ML003778190

Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

ML003778190
Person / Time
Site:	Indian Point
Issue date:	12/12/2000
From:	Groth J Consolidated Edison Co of New York
To:	Document Control Desk, NRC/FSME
References
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Download: ML003778190 (270)

Text

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One)

[] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 1996 OR 0 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to IRS Employr No.

Identification Commbisaon Regstrat, Stats ofln o Ail Number Addres of Prin-i-al Executive Oflices and Telephone Number 72-1229752 1-11299 ENTERGY CORPORATION (a Delaware corporation) 639 Loyola Avenue New Orleans, Louisiana 70113 Telephone (504) 529-5262 ENTERGY ARKANSAS, INC. 71-0005900 1-10764 (an Arkansas corporation) 425 West Capitol Avenue, 40th Floor Little Rock, Arkansas 72201 Telephone (501) 377-4000 ENTERGY GULF STATES, INC. 74-0662730 1-2703 (a Texas corporation) 350 Pine Street Beaumont, Texas 77701 Telephone (409) 838-6631 ENTERGY LOUISIANA, INC. 72-0245590 1-8474 (a Louisiana corporation) 639 Loyola Avenue New Orleans, Louisiana 70113 Telephone (504) 529-5262 64-0205830 0-320 ENTERGY MISSISSIPPI, INC.

(a Mississippi corporation) 308 East Pearl Street Jackson, Mississippi 39201 Telephone (601) 368-5000 ENTERGY NEW ORLEANS, INC. 72-0273040 0-5807 (a Louisiana corporation) 639 Loyola Avenue New Orleans, Louisiana 70113 Telephone (504) 529-5262 SYSTEM ENERGY RESOURCES, INC. 72-0752777 1-9067 (an Arkansas corporation)

Echelon One 1340 Echelon Parkway Jackson, Mississippi 39213 Telephone (601) 368-5000

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

Name of Each Exchange on Which Registered Registrant Title of Class Common Stock, $0.01 Par Value - 235,117,712 New York Stock Exchange, Inc.

Entergy Corporation Chicago Stock Exchange Shares outstanding at February 28, 1997 Incorporated Pacific Stock Exchange Incorporated New York Stock Exchange, Inc.

Entergy Arkansas Capital I 8-1/2% Cumulative Quarterly Income Preferred Securities, Series A Entergy Gulf States, Inc. Preferred Stock, Cumulative, $100 Par Value: New York Stock Exchange, Inc.

$4.40 Dividend Series York Stock Exchange, Inc.

New

$4.52 Dividend Series York Stock Exchange, Inc.

New

$5.08 Dividend Series New York Stock Exchange, Inc.

$8.80 Dividend Series New York Stock Exchange, Inc.

Adjustable Rate Series B (Depository Receipts)

New York Stock Exchange, Inc.

Preference Stock, Cumulative, without Par Value

$1.75 Dividend Series New York Stock Exchange, Inc.

Entergy Gulf States Capital I 8.75% Cumulative Quarterly Income Preferred Securities, Series A New York Stock Exchange, Inc.

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

Entergy Louisiana Capital I 9% Cumulative Quarterly Income Preferred Securities, Series A Securities registered pursuant to Section 12(g) of the Act:

Re2istrant Title of Class Preferred Stock, Cumulative, $100 Par Value Entergy Arkansas, Inc.

Preferred Stock, Cumulative, $25 Par Value Preferred Stock, Cumulative, $0.01 Par Value Preferred Stock, Cumulative, $100 Par Value Entergy Gulf States, Inc.

Preferred Stock, Cumulative, $100 Par Value Entergy Louisiana, Inc.

Preferred Stock, Cumulative, $25 Par Value Preferred Stock, Cumulative, $100 Par Value Entergy Mississippi, Inc.

Entergy New Orleans, Inc. Preferred Stock, Cumulative, $100 Par Value

Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes 4 No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrants' knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [I The aggregate market value of Entergy Corporation Common Stock, $0.01 Par Value, held by non affiliates, was $6.2 billion based on the reported last sale price of such stock on the New York Stock Exchange on February 28, 1997. Entergy Corporation is the sole holder of the common stock of Entergy Arkansas, Inc., Entergy Gulf States, Inc., Entergy Louisiana, Inc., Entergy Mississippi, Inc., Entergy New Orleans, Inc., and System Energy Resources, Inc.

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

TABLE OF CONTENTS Page Number Definitions 1 Part I Item

1. Business 35 Item 2. Properties 36 Item 3. Legal Proceedings 36 Item 4. Submission of Matters to a Vote of Security Holders Part U 36 Item 5. Market for Registrants' Common Equity and Related Stockholder Matters 37 Item 6. Selected Financial Data Item 7. Management's Discussion and Analysis of Financial Condition and 37 Results of Operations 38 Item 8. Financial Statements and Supplementary Data Item 9. Changes in and Disagreements with Accountants on Accounting and 182 Financial Disclosure Part III 182 Item 10. Directors and Executive Officers of the Registrants 191 Item 11. Executive Compensation 198 Item 12. Security Ownership of Certain Beneficial Owners and Management 202 Item 13. Certain Relationships and Related Transactions Part IV 203 Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 203 Experts 204 Signatures 211 Consents of Experts 214 Report of Independent Accountants on Financial Statement Schedules S-I Index to Financial Statement Schedules Index Exhibit Entergy Arkansas, Inc., Entergy Gulf This combined Form 10-K is separately filed by Entergy Corporation, Entergy New Orleans, Inc., and System States, Inc., Entergy Louisiana, Inc., Entergy Mississippi, Inc.,

to any individual company is filed by such Energy Resources, Inc. Information contained herein relating only as to itself and makes no other company on its own behalf. Each company makes representations representations whatsoever as to any other company.

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

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

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

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

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

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

DEFINITIONS (Continued)

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

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

Gas, Inc., and Southern Gulf Railway Company)

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

Entergy Operations Entergy Operations, Inc.

Entergy Power Entergy Power, Inc.

Entergy Services Entergy Services, Inc.

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

DEFINITIONS (Continued)

Abbreviation or Acronym Term Independence Independence Steam Electric Station (coal), owned 16% by Entergy Arkansas, 25% by Entergy Mississippi, and 11% by Entergy Power IRS Internal Revenue Service kWh kilowatt-hour(s)

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

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

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

DEFINITIONS (Concluded)

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

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

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

System Fuels System Fuels, Inc.

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

iv

PART I Item 1. Business BUSINESS OF ENTERGY General Entergy Corporation is a Delaware corporation which, through its direct and indirect subsidiaries, engages in the domestic and foreign electric utility business, other domestic energy-related enterprises, and telecommunications based businesses. It has no significant assets other than the stock of its subsidiaries. Entergy Corporation is registered as a public utility holding company under PUHCA. As such, Entergy Corporation and its various direct and indirect subsidiaries (with the exception of its EWG, FUCO, and ETHC subsidiaries) are subject to the broad regulatory provisions of PUHCA. PUHCA historically has limited the operations of registered holding companies to a single, integrated public utility system and functionally related activities.

Domestic Operations and Investments Entergy Corporation has five wholly-owned domestic retail electric utility subsidiaries: Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans. As of December 31, 1996, these utility companies provided retail electric service to approximately 2.4 million customers in portions of the states of Arkansas, Louisiana, Mississippi, Tennessee, and Texas. In addition, Entergy Gulf States furnishes natural gas utility service in and around Baton Rouge, Louisiana, and Entergy New Orleans furnishes natural gas utility service in New Orleans, Louisiana. The business of these domestic utility companies is subject to seasonal fluctuations, with the peak period occurring during the third quarter of each year. During 1996, these domestic utility companies' combined electric sales as a percentage of total electric sales were: residential - 26.5%; commercial - 19.9%; and industrial - 41.5%. Electric revenues from these sectors as a percentage of total electric revenues were: residential 35.3%; commercial - 24.4%; and industrial - 30.8%. Sales to governmental and municipal sectors and to nonaffiliated utilities accounted for the balance of energy sales. The major industrial customers of these companies are in the chemical processing, petroleum refining, paper products, and food products industries. The retail rates and services of Entergy's domestic retail utility subsidiaries are regulated by state and/or local utility regulatory bodies.

Entergy Corporation owns directly all of the common stock of Entergy Power, a Delaware corporation and domestic power producer that owns 725 MW of fossil-fueled generating assets located in Arkansas. Entergy Power markets electric capacity and energy in the wholesale market. Entergy Corporation also owns 100% of the voting stock of System Energy, an Arkansas corporation that owns and leases an aggregate 90% undivided interest in the Grand Gulf nuclear plant. System Energy sells the capacity and energy from its interest in Grand Gulf 1 at wholesale to its only customers, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans (see "CAPITAL REQUIREMENTS AND FUTURE FINANCING - Certain System Financial and Support A2reements - Unit Power Sales Agreement," below). Both Entergy Power's and System Energy's wholesale power sales are subject to the jurisdiction of FERC.

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

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

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

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

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

Entergy Power Marketing Corporation, a Delaware corporation, is a wholly-owned subsidiary of Entergy Corporation that is in the business of marketing electricity and generating fuels to third parties.

It has applied to the SEC for authority to deal in a wide range of energy commodities and related financial products.

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

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

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

interest in Edesur, S.A.,

which is the retail electric distribution company for about 1.9 million customers in Buenos Aires, Argentina. In addition, on February 7, 1997, Entergy Corporation acquired a controlling stock interest in London Electricity plc, a regional electric company that is principally engaged in the distribution of electricity for approximately 2 million customers in and around London, England. London Electricity also engages in other business activities, including ownership of an interest in a 1,000 MW gas-fired combined cycle generating station and several private electric distribution systems, Other foreign electric generation and transmission assets in which Entergy Corporation owns an interest are set forth below:

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

Argentina - Costanera, expansion, 220 MW 10%

Pakistan - Hub River, 1,292 MW 7%

Peru - Edegel - 793 MW 21%

Argentina - Transener 10%

(transmission 5,000 miles) million in equity capital in As of December 31, 1996, Entergy Corporation had a net investment of $812 continues to seek opportunities to businesses other than its domestic retail utility businesses. Entergy Corporation state and local utility regulatory expand its domestic and foreign businesses that are not regulated by domestic in certain foreign and domestic authorities. Entergy Corporation's continued acquisition of and investments under PUHCA.

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

addition, there are exchange control restrictions in certain countries Selected Data in the following tables:

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

Entergy Entergy Arkansas Gulf States Louisiana Mvfississippi New Orleans (Millions of kWh)

Electric Depatmnt.: 96,326 17,134 31,551 30,843 11,272 5,526 Sales to retail customers Sales for resale: 656 143 1,368 10,471 66 8,302 10,583

- Affiliates 982 521 212 6,720 2,148 8,302 106,909

-Odters 31,968 13,161 5,804 34,325 34,355 Total Steam Dqcpa t:

- Sales to stean 1,826 1,826 8,302 108,735 products customer 36,181 31,968 13,161 5,804 TOTAL 34,325 I=====

Average use per residential 13,455 11,497 14,673 14,579 13,613 11,696 custotnr (kWh)

(a) Includes the effect of intercompany eliminations.

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

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

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

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

Full-time:

Entergy Corporation Entergy Arkansas 1,455 Entergy Gulf States 1,566 Entergy Louisiana 756 Entergy Mississippi 742 Entergy New Orleans 328 System Energy Entergy Operations 3,728 Entergy Services 2,940 Other subsidiaries 1,713 Total Full-time 13,228 Part-time 135 Total Entergy 13,363 Competition Refer to "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS" for a detailed discussion of competitive challenges Entergy faces in the utility industry, including the recent filings of the domestic utility companies with their respective state and local regulatory authorities addressing transition to competition.

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

1997 1998 1999 Total (In Millions)

$159 $186 $196 $541 Entergy Arkansas 140 147 150 437 Entergy Gulf States 102 99 99 300 Entergy Louisiana 63 66 68 197 Entergy Mississippi 27 28 29 84 Entergy New Orleans 19 21 23 63 System Energy costs are expected in connection with the With the exception of Entergy Arkansas, no significant construction construction expenditures for the replacement of ANO domestic utility companies' generating facilities. Projected estimated figures above. See Note 9 for additional 2's steam generators are included in Entergy Arkansas' estimates because of a number of factors, including information. Actual construction costs may vary from these regulations, modifications to nuclear units to meet changes in load growth estimates, changes in environmental addition to and materials, and cost of capital. In regulatory requirements, increasing costs of labor, equipment scheduled long-term debt and preferred stock maturities construction expenditure requirements, Entergy must meet 6, and 7 for further capital requirements and financing and cash sinking fund requirements. See Notes 4, 5, information.

to invest periodically in, or make loans to, its Entergy Corporation's primary capital requirements are FINANCIAL DISCUSSION AND subsidiaries and to invest in new enterprises. See "MANAGEMENT'S discussion of Entergy Corporation's for additional ANALYSIS - LIQUIDITY AND CAPITAL RESOURCES,"

and financial sources for such investments. The principal current and future planned investments in its subsidiaries from its subsidiaries. Certain events, such as the source of funds for Entergy Corporation is dividend distributions amount of these distributions. Substantial write-offs or River Bend issues discussed in Notes 2 and 9, could limit the adversely affect Entergy Gulf States' ability to pay charges resulting from adverse rulings in this matter could dividends.

Certain System Financial and Support Agreements Entergy New Unit Power Sales Agreement (Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Orleans, and System Energy) from System Energy's 90% ownership and The Unit Power Sales Agreement allocates capacity and energy Entergy Arkansas (36%), Entergy Louisiana (14%),

leasehold interests in Grand Gulf I (and the related costs) to Entergy Arkansas, Entergy Louisiana, Entergy Entergy Mississippi (33%), and Entergy New Orleans (17%).

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

retained shares of Grand Gulf 1. See Note 2 for further information Availability Agreement (Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)

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

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

Under the Availability Agreement, as amended to date:

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

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

- the September 1989 write-off of System Energy's investment in Grand Gulf 2, amounting to approximately $900 million, is being amortized for Availability Agreement purposes over 27 years rather than in the month the write-off was recognized on System Energy's books; and

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

17. 1%; Entergy Louisiana - 26.9%; Entergy Mississippi - 31.3%; and Entergy New Orleans - 24.7%.

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

System Energy has assigned its rights to payments and advances from Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans under the Availability Agreement as security for its first mortgage bonds and reimbursement obligations to certain banks providing the letters of credit in connection with the equity funding of the sale and leaseback transactions described in Note 10 under "Sale and Leaseback Transactions Grand Gulf 1 Lease Obligations (System Energy)." In these assignments, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans further agreed that, in the event they were prohibited by governmental action from making payments under the Availability Agreement (if, for example, FERC reduced or disallowed such payments as constituting excessive rates), they would then make subordinated advances to System Energy in the same amounts and at the same times as the prohibited payments. System Energy would not be allowed to repay these subordinated advances so long as it remained in default under the related indebtedness or in other similar circumstances.

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

However, if there is an event of default, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy o0 sucn New Orleans must make those payments directly to the holders of indebtedness that are the beneticianes obligations to the amount of the respective assignment agreements. The payments must be made pro rata according secured.

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

Power Sales Agreement to Since commercial operation of Grand Gulf 1 began, payments under the Unit Accordingly, no payments System Energy have exceeded the amounts payable under the Availability Agreement.

Entergy Mississippi, and Entergy New under the Availability Agreement by Entergy Arkansas, Entergy Louisiana, Entergy the ability of Entergy Arkansas, Orleans have ever been required. In the event such payments were required, their customers amounts paid under the Louisiana, Entergy Mississippi, and Entergy New Orleans to recover from the outcome of rate proceedings before Availability Agreement, or under the assignments thereof, would depend upon arose over the allocation of capacity and state and local regulatory authorities. In view of the controversies that opposition to full recovery would be likely energy from Grand Gulf 1 pursuant to the Unit Power Sales Agreement, and the outcome of such proceedings, should they occur, is not predictable.

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

Capital Funds Agreement (Entergy Corporation and System Energy)

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

Funds Agreement, and System Entergy Corporation has entered into various supplements to the Capital first mortgage bonds and for reimbursement Energy has assigned its rights under such supplements as security for its equity funding of the sale and leaseback obligations to certain banks providing letters of credit in connection with the

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

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

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

Wholesale Rate Matters System Energy As described above under "CAPITAL REQUIREMENTS AND FUTURE FINANCING - Certain System Financial and Support Agreements," System Energy recovers costs related to its interest in Grand Gulf 1

through rates charged to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans for capacity and energy under the Unit Power Sales Agreement.

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

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

The domestic utility companies engage in the coordinated planning, construction, and operation of generation and tanmission facilities pursuant to the terms of the System Agreement as described under "PROPERTY Generatin! Stations," below.

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

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

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

$22.6 million and $13.2 million, respectively). The FERC staff subsequently submitted testimony concluding that Entergy's treatment was reasonable. However, because it concluded that Entergy's treatment violated the tariff, FERC staff maintained that refunds of approximately $7.2 million should be ordered. Entergy submitted testimony on September 23, 1994, describing the potential impacts (not including interest) on Service Schedule MSS-1 calculations if extended reserve shutdown units were not included in the MSS-1 calc ilations during the period 1987 through 1993. Under such a theory, Entergy Louisiana and Entergy Mississippi would have been overbilled by $10.6 and $8.8 million respectively, and Entergy Arkansas and Entergy New Orleans would have been underbilled by $6.3 and $13.1 million respectively. The amounts potentially subject to refund will continue to accrue while the case is pending.

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

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

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

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

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

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

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

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

rate and tariff issues will be resolved as part of FERC's sales, but subsequently asked that In August 1995, EPMC filed an application for permission to make market-based discussed above is resolved.

action not be taken on that request until the open access transmission service proceeding proposing terms On December 13, 1995, Entergy Services filed revised transmission tariffs in a separate proceeding and conditions and conditions for open access transmission service that are substantially identical to the terms same as those determined in the pending contained in the Mega-NOPR transmission tariffs with rates to be the subject to the outcome proceeding. On February 14, 1996, FERC accepted for filing the revised transmission tariffs sales. Subsequently, of the pending proceeding and conditionally accepted EPMC's application for market-based FERC accepted EPMC's application without condition.

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

Retail Rate Matters and Entergy New Orleans)

General (Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, retail rates over a Certain costs related to Grand Gulf 1, Waterford 3, and River Bend were phased into all such costs at once.

period of years in order to avoid the "rate shock" associated with increasing rates to reflect all of these programs, and The deferral period in which costs are incurred but not currently recovered has expired for Mississippi, and Entergy New Orleans are now Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy recovering those costs that were previously deferred.

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

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

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

an orderly transition to a more Entergy has initiated proceedings with its state and local regulators regarding DISCUSSION AND ANALYSIS competitive market for electricity. See "MANAGEMENT'S FINANCIAL a discussion of the transition to competition filings SIGNIFICANT FACTORS AND KNOWN TRENDS," for and Entergy Arkansas with their state and made by Entergy Mississippi, Entergy Gulf States, Entergy Louisiana, local regulators.

Entergy Gulf States, Entergy Louisiana, Entergy Least Cost Integrated Resource Planning (Entergy Arkansas, Mississippi, and Entergy New Orleans) as least cost planning, in order to Entergy continues to utilize integrated resource planning, also known Integrated resource planning is the development of compete more effectively in both retail and wholesale markets.

demands reliably, at the lowest possible cost, integrated supply and demand side strategies to meet future electricity and in a more competitive manner.

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

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

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

portion of such costs for future recovery. In 1996 and subsequent 78%. Deferrals ceased in 1990, and Entergy Arkansas is interest in Grand Gulf I costs and recovers the remaining through 1998. As of December 31, 1996, the balance recovering a portion of the previously deferred costs each year to recover on a current basis the incremental costs of deferred costs was $228 million. Entergy Arkansas is permitted of financing the unrecovered deferrals.

retained share of Grand Gulf I to third Entergy Arkansas has the right to sell capacity and energy from its Entergy Arkansas' avoided energy cost.

parties and to sell such energy to its retail customers at a price equal to of Grand Gulf I capacity and energy accrue to Proceeds of sales to third parties of Entergy Arkansas' retained share the benefit of Entergy Arkansas' stockholder.

