on Spiem Energy's total cost of phase-in plan, the Company in 1991-1992, will be senice, including System Energy's operating expenses, collecting Grand Gulf I related costs incurred but not depreciation, and capital costs attributable to the unit collected in previous years. These collections constitute for the month Ac Company's monthly obligation for cash available to satisfy construction expenditure payments to Sjstem Energy for Grand Gulf I capacity requiicments. and energy 's currently approximately $22 million. l In addition to the above capital requirements, the Aftiriarious appeals of theJune 13 Decision on i Company will require approximately $123.6 million remand f'om the D. C. Ciruit, on November 30,1987, during 1990-1992 to meet long term debt maturities and the FERG issued an order maintaining the previous to satisfy sinking fund requirements- .

allocat%n of Grand Gulf I capacity and energy among The Company's present plan is to m'eet its above the S stem operating companies as mandated by the requirements principally through internally generated June 13 Decision. In issuing the November 30,1987 funds, supplemented by short term borrowings and the order, the FERC found that the allocation in theJune 13 issuance of such other securities as may be appropriate at Decision was not unduly discriminatory. Requests for  ;

the time. The Company's G&R liond and preferred stock rehearing of the FERC's November 30,1987 order were  ;

carnings coverages at December 31,1989, were below filed by various parties and by oriter datedJanuary 29, levels necessary to permit the issuance of additional G&R 1988, the FERC denied such requests. Petitions for j Bonds (except for certain refunding purposes) or review of the November 30,1987 andJanuary 29,1988 l prefened stock, due to the write-offin September 1989 orders were filed with the D. C. Circuit by various parties,

of $60 million of previously deferred Grand Gulf 1- and certain parties attempted to raise ag tin the issue of i related costs. These coverages will continue to be FERC jurisdiction to allocate capacity and energy and l- affected by the amount of the write-off through August related costs among the Sptem operating companies. In 1990. a per cmiam decision dated hlay 26,1989, the D. C.

During the period 1990-1992, the Company may Circuit summarily rejected thejurisdictional arguments

~

issue additional G&R lionds primarily in connection with and denied the petitions for review of the FERC's a possibie debt and preferred stock refinancing program. November 30,1987 and thejanuary 29,1988 orders, l The Company plans to proceed, subject to receipt of holding that the FERC's action was both rational and necessary regulatory approval, with arrangements for the within the FERC's range of discretion, inJuly 1989, possible early redemption, purchase or other acquisition separate motions for rehearing of the D. C. Circuit's NIay  !

of all or a portion of certain outstanding series of the 26,1989 order were filed by the City of New Orleans, Company's high cost debt and preferred stock. The Louisiana 'and by the Alississippi Attorney General and series of the Company's first mortgage bonds being the SIPSC. On August 28,1989, the D. C. Ciicult denied considered for acquisition inchide, but may not be the SIPSC's and Alississippi Attorney General's petition limited to, the 121/ l percent series due hlay 1,1992. for rehearing and rejected the City of New Orleans' 31

petition as not being filed in a timely manner On Since commercial operation of Grand Gulf 1, Det ember 27,1989, the MPSC and the Mississippi payments under the Unit Power Sales Agreement (which Attorney General filed a petition for writ of certiorari to - inchules a return on equity) have exceeded the amounts the D. C. Circuit, secking teview by the United States payable umler the Availability Agieement (which does Supreme Court of the May 26,1989 decision of the D. C. not cover a return on equity). Accordingly, no payments Circuit. The matter is pending, have ever been recpiired under the Availability it is not possible at this time to predict the ultimate Agieement.

outcome of this matter, including possille reallocation, in November 1981, the System operating companies if any, or the effect thereof upon System L.. rgy and the entered into a Reallocation Agreement, which would System operating c ompanies, includinr, powihle icfunds, have allocated the capacity and energy available to if any. Any material modification of the allocation System Energy from the Grand Gulf Station and the established by theJune 13 Ikcision coud give sise to related costs to the Company, l.P&l. and NOPSI. These mlditional litigation, disputes and chahenges in the companies tims agreed to assume all the responsinilities afle&djurisdictions, and obligations of AP&L with respect to the Grand Gulf Station under the Availability Agreement,with AP&l.