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

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

Recovery of River Bend Costs Bend operating and purchased power Entergy Gulf States deferred approximately $369 million of River 1986 PUCT accounting order. Approximately $182 costs, depreciation, and accrued carrying charges, pursuant to a the remaining $187 million was written off in million of these costs are being amortized over a 20-year period, and below. As of December 31, 1996, the the first quarter of 1996 in accordance with SFAS 121, as discussed Gulf States deferred approximately $400.4 unamortized balance of the remaining costs was $117 million. Entergy of which approximately $40 million was million of similar costs pursuant. to a 1986 LPSC accounting order, 10-year period ending in February 1998.

unamortized as of December 31, 1996, and are being amortized over a Gulf States deferred $294 million of its In accordance with a phase-in plan approved by the LPSC, Entergy 1991. Entergy Gulf States has amortized River Bend costs related to the period February 1988 through February million will be recovered in 1997 and early 1998.

$225 million through December 31, 1996. The remainder of $69 Texas Jurisdiction - River Bend in annual revenues of $59.9 million In 1988, the PUCT granted Entergy Gulf States a permanent increase of company-wide River Bend plant investment resulting from the inclusion in rate base of approximately $1.6 billion deferred River Bend costs (Allowed Deferrals).

and approximately $182 million of related Texas retail jurisdiction of company-wide River Bend plant costs and At the same time, the PUCT disallowed as imprudent $63.5 million

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

culminating in an appeal to the The PUCT's order has been the subject of several appellate proceedings, the Supreme Court issued an opinion reversing the Texas Supreme Court (Supreme Court). On January 31, 1997, proceedings. The Supreme Court found that the PUCT's order and remanding the case to the PUCT for further a ruling on the abeyed plant costs and incorrectly PUCT had prejudiced Gulf States' rights by attempting to defer have been allowed in rates. The Supreme Court determined the amount of federal income tax expense that should take further evidence or to decide the case on the ruled that the PUCT could choose either to conduct hearings and of Public Utility Counsel filed a motion for rehearing of original evidence. On February 18, 1997, the Texas Office the Supreme Court's decision, arguing that the Supreme Court's remand should have instructed the PUCT as to how motion for rehearing the case should be dealt with on remand. Entergy Gulf States filed a brief in opposition to the will grant the motion on February 25, 1997. Entergy Gulf States believes that it is unlikely that the Supreme Court remand.

for rehearing. No procedural schedule has yet been issued by the PUCT concerning the case on and As of December 31, 1996, the River Bend plant costs disallowed for retail ratemaking purposes in Texas million and the River Bend plant costs held in abeyance totaled (net of taxes and depreciation) approximately $12 as

$266 million, respectively. The Allowed Deferrals were approximately $77 million, net of taxes and amortization,

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

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

power In prior proceedings involving other utilities, the PUCT has held that the original cost of nuclear Entergy Gulf States has plants will be recoverable in electric rates to the extent those costs were prudently incurred.

management consultants previously filed with the PUCT a cost reconciliation study prepared by Sandlin Associates, of the River Bend costs with expertise in the cost analysis of nuclear power plants, which supports the reasonableness of the River Bend cost held in abeyance by the PUCT. This reconciliation study determined that approximately 82%

federal nuclear safety increase above the amount included by the PUCT in rate base was a result of changes in of the abeyed amounts. In particular, there have been requirements, and provided other support for the remainder investment in the plants ranged four other rate proceedings in Texas involving nuclear power plants. Disallowed reasons. Appeals of from 0% to 15%. Each case was unique, and the disallowances in each were made for different management believes two of these PUCT decisions are currently pending. Based upon the PUCT's prior decisions, and that it is reasonably possible that it will recover that River Bend construction costs were prudently incurred all or substantially all of the abeyed through rates, or otherwise through means such as a deregulated asset plan, River Bend plant costs. In the event of an adverse ruling in this case, an after-tax write off, as of December 31, 1996, of up to $278 million could be required.

NISCO Unrecovered Costs Gulf States' In 1986, the PUCT ordered that the purchased power costs from NISCO in excess of Entergy to $15 million of avoided costs be disallowed. The PUCT disallowance resulted in approximately $12 million continued to expense as the costs unrecovered purchased power costs on an annual basis, which Entergy Gulf States the PUCT to allow were incurred. In April 1991, the Texas Supreme Court, on the appeal of such order, ordered cost in future proceedings if Entergy Gulf States to recover purchased power payments in excess of its avoided and necessary Entergy Gulf States established to the PUCT's satisfaction that the payments were reasonable expenses.

requested a final In January 1992, Entergy Gulf States applied to the PUCT for a new fixed fuel factor and 1, 1986 and September 30, 1991.

reconciliation of fuel and purchased power costs incurred between December under-recoveries related to Entergy Gulf States proposed to recover net under-recoveries and interest (including purchased power payments made NISCO) over a twelve-month period. In June 1993, the PUCT concluded that the In October 1993, Entergy to NISCO in excess of Entergy Gulf States' avoided cost were not reasonably incurred.

matter is still pending. As of Gulf States appealed the PUCT's order to the Travis County District Court where the purchased power costs and December 31, 1996, Entergy Gulf States has expensed $140.8 million of unrecovered deferred revenue pending the appeal to the District Court. No assurance can be given as to the timing or outcome of the appeal.

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

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

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

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

Steam Customer Contract In August 1996, Entergy Gulf States entered into agreements with its only steam customer whereby a generating facility will be leased to such customer beginning in August 1997, the expiration date of the previous contract. As a result of these arrangements, Entergy Gulf States' annualized revenues are expected to decrease by approximately $33 million, and its net income is expected to be reduced by approximately $15 million annually. See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS," for a further discussion.

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

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

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

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

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

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

from the monthly reconciliation of actual fuel cost incurred with fuel revenues Entergy Mississippi Retail Rate Proceedings resolved during the current Refer to Note 2 for a discussion of the retail rate proceedings which have been Entergy Mississippi operates.

year and/or are currently outstanding in the regulatory jurisdictions in which Rate Freeze Mississippi agreed that it In connection with the settlement of various issues related to the Merger, Entergy 3, 1998, except for certain instances.

will not request any general retail rate increase to take effect before November the settlement agreement between Entergy See Note 2 for a discussion of the rate freeze as well as other aspects of Mississippi and the MPSC.

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

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

certain performance factors. Refer to Note 2 for a discussion of the 1997.

The formula rate plan filing for the 1996 test year will be filed in March Fuel Adjustment Clause that recovers changes in the cost of fuel Entergy Mississippi's rate schedules include a fuel adjustment clause sales and costs for the month, adjusted and purchased power. The monthly fuel adjustment rate is based on projected the second prior month.

for differences between actual and estimated costs and kWh sales for Entergy New Orleans Earnings Analysis Filings Refer to Note 2 for a discussion of the earnings analysis filings which have been resolved during the current year and/or are currently outstanding in the regulatory jurisdiction in which Entergy New Orleans operates.

Recovery of Grand Gulf 1 Costs Under Entergy New Orleans' various rate settlements with the Council in 1986, 1988, and 1991, Entergy New Orleans agreed to absorb and not recover from ratepayers a total of $96.2 million of its Grand Gulf I costs.

Entergy New Orleans was permitted to implement annual rate increases in decreasing amounts each year through 1995, and to defer certain costs and related carrying charges, for recovery on a schedule extending from 1991 through 2001. As of December 31, 1996, the uncollected balance of Entergy New Orleans' deferred costs was $136 million. The 1994 NOPSI Settlement did not affect the scheduled Grand Gulf 1 phase-in rate increases.

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

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

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

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

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

2, 1980.

Entergy Arkansas holds a license for two hydroelectric projects (70 MW) that was renewed on July This license, granted by FERC, expires in February 2003.

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

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

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

aspects of decommissioning plants at the end of their licensed lives, These matters are briefly discussed below.

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

on-site storage capacity, and costs of providing additional on-site storage, see Note Regulation of Low-Level Radioactive Waste normal nuclear The availability and cost of disposal facilities for low-level radioactive waste resulting from Waste Policy Act of plant operations are subject to a number of uncertainties. Under the Low-Level Radioactive states may participate in regional 1980, as amended, each state is responsible for disposal of its own waste, and participate in the Central compacts to fulfill their responsibilities jointly. The States of Arkansas and Louisiana of Mississippi participates Interstate Low Level Radioactive Waste Compact (Central States Compact), and the State Two disposal sites are currently in the Southeast Low Level Radioactive Waste Compact (Southeast Compact). Carolina located in South operating in the United States, but only one site, the Bamwell Disposal Facility (Barnwell),

of Barnwell provides and operated by the Southeast Compact, is open to out-of-region generators. The availability new the need to develop only temporary relief from low-level radioactive waste storage and does not alleviate disposal capacity.

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

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

The EPAct requires all electric utilities (including Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy) that purchased uranium enrichment services from the DOE to contribute up to a total of $150 million annually, adjusted for inflation, up to a total of $2.25 billion over approximately 15 years, for decontamination and decommissioning of enrichment facilities. In accordance with the EPAct, contributions to decontamination and decommissioning funds are recovered through rates in the same manner as other fuel costs. See Note 9 for the estimated annual contributions by Entergy for decontamination and decommissioning fees.

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

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

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

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

ANO Matters (Entergy Corporation and Entergy Arkansas)

Entergy Operations has made periodic inspections and repairs on ANO 2's steam generators. In October 1996, Entergy Corporation's Board of Directors authorized Entergy Operations to negotiate a contract, with appropriate cancellation provisions, for the fabrication and replacement of the steam generators at ANO 2. Entergy Operations estimates the cost of fabrication and replacement of the steam generators to be approximately $150 million. A letter of intent for the fabrication has been signed by Entergy Operations, which includes a commitment the for not more than $3.2 million, and a contract is expected to be entered into in 1997. If the contract to purchase outage in 2000.

steam generators is not canceled, the steam generators will be installed during a planned refueling See Note 9 for additional information.

River Bend (Entergy Corporation and Entergy Gulf States)

In connection with the Merger, Entergy Gulf States filed two applications with the NRC in January 1993 to a change amend the River Bend operating license. The applications sought the NRC's consent to the Merger and to the in the licensed operator of the facility from Entergy Gulf States to Entergy Operations. The NRC Staff issued On two license amendments for River Bend, which were effective immediately upon consummation of the Merger.

the two license amendments for River February 14, 1994, Cajun filed with the D.C. Circuit petitions for review of Bend. In March 1995, the D.C. Circuit ordered that the original NRC order and license amendments be set aside, findings and remanded the case to the NRC for further consideration. Subsequently, the NRC affirmed its original Cities and Cooperative filed petitions for review and reissued the two license amendments. Cajun and the Arkansas on an unopposed motion of the of those NRC orders with the D. C. Circuit. Pursuant to the Cajun Settlement, from the parties to the proceedings before the D.C. Circuit, the D.C. Circuit ordered that the cases be removed amendments calendar for oral argument and held in abeyance pending a further order of the court. The two license are in full force and effect.

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

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

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

Entergy Louisiana is subject to regulation by the LPSC as to electric service, rates and charges, certification other matters.

of generating facilities and power or capacity purchase contracts, depreciation, accounting, and Algiers.

Entergy Louisiana is also subject to the jurisdiction of the Council with respect to such matters within by the Entergy Mississippi is subject to regulation as to service, service areas, facilities, and retail rates MPSC. Entergy Mississippi is also subject to regulation by the APSC as to the certificate of environmental compatibility and public need for the Independence Station.

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

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

Entergy Gulf States holds non-exclusive franchises, permits, or certificates of convenience and necessity to provide electric and gas service in approximately 55 incorporated villages, cities, and towns in Louisiana and approximately 63 incorporated cities and towns in Texas. Entergy Gulf States ordinarily holds 50-year franchises in Texas and 60-year franchises in Louisiana. Entergy Gulf States' current electric franchises will expire during 2007 2036 in Texas and during 2015 - 2046 in Louisiana. The natural gas franchise in the City of Baton Rouge will expire in 2015. In addition, Entergy Gulf States has received from the PUCT a certificate of convenience and necessity to provide electric service to areas within 21 counties in eastern Texas.

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

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

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

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

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

Clean Air Legislation The Clean Air Act Amendments of 1990 (the Act) set up three programs that affect Entergy: an acid rain program for control of sulfur dioxide (SO 2 ) and nitrogen oxides (NOx), an ozone nonattainment area program for control of NOx and volatile organic compounds, and an operating permits program for administration and enforcement of these and other Clean Air Act programs.

Under the acid rain program, no additional control equipment is expected to be required by Entergy to units for emissions based control SQ 2. The Act provides "allowances" to most of the affected Entergy generating upon past emission levels and operating characteristics. Each allowance is an entitlement to emit one ton of SO 2 per generating year. Under the Act, utilities will be required to possess allowances for SO 2 emissions from affected S02 allowance units. All Entergy generating units are classified as "Phase II" units under the Act and are subject to history, the domestic utility companies have been requirements beginning in the year 2000. Based on operating Management believes that it will be allocated more allowances than are currently necessary for normal operations.

sources, and able to operate its units efficiently without installing scrubbers or purchasing allowances from outside that one or more of the domestic utility companies may have excess allowances.

of Control equipment may eventually be required for NOx reductions due to the ozone nonattainment status environmental the areas served by Entergy Gulf States in and around Beaumont and Houston, Texas. Texas deferred NOx controls on power plants until at least authorities are studying the causes of ozone pollution and have for the affected Entergy Gulf States 1999. If Texas decides to regulate NOx, the cost of such control equipment plants is estimated at $10.4 million through the year 2000.

Other Environmental Matters of 1980, as The provisions of the Comprehensive Environmental Response, Compensation, and Liability Act transporters of amended (CERCLA), authorize the EPA and, indirectly, the states to require generators and certain site, to clean-up the certain hazardous substances released from or at a site, and the owners or operators of any such joint and several liability on site or reimburse such clean-up costs. CERCLA has been interpreted to impose Also, certain operating responsible parties. Entergy sent waste materials to various disposal sites over the years.

are now regulated by procedures and maintenance%practices, which historically were not subject to regulation, of governmental action under CERCLA, as a result of environmental laws. Some of these sites have been the subject activities. These companies have which the domestic utility companies have become involved with site clean-up clean-ups and have participated to various degrees in accordance with their respective potential liabilities in such site reserves for such developed experience with clean-up costs. The domestic utility companies have established is not considered environmental clean-up/restoration activities. In the aggregate, the cost of such remediation material to these companies or to Entergy.

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

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

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

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

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

Entergy Arkansas has performed the activities necessary to stabilize the site, at a cost of approximately $400,000.

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

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

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

Entergy Gulf States has pursued negotiations with the EPA and is a member of a task force with other PRPs for the voluntary clean-up of the waste site. A consent decree has been signed by all PRPs for the voluntary clean-up of the Bailey site. Remediation costs are currently expected to be approximately $33 million, however, federal and state agencies are still examining potential liabilities associated with natural resource damage. Entergy Gulf States is expected to be responsible for 2.26% of the estimated clean-up cost. This matter is currently under negotiation with the other PRPs and the agencies. Entergy Gulf States does not believe that its remaining responsibility with respect to this site will be material after allowance for the existing provision for clean-up in the amount of $629,000.

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

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

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

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

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

MGP site, known as the Old Entergy Gulf States is currently involved in an initial investigation of an to have operated from approximately Jennings ice Plant, located in Jennings, Louisiana. The MGP site is believed on the surface soil, a notification was made to 1909-1926. In July 1996, a petroleum-like substance was discovered by an environmental consultant for the the LDEQ. The LDEQ was aware of this site based upon a survey performed consultant to collect core samples and to EPA. Entergy Gulf States obtained the services of an environmental that occurred at Jennings. Results of the perform a search of historical records to determine the type of operation were found on-site. Entergy Gulf States does not core sampling are not final, but limited amounts of contamination will be material. The amount of the existing presently believe that its ultimate responsibility with respect to this site provision for clean-up is $500,000.

for an abandoned waste oil Entergy Gulf States along with Entergy Louisiana has been named as a PRP Inc., which is included on the NPL.

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

regarding litigation in connection with the Combustion, Inc. site, see "Other with respect to this site will be material.

Entergy Gulf States does not presently believe that its ultimate responsibility liability with respect to a site in Entergy Gulf States received notification in 1992 from the EPA of potential including medical and chemical wastes. During Iota, Louisiana. This site was the depository of a variety of wastes, to settle its liability for this site.

1996, Entergy Gulf States paid approximately $45,000 to the EPA has been notified of its potential Entergy Gulf States, along with Entergy Arkansas and Entergy Louisiana, Arkansas. Although Entergy Gulf States liability with respect to the Benton Salvage site located in Saline County, Salvage site, no remediation is expected to be and Entergy Louisiana have had minor involvement in the Benton a discussion of the Benton Salvage site.

required by these companies. See "Entergy Arkansas" above for Entergy Louisiana, Entergy New Orleans, and System Energy received notices from the EPA and/or the Entergy Louisiana, Entergy New Orleans, and System Energy have be a PRP for disposal sites that are neither owned states of Louisiana and Mississippi that one or more of them may the sites discussed below have been remediated:

nor operated by any Entergy subsidiary. In response to such notices, was notified in 1990 of its

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

PRPs for the Disposal Systems,

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

and remedial activities at three retired From 1992 to 1994, Entergy Louisiana performed site assessments and and Thibodaux municipal sites, previously owned power plants, known as the Homer, Jonesboro, the power plants as part of the operated by Louisiana municipalities. Entergy Louisiana purchased useful lives.

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

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

Significant remedial activities are ongoing at the Thibodaux site.

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

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

During 1993, the LDEQ issued new rules for solid waste regulation, including regulation of waste water impoundments. Entergy Louisiana has determined that certain of its power plant waste water impoundments were affected by these regulations and has chosen to upgrade or close them. As a result, a remaining recorded liability in the amount of $6.7 million existed at December 31, 1996, for waste water upgrades and closures to be completed by the end of 1997. Cumulative expenditures relating to the upgrades and closures of waste water impoundments were

$7.1 million as of December 31, 1996.

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

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

FERC's orders approving the Merger were appealed to the D.C. Circuit by Entergy Services, the City, the Arkansas Electric Energy Consumers (AEEC), the APSC, Cajun, the MPSC, the American Forest and Paper Association, the State of Mississippi, the City of Benton and other cities, and Occidental Chemical Corporation (Occidental). Entergy Services sought review of FERC's deletion of a 40% cap on the amount of fuel savings Entergy Gulf States may be required to transfer to other Entergy domestic utility companies under a tracking mechanism designed to protect the other companies from certain unexpected increases in fuel costs. The other parties sought to overturn FERC's decisions on various grounds, including the issues of whether FERC appropriately conditioned the Merger to protect various interested parties from alleged harm and FERC's reliance on Entergy's transmission tariff to mitigate any potential anticompetitive impacts of the Merger.

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

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

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

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

(Entergy Corporation and Entergy Arkansas)

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

Trial dates have not been set in the other suits.

(Entergy Corporation and Entergy Gulf States)

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

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

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

(Entergy Louisiana and Entergy New Orleans)

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

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

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

A number of plaintiffs who allegedly suffered damage or injury, or are survivors of persons who died, allegedly as a result of exposure to "hazardous toxic waste" that emanated from a site in Livingston Parish, sued Entergy Gulf States and approximately 70 other defendants, including Entergy Louisiana, in 17 suits filed in the Livingston Parish, Louisiana District Court (State District Court). The plaintiffs alleged that the defendants generated, transported, or participated in the storage of such wastes at the facility, which was previously operated as a waste oil recycling facility. These State District Court suits, which seek damages in total amounts ranging from $I million to $10 billion and are now consolidated in a class action, and three federal suits in three states other than Louisiana involving issues arising from the same facility, have been removed and transferred, respectively, to the U.S. District Court for the Middle District of Louisiana. Entergy Gulf States settled all claims against it in the suits and the settlements were approved by court order on February 7, 1996. Entergy Louisiana received preliminary approval of a settlement of all claims against it in the suits for approximately $2.3 million. A court date for the fairness hearing to approve the settlement has not been set.