C. Avellabildy Agreement and lleellosetion Agreement ielinquishing its rights to the capacity and energy of the The Systt m operating companies are severally Grand Gulf Station. Each of the System operating obligated, unde the Availability Agreement in companies, including AP&l., woukt have remained accordance with itated peicentages (the Coinpany,31.3 primarily liable to System Energy and its assignees for percent; AP&L,17.1 percent: 1.P&l.,26.9 percent; and payments or advances under the Availability Agreement NOPSI,2 l.7 percent), to make payments or subordi- and assignments thereof. APkL was obligated to make its nated advames in amounts that, when added to any. share of the payments or adumces only if the other amounts iccched by System Energy under the Unit System operating companies were unable to meet their Pouer Sales Agreement or othenvise, are adecpiate to contractual obligations. However, the l'ERC's June 13 cmer all of the operating expenses, including deprecia- Decision allocating a portion of Grand Gulf I capacity tion and interest charges, of System Energy. System and energy to AP&L supersedes the Reallocation -

Energy has, with the consent of the System operating Agreement insofar as it relates to Grand Guli 1, companies, awigned its rights to payments and adumces Responsibility for the Grand Gulf 2 amortitation from the System operating companies under the amounts described above has been allocated to the Availability Agreemem to certain creditors as security for Company, LP&L and NOPSI under the terms of the certain of its indebtedness for borrowed money. Reallocation' Agreement. AP&L is liable for its share of Payments or adumces under the Availability Agteement such amounts only if the other System operating me only required to be made to the extent System . companies are unable to meet their contractual Energy's receipts f rom all sources. including the Unit obligations. No payments of any amortiration amounts Power Sales Agreement approved by the FERC, are less will be required as long as amounts paid to System than the amount required under the Availability Energy under the Unit Power Sales Agreement, together Agreement. with other ftmds available to Syste_m Energy, exceed inJune 19S9, System Energy and the System amounts required under the Availability Agreement, operating companies, with the prior consent of such ' which is expected to be the case for the foreseeable cieditors, amended the Availability Agreement so that future, the Grand Gulf 2 write-oli(See Note 2) would be amorti/ed for Antilability Agreement purposes over 27 3 cars rather than in the month the write-off was recogni/ed on System Energy's hooks. This amendment -

was made so that the write off of Grand Gulf 2 in September 19S9 wouhl not cause a payment by the System operating companies to be requhed under the Anillability Agreement.

35 l

1

7 NOTES TO HNANCIAL STATEGRENTS e .

Miniuippi Pmm W Light Onnfmny D. $berebeldet Litigetlen for its decision. In remanding the case to the District Enteigv Corporation, certain other System . Court for further proceedings, the Fifth Circuit companies, including the Company, and individuals are suggested that the District Court could again consider defendants in a consolidated purported class action suit. the incrits of the defendanti Motions for Summary The initial complaint was filed on August 19,1985, by an Judgment and determine, with the benefit of certain Entergy Corporation shareholder (purportirig to guidelines as to the interpretation of governing law represent a class that purchased Entergy Corporation _ articulated by the Fifth Circuit, whether the defendants conunon stock). Four similar complaints were filed on are entitled to summaiyjudgment as a matter oflaw.

August 20,1985, August 23,1985, Septeinher 6,1985, The District Court was directed,ifit makes such a and September 19,1985, respectively, by shareholders of determination, to provide a detailed analysis supporting Entergy Corporation (purporting to represent classes its conclusions that wouhl facilitatejudicial review.

that purchased Entergy Corporation conunon stock), Alternatively, the Fifth Circuit noted, the District Court The five actions were consolidated in the District Court. could decline to rule on the defendants' Motions for The consolidated, amended and supplemental SununaryJudgment until further developmem of the complaint alleged violations of the disclosure require- case has taken place and the issues have been narrowed >

ments of the Securities Exchange Act of 1931 and the through the availabic pre-trial techniques. Based upon Securities Act of 1933, conunon law fraud and conunon the Filth Circuit's decision, the District Court allowed law negligent misrepresentation in connection with the the parties to rebrief the Motion for Smumaryjudgment financial condition of Entergy Corporation and prays for and, onJanuary 17,1989, the System defendants filed a compensatory and punitive damages, legal c osts and fees Renewed Motion for Summaryjudgment and a verified and other propei relief against Entergy Corporation, answer to the consolidated, amended and supplemental .

System Energy, the Company, AP&L, LP&L and NOPS!; complaint. OnJuly 20,1989, the plaintitTs filed a -

certain current members and former members of . memonmdum in opposition to the Renewed Motion for Entergy Corporation's lloard of Directors: certain SummaryJudgment. On September 29,1989, the System current o'licers and former ollicers of Entergy defendants filed reply papers to plaintifTs' opposition.

Corporation, System Energy, the Company, AP&L, LP&L The District Court has scheduled the trial to commence and NOPSl; the independent auditors of Entergy on March <l,1991. The outcome of this matter and its Corporation and certain undenvriters of Entergy impact on the Company's financial condition cannot be Corporation common stock, On March 11,1986, the predicted. The matter is pending, plaintiffs in the consolidated action filed a Motion for Class Action Determination.

On April 18,1986, Entergy Corporation and certain other System companies and individual defendants

(' System defendants") filed a Motion to Dismiss or in the alternative,'a Motion for SummaryJudgment. On January 12,1987, the District Court entered ajudgment granting defendants' Motions for SummaryJudgment and dismissed the suit. On February 6,1987, the plaintiffs in the consolidated action filed a Notice of Appeal with the Fifth Circuit. OnJune 7,1988, the Fifth Circuit rendered a decision vacating thejudgment of the District Court, based,in part, on the conclusion that the District Court had not adequately explained the basis 36

l t

i E3 System feels, ine. - ' F. Ses Centreet Litigation The Company has a 19 percent interest in SFI, a in December 1967, the Company and United h

= jointly-owned subsidiary of the System operating ' entered into a Gas Sales Agteement, under which Unised f companies. SFl operates on a non-profit basis for the agreed to sell and deliver and the Company agiced to j purpose ofimolementing certain prognuns for the purchase and receive large vohunes of natural gas. The  ;

procurement, delivery and storage of fuel supplies for Company used the gas as fuel in generating electricity at j the System. Its costs are primarily recovered through two ofits generating stations in hiississippi. The Gas charges for fuel delivered. Sales Agreement expired December 31,1987.

The parent companies of SFI had agreed to make in October 1986, the Company filed a suit against loans to SFI to finance its fuel supply arrangements United in the United States District Court for the

mder a loan agieement datedJanuay 4,1978, as Southern District of hiississippi. The Company contends amended through December 31,1983. As of December that United's billing practices violate Article XIV of the  !

' 31,'1989, the Company had loaned SFI approximately Gas Sales Agreement, as amended, which sets forth the  !

$5.5 million under a loan agreement which matures on procedures under which United may calculate the price l December 31,2008. At this time, no future. loans may be of gas to the Company each month.This complaint j made to SFl by the parent companies, was amended in August 1987. In this amended suit, the  ;

SFI's parent companies, including the Company, Company seeks restitution of all monics heretofore I have covenanted and agreed, severally in accordance wrongfully oveicharged and billed by United, and ..

- with their respective shares of ownership of SFI's other relief.  ;

common stock, that they will take any.and all action . Pursuant to its claims in the suit concerning the j necessary to keep SFI in a sound financial condition and improper billing practices by United under Article XIV, i to place SFI in a position to discharge. and to cau>e SFl~ the Company withheld approximately one third of the l to discharge,its obligations in connection with long-term amounts billed to the Company by United in the August J leases of oil storage and handling facilities and coal cars .and September 1986 statements from United and paid 1 having, at December 31.1989, an aggregate discounted the amount withheld (approximately $8 million) into value of approximately $67.0 million. escinw with a bank inJackson, hiississippi, ) j Fuel exploration and development activities of SFI in November 1986, United answered the Conipany's .

have declined over recent years and some fuel programs complaint and filed a counterclaim (which was amended .  !

are being phased-out or transferred to other parties. In in August 1987) seeking a declaratoryjudgment, which  !

this connection, certain charges and credits relating to would interpret the Gas Sales Agreement to permit j SFI's investment in the fuel programs may be allocated United to exclude the purchases ofits marketing ]

tc .ae System operating companies, including the . alliliates in calculating the Company's invoice each  :

Company, Any such charges or credits allocated to the month. In addition, United sought ajudgment against l Company are not expected to significantly affect future the Company in the amount of approximately $12.9 [

results of operations. million with interest, attorney's fees and other costs, and an order of the court requiring the escrow agent to pay i United so much of the amount of thejudgment as funds '!

in the escrow would permit. The Company answered i United's counterclaim, as amended, denied that United l was entitled to any of the relief claimed, and sought instead that the monies held in escrow be paid to the

]  !

Company. The hlPSC has intervened in the case on a

f behalf of the Company's customers and in opposition to {

the claims of United.

t 1

0 1

II H

h a

O d

h n i

m NOT88 70 HNANUAL STFP."8NTS '

Miniuippiiswn &'l.ib,. tpany InJanuan11987, United submitted an invoice to tlw in the event the courts ultimately hold that United 4 Company in the amount of approximately $24 million did not overcharge the Company during 1986 and 1987 l

for an amount allegedly owed Unhed for the Company's and that a deficiency occurred in the amount of gas failure to take certain volumes of gas during 1986 under taken by the Company during those years after all credits  !

the Gas Sales Agieement. In February 1987, the have been applied, it would be the Company's intention l Company filed a declaratoryjudgment suit against (i) to take and pay as taken for the gas comprising the United in the United States District Court for the deficiency or (ii) to pay United for the deficiency and to j Southern District of Mississippi, which seeks a declara- take the gas paid for during the year fobowing any such toryjudgment that the Company does not have to pay finaljudicial ruling. The Company's right to take the gas thejanuan 1987 invoice from United because the could he contested by United. The Company recovers Company is relieved of its "take or pay