(Entergy Gulf States)

A total of 23 suits have been filed on behalf of approximately 4,255 plaintiffs in state and federal courts in Jefferson County, Texas. These suits seek relief from Entergy Gulf States as well as numerous other defendants for damages caused to the plaintiffs or others by the alleged exposure to hazardous waste and asbestos on the defendants' premises. All of the plaintiffs in such suits are also suing Entergy Gulf States and all other defendants on a conspiracy count. It is not yet known how many of the plaintiffs in the suits discussed above worked on Entergy Gulf States' premises. There have been numerous asbestos-related law suits filed in the District Court of Calcasieu Parish in Lake Charles, Louisiana, on behalf of approximately 200 plaintiffs naming numerous defendants including Entergy Gulf States. The suits allege that each plaintiff contracted an asbestos-related disease from exposure to asbestos insulation products on the premises of such defendants. Settlements of the Jefferson County suits involving approximately 1,800 plaintiffs and Calcasieu Parish suits involving approximately 91 plaintiffs are in the process of being consummated. In May 1996, the majority of remaining cases in Calcasieu Parish involving approximately 70 plaintiffs were settled for an immaterial amount; there are approximately 40 cases still pending. Entergy Gulf States' share of the settlements of these cases was not material to its financial position or results of operations.

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

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

FERC and the SEC seeking approval for the transfer of certain Cajun consummated.

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

both the portion of the suit by Cajun to rescind the Operating Agreement to declare the In 1992, two member cooperatives of Cajun brought an additional independent action approval which was Operating Agreement null and void, based upon Entergy Gulf States' failure to get prior LPSC as a plaintiff in this action. Eutergy alleged to be necessary. Prior to its bankruptcy proceedings, Cajun intervened by the Cajun Settlement.

Gulf States believes the suits are without merit and believes Cajun's claim is mooted Middle District On December 21, 1994, Cajun filed a petition in the United States Bankruptcy Court for the Code. Proponents of all of the plans of of Louisiana seeking relief under Chapter 11 of the Bankruptcy an integral condition to Settlement as reorganization submitted to the Bankruptcy Court have incorporated the Cajun Court depends on Bankruptcy the effectiveness of their plan. The timing and completion of a reorganization plan proposals by three groups approval and any required regulatory approvals. The Bankruptcy Court has approved rules for how Cajun's an order that establishes seeking to acquire the non-nuclear assets of Cajun and has signed on the balloting began hearings creditors will vote on the three plans. On December 16, 1996, the Bankruptcy Court Court.

and the plan that will be adopted. The matter remains before the Bankruptcy proceedings, and See Note 9 for additional information regarding the Cajun litigation, Cajun's bankruptcy related filings.

Cajun - Transmission Service (Entergy Corporation and Entergy Gulf States) service charge Entergy Gulf States and Cajun are parties to FERC proceedings relating to transmission FERC orders issued as a result disputes. See Note 9 for additional information regarding these FERC proceedings, Gulf States.

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

FERC has already addressed the matter in the proceedings described in Note Service Area Dispute (Entergy Corporation and Entergy Gulf States)

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

injunction. Entergy Gulf States believes this proceeding is resolved by the Cajun

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(Entergy Corporation and Entergy Mississippi)

On October 11, 1994, twelve Mississippi cities filed a complaint in state court against Entergy Mississippi and eight electric power associations seeking a judgment from the court declaring unconstitutional certain Mississippi statutes that establish the procedure that must be followed before a municipality can acquire the facilities and certificate rights of a utility serving in the municipality. Specifically, the suit requests that the court declare unconstitutional certain 1987 amendments to the Mississippi Public Utilities Act that require that the MPSC cancel a utility's certificate to serve in the municipality before a municipality may acquire a utility's facilities located in the municipality. The suit also requests that.the court find that Mississippi municipalities can serve any consumer in the boundaries of the municipality and within one mile thereof. On January 6, 1995, Entergy Mississippi and the other defendants filed motions to dismiss. In October 1995, the state court dismissed the complaint. The plaintiffs have appealed the dismissal to the Mississippi Supreme Court, where it is currently pending.

Taxes' Paid Under Protest (Entergy Corporation and Entergy Louisiana)

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

the parish in which Waterford 3 is located, have disputed use taxes paid on nuclear fuel ($6.5 million through 1996) under protest by Entergy Louisiana. Entergy Louisiana has been successful in lawsuits in the Parish with regard to recovering these taxes, plus interest, and also with regard to Parish lease tax issues pertaining to fuel financing arrangements. In June 1995, Entergy Louisiana received a favorable decision from the Louisiana Fifth Circuit Court of Appeals that confirmed that no such use taxes are due. The Parish and Entergy Louisiana are currently discussing a possible settlement of all pending tax-related litigation including the likely return of the amounts previously paid under protest. The suits by Entergy Louisiana with regard to state use tax paid under protest on nuclear fuel are still pending.

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

In August 1994, Entergy received an IRS report covering the federal income tax audit of Entergy Corporation and subsidiaries for the years 1988 - 1990. The report asserts an $80 million tax deficiency for the 1990 consolidated federal income tax returns related primarily to the uti"lization of accelerated investment tax credits associated with Waterford 3 and Grand Gulf nuclear plants. Changes to the initial report, made in the IRS appeal process, have reduced the assessment related to the issue by $22 million to $58 million. Entergy and the Appeals Officer agreed to pursue a "technical advice" ruling from the IRS National Office to address the remainder of the issue. Entergy Corporation believes there is no material tax deficiency and is confident that a satisfactory resolution of the matter will be achieved.

Panda Energy Corporation Complaint (Entergy Corporation)

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

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

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

Catalyst Technologies, Inc. (Entergy Corporation)

In June 1993, Catalyst Technologies, Inc. '(CTI) filed a petition against Electec, Inc. (Electec), the predecessor to Entergy Enterprises. Prior to the filing of the petition, CTI and Electec entered into an agreement whereby CTI was required to raise a specified amount of funding in exchange for the right to acquire Electec's computer software technology marketing rights. CTI alleges that due to actions of Electec, it was unable to secure the necessary fundiing, and, therefore, was not able to meet the terms of the agreement. The petition alleges breach of contract, breach of the obligation of good-faith and fair dealing, and bad-faith breach of contract against Electec. It now was originally believed CTI was claiming damages of approximately $36 million from Entergy Enterprises. It appears that CTI will allege damages ranging from $231 million to $258 million. Entergy Enterprises' position is that CTI is not entitled to any damages, and that even if damages were sustained, they would not exceed $600,000.

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

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

Ratios of Earnings to Fixed Charges Years Ended December 31, 1992 1993 1994 1995 1996 2.28 3.11(b) 2.32 2.56 2.93 Entergy Arkansas 1.72 1.54 .36(c) 1.86 1.47 Entergy Gulf States 2.79 3.06 2.91 3.18 3.16 Entergy Louisiana 2.37 3.79(b) 2.12 2.92 3.54 Entergy Mississippi 2.66 4.68(b) 1.91 3.93 3.51 Entergy New Orleans 2.04 1.87 1.23 2.07 2.21 System Energy Ratios of Earnings to Combined Fixed Charges and Preferred Dividends Years Ended December 31, 1992 1993 1994 1995 1996 Entergy Arkansas 1.86 2.54(b) 1.97 2.12 2.44 Entergy Gulf States(a) 1.37 1.21 .29(c) 1.54 1.19 2.18 2.39 2.43 2.60 2.64 Entergy Louisiana Entergy Mississippi 1.97. 3.08(b) 1.81 2.51 3.07 Entergy New Orleans. 2.36 4.12(b) 1.73 3.56 3.22 (a) "Preferred Dividends" in the case of Entergy Gulf States also include dividends on preference stock.

and $18 (b) Earnings for the year ended December 31, 1993, include approximately $81 million, $52 million, New Orleans, respectively, related to the million for Entergy Arkansas, Entergy Mississippi, and Entergy change in accounting principle to provide for the accrual of estimated unbilled revenues.

fixed (c) Earnings for the year ended December 31, 1994, for Entergy Gulf States were not adequate to cover

$144.8 million and $197.1 million, charges and combined fixed charges and preferred dividends by respectively.

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INDUSTRY SEGMENTS Entergy New Orleans Narrative Description of Enterply New Orleans Industry Segments Electric Service Entergy New Orleans supplied retail electric service to 188,912 customers as of December 31, 1996. During 1996, 40% of electric operating revenues was derived from residential sales, 39% from commercial sales, 6% from industrial sales, and 15% from sales to governmental and municipal customers.

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

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

from industrial sales, and 16% from sales to governmental and municipal customers. (See "FUEL SUPPLY Natural Gas Purchased for Resale.")

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

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

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

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

from the natural gas business.

PROPERTY Generating Stations December 31, 1996, by The total capability of Entergy's owned and leased generating stations as of company and by fuel type, is indicated below:

Owned and Leased Capability MW(1)

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

1,061 _

1,061 System Energy 70 16,506 (3) 4,485 351 Total 21,412 (3) as demonstrated under actual (1) "Owned and Leased Capability" is the dependable load carrying capability that each station was designed to operating conditions based on the primary fuel (assuming no curtailments) utilize.

extended reserve as follows: Entergy (2) Excludes the capacity of fossil-fueled generating stations placed on

- 157 MW; Entergy Mississippi Arkansas - 506 MW; Entergy Gulf States - 405 MW; Entergy Louisiana that are not expected to be utilized in the 73 MW; and Entergy New Orleans - 143 MW. Generating stations shutdown in order to minimize operating near-term to meet load requirements are placed in extended reserve expenses.

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

1999.

(4) Includes 188 MW of capacity leased by Entergy Arkansas through and recommend the location and Load and capacity projections are regularly reviewed in order to coordinate in light of the availability of power, the time of installation of additional generating capacity and of interconnections load and capability projections and bulk power location of new loads, and maximum economy to Entergy. Based on capacity. When new generation resources availability, Entergy has no current plans to install additional generating construction of new base load generating capacity.

are needed, Entergy expects to meet this need by means other than things, purchasing power in the wholesale power In the meantime, Entergy will meet capacity needs by, among other shutdown.

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

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

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

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

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

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

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

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

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

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

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

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

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

Natural Gas Fuel Oil Nuclear Fuel  % Coal ECents

% Cents  % Cents

% Cents of Per of per of Per of per Gen kWh Gen kWh Gen kWh Year Gen kWh 42 2.99 1 3.03 41 .56 16 1.73 1996 35 .60 15 1.73 1995 50 1.99 16 1.82 1 3.99 39 .60 1994 44 2.24 Actual 1996 and projected 1997 sources of generation for the domestic utility companies and System Energy are:

Natural Gas Fuel Oil Nuclear Coal 1996 1997 1996 1997 1996 1997 1996 1997 7% 7% 57% 51% 36% 42%

Entergy Arkansas 19% 11% 15%

69% 66% 20%

Entergy Gulf States - 44% 52%

56% 48% 29%

Entergy Louisiana 13% 33%

54% 71%

Entergy Mississippi 99% 100% 1%

Entergy New Orleans - 100 0/o(a) 1000/o(a)

System Energy 41% 41% 16% 20%

42% 39% 1% -

Total (a) Capacity and energy from System Energy's interest in Grand Gulf 1 is allocated as follows: Entergy Arkansas 36%; Entergy Louisiana - 14%; Entergy Mississippi - 33%; and Entergy New Orleans - 17%.

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

Natural Gas Long-term The domestic utility companies have long-term firm and short-term interruptible gas contracts.

can be called upon, if firm contracts comprise less than 30% of the domestic utility companies' total requirements but Additional gas requirements necessary, to satisfy a significant percentage of the domestic utility companies' needs.

a transportation service are satisfied by short-term contracts and spot-market purchases. Entergy Gulf States has stations by using such agreement with a gas supplier that provides flexible natural gas service to certain generating supplier's pipeline and gas storage facility.

requirements of Many factors, including wellhead deliverability, storage and pipeline capacity, and demand Demand is tied to regional end users, influence the availability and price of natural gas supplies for power plants.

gas are expected to be weather conditions as well as to the prices of other energy sources. Supplies of natural to power plants may be adequate in 1997. However, pursuant to federal and state regulations, gas supplies interrupted during periods of shortage. To the extent natural gas supplies may be 0usruptewincal omnw. iui,,,,

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

Coal Entergy Arkansas has long-term contracts with mines in the State of Wyoming for the supply of low-sulfur These contracts, which expire in 2002 coal for the White Bluff Steam Electric Generating Station and Independence.

annual coal requirements. Additional and 2011, provide for approximately 85% of Entergy Arkansas' expected Gulf States has a contract for a supply of low requirements are satisfied by annual spot market purchases. Entergy satisfy the fuel requirements at Nelson Unit 6 sulfur Wyoming coal for Nelson Unit 6, which should be sufficient to contracts that should provide an adequate through 2010. Cajun has advised Entergy Gulf States that Cajun has supply of coal until 1999 for the operation of Big Cajun 2, Unit 3.

Nuclear Fuel ore to produce a concentrate, the The nuclear fuel cycle involves the mining and milling of uranium of that gas, fabrication of nuclear fuel conversion of uranium concentrate to uranium hexafluoride gas, enrichment spent fuel.

assemblies for use in fueling nuclear reactors, and disposal of the Entergy Arkansas',

System Fuels is responsible for contracts to acquire nuclear material to be used in fueling during the inventories of such materials Entergy Louisiana's, and System Energy's nuclear units and maintaining nuclear fuel and the fabrication of its own various stages of processing. Each of these companies contracts for Gulf States' The requirements for Entergy purchases the required enriched uranium hexafluoride from System Fuels.

Entergy Operations acts as agent for River Bend plant are covered by contracts made by Entergy Gulf States.

nuclear fuel contracts.

System Fuels and Entergy Gulf States in negotiating 4nd/or administering with a bank that provides up to $45 In October 1989, System Fuels entered into a revolving credit agreement Should System Fuels default on its million in borrowings to finance its nuclear materials and services inventory.

Louisiana, and System Energy have agreed to obligations under its credit agreement, Entergy Arkansas, Entergy purchase nuclear materials and services under the agreement.

following tabulation shows the years Based upon the planned fuel cycles for Entergy's nuclear units, the services:

through which existing contracts and inventory will provide materials and Acquisition of or Conversion Spent to Uranium Fuel Uranium Hexafluoride Enrichment Fabrication Disposal Concentrate (1) (1) (2) 2000 (3)

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

ANO 2 (1) (1) (2) 2001 (3)

River Bend (1) (1) (2) 1999 (3)

Waterford 3 (1) (1) (2) 2000 (3)

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

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

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

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

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

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

$80 million, and $110 million, respectively. As of December 31, 1996, the unrecovered cost base of Entergy Arkansas', Entergy Gulf States', Entergy Louisiana's, and System Energy's nuclear fuel leases amounted to approximately $79.1 million, $49.8 million, $38.2 million, and $83.6 million, respectively. The lessors finance the acquisition and ownership of nuclear fuel through credit agreements and the issuance of notes. These agreements are subject to annual renewal with, in Entergy Louisiana's and Entergy Gulf States' case, the consent of the lenders. The credit agreements for Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy have been extended and now have termination dates of December 1999, December 1999, January 2000, and February 2000, respectively. The debt securities issued pursuant to these fuel lease arrangements have varying maturities through January 31, 1999. It is expected that the credit agreements will be extended or alternative financing will be secured by each lessor upon the maturity of the current arrangements. If extensions or alternative financing cannot be arranged, the lessee in each case must purchase sufficient nuclear fuel to allow the lessor to retire such borrowings.

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

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

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

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

$9 million, $9 million, and $18 million, respectively, for EPRI and other research programs in which Entergy involved.

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

Item 3. Le2al Proceedins Refer to Item 1. "Business - RATE MATTERS AND REGULATION," for details of the registrants' material rate proceedings and other regulatory proceedings and litigation that are pending or that terminated in the fourth quarter of 1996.

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

PART H Item 5. Market for Re-istrants' Common Equity and Related Stockholder Matters Entergy Corporation The shares of Entergy Corporation's common stock are listed on the New York, Chicago, and Pacific Stock Exchanges.

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

1996 1995 High Low High Low (In Dollars)

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

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

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

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

1996 1995 (In Millions)

Entergy Arkansas $142.8 $153.4 Entergy Gulf States -

Entergy Louisiana $179.2 $ 221.5 Entergy Mississippi $ 79.9 $ 61.7 Entergy New Orleans $ 34.0 $ 30.6 System Energy $112.5 $ 92.8 Entergy S.A. $ 0.7 $ 3.5 Entergy Transener S.A. $ 1.7 $ 2.1 Entergy Argentina S.A. $ 0.3 Entergy Argentina S.A. Ltd. $ 3.1 In February 1997, Entergy Corporation received common stock dividend payments from its subsidiaries totaling $66.9 million. For information with respect to restrictions that limit the ability of System Energy and the domestic utility companies to pay dividends, see Note 8. In order to improve its capital structure, Entergy Gulf States has not paid common stock dividends since the third quarter of 1994. See "Management's Financial Discussion and Analysis - Liquidity and Capital Resources".

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

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

SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON."

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

COMPARISON."

SELECTED FINANCIAL DATA - FIVE-YEAR Entergy Louisiana. Refer to information under the heading "ENTERGY LOUISIANA, INC.

SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON."

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

COMPARISON."

SELECTED FINANCIAL DATA - FIVE-YEAR Entergy New Orleans. Refer to information under the heading "ENTERGY NEW ORLEANS, INC.

SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON."

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

SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON."

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

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

and "- RESULTS OF OPERATIONS."

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

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

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

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

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

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

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

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

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

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

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

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

Item 8. Financial Statements and Supplementary Data.

INDEX TO FINANCIAL STATEMENTS Entergy Corporation and Subsidiaries:

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

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

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

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

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

Balance Sheets, December 31, 1996 and 1995 for Entergy Gulf States, Inc. 80 Statements of Retained Earnings for the Years Ended December 31, 1996, 1995, and 1994 for 82 Entergy Gulf States, Inc.

Selected Financial Data - Five-Year Comparison for Entergy Gulf States, Inc. 83 Report of Independent Accountants for Entergy Louisiana, Inc. 85 Management's Financial Discussion and Analysis for Entergy Louisiana, Inc. 86 Statements oflncme For the Years Ended December 31, 1996, 1995, and 1994 for Entergy 88 Louisiana, Inc.

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

. Louisiana, Inc.

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

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

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

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

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

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

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

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

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

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

Selected Financial Data - Five-Year Comparison for System Energy Resources, Inc.. 123 Notes to Financial Statements for Entergy Corporation and Subsidiaries 124 ENTERGY CORPORATION AND SUBSIDIARIES REPORT OF MANAGEMENT The management of Entergy Corporation and subsidiaries has prepared and is responsible for the financial statements and related financial information included herein. The financial statements are based on generally accepted accounting principles. Financial information included elsewhere in this report is consistent with the financial statements.

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

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

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

ED LUPBERGER GERALD D. MCINVALE Chairman, President, and Chief Executive Officer Executive Vice President and of Entergy Corporation, Entergy Arkansas, Chief Financial Officer Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans DONALD C. HINTZ President and Chief Executive Officer of System Energy

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ENTERGY CORPORATION AND SUBSIDIARIES AUDIT COMMITTEE CHAIRPERSON'S LETTER are not The Entergy Corporation Board of Directors' Audit Committee is comprised of five directors who officers of Entergy Corporation: Lucie J. Fjeldstad, Chairperson, Admiral Kinnaird McKee, Eugene H. Owens, Robert D. Pugh, and H. Duke Shackelford. The committee held five meetings during 1996.

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

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

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

1996 1995 1994 (In Millions)

Entergy $1,458 $1,426 $1,558 Entergy Arkansas $ 377 $ 338 $ 356 Entergy Gulf States $ 322 $ 401 $ 326 Entergy Louisiana $ 352 $ 385 $ 368 Entergy Mississippi $ 182 $ 185 $ 195 Entergy New Orleans $ 44 $ 99 $ 39 System Energy $ 287 $ 96 $ 337 The positive cash flow from operations for the domestic utility companies results from continued efforts to streamline operations and to reduce costs, as well as from collections under rate phase-in plans that exceed current cash requirements for the related costs. (In the income statement, these revenue collections are offset by the amortization of previously deferred costs so that there is no effect on net income.) These phase-in plans will continue to contribute to Entergy's cash position over the next several years. Specifically, the Grand Gulf 1 phase-in plans will expire in 1998 for Entergy Arkansas and Entergy Mississippi, and in 2001 for Entergy New Orleans. Entergy Gulf States' phase-in plan for River Bend will expire in 1998, and Entergy Louisiana's phase-in plan for Waterford 3 will expire in June 1997.

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

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

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ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES In May 1996, Entergy Corporation registered 10 million additional shares of common stock pursuant to a new dividend reinvestment and stock purchase plan, which became effective in July 1996. See Note 5 for further discussion.