• obligations purchased gas costs from its customers under a f uel under the Gas Sales Agreement as a result of United's adjustment clause, improper billing practices. The suit also seeks a declara- In addition to questions of whether the Company toryjudgment that the Company is entitled to certain was excused from its obligation to United under the Gas credits under Article Vill of the Gas Sales Agreement Sales Agreement in 1986 and 1987, and whether or not due to force majeure conditions or maintenance shut United overcharged the Company under the agicement, downs that its generating stations have experienced or the court will address issues such as (1) the amount of i may experience in the future. In March 1987, United any credits available to the Company under the agree-filed its answer and counterclaim for the amount of the. ment, (2) the method of calculation, the timing and the January invoice, plus interest, costs and attorney's fees. manner of any payment due to United and (3) the in February 1988, United submitted an invoice to method 6f accounting for takes of gas after payment the Company in the amount of approximately $100.6 under the agreement. The matter is pending, million for an amount allegedly owed United for the Company's failure to take certain volumes of gas during 1987 under the Gas Sales Agreement. Accordingly, the Company amended the suit filed in Febrmuy 1987, to include issues raised by United's second imulce, in April d 1988, United filed its amended answer and counterclaim

' for the amount of the 1987 and 1988 invoices, plus interest, costs and attorney's fees. The MPSC has also intenened in opposition to United in this action.

1 3s l

> l

e l 4k Ia k kkk .i k kI(k !IikiIiiI kN kii I!iIegI and la(ilines at the Nor th Antelope (.oal \lme wtm h n lo(ated near Wright, moming The low-sulphu oial piofllu ed at IIin siliile n dedu alt'd Cu htsneh hi Isi,s and the minei estimated resettes are presenth espriied to piovide foi at least 30 seats of the proiet ted requor-TRAlt$ACil0918 Wifil AFFILIATE $ ments of Ist:s The (.ompam ic< onk io, nnesimeni m the eqininuent and f ac ihties of the none io the cuent of A. Jointly Owned f adlities in ownei hip interest The ( .ompain i unesiment in the

( 'I hr ( omp.nn ow m 2; pen ent of Isl.s. a nm-unit.

m i.d.,o ed -, .m.m .m.in b u .eed ,u.a, x cw a, <.

< oal mine equipment and f at ihties at l>cc embr 31.

n,s9. wamppn.cm.eeh $ hs s mdho, . i- am umni.m.d

= Ai kansas Ihe( .mpam ic< ords its unestment in and depreciation of approximatch $ l. l nulhon. z\s of esprines auot iated with ihn stanon to the extent of in liet emhe 31.1988, the ('.omp. ini unestment in the

< m ne nt u p and p.n t u ip.u n in I he ( .ompam i un est- coal inine equipment <nd bu ihties was approsunatch meni m ist s ai lin ember 31.1989. was appiodmatch $15 8 noihon. leu au umulaird depte(iation of $3 9

$2lx h nulhon. Ir,s .u < (nnulated depic(ianon of nullion.

approximatch v li h unihon As of lin emhet 31.19sh.

_ the ( .ompam s unestnu ni in Isl.s was appioximatch B.0tlier Affilleted Transostions

$22h l iiulln sin. leu iu ( umulated depic< iation of The Cotiipain hins lioin and on sclh ric( tiu it ic i

$3N h nothon. the othei opet ating subsuhar in ol I ntrip ( .or poiation In Tugust 19s 1. the ( .ompain and AlW1. enicied (iiu ludnig hatem 1 ncip ) undri iate s( heduln filed mio a mni power pun base agicement foi the with the ii R(: lei addition, the t 'omp,un pm t bases f uel

_ ( ompam N pun base of APAlJs < apat its aint encip hom $1'l and set enn in hniod and advnon senu n tiom I < s 2 f oi a lh e-se.o ter m. whic h ended m h om I nicip Neith n.

lin e m bri 1989 'I he .unounn of power puu hased f rom Al%I under thn agierinent weir appn Umatch $50. l L milhon. 55n 3 nulhon aial S5ti ti milhon m 1989.1988 a'ul 19C/ i t sj u-( in ch .

E,-

I oi i he h u s i mied lin embr 31 1989 19ss 1987 Iln linen su ntiv g

1%iwn vild ici iht hssicin $$$,4$4 $' illi $ }2,82 ]

=

F Pm ehased Power I Apenses:

l'owei pun h.ned n oin the sniem tru ludmg (.iand ( .ull 1) 71,859 75.096 82.51n l'ower pun has :I h om wiem 1.ncip ibiand ('.ull Ii 276,110 30s.3 Iti 317 .'i l 9 g l'owei pun based in,m hairm i neim i( .iaiul Gull 1 - delen cd n (72,256) t 125.293 i i 182.739 i

_ l'uct IXpense:

= lin i puu nased ham s)1 23,244 21.231 21.973 o-Other:

'l n huit al and ;uh non sen - iua based tiom 1.nteigs Neivu n 14,074 13.235 13.532 M

$ (/

e

, i i

Neft8 TO HMANCIAL STAflMINTS .

7

. Atiniuqti n m e u sa a mq a.,

l l-  :

s f

P0$fNtfittmINT BENIHil o

l The companies of the Sptem have varicms '

Iwatretirement benefh plans covering substantially all of

[ their employees. The pension plans are noncontributory and provide pension benefits that are based on the employees' credited senice and average compensation, generally during the lai,t the years before retirement.

The policy of the Company is to fund pension c osts in accordance with contribution guidelines establii.hed by the l'.mployee Retliement income Security Act of 1974, as amended, and the Internal Revenue Oule of 1986, as amefuled,

[ The Company's 1989,1988 aiul 1987 pension cost  ;

(income) inchuled the following toinponents:

For The Years 1:iuled liecember 31 1989 1988 1987 the Thoumdd i Senice cost-henefits earned duiing the peiiod $ 2,166 $ 2,020 $2,253 Interest cost on projected benefit obligation 6,388 5,938 5,521 Actual seturn on plan assets - (19.321) (10,651) (4,718)

Net amortiration and deferral 10,608 1,683 (3,699) i Net pensioni cost (income) . $ C59P $(1,013)* $ (613)*

.; . --...,;==.;....;. ..;_-.. .: ..-. = . = . = = . . = . .=7 . . = . _ . . _ = . _ . _

• 1;xcludes $(250) pertaining to the amortiration of the special early sciliement program olTered in 1985.

The a', sets of the plan consist primarily of common and pielerted stocks, thed income securities, interest in a money market fund and insurance contracts.

4 40 L >

The imulc<l i,tatm of the Compami pemion plan was e followi, at I c(emhe: 31:

1989 1988 (la lheuwudo At tuasial piesent salue of at(tnuulate<l petnioti plain het : .ts:

Vesic <l $ 62,219 $51,457 Nomestect 5,093 4,974

~ ~ ~ '

Au muulatc<l benefit obligation $ 67,312 $59,431 l'lan awets at f air value $105,569 $90,451 Piojci teil benefit obligation 82,368 72,101 Plan awets in cu en of projet ted benefit obligation 23,201 18,350 l'mecogni/ul ttamition awel (15,004) (16,254) linic< ogniecd n-ioi i scivic e c ost 1,347 1,350 l'niet ognized net gain (11,192) (5,252)

~ ~' ~~ ~ ~

Ac crued pemion liah'lity i " $ ll,648i~ ~ "S(1,806) ~

u- - =: _

iallsiti(nl a% cts ale le uh aIIuntkie( (lvel Ic QIcatel~

of the remaining scivic e peiiod of acthe participants on 15 )eais.

Awmnptium med in the actuaulal calculatium weic as follows:

_ _ _._ _ . __ 198_9 1988 Weighted aserage discount late 9.0% 9.0%

Rate of inricase in f uture compemation 5.6% 5.6%

l'.spet ted long term rate ol seturn on plan awets 8.5% 8.5%

The Company pimideuertain health raic aiul life and fees to imtirance t ompanics, The omt of providing icaniance benefits for retired employees, Substantially these benefits for ictivees is not separable f rom the t mt all employees ma> become eligible f or these benefits 11 of providing benefits for active emplo)ers. The total emt ther irah ictiicment age while still employed by the ofluoviding :hm benefits atul the merawe nuinher of Compan). These atul other similar benefits for arthe active emplo)ces and retisces for the last thtee )cais employees aic piovided tinough payments of pieminim weic as follows:

1989 1988 1987 Total o r i of health care atul lif e imurance (in thomands) = $4,250 $2,899 $2,212 Nmnha of arthe emplo)ees . 1,59(i 1,585 1,512 Number of tetiires 357 3 14 391 41

N0788 TO HNA M i&LSTAftGBENTS -

\lonurpjn l* suer W laght Lempans OUARTERLY RESULTS (UNAUDITED):

j t 'naialiic<l opeiaims results in quaticis follow:

Qu.u tri 1 iulect

\ tait h June Nr. tember 1)ct embri in I kn voul l

19H9

( >pci anng i es enues $162,846 $174,047 $198,151 $174,702

()po ating nu ome 25,808 23,246 37,953 25,237 Net im ome 9,888 6,426 (l1,863)* 7,968 1988

( >pci ating ies enues $ 150.933 $ 151.Mu"> 520'tI57 Sl 75 022

()pciatmg nu ome 26.961 21.691 38.260 26.406 Net nu ome 12.511 6. l b l 22 N25 I l 386

• 'I he ihn <l quaitei 1989 net low icilet is a 'I'he husoirw of tiu ( .oinpam is suh c< i t to seasonal inlin tum of appioximatch S32.x inilhou as a iesult of thu tuations with peak petio<ls ot < tu t ing cha uig tiu-the $ho inithon wiiic-oll of picuoush <lel ric<l(,ianti suitunci inonths .\u onlingh, car tungs mioiination lot

(, ult 1-ielate<l < osts (See Note 2 L am thice inoinii peiio<l shoukt not lu-(onsulcini as a basis f oi estunatnig the irsuits of opeiatiom foi a f ull s car .