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

To make capital investments, fund its subsidiaries, and pay dividends, Entergy Corporation will utilize internally generated funds, cash on hand, funds available under its $300 million credit facility, funds received from its dividend reinvestment and stock purchase plan, and other bank financings if required. See Note 9 for a discussion of capital requirements. Entergy Corporation receives funds through dividend payments from its subsidiaries. During 1996, such dividend payments from subsidiaries totaled $554.2 million. In order to improve its capital structure, Entergy Gulf States has not paid common stock dividends since the third quarter of 1994. In 1996, Entergy Corporation paid $405 million of common stock dividends.

Declarations of dividends on common stock are made at the discretion of Entergy Corporation's Board of Directors.

Management will not recommend future dividend increases to the Board unless such increases are justified by adequate earnings growth of Entergy Corporation and its subsidiaries. See Note 8 for information on dividend restrictions.

Enterey Corporation and Entergy Gulf States See Notes 2 and 9 regarding River Bend and Cajun issues, including recent developments. An adverse ruling regarding River Bend could result in up to approximately $278 million of potential write-offs (net of tax) and up to

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

Enterpgy Corporation and System Enerrv Under the Capital Funds Agreement, Entergy Corporation has agreed to supply to System Energy sufficient capital to maintain System Energy's equity capital at a minimum of 35% of its total capitalization (excluding short term debt), to permit the continued commercial operation of Grand Gulf I, and to pay in full all indebtedness for borrowed money of System Energy when due under any circumstances.

In addition, under supplements to the Capital Funds Agreement assigning System Energy's rights as security for specific debt of System Energy, Entergy Corporation has agreed to make cash capital contributions, if required, to enable System Energy to make payments on such debt when due. The Capital Funds Agreement can be terminated by the parties thereto, subject to consent of certain creditors.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

During 1995, Entergy Louisiana received separate notices from two large industrial customers that will These proceed with proposed cogeneration projects for the purpose of fulfilling their future electric energy needs.

customers will continue to purchase their energy requirements from Entergy Louisiana until their cogeneration these facilities are completed and operational, which is expected to occur in 1997 and 1998. After that time, these two customers will continue to purchase energy from Entergy Louisiana, but at a reduced level. During 1996, industrial sales, and provided customers represented an aggregate of approximately 17% of total Entergy Louisiana 12% of total industrial base revenues.

During 1996, Entergy Gulf States entered into agreements concerning a steam generating station that historically has been contractually dedicated to providing steam and cogenerated electricity for a large industrial customer. Under these agreements, the generating facility was leased to the customer, but Entergy Gulf States will major continue to operate the facility. The customer has announced that it will spend $190 million to make As a result of these agreements, which improvements to the facility, including a new 150 MW gas turbine generator.

Gulf wvere entered into with the expectation that the customer otherwise would terminate its contracts with Entergy to States and construct its own generating facilities, Entergy Gulf States' revenues from this customer are estimated and Entergy Gulf States' net income is be reduced by approximately $33 million annually beginning in August 1997, expected to be reduced by approximately $15 million annually.

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

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

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

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

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

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

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

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

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ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS On January 5, 1996, Entergy Corporation finalized its acquisition of CitiPower, an electric distribution of CitiPower was company serving Melbourne, Australia, and surrounding suburbs. The purchase price and the approximately $1.2 billion, of which $294 million represented an equity investment by Entergy Corporation, the majority of remainder represented debt that is non-recourse to Entergy Corporation. Entergy Corporation funded line of credit. CitiPower serves the equity portion of the investment by using $230 million of its $300 million approximately 238,000 customers, the majority of which are commercial customers. At the time of the acquisition, CitiPower had 846 employees.

$2.1 billion.

On December 18, 1996, Entergy made a formal cash offer to acquire London Electricity for the metropolitan London Electricity is a regional electric company serving approximately two million customers in area of London, England. The offer was approved by authorities in the United Kingdom and as of February 7, 1997, of the common the offer was made unconditional and Entergy, through an English subsidiary, controlled over 90%

expects to gain control of shares of London Electricity. Through procedures available under applicable law, Entergy billion of debt that is 100% of the common shares of London Electricity. The acquisition was financed with $1.7 from available non-recourse to Entergy Corporation, and $392 million of equity provided by Entergy Corporation cash and borrowings under its $300 million line of credit.

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

interest On December 20, 1996, Entergy exercised an option to acquire, through a subsidiary, a 25% equity cycle generating facility in San Isidro S.A., a Chilean company which is developing a 370 MW gas fired, combined in central Chile. Entergy's interest, which is expected to be acquired during the first quarter of 1997, will require an payment of the estimated $20 million cash investment as well as a guaranty of up to $30 million relating to the is Empresa turnkey contractor for the San Isidro project. The other owner of the project, who is also the developer, Nacional de Electricidad, S.A. (ENDESA).

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

Derefulated Utility Operations and steam Entergy Gulf States discontinued regulatory accounting principles for its wholesale jurisdiction The operating department and the Louisiana deregulated portion of River Bend during 1989 and 1991, respectively.

million in 1994.

income (loss) from these operations was $13.9 million in 1996, $1.2 million in 1995, and ($5.2)

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

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

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

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

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

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

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

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

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

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

accounting for decommissioning/closure costs and the potential impact of these changes Financial Instruments a policy that financial Derivative instruments have been used by Entergy on a limited basis. Entergy has purposes. See Notes 7 and 9 for derivatives are to be used only to mitigate business risks and not for speculative as of December 31, 1996.

additional information concerning Entergy's derivative instruments outstanding (This page intentionally left blank)

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

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

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

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

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

COOPERS & LYBRAND L.L.P.

New Orleans, Louisiana February 13, 1997 ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS On January 5, 1996, Entergy Corporation finalized its acquisition of CitiPower. In accordance with the purchase method of accounting, the results of operations for 1995 and 1994 of Entergy Corporation and subsidiaries reported in its Statements of Consolidated Income and Cash Flows do not include CitiPower's results of operations.

See Note 13 for additional information regarding CitiPower.

Net Income Consolidated net income decreased in 1996 primarily due to the $174 million net of tax write-off of River Bend rate deferrals pursuant to SFAS 121 and the one-time recording in 1995 of the cumulative effect of the change in accounting method for incremental nuclear refueling outage maintenance costs at Entergy Arkansas. The effect of these items was partially offset by the reversal of a Cajun-River Bend litigation accrual at Entergy Gulf States.

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

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

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

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

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

Increase/

(Decrease)

Description 1996 1995 (In Millions)

Change in base revenues ($117.5) $6.6 Rate riders 1.8 15.3 Fuel cost recovery 382.3 (28.0)

Sales volume/weather 108.0 141.3 Other revenue (including unbilled) (49.3) 4.3 Sales for resale 37.6 35.6 System Energy-FERC Settlement - 120.5 Total $362.9 $295.6 ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Electric operating revenues increased in 1996 as a result of higher fuel adjustment revenues, which do not affect net income, and an increase in retail energy sales, partially offset by rate reductions at various domestic utility companies. The increase in retail sales is primarily the result of an increase in customers and customer usage.

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

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

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

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

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

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

Other operation and maintenance expenses decreased because of lower payroll-related expenses resulting from the restructuring program discussed in Note 12 and 1994 Merger-related costs. The decrease in operating expenses was partially offset by an increase in nuclear refueling outage expenses due to a 1995 refueling outage at Grand Gulf 1 and the adoption of the change in accounting method at Entergy Arkansas.

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

ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Interest charges decreased in 1995 as a result of the retirement and refinancing of higher cost long-term debt Preferred dividend requirements decreased in 1996 and 1995 due to stock redemption activities.

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

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

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

Operating Revenues:

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

Operation and maintenance:

Fuel, fuel-related expenses, and gas purchased for resale 1,635,885 1,395,889 1,450,598 Purchased power 704,744 356,596 340,067 Nuclear refueling outage expenses 55,148 84,972 63,979 Other operation and maintenance 1,577,383 1,528,351 1,613,313 Depreciation, amortization, and decommissioning 790,948 695,865 659,142 Taxes other than income taxes 353,270 300,120 284,349 Rate deferrals (33,874)

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

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

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

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

Preferred and preference dividend requirements of subsidiaries and other 77,969 81,718 70,536 Total 790,571 737,201 759,675 Income Before Income Taxes 841,186 820,747 473,565 Income Taxes 421,159 336,182 131,724 Income before the Cumulative Effect of Accounting Changes 420,027 484,565 341,841 Cumulative Effect of Accounting Changes (net of income taxes) 35,415 Net Income $420,027 $519,980 $341,841 Earningsper average common share before cumulative effect of accounting changes $1.83 $2.13 $1.49 Earnings per average common share $1.83 $2.28 $1.49 Dividends declared per common share $1.80 $1.80 $1.80 Average number of common shares outstanding 229,084,241 227,669,970 228,734,843 See Notes to Financial Statements.

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

Operating Activities:

Net income $420,027 $519,980 $341,841 Noncash items included in net income:

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

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

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

Amortization of deferred revenues - (14,632)

Changes in working capital:

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

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

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

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

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

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

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

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

Proceeds from saleileaseback of nuclear fuel 109,980 226,607 128,675 Acquisition of CitiPower (1,156,112)

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

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

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

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

Financing Activities:

Proceeds from the issuance of:

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

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

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

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

(48,497)

Premium and expense on refinancing sale/leaseback bonds Repurchase of common stock (119,486)

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

Changes in short-term borrowings - net (24,981) (126,200) 128,200 Common stock dividends paid (405,346) (408,553) (410,223) 171,907 (714,533) (748,216)

Net cash flow provided by (used in) financing activities Effect of exchange rates on cash and cash equivalents 50--

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

Cash paid during the period for:

Interest - net of amount capitalized $677,535 $626,531 $660,150 Income taxes $373,247 $285,738 $218,667 Noncash investing and financing activities:

Capital lease obligations incurred $16,358 $88,574 Change in unrealized appreciation (depreciation) of

$7,803 $16,614 ($2,198) decommissioning trust assets Acquisition of nuclear fuel $47,695 See Notes to Financial Statements.

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

Current Assets:

Cash and cash equivalents:

Cash $34,807 $42,822 Temporary cash investments - at cost, which approximates market 346,782 490,768 Special deposits 7,114 Total cash and cash equivalents 388,703 533,590 Notes receivable 1,384 6,907 Accounts receivable:

Customer (less allowance for doubtful accounts of

$9.2 million in 1996 and $7.1 million in 1995) 324,687 333,343 Other 99,066 59,176 Accrued unbilled revenues 351,429 293,461 Deferred fuel 122,184 25,924 Fuel inventory 139,603 122,167 Materials and supplies - at average cost 339,622 345,330 Rate deferrals 444,543 420,221 Prepayments and other 151,312 175,121 Total 2,362,533 2,315,240 Other Property and Investments:

Decommissioning trust funds 357,962 277,716 Nonregulated investments 513,058 372,453 Other 59,053 62,166 Total 930,073 712,335 Utility Plant Electric 22,811,164 21,698,593 Plant acquisition adjustment - Entergy Gulf States 455,425 471,690 Electric plant under leases 679,991. 675,425 Property under capital leases - electric 147,277 145,146 Natural gas 168,143 166,872 Steam products 81,743 77,551 Construction work in progress 401,676 482,950.

Nuclear fuel under capital leases 250,651 312,782 Nuclear fuel 112,625 49,100 Total 25,108,695 24,080,109 Less - accumulated depreciation and amortization 8,885,572 8,259,318 Utility plant - net 16,223,123 15,820,791 Deferred Debits and Other Assets:

Regulatory assets:

Rate deferrals 399,493 1,033,282 SFAS 109 regulatory asset - net 1,196,041 1,279,495 Unamortized loss on reacquired debt 217,664 224,131 Other regulatory assets 435,652 350,601 Long-term receivables 216,082 224,726 CitiPower license (net of$V5.6 million of amortization) 606,214 Other 379,419 305,329 Total 3,450,565 3,417,564 TOTAL $22,966,294 $22,265,930 See Notes to Financial Statements.

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

Current Liabilities:

$345,620 $558,650 Currently maturing long-term debt 20,686 45,667 Notes payable 554,558 460,379 Accounts payable 155,534 140,054 Customer deposits 180,340 207,828 Taxes accrued 78,010 72,847 Accumulated deferred income taxes 203,425 195,445 Interest accrued 8,950 12,194 Dividends declared 151,287 151,140 Obligations under capital leases 184,157 247,039 Other 1,882,567 2,091,243 Total Deferred Credits and Other Liabilities: 3,770,760 3,777,644 Accumulated deferred income taxes 607,641 612,701 Accumulated deferred investment tax credits 247,360 303,664 Obligations under capital leases 1,298,306 1,277,419 Other 5,924,067 5,971,428 Total 7,590,804 6,777,124 Long-term debt 216,986 253,460 Subsidiaries' preferred stock with sinking fund 150,000 150,000 Subsidiarys preference stock Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding 130,000 solely junior subordinated deferrable debentures Shareholders! Equity:

430,955 550,955 Subsidiaries! preferred stock without sinking fund Common stock, $.01 par value, authorized 500,000,000 shares; issued 234,456,457 shares in 1996 and 2,345 2,300 230,017,485 shares in 1995 4,320,591 4,201,483 Paid-in capital 2,341,703 2,335,579 Retained earnings 21,725 Cumulative foreign currency translation Less - treasury stock (1,496,118 shares in 1996 and 45,449 67,642 2,251,318 in 1995) 7,071,870 7,022,675 Total Commitments and Contingencies (Notes 2, 9, 10, and 16)

TOTAL $22,966,294 $22,265,930 See Notes to Financial Statements.

ENTERGY CORPORATION AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED RETAINED EARNINGS AND PAID-IN CAPITAL For the Years Ended December 31, 1996 1995 1994 (In Thousands)

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

Net income 420,027 519,980 341,841 Total 2,755,606 Deduct: 2,743,719 2,651,923 Dividends declared on common stock 412,250 409,801 411,806 Common stock retirements

"- 13,940 Capital stock and other expenses 1,653 (1,661) 2,438 Total 413,903 408,140 428,184 Retained Earnings, December 31 $2,341,703 $2,335,579 $2,223,739 Paid-in Capital, January 1 $4,201,483 $4,202,134 $4,223,682 Add:

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

Common stock issuances related to stock plans 117,560 Total (3,002) 4,320,838 4,199,106 4,223,659 Deduct:

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

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

ENTERGY CORPORATION AND SUBSIDIARIES SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON 1996 1995 1994 1993 1992 (In Thousands, Except Per Share Amounts) $ 4,098,332

$ 7,163,526 $ 6,287,206 $ 5,981,820 $ 4,475,224 Operating revenues Income before cumulative effect of a change in

$ 420,027 $ 484,565 $ 341,841 $ 458,089 $ 437,637 accounting principle Earnings per share before cumulative effect of accounting $$ 2.48 changes $ 1.83 $ 2.13 $ 1.49 $ 2.62 1.65 1.45

$ 1.80 $ 1.80 $

$ 1.80 Dividends declared per share 8.11% 5.31% 12.58% 10.31%

6.41%

Return on average common equity $ 28.41 $ 27.93 $ 28.27 $ 24.35

$ 28.51 Book value per share, year-end (2) $ 22,265,930 $ 22,621,874 $ 22,876,697 $ 14,239,537 Total assets (2) $ 22,966,294 $ 5,630,505

$ 7,484,248 $ 7,817,366 $ 8,177,882

$ 8,335,150 Long-term obligations (1X2)

(1) Includes long-term debt (excluding currently maturing debt), preferred and preference stock with sinking fund, preferred securities of subsidiary trust, and noncurrent capital lease obligations.

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

1996 1995 1994 1993 1992 (In Thousands)

Electric Operating Revenues: $1,441,628

$2,277,647 $2,177,348 $2,127,820 $1,594,515 Residential 1,071,070 1,008,474 1,573,251 1,491,818 1,500,462 Commercial 1,197,695 1,098,147 1,987,640 1,810,045 1,834,155 Industrial 136,471 127,880 169,287 154,032 159,840 Governmental 3,999,751 3,676,129 6,007,825 5,633,243 5,622,277 Total retail 280,505 243,507 376,011 334,874 293,702 Sales for resale 88,713 96,971 67,104 119,901 (123,569)

Other (1) $4,368,969 $4,016,607

$6,450,940 $6,088,018 $5,792,410 Total Billed Electric Energy Sales (Millions of kWh): 18,946 17,549 Residential 28,303 27,704 26,231 12,928 20,719 20,050 13,420 21,234 23,610 Commercial 41,030 24,889 44,340 42,260 Industrial 1,887 1,839 2,449 2,311 2,233 Governmental 59,142 55,926 96,326 92,994 89,544 Total retail 8,291 7,979 10,583 10,471 7,908 Sales for resale 67,433 63,905 106,909 103,465 97,452 Total Gulf States (1) 1994 includes the effects of the FERC Settlement, the 1994 NOPSI Settlement, and an Entergy reserve for rate refund.

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

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

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

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

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

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

COOPERS & LYBRAND L.L.P.

New Orleans, Louisiana February 13, 1997 ENTERGY ARKANSAS, INC.

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

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

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

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

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

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

Increasel (Decrease)

Description 1996 1995 (In Millions)

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

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

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

ENTERGY ARKANSAS, INC.

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

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

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

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

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

ENTERGY ARKANSAS, INC.

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

Operating Revenues $1,743,433 $1,648,233 $1,590,742 Operating Expenses:

Operation and maintenance:

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

Allowance for equity funds used during construction 3,886 3,567 4,001 Miscellaneous - net 32,591 46,227 48,049 Total 36,477 49,794 52,050 Interest Charges:

Interest on long-term debt 98,531 106,853 106,001 Other interest - net 6,257 8,485 4,811 Distributions on preferred securities of subsidiary 1,927 Allowance for borrowed funds used during construction (2,330) (2,424) (3,674)

Total 104,385 112,914 107,138 Income Before Income Taxes 242,242 208,747 171,483 Income Taxes 84,444 72,082 29,220 Income before the Cumulative Effect of Accounting Changes 157,798 136,665 142,263 Cumulative Effect of Accounting Changes (net of income taxes) - 35,415 -

Net Income 157,798 172,080 142,263 Preferred Stock Dividend Requirements and Other 16,110 18,093 19,275 Earnings Applicable to Common Stock $141,688 $153,987 $122,988 See Notes to Financial Statements.

ENTERGY ARKANSAS, INC.

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

Operating Activities:

Net income $157,798 $172,080 S142,263 Noncash items included in net income:

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

Change in rate deferrals/excess capacity-net 139,701 125,504 102,959 Depreciation, amortization, and decommissioning 167,878 162,087 149,871 Deferred income taxes and investment tax credits (46,026) (33,882) (54,080)

Allowance for equity funds used during comstruction (3,886) (3,567) (4,001)

Changes in working capital:

Receivables (4,292) (39,209) 10,817 Fuel inventory 137 (22,895) 17,359 Accounts payable (1,112) 55,732 (32,114)

Taxes accrued 14,035 (5,080) 2,226 Intmve accrued (2,615) (824) (346)

Other working capital accounts (7,529) (28,375) 20,324 Decommissioning trust contributions (18,961) (16,702) (11,581)

Provismon for estimated losses and reserves 4,125 2Z849 16,617 Other (22,675) 6,055 (4,744)

Net cash flow provided by operating activities 376,578 338,358 355,577 Investing Activities:

Construction expenditures (145,529) (165,071) (179,116)

Allowance for equity funds used during construction 3,886 3,567 4,001 Nuclear fuel purchases (26,084) (41,219) (40,074)

Proceeds from saleleaseback of nuclear fuel 25,451 41,832 40,074 Net cash flow used in investing activities (142,276) (160,891) (175,115)

Fimancing Activities:

Proceeds fim issuance of.

First mortgage bonds 84,256 Other long-team debt - 118,662 27,992 Preferred securities of subsidiary trust 58,168 Retirement of.

Firstmortgage bonds (11Z,07) (25,800) (80)

Ote long-term debt (1,700) (124,025) (30,231)

Redemption of preferred stock (69,624) (9,500) (11,500)

Changes in short-tem borrowings - net (34,000) 12,605 Dividends paid:

Common stock (142,800) (153,400) (80,000)

Preferred stock (17,736) (18,362) (19,597)

Net cash flow used in financing activities (202,243) (246,425) (101,531)

Net increase (decrease) in cash and cash equivalents 32,059 (68,958) 78,931 Cash and cash equivalents at beginning ofperiod 11,798 80,756 1,825 Cash and cash equivalents at end of period $43,857 $11,798 $80,756 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the period for Interest - net of amount capitalized $94,662 $102,851 $98,717 Income taxes $110,211 $113,080 $79,553 Noncash investing and financing activities:

Capital lease obligations incurred $16,358 $47,719 Acquisition of naclear fuel $27,500 Change in unrealized appreciation of decommissioning trust assets $5,968 $9,128 $1,361 See Notes to Financial Statements.