• l]

l I

R8(988 Of P999R88519881989 Mhuuij14 I& W Lught Gompany Selected financial Data (000'n Omitted) 1989 19x4 1987 1986 1985 Electric Operating Resenuest Residential $ 274,841 $ 258,378 $ 240,867 $ 246,150 $ 207,738 Quninetrial 212,107 195,451 175,418 178,240 152,007 Indui, trial 147,146 134,378 121,999 125,133 113,011 Governinental & niunicipal - 23,624 21,143 22,001 22,917 19,4K0

'I otal actail ener gy sales . 657,718 609,350 560,285 572,470 492,269 l'ublic utilities 45,886. 60,772 48,310 90.411 101,384 Total elect ic energv sales . 703,604 670,122 - 608,595 662,881 596,653 hiistellaneom revenues 6,712 12.973 12.129 10,302 6,100 Defened fuel adjmtment iesenues . (570) 452. I12 765 2,376 Total electric operating revenues $ 709,746 $ 683,547 $ 620,836 $ 673,948 $ 605,129 Net income $ 12,419 $ $2,886 $ 51,767 $ 53,860 $ $0,913 Totti l'lectric Utility Plant:

h oduction $ 568,748 $ 575,320 $ 573,379 $ 572,828 $ 572,616 1 rammiwion 288,372 270,655 255,010 243,675 247,476 Distribution 330,243 310,964 296,305 281,036 267,162 General & other 47,092 3h,798 31,449 26,721 25,383 Total utility plant completed 1,234,455 1,195.737 1,159,143 1,129,260 1,112,667 Plant held for f uture me 3,729 3,968 3,938 3,939 3,939 Comtruction work in piogiew 17,131 16,743 16,852 3,917 2,365 l'.le< tiic plant acquisition adjustments 590 772 953- 1,135 1,317 Total electric utility plant $1,255,905 $1,217,220 $1,180,886 $1,138,281 $ 1,120,288 Totzt Awets $1,565,707 $1,555,149 $ 1,459,401 $ 1,453,172 $1,332,482 R2te Referral . Net of Recoveries (Awet) $ 680,007 $ 673,210 $ 547,616 $ 364,231 $ 146,608 tong. term Debt $ 602,98b 5 568,071 $ 483,010 $ 468,150 $ 40!,065 Preferred Stock, with sinking fund $ 80,578 $ 90,189 $ 90,689 $ 56,193 $ 51,802 4

43

i J

etCORD Of P900Rtl819851989 + .

Mmbuppi1%:rr W Lught Gmparoy Selected Financial Data (000's Omittect). _~

1989 1988 --

1987 - - _

1986 1985 Other Data:

Flectric Energy Sales (hlKWil):

Resiciential 3,451.644 3,429,923 3,365,404 3,336,542 3,191,980 Conunen cial 2,678,705 2,602,871 1440,477 2,412,868 2,318,724 Industrial 2,368,162 2,227,588 2,081,977 2,009,932 2,018,793 Gmernmental & inunicipal 308,235 291,328 329,071 337,557 323,269

_ ~ _ . . . . _ __ _ _ _ _ _ _ _ _ _ . . _ . _

Total retall energi sales 8,806,746 8,551,710 8,216,929 8,096,899 7,852,766 ,

Public utilities 1,037,885 1.350,855 966,351 2,389,355 2,272,493 Total electiic energy sales 9,844,631 9,902,565 9,I83,280 10,486,251 10,125,259 Electric Customern (End of Period):

Residential 296,540 291,137 288,577 285,400 282,013 Cominer cial 44,368 42,660 42,095 11,308 41,016 Industrial 3.598 3,190 3,425 3,461 3,411 Governmental & municipal . 2,736 2,711 2,683 E636 2,526 Total a ctail customein 347,212 339,998 336,780 332,805 328,996 Public utilities 2 2 2 2 2 T otal customer s 387,244 310,000 336,782 332,807 328,998 Energy Source and Dispoultion (hlKWil):

Total generation 4,471,698 4,619,983 4,583,486 6,826,689 6,471,405 Pun based and net interthange 6,208,514 6,138,223 5,376,113 1,372,089 4,435,969 Total 10,680.212 10,758,206 9,959,629 11,198,778 10,907,374

1. css: Company use, Imses and unaccounted for 835,581 855,GII 776,319 712,521 782,115 Total electric eneigy sales 9,844,631 9.902,565 9,183,280 10,486,251 10,125,259 Net tnput . hlKWil 9,642,327 9.107,351 8,993,278 8,809,423 8.631,881 Peak 1.oad . KW 2,100,000 2,062,000 2,037,000 2,132,000 1,858,000 Imad Factor . Percent 52 52 50 47 53 Net Plant Capabillty KW 3,136,000 3,136,900 3,136,000 3.I36,000 3,136,000 23,438 23,231 20,281 20.016 19,871 Circuit blites of Electric 1.ines 44 i

o efPKitS/ M60N DIRICital, PLANT 8AANA0ERF, Mauiurppi1%ws V l.rght Ganpany

, (*'*w. . DlVill0N DIRECTOR $

[j

j

.lanws S. l'ilgiiin Noi ther n 1)ivision fj Gienada b ,/;

q%%gv# FfKER$ J'.' " al!"tmon

(,c n"ti hy."." -

Jert) 1.. Mauklen

'I '" ""

Chair man of the Itoaict aiul Chief I'.scentisc Olfk er G Miain 11. Tt q>d Southein 1)ivision Mic hael 11. Itenm.

lhookhm n l'icsident anal Chief Ojwiating Offic e _-

George A. *l'at* Goll pgggy gggggggg Semot \ ice l'icsulent.

Chief l'inam ial Ollh er and Coiposaic Senetaiy q,9.ohn A Alln d j liill l'. (,.owar liaxter Wilson Steam l~.lectiir Station y;g g Vice l'sesidein-l'nblic Allaiis l Otis I)cucase _

l. lank i'. Udllahrt .,,.,: " her Steam ).lcrtnr Stan.on

\.n e l'ichident aiul Chiel 1.iignieer 3 g,,

Rober t 11. Goodson Vice l'iesulent- Administiatisc Servues .\ T. JWmon Rex liiown Steam 1.let tric Station William G. l'uh i Vic e l'icsident- 1ininan Remunes

.\lati Sdiu ii Gerahl Andrm Steam l'let tiir Station J imes I.. Mooie g ,, ;g, i tre l'resulent- Coil>ot ate Connnuniratiom Rex M. Shannon .

l. Mic hael Ruw .

1)cita Strain 1. lectin Station

\.. ice l'icsident- Mai tet,mg tual Area lieseloinnent Ch Maid C. Iliram Walteis Vic e l'icsident- Cmtome: Servic es James F.. Colei _

Tr easin er Allan i1. Maj>[i Awistant Treasurci aiul Awistant Serietaiy 45

l l ;.

De&R9 Of DIRECteel, ADVl80RY DIRECTOR $

Miuiuttpo her W l.ight Guntmn.,

-irm w.

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ghj Jeny L hiaulden Senior Vice President and Su. tern Executive fj Ai kansn/ hliwiwippi/ h'liwouri liivision

'i ~ k.%.& Entergs Corporation

'j 'Q . Chaliinan of the lloard atul Chief Execut ive Officer Q Sliwiwippi Power & l.ight Coinpany Ga.

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• OARD OF DitlCfots AtLansa Poner & l.ight Coinpany Jac kson hiichael 11. licinis President and Chief Operating Ofiker Ric har d 1). Sh Rae Sr.

Sliwiwippi Power & l.ight Coinpany Chalinnan of the lioard jac Lson hk Rae's. Inc. (1)cpartinent Stoies)

Jac Lson 1)asid C. Ihainlette 111 Attor ney-at l.aw John N. Pahner Sr.

Adann. I'or nian, Truly. War d. Sinith & lirainlette Chaisinan of the lloard and Picsident Natcher Slohile Tele (onununication Technologies (Nitel)

Jac kson Jaines IL Cainphell Chalinnan of the lioard and Picsident l'..it Robinson hilSSCO Corpoiation Chairnian of the lloard aiul Chief Executive Officer Jackson I)cposit Guaranty National llank Jat Lson frank R.1)ay Chainnan of the Itoaid tir. Walter Washington Tnntinail National llank IS esident jattson Ahorn State Univeisity 1.orinan John O. EininetichJr.

Publisher / Editor Robert hl. Williannjr.

The Connnonnealth Chainnan of the Itoard Greenwood Reeves-Williann linihteis Southaven Nonnan it GillisJr.

Attorney-at 1.aw Gillis & Gillis ADVISORY DIRECTOR $

hirComh 1.awien(c Adann Robert E. Kennington 11 Attorney-at l.aw Chaliinan of the lloard and ChiciExecutive Oiruct Adann Fonnan. Truly, Waid. Smith & liramlette Sunburst llank Natcher Grenada ilennan Ilines Edwin 1.upherger Chainnan Emeritus Chainuan of the lloarci and : re ;dcat I)cposit Guaranty National llant Entergy Corporation Jackson New Oilcarn 1)r.J. llarveyjohnston Physician Surgical Clinic Awociates, P. A.

Jac kson 1.eRoy P. Pete3 President 46 Greenville Compiew Coinpany Gteenville

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$TOCRNOLDER l#f0RMAfl001 Mmhuppi1%m W !.sght G>mjmn; TAX $1ATUS Of Pttf tRRED DIVIDEND PAYMENTS 4 ,

bi A The Company's 1989 distiihatinin on all outuami-Y ing sciies of its gueferied stock weie enthe!v a acturn of capital ancl, therefore, weie not taxable to stoc khi.!ders 3

as dividend iru ome for federal inc ome tax purposes.