ENTERGY ARKANSAS, INC.

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

Current Assets:

Cash and cash equivalents:

Cash $5,117 $7,780 Temporary cash investments - at cost, which approximates market:

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

Customer (less allowance for doubtful accounts of $2.3 million in 1996 and $2.1 million in 1995) 71,144 81,686 Associated companies 45,303 40,577 Other 5,862 6,962 Accrued unbilled revenues 104,764 93,556 Fuel inventory - at average cost 57,319 57,456 Materials and supplies - at average cost 72,976 75,030 Rate deferrals 153,141 131,634 Deferred excess capacity 9,005 11,088 Deferred nuclear refueling outage costs 24,534 32,824 Prepayments and other 7,491 8,974 Total 595,396 551,585 Other Property and Investments:

Investment in subsidiary companies - at equity 11,211 11,122 Decommissioning trust fund 203,274 166,832 Other - at cost (less accumulated depreciation) 5,058 5,085 Total 219,543 183,039 Utility Plant:

Electric 4,578,728 4,438,519 Property under capital leases 57,869 48,968 Construction work in progress 83,524 119,874 Nuclear fuel under capital lease 79,103 98,691 Nuclear fuel 27,500 Total 4,826,724 4,706,052 Less - accumulated depreciation and amortization 1,976,204 1,846,112 Utility plant - net 2,850,520 2,859,940 Deferred Debits and Other Assets:

Regulatory assets:

Rate deferrals 75,249 228,390 Deferred excess capacity 5,984 SFAS 109 regulatory asset - net 244,767 219,906 Unamortized loss on reacquired debt 56,664 58,684 Other regulatory assets 80,257 68,160 Other 31,421 28,727 Total 488,358 609,851 TOTAL $4,153,817 $4,204,415 See Notes to Financial Statements.

ENTERGY ARKANSAS, INC.

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

Current Liabilities:

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

91,205 42,156 Associated companies 97,589 120,250 Other 21,800 18,594 Customer deposits 54,194 40,159 Taxes accrued 70,506 48,992 Accumulated deferred income taxes 27,625 30,240 Interest accrued 2,832 4,458 Dividends declared 33,873 34,450 Co-owner advances 6,955 17,837 Deferred fuel cost 53,012 54,697 Obligations under capital leases 15,135 26,238 Other 507,858 467,438 Total Deferred Credits and Other Liabilities:

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

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

TOTAL $4,153,817 $4,204,415 See Notes to Financial Statements.

ENTERGY ARKANSAS, INC.

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

Retained Earnings, January 1 $492,386 $491,799 $448,811 Add:

Net income 157,798 142,263 172,080 Increase in investment in subsidiary 42 Total 650,226 663,879 591,074 Deduct:

Dividends declared:

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

ENTERGY ARKANSAS, INC.

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

$1,648,233 $1,590,742 $1,591,568 $1,521,129 Operating revenues $1,743,433 Income before cumulative effect of accounting changes $ 157,798 $ 136,665 $ 142,263 $ 155,110 $ 130,529

$4,204,415 $4,292,215 $4,334,105 $4,038,811 Total assets $4,153,817

$1,423,804 $1,446,940 $1,478,203 $1,453,588 Long-term obligations (1) $1,439,355 (1) Includes long-term debt (excluding currently maturing debt), preferred stock with sinking fund, preferred securities of subsidiary trust, and noncurrent capital lease obligations.

1996 1995 1994 1993 1992 (In Thousands)

Electric Operating Revenues:

Residential $546,100 $542,862 $506,160 $528,734 $476,090 318,475 307,296 306,742 291,367 Commercial 323,328 362,854 338,988 336,856 325,569 Industrial 364,943 17,084 16,698 16,670 17,700 Governmental 16,989 1,241,275 1,169,142 1,189,002 1,110,726 Total retail 1,251,360 Sales for resale 248,211 178,885 212,314 175,784 203,470 Associated companies 181,558 207,887 195,844 182,920 203,696 Non-associated companies 32,229 26,366 23,086 25,375 Other 35,975

$1,648,233 $1,590,742 $1,591,568 $1,521,129 Total $1,743,433 Billed Electric Energy Sales (Millions of kWh): 5,680 5,102 6,023 5,868 5,522 Residential 4,067 3,841 4,390 4,267 4,147 Commercial 5,690 5,509 6,487 6,314 5,941 Industrial 230 248 234 243 231 Governmental 14,700 17,134 16,692 15,841 15,667 Total retail Sales for resale 10,471 8,386 10,591 8,307 10,357 Associated companies 5,643 5,056 6,720 5,066 4,906 Non-associated companies 29,617 30,113 34,325 30,144 31,338 Total

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

Utilities We have audited the accompanying balance sheets of Entergy Gulf States, Inc. (formerly Gulf States retained earnings and cash Company) as of December 31, 1996 and 1995 and the related statements of income (loss),

statements are the flows for each of the three years in the period ended December 31, 1996. These financial financial opinion on these responsibility of the Company's management. Our responsibility is to express an statements based on our audits.

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

provide a reasonable basis for our opinion.

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

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

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

COOPERS & LYBRAND L.L.P.

New Orleans, Louisiana February 13, 1997

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ENTERGY GULF STATES, INC.

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

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

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

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

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

Increase(

(Decrease)

Description 1996 1995 (In Millions)

Change in base revenues ($60.3) $32.0 Fuel cost recovery 152.0 (29.6)

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

ENTERGY GULF STATES, INC.

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

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

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

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

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

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

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ENTERGY GULF STATES, INC.

STATEMENTS OF INCOME (LOSS)

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

Operating Revenues:

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

Operation and maintenance:

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

Allowance for equity funds used during construction 2,618 1,125 1,334 Write-off of plant held for future use (85,476)

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

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

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

Interest Charges:

Interest on long-term debt 181,071 191,341 195,414 Other interest - net 12,819 8,884 8,720 Allowance for borrowed funds used during constnxtion (2,235) (1,026) (1,075)

Total 191,655 199,199 203,059 Income (Loss) Before Income Taxes 98,204 186,163 (144,941)

Income Taxes 102,091 63,244 (62,086)

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

Preferred Stock Dividend Requirements and Other 28,505 29,643 29,919 Earnings (Loss) Applicable to Common Stock ($32,392) $93,276 ($112,674)

See Notes to Financial Statements.

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

Operating Activities:

Net income (loss) ($3,887) $122,919 ($82,755)

Noncash items included in net income (loss):

194,498 -

Write-off of River Bend rate deferrals 72,597 66,025 96,979 Change in rate deferrals 206,070 202224 197,151 Depreciative, amortizatfioM and deconmissioning 101,380 63,231 (62,171)

Deferred income taxes and investment tax credits (2618) (1,125) (1.334)

Allowance for equity funds used during construction

- 85,476 Wrift-offof plant held for future use Changes in working capital:

3,691 40,193 (72,341)

Receivables (12,868) (6,357) (2,336)

Fuel inventoy (26,706) (4,820) 60,112 Accotnts payable (1,266), 24,935 (10,378)

Taxes accrued (7,186) 1,510 (4,189)

Interest accrued 56,972

- (56,972)

Reserve for rate refund (68,349) (24,840) (431)

Deferred fuel (70,775) (16,079) 34,212 Other working capital accounts (17,303) 7,332 5,522 Change in other regulatory assets (3,202)

(5,922) (8,147)

Decommissioning trust contributions (1,885) 10,119 4,181 Provisio for estimated losses and reserves (37,116) (19,394) 24,891 Other 322,355 400,754 326,359 Net cash flow provided by operating activities Investing Activities:

(154,993) (185,944) (155,989)

Construction expenditures 1,334 2,618 1,125 Allowance for equity funds used during construction (25,124) (1,425) (31,178)

Nuclear fuel purchases 26,523 542 29,386 proceeds from sale/leaseback of nuclear fuel (150,976) (185,702) (156,447)

Net cash flow-used in investing activities Financing Activities:

780 2,277 101,109 Proceeds from the issuance of long-term debt Retirement of.

(195,417)

First mortgage bonds (50,425) (50,425) (102,425)

Other long-term debt (10,179) (7,283) (6,070)

Redemption of preferred and preference stock Dividends paid:

- (289,100)

Common stock (28,336) (29,661) (30,131)

Preferred and preference stock (283,577) (85,092) (326,617)

Net cash flow used in financing activities (112,198) 129,960 (156,705)

Net increase (decrease) in cash and cash equivalents 234,604 104,644 261,349 Cash and cash equivalents at beginning of period

$122,406 $234,604 $104,644 Cash and cash equivalents at end of period SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the period for

$189,962 $187,918 $191,850 Interest- net of amount capitalized

$285 $208 $251 Income taxes Noncash investing and financing activities:

. $31,178 Capital lease obligations incurred Change in unrealized appreciation (depreciation) of

$1,604 S2,121 ($915) decommissioning trust assets See Notes to Financial Statements.

ENTERGY GULF STATES, INC.

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

Current Assets:

Cash and cash equivalents:

Cash $6,573 $13,751 Temporary cash investments - at cost, which approximates market:

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

Customer (less allowance for doubtful accounts of $2.0 million in 1996 and $1.6 million in 1995) 87,883 110,187 Associated companies 2,777 1,395 Other 30,758 15,497 Accrued unbilled revenues 75,351 73,381 Deferred fuel costs 99,503 31,154 Accumulated deferred income taxes 56,714 43,465 Fuel inventory - at average cost 45,009 32,141 Materials and supplies - at average cost 86,157 91,288 Rate deferrals 105,456 97,164 Prepayments and other 16,321 15,566 Total 728,335 745,842 Other Property and Investments:

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

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

Regulatory assets:

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

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ENTERGY GULF STATES, INC.

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

Current Liabilities:

Currently maturing long-term debt $160,865 $145,425 Accounts payable: 55,630 31,349 Associated companies 85,541 136,528 Other 25,572 21,983 Customer deposits 36,147 37,413 Taxes accrued 49,651 56,837 Interest accrued 12,354 22,627 Nuclear refueling reserve 39,110 37,773 Obligations under capital leases 18,186 86,653 Other 483,056 576,588 Total Deferred Credits and Other Liabilities: 1,200,935 1,177,144 Accumulated deferred income taxes 219,188 208,618 Accumulated deferred investment tax credits 83,524 108,078 Obligations under capital leases 33,688 58,047 Deferred River Bend finance charges 539,752 558,750 Other 2,077,087 2,110,637 Total 1,915,346 2,175,471 Long-term debt 77,459 87,654 Preferred stock with sinking fund 150,000 150,000 Preference stock Shareholder's Equity, 136,444 136,444 Preferred stock without sinking fund Common stock, no par value, authorized 200,000,000 shares; issued and outstanding 114,055 114,055 100 shares in 1996 and 1995 1,152,689 1,152,505 Paid-in capital 325,312 357,704 Retained earnings 1,728,500 1,760,708 Total Commitments and Contingencies (Note 2, 9, and 10)

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

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

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

Net income (loss) (3,887) 122,919 (82,755)

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

Dividends declared:

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

ENTERGY GULF STATES, INC.

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

Operating revenues $2,019,181 $1,861,974 $1,797,365 $1,827,620 $1,773,374 Income (loss) before extraordinary items and the cumulative effect of $ 69,461 $ 139,413 accounting changes $ (3,887) $ 122,919 $ (82,755)

$ 6,861,058 $6,843,461 $7,137,351 $7,164,447 Total assets $6,431,448

$ 2,521,203 $2,689,042 $2,772,002 $2,798,768 Long-term obligations (1) $2,226,329 (1) Includes long-term debt (excluding currently maturing debt), preferred and preference stock with sinking fund, and noncurrent capital lease obligations.

1996 1995 1994 1993 1992 (In Thousands)

Electric Operating Revenues:

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

$1,719,201 $1,747,961 $1,694,536 Total $1,925,988 $1,788,964 Billed Electric Energy Sales (Millions of kWh): 6,825 8,035 7,699 7,351 7,192 Residential 5,711 6,417 6,219 6,089 5,474 Commercial 14,413 16,661 15,393 15,026 14,294 Industrial 296 302 438 311 297 Governmental 27,014 31,551 29,622 28,763 27,493 Total retail Sales for resale 656 2,935 1,866 Associated companies 540 2,148 2,212 1,650 666 Non-associated companies 27,554 34,769 32,279 28,159 Total Electric Department 34,355 1,742 1,659 1,597 1,722 Steam Department 1,826 36,511 33,938 29,756 29,276 Total 36,181 (1) 1994 includes the effects of an Entergy Gulf States reserve for rate refund.

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

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

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

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

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

COOPERS & LYBRAND L.L.P.

New Orleans, Louisiana February 13, 1997 ENTERGY LOUISIANA, INC.

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

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

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

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

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

Increase/

(Decrease)

Description 1996 1995 (In Millions)

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

Fuel cost recovery 160.2 (35.9)

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

Sales for resale 6.6 12.9 Total $154.0 ($35.5)

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

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

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

ENTERGY LOUISIANA, INC.

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

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

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

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

ENTERGY LOUISIANA, INC.

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

Operating Revenues $1,828,867 $1,674,875 $1,710,415 Operating Expenses:

Operation and maintenance:

Fuel, fuel-related expenses, and gas purchased for resale 419,331 300,015 331,422 Purchased power 403,322 351,583 366,564 Nuclear refueling outage expenses 15,885 17,675 18,187 Other operation and maintenance 297,667 311,535 350,854 Depreciation, amortization, and decommissioning 167,779 161,023 151,994 Taxes other than income taxes 72,329 55,867 56,101 Rate deferrals (10,767)

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

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

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

Total 130,919 134,885 133,977 Income Before Income Taxes 309,322 318,651 277,127 Income Taxes 118,560 117,114 63,288 Net Income 190,762 201,537 213,839 Preferred Stock Dividend Requirements and Other 19,947 21,307 23,319 Earnings Applicable to Common Stock $170,815 $180,230 $190,520 See Notes to Financial Statements.

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

Operating Activities:

$190,762 $201,537 $213,839 Net income Nowak items included in net income: 19,860 28,422 28,422 Change in rate deferrals 167,779 161,023 151,994 Depreciation, amortization, and decommissioning 18,809 2,450 (15,972)

Deferred income taxes and investment tax credits (862) (1,950) (3,486)

Allowance for equity funds used during construction - (14,632)

Amortization of deferred revenues Changes in working capital: (4,889) (8,069) 1,094 Receivables 22,838 4,420 (6,811)

Accounts paya"e (11,222) 20,472 (16,970)

Tax accrued 5,047 1,215 846 Interest accrued (26,831) (16,993) 31,064 Odier working capital accounts (8,790) (7,493) (4,815)

Decommissioning trust contributions (6,385) 1,801 1,101 Change in other regulatory assets 3,240 (1,996) 26,780 Provision fbr estimated losses and reserves (17,685) (182) (24,833)

Other 351,671 384,657 367,621 Net cash flow Provided by operating activities Investing Activities: (103,187) (120,244) (140,669)

Construction expenditures 862 1,950 3,486 Allowance for equity funds used during construction - (44,707)

Nuclear fue purchases  ;. 47,293 Proceeds from sale/leaseback of nuclear fuel (102,325) (115,708) (137,183)

Net cash flow used in investing activities Financing Activities:

Proceeds fioro the issuance of.

113,994 19,946 First mortgage bonds - 16,577 Otdw on-lenm debt 67,795 Preferred securities of subsidiary hus Retirement of First mortgage bonds (130,000) (75,000) (25,000)

(270) (308) (322)

Other long-term debt (67,824) (11,256) (15,038)

Redemption ofpreferred stock (45,393) 49,305 (24.887)

Changes in short-term borrowings - net Dividends pai: (179,200) (221,500) (167,100)

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

Preferred tock (259,970) (263,297) (235,209)

Net cash flow used in financing activities (10,624) 5,652 (4,771)

Net increase (decrease) in cash and cash equivalents 34,370 28,718 33,489 Cash and cash equivalents at beginning of period

$23,746 $34,370 $28,718 Cash and cash equivalents at end of period SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during te period for: $118,007 $128,485 $128,000 Interest - net of amount capitalized $125,924 $96,066 $96,422 Income taxes Nowcak investing and financing activities: . - $9,677 Capital lease obligations incurred $32,685 Acquisition of nuclear fuel Change in unrealizod appreciation (depreciation) of $2,304 ($1,129)

S301 decommissioning trust assets See Notes to Finarcial Statements.

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ENTERGY LOUISIANA, INC.

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

Current Assets:

Cash and cash equivalents:

Cash $I ,804 $3,952 Temporary cash investments - at cost, which approximates market 21,942 30,418 Total cash and cash equivalents 23,746 34,370 Accounts receivable:

Customer (less allowance for doubtful accounts of $1.4 million in 1996 and 1995) 73,823 72,328 Associated companies 11,606 8,033 Other 7,053 8,979 Accrued unbilled revenues 63,879 62,132 Deferred fuel costs 18,347 10,200 Accumulated deferred income taxes 1,465 Materials and supplies - at average cost 78,449 79,799 Rate deferrals 5,749 25,609 Deferred nuclear refueling outage costs 5,300 21,344 Prepaid income tax 24,651 Prepayments and other 10,234 9,118 Total 324,302 331,912 Other Property and Investments:

Nonutility property 20,060 20,060 Decommissioning trust fund 50,481 38,560 Investment in subsidiary companies - at equity 14,230 14,230 Other - at cost (less accumulated depreciation) 2,465 1,113 Total 87,236 73,963 Utility Plant:

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

Regulatory assets:

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

ENTERGY LOUISIANA, INC.

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

Current Liabilities:

Currently maturing long-term debt $34,275 $35,260 Notes payable: 31,066 61,459 Associated companies 15,000 Other Accounts payable: 73,389 37,494 Associated companies 89,550 69,922 Other 59,070 56,924 Customer deposits 7,390 18,612 Taxes accrued 3,366 Accumulated deferred income taxes 49,249 44,202 Interest accrued 3,489 5,149 Dividends declared 28,000 28,000 Obligations under capital leases 4,940 17,397 Other 392,785 380,418 Total Deferred Credits and Other Liabilities: 831,093 807,278 Accumulated deferred income taxes 139,899 145,561 Accumulated deferred investment tax credits 10,156 43,362 Obligations under capital leases 16,809 23,947 Deferred interest - Waterford 3 lease obligation 114,665 116,696 Other 1,112,622 1,136,844 Total Long-term debt 1,373,233 1,385,171 92,500 100,009 Preferred stock with sinking fund Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely junior subordinated deferrable debentures 70,000 Shareholder's Equity:

Preferred stock without sinking fund 100,500 160,500 Common stock, $0.01 par value, authorized 250,000,000 shares; issued and outstanding 1,088,900 1,088,900 165,173,180 shares in 1996 and 1995 (2,659) (4,836)

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

TOTAL $4,279,278 $4,331,523 See Notes to Financial Statements.

ENTERGY LOUISIANA, INC.

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

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

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

Preferred stock 17,412 20,775 22,359 Common stock 179,200 221,500 167,100 Capital stock expenses 2,536 532 809 Total 199,148 242,807 190,268 Retained Earnings, December 31 (Note 8) $63,764 $72,150 $113,420 See Notes to Financial Statements.

ENTERGY LOUISIANA, INC.

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

$1,553,745 Operating revenues $1,828,867 $1,674,875 $1,710,415 $1,731,541

$ 190,762 $ 201,537 $ 213,839 $ 188,808 $ 182,989 Net income $4,463,998 $4,109,148

$4,279,278 $4,331,523 $4,435,439 Total assets $1,611,436 $1,622,909

$1,545,889 $1,528,542 $1,530,558 Long-term obligations (1)

(1) Includes long-term debt (excluding currently maturing debt), preferred stock with sinking fund, preferred securities of subsidiary trust, and noncurrent capital lease obligations.

1996 1995 1994 1993 1992 (In Thousands)

Electric Operating Revenues:

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

$1,828,867 $1,674,875 $1,710,415 $1,731,541 Total Billed Electric Energy Sales (Millions of kWh): 7,368 6,996 7,893 7,855 7,449 Residential 4,307 4,846 4,786 4,631 4,435 Commercial 15,914 15,013 17,647 16,971 16,561 Industrial 385 457 439 423 398 Governmental 26,701 30,843 30,051 29,064 28,115 Total retail Sales for resale 143 44 10 112 204 Associated companies Non-associated companies 982 1,293 776 1,213 1,101 Total 31,968 31,388 29,850 29,440 28,006 (This page intentionally left blank)

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

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

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

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

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

COOPERS & LYBRAND L.L.P.

New Orleans, Louisiana February 13, 1997

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ENTERGY MISSISSIPPI, INC.

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

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

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

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

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

Increase/

(Decrease)

Description 1996 1995 (In Millions)

Change in base revenues ($2.2) ($6.1)

Grand Gulf Rate Rider 7.1 (0.6)

Fuel cost recovery 33.6 12.8 Sales volume/weather 8.5 14.9 Other revenue (including unbilled) (2.1) 5.6 Sales for resale 23.7 3.4 Total $68.6 $30.0 Electric operating revenues increased in 1996 primarily due to increases in fuel adjustment revenues, the Grand Gulf 1 rate rider, sales for resale, and retail energy sales. Fuel adjustment revenues increased in response to higher fuel costs. In connection with an annual MPSC review, in October 1995, Entergy Mississippi's Grand Gulf I rate rider was adjusted upward as a result of its undercollection of Grand Gulf I costs. The fuel adjustment clause and the Grand Gulf 1 rate rider do not affect net income. Sales for resale, specifically sales to associated companies, increased primarily due to changes in the generation requirements and availability among the domestic utility companies. The increase in retail sales volume is primarily due to increased customer usage.

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

ENTERGY MISSISSIPPI, INC.

MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Expenses Operating expenses increased in 1996 due to an increase in fuel, and purchased power expenses, partially offset by a decrease in other operation and maintenance expenses. Fuel and purchased power expenses increased as a result of higher fuel costs and an increase in energy sales. Other operation and maintenance expenses decreased as a result of lower payroll, contract work, and materials and supplies expenses. Payroll expenses decreased due to restructuring costs recorded in 1995 and the resulting decrease in employees. Contract work and materials and supplies expenses decreased because of the turbine repairs at some of Entergy Mississippi's generating plants in 1995.

Operating expenses decreased in 1995 due primarily to a decrease in other operation and maintenance expenses. Other operation and maintenance expense decreased in 1995 due to 1994 Merger-related costs allocated to Entergy Mississippi and payroll expenses. No significant Merger-related costs were allocated to Entergy Mississippi during 1995. Payroll expenses decreased as a result of the restructuring program announced and accrued for during 1994. In addition, maintenance expenses decreased at various power plants.

Other Income tax expense increased in 1996 as a result of higher pretax income. Income tax expense increased in 1995 due primarily to the 1994 write-off of unamortized deferred investment tax credits and higher pretax income in 1995.

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ENTERGY MISSISSIPPI, INC.

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

Operating Revenues $958,430 $889,843 $859,845 Operating Expenses:

Operation and maintenance:

Fuel fuel-related expenses, and gas purchased for resale 207,116 163,198 164,428 Purchased power 272,812 240,519 235,019 Other operation and maintenance 122,628 144,183 156,954 Depreciation, amortization, and decommissioning 40,313 38,197 36,592 Taxes other than income taxes 43,389 46,019 43,963 Amortization of rate deferrals 107,576 107,339 110,481 Total 793,834 739,455 747,437 Operating Income 164,596 150,388 112,408 Other Income (Deductions):

Allowance for equity funds used during construction 1,143 950 1,660 Miscellaneous - net .1,662 3,036 (1,117)

Total 2,805 3,986 543 Interest Charges:

Interest on long-term debt 44,137 46,998 47,835 Other interest - net 3,870 4,638 4,929 Allowance for borrowed funds used during construction (923) (806) (1,067)

Total 47,084 50,830 51,697 Income Before Income Taxes 120,317 103,544 61,254 Income Taxes 41,106 34,877 12,475 Net Income 79,211 68,667 48,779 Preferred Stock Dividend Requirements and Other 5,010 7,515 7,624 Earnings Applicable to Common Stock $74,201 $61,152 $41,155 See Notes to Financial Statements.

ENTERGY MISSISSIPPI, INC STATEMENTS OF CASH FLOWS For the Years Ended December 31, 1996 1995 1994 (in Thouiwmas)

Ope*ting Activities:

Net income S79,211 $68,667 S48,779 Noncash items included in net income:

130,602 114,304 109,105 Change in ate deferrls 40,313 38,197 36,592 Depre*iation and amontization (32,887) (36,774) (34,409)

Deferred income Wtxe and investment tax credits (1,143) (950) (1,660)

Allowance for equity finds used during construction Changes in working capital:

(4,123) (5,277) 33,154 Receivables 20 (1,901) 3,872 Fuel inventory (8,733)

SS 15,553 Accounts payable (3.431)

(2,157) 7,818 Taxes accrued (925) 1,457 (Z794)

Interest accrued 13,480 4,074 (21,108)

Odhe working capital accounts (7,219)

(28,573) 1,075 Change in other regulatory assets (2,534) 3,882 8,428 Other 181,966 184,943 195,114 Net cash flow provided by operating activities Investing Activities:

(85,018) (79,146) (121,386)

Construction expenditures 1,143 950 1,660 Allowance for equity finds used during construction (119,726)

(83.875) (78,196)

Net cash flow used in investing activities Financing Activities:

Proceeds fiom the issuance oV 79,480 24,534 General and refunding mortgage bonds S- 15,652 Othr long-term debt Retirement of General and refAnding mortgage bonds (26,000) (45,000) (30,000)

(35,000) (20,000) (18,000)

First mortgage bonds (16,045)

(15) (965)

Odhe long-term debt (15,000)

(9,876) (15,000)

Redemption of preferred stock (30,000) 18,432 50,253 Changes in short-term borrowings - net Dividends paid: (45,600)

(79,900) (61,700)

Common stock (5,000) (6,215) (7,762)

Preferred stock (105,538) (99,400) (73,789)

Net cash flow used in financing activities Net increae (decease) in cash and cash equivalents (7,447) 7,347 1,599 Cash and cash equivalents at beginning of period 16,945 9,598 7,999

$9,498 $16,945 $9,598 Cash and cash equivalents at end of period SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the period fw $52,737

$46,769 $48,617 Interest - net of amount capitalized $67,746 $39,000

$73,687 See Notes to Financial Statements.

ENTERGY MISSISSIPPI, INC.

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

Current Assets:

Cash and cash equivalents:

Cash $2,384 $2,574 Temporay cash investments - at cost, which approximates market:

Associated companies 3,248 Other 11,123 Special deposits 7,114 Total cash and cash equivalents 9,498 16,945 Accounts receivable:

Customer (less allowance for doubtful accounts of $1.4 million in 1996 and $1.6 million in 1995) 44,809 46,214 Associated companies 4,382 1,134 Other 2,014 1,967 Accrued unbilled revenues 49,383 47,150 Fuel inventory - at average cost 6,661 6,681 Materials and supplies - at average cost 17,567 19,233 Rate deferrals 142,504 130,622 Prepayments and other 7,434 11,536 Total 284,252 281,482 Other Property and Investments:

Investment in subsidiary companies - at equity 5,531 5,531 Other - at cost (less accumulated depreciation) 7,923 5,615 Total 13,454 11,146 Utility Plant:

Electric 1,633,484 1,559,955 Construction work in progress 47,373 55,443 Total 1,680,857 1,615,398 Less - accumulated depreciation and amortization 635,754 613,712 Utility plant - net 1,045,103 1,001,686 Deferred Debits and Other Assets:

Regulatory assets:

Rate deferrals 104,588 247,072 SFAS 109 regulatory asset - net 11,813 6,445 Unamortized loss on reacquired debt 9,254 10,105 Other regulatory assets 46,309 17,736 Other 6,693 6,311 Total 178,657 287,669 TOTAL $1,521,466 $1,581,983 See Notes to Financial Statements.

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ENTERGY MISSISSIPPI, INC.

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

Current Liabilities:

Currently maturing long-term debt $96,015 $61,015 Notes payable - associated companies 50,253 Accounts payable:

Associated companies 32,878 24,391 Other 23,701 32,100 Customer deposits 26,258 24,339 Taxes accrued 26,482 28,639 Accumulated deferred income taxes 58,634 54.090 Interest accrued 20,909 21,834 Other 3,065 6,875 Total 338,195 253,283 Deferred Credits and Other Liabilities:

Accumulated deferred income taxes 249,522 278,581 Accumulated deferred investment tax credits 25,422 27,978 Other 19,445 22,515 Total 294,389 329,074 Long-term debt 399,054 494,404 Preferred stock with sinking fund 7,000 16,770 Shareholder's Equity:

Preferred stock without sinking fund 57,881 57,881 Common stock, no par value, authorized 15,000,000 shares; issued and outstanding 8,666,357 shares in 1996 and 1995 199,326 199,326 Capital stock expense and other (143) (218)

Retained earnings 225,764 231,463 Total 482,828 488,452 Commitnents and Contingencies (Note 2 and 9)

TOTAL $1,521,466 $1,581,983 See Notes to Financial Statements.

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ENTERGY MISSISSIPPI, INC.

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

$231,463 $232,011 $236,337 Retained Earnings, January 1 Add:

Net income 79,211 68,667 48,779 310,674 300,678 285,116 Total Deduct:

Dividends declared:

4,803 5,971 7,404 Preferred stock 79,900 61,700 45,600 Common stock 207 1,544 101 Preferred stock expenses 69,215 53,105 84,910 Total $231,463 $232,011

$225,764 Retained Earnings, December 31 (Note 8)

See Notes to Financial Statements.

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ENTERGY MISSISSIPPI, INC.

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

$ 859,845 $ 883,818 $ 799,483 Operating revenues $ 958,430 $ 889,843 $ 69,037 $ 65,036

$ 79,211 $ 68,667 $ 48,779 Net Income $1,637,828 $1,681,992 $1,665,480

$1,521,466 $1,581,983 Total assets $ 5071555 $ 563,612 $ 576,787

$ 406,421 $ 511,613 Long-term obligations (1)

(I) Includes long-term debt (excluding currently maturing debt), and preferred stock with sinking fund, and noncurrent capital lease obligations.

1996 1995 1994 1993 1992 (In Thousands)

Electric Operating Revenues:

$358,264 $336,194 $332,567 $341,620 $309,614 Residential 257,154 251,285 236,191 281,626 262,786 Commercial 184,637 182,060 169,977 185,351 178,466 Industrial 27,495 28,530 26,377 29,093 27,410 Governmental 801,853 803,495 742,159

$54,334 804,856 Total retail Sales for resale 34,640 17,988 58,749 35,928 37,747 Associated companies 16,728 21,100 19,995 22,814 21,906 Non-associated companies 3,517 24,583 19,341 22,533 27,153 Other $859,845 $883,818 $799,483

$958,430 $889,843 Total Billed Electric Energy Sales (Millions of kWh): 4,014 3,983 3,644 4,355 4,233 Residential 3,151 2,928 2,804 3,508 3,368 Commercial 2,985 2,787 2,631 3,063 3,044 Industrial 330 336 318 346 336 Governmental 10,981 10,480 10,034 9,397 11,272 Total retail Sales for resale 1,079 758 253 Associated companies 1,368 959 937 512 670 521 692 Non-associated companies 12,071 11,462 10,587 13,161 12,632 Total

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

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

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

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

COOPERS & LYBRAND L.L.P.

New Orleans, Louisiana February 13, 1997

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ENTERGY NEW ORLEANS, INC.

MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income decreased in 1996 primarily due to the rate refiund recorded in December 1996, based on the Council's review of Entergy New Orleans' 1996 earnings. The decrease in net income was partially offset by reduced other operating and maintenance expenses.

Net income increased in 1995 principally due to 1994 refunds associated with the 1994 NOPSI Settlement and a decrease in other operation and maintenance expense, partially offset by a permanent rate reduction that took place January 1, 1995.

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

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

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

Increase/

(Decrease)

Description 1996 1995 (In Millions)

Change in base revenues ($8.5) $7.8 Fuel cost recovery 28.5 (0.3)

Sales volume/weather (4.8) 12.5 Other revenue (including unbilled) (1.4) 6.1 Sales for resale (0.5) 3.5 Total $13.3 $29.6 In 1996, electric operating revenues increased primarily due to higher fuel adjustment revenues, caused by elevated fuel prices, which do not affect net income. The increase was offset by a rate refund recorded in 1996, as discussed in "Net Income" above, and lower industrial sales attributable to a significant reduction in electricity usage by a large customer. Electric operating revenues increased in 1995 as a result of refunds in 1994 associated with the 1994 NOPSI Settlement and an increase in energy sales. The increase in energy sales in 1995 was primarily due to weather effects on retail sales and an increase in sales for resale.

Gas operating revenues in 1996 increased primarily due to higher gas prices. This increase was offset by the rate refund recorded in 1996, as discussed in "Net Income" above. Gas operating revenues decreased in 1995 primarily due to the rate reduction agreed to in the NOPSI Settlement effective January 1, 1995, and a lower unit purchase price for gas purchased for resale.

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ENTERGY NEW ORLEANS, INC.

MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Expenses In 1996, operating expenses increased due to higher fuel expenses, including purchased power, and gas purchased for resale. This increase was offset by reduced amortization of previous rate deferrals, the recording of rate deferrals, and lower other operation and maintenance expenses. Fuel expenses, including gas purchased for resale, increased as a result of significantly higher unit prices. Purchased power increased due to changes in generation availability and requirements among the domestic utility companies. Rate deferrals increased due to the deferral of a portion of the System Energy rate increase being billed to Entergy New Orleans, as discussed in Note

2. Other operation and maintenance expenses decreased primarily due to lower payroll expenses due to restructuring and reduced regulatory commission expenses.

Operating expenses increased in 1995 due primarily to increased amortization of rate deferrals, partially offset by a decrease in fuel and other operation and maintenance expenses. Fuel expenses decreased in 1995 primarily due to a decrease in fuel prices. Other operation and maintenance expenses decreased primarily due to a decrease in maintenance activity and lower payroll expenses. In 1995, the increase in the amortization of rate deferrals is primarily a result of the collection of larger amounts of previously deferred costs under the 1991 NOPSI Settlement, which allowed Entergy New Orleans to record an additional $90 million of previously incurred Grand Gulf 1-related costs.

Other Income taxes decreased in 1996 due to lower pretax income. Income taxes increased in 1995 as a result of lower pretax income in 1994 due to the 1994 NOPSI Settlement and the write-off of the unamortized balances of deferred investment tax credits pursuant to the FERC Settlement in 1994.

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ENTERGY NEW ORLEANS, INC.

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

Operating Revenues:

Electric $403,254 $390,002 $360,430 Natural gas 101,023 80,276 87,357 Total 504,277 470,278 447,787 Operating Expenses:

Operation and maintenance:

Fuel, fuel-related expenses, and gas purchased foi resale 129,059 102,314 113,735 Purchased power 176,450 145,920 145,935 Other operation and maintenance 71,421 76,510 80,656 Depreciation, amortization, and decommissioning 20,007 19,420 19,275 Taxes other than income taxes 27,388 27,805 27,814 (4,866) (4,392)

Rate deferrals Amortization of rate deferrals 27,240 31,971 27,009 Total 446,699 399,548 414,424 Operating Income 57,578 70,730 33,363 Other Income:

Allowance for equity funds used during construction 321 158 331 Miscellaneous - net 1,146 1,639 2,141 Total 1,467 1,797 2,472 Interest Charges:

Interest on long-tern debt 15,268 15,948 17,092 Other interest - net 1,036 1,853 1,179 Allowance for borrowed funds usdd during construction (252) (127) (247)

Total 16,052 17,674 18,024 Income Before Income Taxes 42,993 54,853 17,811 Income Taxes 16,217 20,467 4,600 Net Income 26,776 34,386 13,211 Preferred Stock Dividend Requirements and Other 965 1,411 1,581 Earnings Applicable to Common Stock $25,811 $32,975 $11,630 See Notes to Financial Statements.

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ENTERGY NEW ORLEANS, INC.

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

Operating Activities:

Net income S26,776 $34,386 $13,211 Noncash items included in net income:

Change in rate deferrals 35,917 31,564 24,106 20,007 19,420 19,275 De*rcation and amoization (18,006)

(12,274) (1,998)

Deferred income taxes and investment tax credits (331)

(321) (158)

Allowance for equity einds used during construction Changes in waking capsitl:

Receivables 832 (5,468) 15,362 (5,638) 12,566 (19,132)

Accounts payable (2,832)

(4,350) 3,225 Taxes aued 214 (131) (230)

Interes accrued 20,172 (20,172)

Income tax refimd (5,216) (4,303) 18,454 Oe woaking capital accounts (1 1,941) (9,500) 8,851 Other 44,006 99,275 38,556 Net cash flow provided by operating activities Investing Activities: (22,777)

(27,956) (27,836)

Constructii expendiures 331 321 158 Allowance for equity funds used during construction (27,635) (27,678) (22,446)

Net cash flow used in investing activities Financing Activities:

Proceeds from the issuance of general and refunding mortgage bonds 39,608 29,805 Retirement of First mortgage bonds (23,250).

(30,000) (24,200) (15,000)

Generaland refunding mortgage bonds

- (3,525) (1,500)

Redemption ofprefered stock Dividends paid: (33,300)

(34,000) (30,600)

Common Stock (1,596)

(965) (1,362)

Preferred stock (48,607) (29,882) (51,396)

Net cash flow used in financing activities (32,236) 41,715 (35,286)

Net increasi (decrease) in cash and cash equivalents 49,746 8,031 43,317 Cash and cash equivalents at beginning of period S17,510 $49,746 $8,031 Cash and cash equivalents at end of period SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during die period for

$15,357 $17,187 $17,707 Interet - net of amount capitalized

$31,870 ($941) $45,984 Income taes (refund) - net See Notes to Financial Statements.

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ENTERGY NEW ORLEANS, INC.

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

Current Assets:

Cash and cash equivalents:

Cash $1,015 $1,693 Temporary cash investments - at cost, which approximates market: 7,435 10,860 Associated companies 9,060 37,193 Other 17,510 49,746 Total cash and cash equivalents Accounts receivable:

Customer (less allowance for doubtful accounts 27,430 29,168 of $0.7million in 1996 and $0.5 million in 1995) 714 551 Associated companies 1,764 843 Other 17,064 17,242 Accrued unbilled revenues 7,290 2,647 Deferred electric fuel and resale gas costs 9,904 8,950 Materials and supplies - at average cost 37,692 35,191 Rate deferrals 7,157 4,529 Prepayments and other 126,525 148,867 Total Other Property and Investments: 3,259 3,259 Investment in subsidiary companies - at equity Utility Plant: 503,061 483,581 Electric 122,700 121,083 Natural gas 18,247 17,525 Construction work in progress 644,008 622,189 Total 347,790 335,021 Less - accumulated depreciation and amortization 296,218 287,168 Utility plant - net Deferred Debits and Other Assets:

Regulatory assets: 99,498 137,916 Rate deferrals 6,051 6,813 SFAS 109 regulatory asset - net 1,647 1,932 Unamortized loss on reacquired debt 15,908 9,204 Other regulatory assets 890 1,047 Other 123,994 156,912 Total

$549,996 $596,206 TOTAL See Notes to Financial Statements.

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ENTERGY NEW ORLEANS, INC.

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

Current Liabilities:

$12,000 $38,250 Currently maturing long-term debt Accounts payable: 18,757 13,851 Associated companies 14,130 24,674 Other 18,974 18,214 Customer deposits 1,204 5,554 Taxes accrued 5,584 9,174 Accumulated deferred income taxes 5,325 5,111 interest accrued 19,465 11,870 Provision for rate refund 1,521 6,867 Other 96,960 133,565 Total Deferred Credits and Other Liabilities: 72,895 81,654 Accumulated deferred income taxes 7,984 8,618 Accumulated deferred investment tax credits 15,666 15,666 Accumulated provision for property insurance 24,713 29,654 Other 121,258 135,592 Total 168,888 155,958 Long-term debt Shareholders' Equity: 19,780 19,780 Preferred stock without sinking fund Common Shareholdees Equity:

Common stock, $0.01 par value, authorized 10,000,000 shares; issued and outstanding 33,744 33,744 8,435,900 shares in 1996 and 1995 36,294 36,306 Paid-in capital Retained earnings subsequent to the elimination of the accumulated deficit on November 30, 1988 73,072 81,261 162,890 171,091 Total Commitments and Contingencies (Note 2 and 9)

$549,996 $596,206 TOTAL See Notes to Financial Statements.