LA 6 XECUTIVE f OfflCll The tax hasis of such outstanding shares shoukt be reduced by the amount of the 1989 distributions hliwiwippi Power & l.ight Company The Company presently believes that all ofits 1990 3081:au Pearl Street diuributioin on all outuanding shaies of its pielet red jacLson, Aliniwippi 39201 sto(L will be taxable to shareboklers as divideint income Telephone: (601) 969 2311 for federalincome tax pmposes.

SEC FORM 10 K AVAILABLE RE6t$fRAR (FOR PRtf tRRED $f0CK): l A mpy of the 1989 Annual Repor t to the Securities lieposit Guaianty National ILmL and 1:u hange Commiwion on l'oim 10 K of sarious Post Ollice Itox 1200 wmpanies in the Aliddle South I;lernic System, Jacksm, Sliwiwippi 3921ful200 int luding the Company, is available without ( han ge upon j written icquest to:

TRANSFER AGENT (FOR PREftRRED $f0CR):

G.A. Golf Senior Vic e Pr esident. Truutnark National llank Chief Financial Ollicer and Corporate Serictary Post Of fice llox 291 hiiwiwippi Power & l.ight Company Jackson, Niiwiwippi 3921fr0291 Post Ollice llox 1610 Jackson, Allwiwippi 39215-1610 j Telephone: (601) 969-2311 TRU$ftt (FOR flR$f MORTGAGE BONDS):

The llank of New York i ENTERGY CORPORATION ANNUAL REPORT i VAILABLE 101 Itaitlay Street New Yoik New Yoik 10286 A mpy of the 1989 Enterg3 Corporation Annual Report is available upon written icqueu t( : 1 TRulitt (FOR GENERAL AND REFUNDING BOND $):

Enterg3 Corporation System Investor Relations llank of hiontreal Trust Company Post Of nce Itox 61005 77 Water Sueet New Orleans,Inuisiana 70161 New York, N( .v Yoik 10005 Telephone: (800) 292-9960 CitifilD PUBLIC ACCOUNTANTS Deloitte & Touche One Shell Square - 37th Fh or New Orleans,InuNana ,0139-3700 i

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l.ight ( kunpmy (NIPkl.) is a inuisiana Powei 61.ight, regulate <l publu ntihiv N1P&l., an<l New Oricam  ;

Public N nic e Inc . System compam engage <lin the g generanon, pun base. Energs Reviuu es leu . is a cliitiibution, aiul sale of nut lear genetuting subsicli:u s ciertric encrp. sespuisible for management N1P&l. serves an<l operation of the Graiul _

appr oximately 317JK kl Gull Nu(lear Station.

rmiomens in 4Tu ounties of Another subsi<liary, Enterm wester n Niiwiwippi with an Sci v;< cs Im ., pr ovi<les ,

nuiom tc< hnical, aciminiv estimatect guipulation of 1.3 milhon. Aml tr ative, ancl wrporate ser vu es 4

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Dec emhe 31,1489, the to Etucip ('ntporation aiul s?, * '

(innpam provi<lc<lciertric the System ( ompanies. ,

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servite to llo inunicipalities aiul pimi<lc<l uansmiwion The Mstem is ciu t enth seeking segulaton appiosal

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senic e to the South to < uneli< late operating g j gM g?g 9.ghpfg Niiwiwippi l'.lectii< Powei sespomibilits foi the Svstemi hNgN +' --

Aw a iaiion aiui in the tour nu icai uniis into a N1unitipal Energy Agenn piopwe<l new subsi<lian, of N1iwiwippi. I ntcip Operations,Inc. g  %

N!Pkl. is a wholh owne<l Also pemling irgulaton subsi<lian of Enteip appionil, a new subsi<lian, Corp n ation, the ele < uit Enterp Pow" , liu ., is utilits hol< ling < ompam ion planne<l as a wholesale the Niitl<lle Nuid Ek rteir generatoi that wottkl System. l'on il scais the purchaw AP&lls inteiest in N1icl<lle Nmth Electri Sntem the inclepen<tein e 2 anct ggggggypg -

has been the lea < ling elecu it Rit< hic 2 genenuing muts encrp utpplici to a an<l then sell the rapacity anct 91 JMnviuar e-mile r egion encip from these units along the lower rea< hes of outskle the N1ichtle Nnith gg the Niiwiwippi Rivet. 1.lcrtrk Nstem.

The M stemi vast netw<n L of interconnectect trammiwion aiul <listribution lines aiul clivenific<l giicI of lowil Iuel an<l nut leat generating plants piovules electricity to mor e than EE E IlIN N 1.7 millk'in iciail rmiomers E Rdml Vr""r 'bm in Aikansas, Inuisiana.

Niiwiwij)pt, aiul N1iWlui t. Nllwiwippl PtIwei N l.lgIll('ofnpain provi(les cierteir seisire lleack u;uicie<lin New within the poi tion of Niiwiwippi shown in sect.

l Or leans I nuisiana. Enterp

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