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ENTERGY NEW ORLEANS STATEMENTS OF RETAINED EARNINGS For the Years Ended December 31, 1996 1995 1994 (In Thousands)

Retained Earnings, January 1 $81,261 $78,886 $100,556 Add:

Net income 26,776 34,386 13,211 Total 108,037 113,272 113,767 Deduct:

Dividends declared:

Preferred stock 965 1,231 1,536 Common stock 34,000 30,600 33,300 Capital stock expenses 180 45 Total 34,965 32,011 34,881 Retained Earnings, December 31 (Note 8) $73,072 $81,261 $78,886 See Notes to Financial Statements.

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ENTERGY NEW ORLEANS, INC.

COMPARISON SELECTED FINANCIAL DATA - FIVE-YEAR 1995 1994 1993 1"2 1996 (In Thousands)

$ 504,277 $$ 447,787 $$ 514,822 36,761 $$ 464,879 26,424

$ 470,278 13,211 Operating revenues $ 26,776 $ 34,386 $ 621,691

$ 592,894 $ 647,605 Net Income $ 549,996 $ 596,206 $ 165,917

$ 167,610 $ 193,262 Total assets $ 168,888 $ 155,958 Long-term obligations (1)

(1) Includes long-term debt (excluding currently maturing debt).

1995 1994 1993 1992 1996 (In Thousands)

Electric Operating Revenues: $142,013 $151,423 $137,668 160,229

$151,577 $141,353 162,410 167,788 Residential 149,649 144,374 25,422 26,205 23,860 Commercial 24,663 22,842 58,726 61,548 56,023 Industrial 58,561 52,880 388,571 406,964 377,780 Governmental 384,450 361,449 Total retail 2,061 2,487 3,086 Sales for resale 2,649 3,217 7,512 9,291 7,234 Associated companies 9,882 9,864 3,836 (37,714) 5,088 Non-associated companies 6,273 15,472 $391,936

$360,430 $423,830 Other (1) $403,254 $390,002 Total Billed Electric Energy 1,806 1,914 Sales (Millions of kWh): 2,049 1,896 1,977 1,998 2,031 1,989 Residential 2,073 2,079 457 537 518 499 Commercial 481 888 951 924 Industrial 974 983 5,326 5,128 Governmental 5,526 5,648 5,396 Total retail Sales for resale 92 89 155 66 149 Associated companies 297 202 262 250 212 Non-associated companies 6,094 5,690 p 5,677 5,533 5,804 o w

• I

• Total (1) 1994 includes the effects of the 1994 NOPSI Settlement.

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REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholder of System Energy Resources, Inc.

Energy Resources, Inc. as of December 31, We have audited the accompanying balance sheets of System and cash flows for each of the three years in earnings 1996 and 1995, and the related statements of income, retainedstatements are the responsibility of the Company's the period ended December 31, 1996. These financialthese financial statements based on our audits.

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

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

Company changed its method of accounting As discussed in Note 1 to the financial statements, in 1996 the for incremental nuclear plant outage maintenance costs.

COOPERS & LYBRAND L.L.P.

New Orleans, Louisiana February 13, 1997

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SYSTEM ENERGY RESOURCES, INC.

MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income increased slightly in 1996 primarily due to lower interest charges attributed to the refinancing of higher-cost debt.

Net income increased in 1995 primarily due to the effect of the FERC Settlement which reduced 1994 net income by $80.2 million (see Note 2). This was partially offset by revenues being adversely impacted by a lower return on System Energy's decreasing investment in Grand Gulf 1.

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

Revenues Operating revenues recover operating expenses, depreciation, and capital costs attributable to Grand Gulf 1. Capital costs are computed by allowing a return on System Energy's common equity funds allocable to its net investment in Grand Gulf 1 and adding to such amount System Energy's effective interest cost for its debt allocable to its investnent in Grand Gulf 1.

Operating revenues increased in 1996 due to an increase in other operation and maintenance expenses, and increased depreciation, amortization, and decommissioning expenses offset by a decrease in nuclear refueling outage expenses as discussed in "Expeses" below.

Operating revenues increased in 1995 due primarily to the effect of the FERC Settlement on 1994 revenues as discussed in "Net Income" above and the recovery of increased expenses in connection with a Grand Gulf 1 refueling outage offset by a lower return on System Energy's decreasing investment in Grand Gulf 1. Revenues attributable to the return on investment are expected to continue to decline each year as a result of the depreciation of System Energy's investment in Grand Gulf 1.

Expenses Operating expenses increased in 1996 due primarily to increases in other operation and maintenance expenses, and depreciation, amortization, and decommissioning expenses. Other operation and maintenance expenses increased primarily because of higher waste disposal costs and medical benefit charges for the year. The increase in decommissioning costs and depreciation rates is reflected in the 1995 System Energy FERC rate increase filing, subject to refund (see Note 2). These increases were partially offset by a decrease in nuclear refueling outage expenses. The decrease in nuclear outage expenses was primarily due to the effect of deferring the nuclear refueling outage expenses in the fourth quarter of 1996 rather than recognizing those expenses as incurred (see Note 1). Grand Gulf 1 was on-line for 322 days in 1996 as compared with 285 days in 1995. The increase in the on-line days was primarily due to the unit's shorter eighth refueling outage that lasted from October 19, 1996 to November 30, 1996 (41 days), compared to a 68-day outage in 1995, and to a lesser extent, unplanned outages in 1996 totaling 3 days, compared to 12 days for 1995.

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SYSTEM ENERGY RESOURCES, INC.

MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Operating expenses increased in 1995 due to higher nuclear refueling outage expenses and higher the depreciation, amortization, and decommissioning costs, partially offset by lower fuel expenses as a result of refueling outage. Grand Gulf 1 was on-line for 285 days in 1995 as compared with 345 days in 1994. The difference in the on-line days was primarily due to the unit's seventh refueling outage that lasted from April 15, 1995, to June 21, 1995 (68 days), and, to a lesser extent, unplanned outages in 1995 totaling 12 days, compared to in 20 days in 1994. Depreciation, amortization, and decommissioning costs increased due to a $4 million increase amortization (as a result of the reclassification of $81 million of Grand Gulf 1 costs and the accelerated and $1 amortization of the reclassified costs over a ten-year period in accordance with the 1994 FERC Settlement) million in decommissioning.

Other Interest expenses decreased in both 1996 and in 1995 due primarily to the retirement and refinancing of higher-cost long-term debt. In 1995, the decrease in interest expense was partially offset by interest associated with the FERC Settlements refunds (See Note 2). Income taxes increased in both 1996 and 1995 due to higher pretax income.

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SYSTEM ENERGY RESOURCES, INC.

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

Operating Revenues $623,620 $605,639 $474,963 Operating Expenses:

Operation and maintenance:

Fuel, fu-related expenses, and gas purchased for resale 43,761 40,262 48,107 Nuclear refueling outage expenses 1,239 24,935 Other operation and maintenance 105,453 98,441 96,504 Depreciation, amortization, and decommissioning 128,474 100,747 93,861 Taxes other than income taxes 27,654 27,549 26,637 Total 306,581 291,934 265,109 317,039 313,705 209,854 Other Income:

Allowance for equity funds used during construction 1,122 1,878 1,090 Miscellaneous - net 5,234 2,492 6,402 Total 6,356 4,370 7,492 Interest Charges:

Interest on long-term debt 135,376 143,020 169,248 Other interest - net 8,344 8,491 7,257 Allowance for borrowed funds used during construction (1,604) (1,968) (1,403)

Total 142,606 149,543 175,102 Income Before Income Taxes 180,789 168,532 42,244 Income Taxes 82,121 75,493 36,837 Net Income $98,668 S93,039 $5,407 See Notes to Financial Statements.

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SYSTEM ENERGY RESOURCES, INC.

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

Operating Activities:

Net inome $98,668 S93,039 $5,407 Noncash items included in net income:

128,474 100,747 93,861 Deprociation, amctaM a01n decommisSIoIng 48,975 (45,337) (30,640)

Deferred income tWxes and investment tax credits (1,122) (1,878) (1,090)

Allowance for equity funds used during construction Changes in working capital: 3,436 (66,433) 48,411 Receivables 560 (18,955) 35,469 Accounts payae (4,825) 37,266 14,430 Tans accrued (4,053) (8,133)

(2,548)

Interest accrued (13,430) (21,874) 14,024 Odier waking cap 92,689 Recoverabe income tEws (18,531) (5,414) (5,157) co s tonin bustcontributios (3,540) 60,388 (4,009)

FERC Settlement - refund obligation 46,919 3,167 (2,371)

Provision for esimajtd losses and reserves 4,290 29,725 19,699 Oedr 96,460 336,987 286,857 Net cash flow provided by operating activities Investng Activities: (29.469) (21.747) (20,766)

C~onstruction expenditures 1,122 1,878 1,090 Allowance for equity funds used during construction (44,704) (51,455) (26,414)

Nuclear fuel purcbses 43,971 52,188 Proceeds friom sale/]easeback of nuclear fuel (29,080) (19,136) (46,090)

Not cash flow used in investing activities Financing Activities:

Proceeds firom te issuance of.

233,656 59,410 First mortgage bonds 133,933 73,343 Othr long4wim debt Retirement of First mortgage bonds (325,101) (105,000) (260,000)

(92,700) (45,320)

Owr long-trm debt (48,436)

Premium and expenses paid on refinancing sale/leaseback bonds (2,990) 2,990 Changes in sho borrowings - net (112,500) (92,800) (148,300)

Common stock dividends paid (165,702) (166,78 (397,326)

Net cash flow used in financing activities 92,075 (89,463) (106,429)

Net increase (decrease) in cash and cash equivalents 240 89,703 196,132 Cash and cash equivalents at beginnig of period s92,315 $240 $89,703 Cash and cash equivalents at end of period SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash*poid during o periodfor $138,483 $147,492 $176,503 Intwest- ad of amount capitalized $36,397 $87,016 ($39,586)

Income W=xe(rcfind)

Noncash investing and financing activities:

Change in unarmzd appreciation (depreciation) of

($70) $3,061 ($1,515) dcomnming trust assets See Notes to Financial Statements.

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SYSTEM ENERGY RESOURCES, INC.

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

Current Assets:

Cash and cash equivalents:

Cash

$26 $240 Temporary cash investments - at cost, which approximates market:

Associated companies 41,600 Other 50,689 Total cash and cash equivalents 92,315 240 Accounts receivable:

Associated companies 71,337 72,458 Other 2,522 Materials and supplies - at average cost 4,837 66,302 67,661 Deferred nuclear refueling outage costs 24,005 Prepayments and other 4,929 16,050 Total 261,410 161,246 Other Property and Investments:

Decommissioning trust fund 62,223 40,927 Utility Plant:

Electric 2,994,445 2,977,303 Electric plant under leases 447,409 444,305 Construction work in progress 41,362 35,946 Nuclear fuel under capital lease 83,558 71,374 Total 3,566,774 3,528,928 Less - accumulated depreciation and amortization 974,472 861,752 Utility plant - net 2,592,302 2,667,176 Deferred Debits and Other Assets:

Regulat" assets:

SFAS 109 regulatory asset - net 264,758 291,181 Unamortized loss on reacquired debt 57,785 52,702 Other regulatory assets 207,214 203,731 Other 15,601 14,049 Total ___61,663 545,358 TOTAL

$3,461,293 $3,431,012 See Notes to Financial Statements.

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SYSTEM ENERGY RESOURCES, INC.

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

Current Liabilities:

Currently maturing long-term debt $10,000 $250,000 Notes payable - associated companies 2,990 Accounts payable:

Associated companies 18,245 17,458 Other 18,836 19,063 Taxes accrued 67,823 72,648 Interest accrued 34,195 36,743 Obligations under capital leases 28,000 28,000 Other 2,306 4,211 Total 179,405 431,113 Deferred Credits and Other Liabilities:

Accumulated deferred income taxes 624,020 602,182 Accumulated deferred investment tax credits 103,647 107,119 Obligations under capital leases 55,558 44,107 FERC Settlement - refund obligation 52,839 56,848 Other 165,517 94,449 Total 1,001,581 904,705 Long-term debt 1,418,869 1,219,917 Common Shareholder's Equity:

Common stock, no par value, authorized 1,000,000 shares; issued and outstanding 789,350 shares in 1996 and 1995 789,350 789,350 Paid-in capital 7 Retained earnings 72,088 85,920 Total 861,438 875,277 Commitments and Contingencies (Note 2, 9, and 10)

TOTAL $3,461,293 $3,431,012 See Notes to Financial Statements.

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SYSTEM ENERGY RESOURCES, INC.

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

Retained Earnings, January 1 $85,920 $85,681 $228,574 Add:

Net income 98,668 93,039 5,407 Total 184,588 178,720 233,981 Deduct:

Qividends declared 112,500 92,800 148,300 Retained Earnings, December 31 (Note 8) $72,088 $85,920 $85,681 See Notes to Financial Statements.

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SYSTEM ENERGY RESOURCES, INC.

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

$ 650,768 $ 723,410 Operating revenues $ 623,620 $ 605,639 $ 474,963

$ 93,039 $ 5,407 $ 93,927 $ 130,141 Net income $ 98,668

$3,431,012 $3,613,359 $3,891,066 $3,672,441 Total assets $3,461,293

$1,474,427 $1,264,024 $1,456,993 $1,536,593 $1,768,299 Long-term obligations (1)

Electric energy sales 7,113 8,302 7,212 8,653 7,354 (Millions of kWh)

(1) Includes long-term debt (excluding current maturities) and noncurrent capital lease obligations.

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ENTERGY CORPORATION AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS NOTE 1.

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)

The accompanying consolidated financial statements include the accounts of Entergy Corporation and its direct subsidiaries: Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, System Energy, Entergy Services, Entergy Operations, Entergy Power, Entergy Enterprises, Entergy Power Operations Corporation, Entergy S.A., Entergy Power Marketing Corporation, Entergy Power Development Corporation, Entergy Technology Holding Company, Entergy Power Edesur Holding LTD, Entergy Transener S.A.,

and Entergy Power Development International Corporation. A number of these subsidiaries have additional subsidiaries. CitiPower is a subsidiary of Entergy Power Development International Corporation.

All significant intercompany transactions have been eliminated. Entergy Corporation's utility subsidiaries maintain accounts in accordance with FERC and other regulatory guidelines. Certain previously reported amounts have been reclassified to conform to current classifications with no effect on net income or shareholders' equity.

Use of Estimates in the Preparation of Financial Statements The preparation of Entergy Corporation and its subsidiaries' financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of December 31, 1996 and 1995, and the reported amounts of revenues and expenses during fiscal years 1996, 1995, and 1994.

Adjustments to the reported amounts of assets and liabilities may be necessary in the future to the extent that future estimates or actual results are different from the estimates used in 1996 financial statements.

Revenues and Fuel Costs Entergy Arkansas, Entergy Louisiana, and Entergy Mississippi generate, transmit, and distribute electricity (primarily to retail customers) in the states of Arkansas, Louisiana, and Mississippi, respectively. Entergy Gulf States generates, transmits, and distributes electricity primarily to retail customers in the States of Texas and Louisiana; distributes gas at retail in the City of Baton Rouge, Louisiana, and vicinity; and also sells steam to a large refinery complex in Baton Rouge. Entergy New Orleans sells both electricity and gas to retail customers in the City of New Orleans (except for Algiers, where Entergy Louisiana is the electricity supplier).

System Energy's operating revenues recover operating expenses, depreciation, and capital costs attributable to Grand Gulf 1 from Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans. Capital costs are computed by allowing a return on System Energy's common equity funds allocable to its net investment in Grand Gulf 1, plus System Energy's effective interest cost for its debt allocable to its investment in Grand Gulf 1.

See Note 2 for a discussion of System Energy's proposed rate increase.

A portion of Entergy Arkansas' and Entergy Louisiana's purchase of power from Grand Gulf has not been included in the determination of the cost of service to retail customers by the APSC and LPSC, respectively, as described in Note 2.

The domestic utility companies accrue estimated revenues for energy delivered since the latest billings.

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The domestic utility companies' rate schedules (except Entergy Gulf States' Texas retail rate schedules) include fuel adjustment clauses that allow either current recovery-or deferrals of fuel costs until such costs are reflected in the related revenues. Entergy Gulf States' Texas retail rate schedules include a fixed fuel factor approved by the PUCT, which remains in effect until changed as part of a general rate case, fuel reconciliation, or fixed fuel factor filing.

Utility Plant Utility plant is stated at original cost. The original cost of utility plant retired or removed, plus the applicable removal costs, less salvage, is charged to accumulated depreciation. Maintenance, repairs, and minor replacement costs are charged to operating expenses. Substantially all of the utility plant is subject to liens of the subsidiaries' mortgage bond indentures.

Utility plant includes the portions of Grand Gulf 1 and Waterford 3 that were sold and currently are leased back. For financial reporting purposes, these sale and leaseback transactions are reflected as financing transactions.

Net electric utility plant in service, by company and functional category, as of December 31, 1996 (excluding owned and leased nuclear fuel, the accumulated provision for decommissioning, and the plant acquisition adjustment related to the Merger), is shown below:

Production Nuclear Other Transmission Distribution Other Total (In Millions)

Entergy Arkansas $ 987 $ 390 S 454 $ 909 $ 121 $ 2,861 Entergy Gulf States 2,357 678 449 764 224 4,472 Entergy Louisiana 2,048 239 331 717 62 3,397 Entergy Mississippi - 221 289 427 61 998 Entergy New Orleans - 17 18 161 18 214 System Energy 2,438 - 16 - 14 2,468 Entergy 7,830 1,632 1,703 3,440 611 15,216 Depreciation is computed on the straight-line basis at rates based on the estimated service lives and costs of removal of the various classes of property. Depreciation rates on average depreciable property are shown below:

Entergy Entergy Entergy Entergy Entergy System Entert' Arkansas Gulf States Louisiana Mississippi New Orleans Enera 1996 3.0% 3.2% 2.7% 3.0% 2.4% 3.1% 3.3%

1995 2.9% 3.3% 2.7% 3.0% 2.4% 3.1% 2.9%

1994 3.0% 3.4% 2.7% 3.0% 2.4% 3.1% 3.0%

AFUDC represents the approximate net composite interest cost of borrowed funds and a reasonable return on the equity funds used for construction. Although AFUDC increases both utility plant and earnings, it is only realized in cash through depreciation provisions included in rates.

Jointly-Owned Generatin! Stations Certain Entergy Corporation subsidiaries own undivided interests in several jointly-owned electric generating facilities and record the investments and expenses associated with these generating stations to the extent of their

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respective ownership interests. As of December 31, 1996, the subsidiaries' investment and accumulated depreciation in each of these generating stations were as follows:

Total Megawatt Accumulated Generating Stations Fuelypl Capability Ownership investment Depreciation (In Thousands)

Entergy Arkansas Independence Unit 1 Coal 836 31.50% $117,515 $ 43,646 Common Facilities Coal 15.75% 29,568 9,921 White Bluff Units 1 and 2 Coal 1,660 57.00% 396,403 166,809 Entergy Gulf States River Bend Unit 1 Nuclear 936 70.00% 3,103,974 746,440 Roy S. Nelson Unit 6 Coal 550 70.00% 400,221 166,820 Big Cajun 2 Unit 3 Coal 540 42.00% 222,957 86,699 Entergy Mississippi Independence Units 1 and 2 Coal 1,678 25.00% 224,814 79,934 System Energy Grand Gulf Unit 1 Nuclear 1,179 90.00%(1) 3,429,562 974,472 Entergy Power Independence Unit 2 Coal 842 21.50% 121,666 40,585 (1) Includes an 11.5% leasehold interest - See Note 10 Income Taxes Entergy Corporation and its subsidiaries file a consolidated federal income tax return. Income taxes are allocated to the subsidiaries in proportion to their contribution to consolidated taxable income. SEC regulations require that no Entergy Corporation subsidiary pay more taxes than it would have paid if a separate income tax return had been filed. In accordance with SFAS 109, "Accounting for Income Taxes", deferred income taxes are recorded for all temporary differences between the book and tax basis of assets and liabilities, and for certain credits available for carryforward.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Investment tax credits are deferred and amortized based upon the average useful life of the related property in accordance with rate treatment.

Acquisition Adjustment Entergy Corporation, upon completion of the Merger in December 1993, recorded an acquisition adjustment in utility plant in the amount of $380 million, representing the excess of the purchase price over the historical cost of the Entergy Gulf States net assets acquired. During 1994, Entergy recorded an additional $124 million of acquisition adjustment related to the resolution of certain preacquisition contingencies and appropriate allocation of purchase price.

The acquisition adjustment is being amortized on a straight-line basis over a 31-year period beginning January 1, 1994, which approximates the remaining average book life of the plant acquired as a result of the Merger.

As of December 31, 1996, the unamortized balance of the acquisition adjustment was $455 million.

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Entergy's future net cash flows are expected to be sufficient to recover the amortization of both the Merger acquisition adjustment and the cost of the CitiPower license discussed in Note 13.

Reacquired Debt of the related new The premiums and costs associated with reacquired debt are being amortized over the life issuances, in accordance with ratemaking treatment.

Cash and Cash Equivalents original maturity of three Entergy considers all unrestricted highly liquid debt instruments purchased with an months or less to be cash equivalents.

Stock Options - SFAS 123 1995, to be effective The FASB issued SFAS 123, "Accounting for Stock-Based Compensation," in October either (a) adoption for financial reporting for 1996 financial statements. The provisions of this statement require statements had they been purposes; or (b) disclosure of the impact the provisions would have had on financial by SFAS 123.

adopted. Entergy has elected the disclosure option. See Note 5 for the disclosures required Continued Application of SFAS 71 The domestic utility companies and System Energy currently account for the effects of regulation pursuant to applies to the financial SFAS 71, "Accounting for the Effects of Certain Types of Regulation." This statement must have rates that (i) are statements of a rate-regulated enterprise that meets three criteria. The enterprise from customers. These approved by the regulator; (ii) are cost-based, and (iii) can be charged to and collected as the generation or transmission criteria may also be applied to separable portions of a utility's business, such meets these criteria, it may capitalize costs that would functions, or to specific classes of customers. If an enterprise it probable that those costs will be recovered otherwise be charged to expense if the rate actions of its regulator make that rate-regulated enterprises in future revenue. The amount capitalized is a "regulatory asset." SFAS 71 requires When an enterprise concludes assess the probability of recovering their regulatory assets at each balance sheet date.

asset must be removed from the entity's that recovery of a regulatory asset is no longer probable, the regulatory balance sheet.

No. 71", specifies how SFAS 101, "Accounting for the Discontinuation of Application of FASB Statement part of its operations should report an enterprise that ceases to meet the criteria for application of SFAS 71 for all or of report the discontinuation that event in its financial statements. In general, SWAS 101 requires that the enterprise applicable segment.

liabilities related to the SFAS,71 by eliminating from its balance sheet all regulatory assets and Additionally, if it is determined that a regulated enterprise is no longer recovering all of its costs and therefore no (see further discussion below) longer qualifies for SFAS 71 accounting, it is possible that a SFAS 121 impairment may exist which could require further write-offs of plant assets.

Energy's operations As of December 31, 1996, the majority of the domestic utility companies' and System of the criteria required for the use of SFAS 71 and the companies have recorded significant continue to meet each regulatory assets.

require utilities to provide As described in Note 2, during 1996, FERC issued Orders No. 888 and 889 which for wholesale power sales. As also open access to their transmission system to promote a more competitive market to have filed transition described in Note 2, Entergy Arkansas, Entergy Gulf States, and Entergy Mississippi accelerated recovery of certain competition proposals with their regulators which provide, among other things, for to these power market. In response capitalized costs to provide for an orderly transition to a competitive retail

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filings, certain regulatory commissions have begun general proceedings to consider retail competition in their jurisdictions.

As the plans have only recently been filed with the regulators, and those regulators have generally deferred action on the plans in lieu of their general proceedings on competition, Entergy cannot, at this time, predict the ultimate outcome of these proceedings. Accordingly, the domestic utility companies and System Energy anticipate that they will continue to meet the criteria for the application of SFAS 71 for the foreseeable future.

Deremulated Operations Entergy Gulf States discontinued regulatory accounting principles for its wholesale jurisdiction and its steam department during 1989 and for the Louisiana retail deregulated portion of River Bend in 1991. The results of these deregulated operations (before interest charges) for the years ended December 31, 1996, 1995, and 1994 are as follows:

1996 1995 1994 (In Thousands)

Operating Revenues $174,751 $141,171 $138,822 Operating Expenses:

Fuel, operating, and maintenance 119,784 115,799 116,386 Depreciation 31,455 31,129 27,890 Total Operating Expenses 151,239 146,928 144,276 Income taxes 9,598 (6,979) (249)

Net Income (Loss) From Deregulated Utility Operations $13,914 $1,222 ($5,205)

SFAS 121 In March 1995, the FASB issued SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" (SFAS 121), which became effective January 1, 1996. This statement describes circumstances that may result in assets (including goodwill such as the Merger acquisition adjustment, discussed above) being impaired. The statement also provides criteria for recognition and measurement of asset impairment Note 2 describes regulatory assets of $169 million (net of tax) related to Texas retail deferred River Bend operating and carrying costs which were written off upon the adoption of SFAS 121 in the first quarter of 1996.

Assets which are regulated under traditional cost-of-service ratemaking, and thereby subject to SFAS 71 accounting, are generally not subject to impairment pursuant to SFAS 121, as this form of regulation assures that all allowed costs are subject to recovery. However, certain deregulated assets and other operations of the domestic utility companies totaling approximately $1.6 billion (pre-tax) could be affected by SFAS 121 in the future. Those assets include Entergy Arkansas' and Entergy Louisiana's retained shares of Grand Gulf 1, Entergy Gulf States' Louisiana deregulated asset plan, the Texas jurisdiction abeyed portion of the River Bend plant, and wholesale jurisdiction and steam department operations. Additionally, all of Entergy's investment in other nonregulated businesses is subject to possible impairment pursuant to SFAS 121.

Entergy periodically reviews these assets and operations whenever events or changes in circumstances indicate that recoverability of these assets is uncertain. Generally, the determination of recoverability is based on the net cash flows expected to result from such operations and assets. Projected net cash flows depend on the future operating costs associated with the assets, the efficiency and availability of the assets and generating units, and the future market and price for energy over the remaining life of the assets. Based on current estimates of future cash

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flows as prescribed under SFAS 121, management anticipates that future revenues from such assets and operations of Entergy will fully recover all related costs Change in Accountint for Nuclear Refueling Outage Costs (Entergy Corporation, Entergy Arkansas, and System Energy)

In December 1995, at the recommendation of FERC, Entergy Arkansas changed its method of accounting for nuclear refueling outage costs. The change, effective January 1, 1995, results in Entergy Arkansas deferring incremental maintenance costs incurred during an outage and amortizing those costs over the operating period immediately following the nuclear refueling outage, which is the period that the charges are billed to customers.

Previously, estimated costs of refueling outages were accrued over the period (generally 18 months) preceding each scheduled outage. The effect of the change for the year ended December 31, 1995, was to decrease net income by

$5.1 million (net of income taxes of $3.3 million) or $.02 per share. The cumulative effict of the change was to increase net income $35.4 million (net of income taxes of $22.9 million) or S.15 per share. The pro forma effects of the change in accounting for nuclear refueling outages in 1994, assuming the new method was applied retroactively to that year, would have been to decrease net income $3.2 million (net of income taxes of $2.1 million), or $.01 per share.

System Energy filed a rate increase request with FERC in May 1995 (see Note 2), which, among other things, proposed a change in the accounting recognition of nuclear refueling outage costs from that of expensing those costs as incurred to the deferral and amortization method described above with respect to Entergy Arkansas.

As described in Note 2, the FERC ALJ issued an initial decision in this proceeding in July 1996, agreeing to the change in recognition of outage costs proposed by System. Energy. Accordingly, System Energy deferred the refueling outage costs incurred in the fourth quarter of 1996. As of December 31, 1996, System Energy's current assets included $24.0 million in deferred nuclear refueling outage costs which will be amortized over the next fuel cycle (approximately 18 months). Amortization of these costs in the fourth quarter of 1996 amounted to $1.2 million.

This change will have no impact on the net income of either Entergy or System Energy since System Energy will recover the refueling outage costs from Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans, and these companies will, in turn, recover these costs from their ratepayers.

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

Fair Value Disclosures The estimated fair value of financial instruments was determined using bid prices reported by dealer markets and by nationally recognized investment banking firms. Considerable judgment is required in developing the estimates of fair value. Therefore, estimates are not necessarily indicative of the amounts that Entergy could realize in a current market exchange. In addition, gains or losses realized on financial instruments may be reflected in future rates and not accrue to the benefit of stockholders.

Entergy considers the carrying amounts of financial instruments classified as current assets and liabilities to be a reasonable estimate of their fair value because of the short maturity of these instruments. In addition, Entergy does not expect that performance of its obligations will be required in connection with certain off-balance sheet commitnents and guarantees considered financial instruments. Due to this factor, and because of the related-party nature of these commitments and guarantees, determination of fair value is not considered practicable. See Notes 5, 7, and 9 for additional disclosure concerning fair value methodologies.

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NOTE 2. RATE AND REGULATORY MATTERS Merter-Related Rate Agreements (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans)

In November 1993, Entergy Corporation, Entergy Arkansas, Entergy Mississippi, and Entergy New Orleans entered into separate settlement agreements whereby the APSC, MPSC, and Council agreed to withdraw from the SEC proceeding related to the Merger. In return, Entergy Arkansas, Entergy Mississippi, and Entergy New Orleans agreed, among other things, that their retail ratepayers would be protected from (i) increases in the cost of capital resulting from risks associated with the Merger, (ii) recovery of any portion of the acquisition premium or transactional costs associated with the Merger, (mii)certain direct allocations of costs associated with Entergy Gulf States' River Bend nuclear unit, and (iv) any losses of Entergy Gulf States resulting from resolution of litigation in connection with its ownership of River Bend. Entergy Arkansas and Entergy Mississippi agreed not to request any general retail rate increase that would take effect before November 1998, except for, among other things, increases associated with the recovery of certain Grand Gulf 1-related costs, recovery of certain taxes, and catastrophic events, and in the case of Entergy Arkansas, excess capacity costs and costs related to the adoption of SFAS 106 that were previously deferred. Entergy Mississippi agreed that retail base rates under the formula rate plan would not be increased above November 1, 1993 levels for a period of five years beginning November 9, 1993.

In 1993, the LPSC and the PUCT approved separate regulatory proposals for Entergy Gulf States that include the following elements: (i) a five-year Rate Cap on Entergy Gulf States' retail electric base rates in the respective states, except for force majeure (defined to include, among other things, war, natural catastrophes, and high inflation); (ii) a provision for passing through to retail customers the jurisdictional portion of the fuel savings created by the Merger; and (iii) a mechanism for tracking nonfuel operation and maintenance savings created by the Merger. The LPSC regulatory plan provides that such nonfuel savings will be shared 60% by shareholders and 40%

by ratepayers during the eight years following the Merger. The LPSC plan requires annual regulatory filings by the end of each May through the year 2001. The PUCT regulatory plan provides that such savings will be shared equally by shareholders and ratepayers, except that the shareholders' portion will be reduced by $2.6 million per year on a total company basis in years four through eight. The PUCT plan also requires a series of regulatory filings to ensure that the ratepayers' share of such savings be reflected in rates on a timely basis, the first of which was made in November 1996, as discussed below in Filings with the PUCT and Texas Cities. Subsequent filings are required in November 1998 and in November 2001. In addition, the plan requires Entergy Corporation to hold Entergy Gulf States, Texas retail customers harmless from the effects of the removal by FERC of a 40% cap on the amount of fuel savings Entergy Gulf States may be required to transfer to other domestic utility companies under the FERC tracking mechanism (see below). On January 14, 1994, Entergy Corporation filed: a petition for review before the D.C.

Circuit seeking review of FERC's deletion of the 40% cap provision in the fuel cost protection mechanism. The matter is currently being held in abeyance.

FERC approved Entergy Gulf States' inclusion in the System Agreement. Commitments were adopted to provide reasonable assurance that the ratepayers of Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans will not be allocated higher costs.

River Bend (Entergy Corporation and Entergy Gulf States)

In 1988, the PUCT granted Entergy Gulf States a permanent increase in annual revenues of $59.9 million resulting from the inclusion in rate base of approximately $1.6 billion of company-wide River Bend plant investment and approximately $182 million of related Texas retail jurisdiction deferred River Bend costs (Allowed Deferrals).

At the same time, the PUCT disallowed as imprudent $63.5 million of company-wide River Bend plant costs and placed in abeyance, with no finding as to prudence, approximately $1.4 billion of company-wide River Bend plant

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investment and approximately $157 million of Texas retail jurisdiction deferred River Bend operating and carrying costs (Abeyed Deferrals).

The PUCT's order has been the subject of several appellate proceedings, culminating in an appeal to the Texas Supreme Court (Supreme Court). On January 3 1, 1997, the Supreme Court issued an opinion reversing the PUCT's order and remanding the case to the PUCT for further proceedings. The Supreme Court found that the PUCT had prejudiced Gulf States' rights by attempting to defer a ruling on the abeyed plant costs and incorrectly determined the amount of federal income tax expense that should have been allowed in rates. The Supreme Court ruled that the PUCT could choose either to conduct hearings and take further evidence or to decide the case on the original evidence. On February 18, 1997, the Texas Office of Public Utility Counsel filed a motion for rehearing of the Supreme Court's decision, arguing that the Supreme Court's remand should have instructed the PUCT as to how the case should be dealt with on remand. Entergy Gulf States filed a brief in opposition to the motion for rehearing on February 25, 1997. Entergy Gulf States believes that it is unlilely that the Supreme Court will grant the motion for rehearing. No procedural schedule has yet been issued by the PUCT concerning the case on remand.

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

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

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

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

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Retail Rate Proceedings Filings with the APSC (Entergy Corporation and Entergy Arkansas)

In October 1996, Entergy Arkansas filed a proposal with the APSC designed to achieve an orderly transition to retail electric competition in Arkansas. The proposal includes a rate decrease totaling $123 million over a three year period beginning in mid-1997 and provides for a universal service charge for customers that remain connected to Entergy Arkansas' electric facilities but choose to purchase their electricity from another source. Although these proposals allow for the complete recovery of the remaining plant investment associated with ANO 1, ANO 2, and Entergy Arkansas' portion of Grand Gulf 1 (excluding the portion retained - see below) as of December 31, 1996, over a seven year period, the NRC operating licenses for these plants permit continued operation until the years 2014, 2018, and 2022, respectively.

Filings with the PUCT and Texas Cities (Entergy Corporation and Entergy Gulf States)

In March 1994, the Texas Office of Public Utility Counsel and certain cities served by Entergy Gulf States instituted an investigation of the reasonableness of Entergy Gulf States' rates. On March 20, 1995, the PUCT ordered a retroactive rate reduction, which was amended, reducing the $52.9 million annual base rate reduction to an annual level of $36.5 million. The PUCT's action was based, in part, upon a Texas Supreme Court decision not to require a utility to use the prospective tax benefits generated by disallowed expenses to reduce rates. The May 26, 1995 amended order no longer required Entergy Gulf States to pass such prospective tax benefits on to its customers.

The rate refund ordered by the PUCT in its March 20, 1995 order, retroactive to March 31, 1994, was approximately $61.8 million (including interest) and was refunded to customers in September, October, and November 1995. Entergy Gulf States and other parties have appealed the PUCT order, but no assurance can be given as to the timing or outcome of the appeal.

In December 1995, Entergy Gulf States filed a petition with the PUCT for reconciliation of fuel and purchased power expenses for the period January 1, 1994, through June 30, 1995. Entergy Gulf States believes that there was an under-recovered fuel balance, including interest, of $22.4 million as of June 1995. Hearings were concluded in October 1996, and on December 18, 1996, the ALU issued his recommendation which included recovery of approximately $20 million of the under-recovered fuel balance. A final decision by the PUCT is expected in March 1997.

In accordance with the Merger agreement, Entergy Gulf States filed a rate proceeding with the PUCT in November 1996. In April 1996, certain cities served by Entergy Gulf States (Cities) instituted investigations of the reasonableness of Entergy Gulf States' rates. In May 1996, the Cities agreed to forego their investigation based on the assurance that any rate decrease ordered in the November 1996 filing will be retroactive to June 1, 1996, and will accrue interest until refunded. The agreement further provides that no base rate increase will be retroactive.

Included in the November 1996 filing was a proposal to achieve an orderly transition to retail electric competition in Texas, similar to the filing described below that Entergy Gulf States made with the LPSC. This filing with the PUCT will be litigated in four phases as follows: (i) fuel factor/fuel reconciliation phase, of which Entergy Gulf States believes there was an under-recovered fuel balance of $41.4 million, including interest, for the period July 1, 1995 through June 30, 1996; (ii) revenue requirement phase; (iii) cost allocation/rate design phase; and (iv) competitive issues phase. Hearings on these matters are scheduled to begin in April 1997. No assurance can be given as to the outcome of these hearings.

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Filings with the LPSC (Entergy Corporation and Entergy Gulf States)

Annual Earnings Reviews In May 1994, Entergy Gulf States filed a required earnings analysis with the LPSC for the test year preceding the Merger (1993). On December 14, 1994, the LPSC ordered a $12.7 million annual rate reduction for Entergy Gulf States, effective January 1995. Entergy Gulf States received a preliminary injunction from the District Court regarding $8.3 million of the reduction relating to the earnings effect of a 1994 change in accounting for unbilled revenues. On January 1, 1995, Entergy Gulf States reduced rates by $4.4 million. Entergy Gulf States filed an appeal of the entire $12.7 million rate reduction with the District Court, which denied the appeal in July 1995.

Entergy Gulf States appealed the order to the Louisiana Supreme Court. The preliminary injunction relating to $8.3 million of the reduction remained in effect during the appeal. On July 2, 1996, the Louisiana Supreme Court ruled on the appeal. The Court found that the LPSC ruled incorrectly on the treatment of the initial balance of unbilled revenues and the revenue annualization adjustment. As a result, Entergy Gulf States will not be required to refund the $8.3 million. The case was remanded to the LPSC for further proceedings related to the revenue annualization adjustment, but as a result of a subsequent rate adjustment pursuant to the third required post-Merger earnings analysis discussed below, the remand was moot.

On May 31, 1995, Entergy Gulf States filed its second required post-Merger earnings analysis with the LPSC. Hearings on this review were held in December 1995. On October 4, 1996, the LPSC issued an order requiring a $33.3 million annual base rate reduction and a $9.6 million refund. One component of the rate reduction removes from base rates approximately $13.4 million annually of costs that will be recovered in the future through the fuel adjustment clause. On October 23, 1996, Entergy Gulf States appealed and obtained an injunction to stay this order, except insofar as the order requires the $13.4 million reduction, which Entergy Gulf States implemented in November 1996. In addition, the LPSC order provides for the recovery of $6.8 million annually related to certain gas transportation and storage facilities costs. Pursuant to the October 1996 LPSC Settlement, this amount was brought forward to $8.1 million (see "LPSC Fuel Cost Review" below). This amount will be applied as an offset against whatever refund, if any, may be required by a final judgment in Entergy Gulf States' appeal of the second post-Merger earnings review order.

On May 31, 1996, Entergy Gulf States filed its third required post-Merger earnings analysis with the LPSC.

Based on this earnings filing, on June 1, 1996, Entergy Gulf States implemented a $5.3 million annual rate reduction.

Hearings on this filing concluded in February 1997. An additional rate reduction may be required upon the issuance by the LPSC of a final rate order.

LPSC Fuel Cost Review In November 1993, the LPSC ordered a review of Entergy Gulf States' fuel costs for the period October 1988 through September 1991 (Phase 1) based on the number of outages at River Bend and the findings in the June 1993 PUCT fuel reconciliation case. In July 1994, the LPSC ruled in the Phase 1 fuel review case and ordered Entergy Gulf States to refund approximately $27.5 million to its customers. Under the order, a refund of

$13.1 million was made through a billing credit on August 1994 bills. In August 1994, Entergy Gulf States appealed the remaining $14.4 million of the LPSC-ordered refund to the District Court and obtained an injunction with respect to that portion of the refund. On April 15, 1996, the appropriate state District Court affirmed the LPSC decision.

Entergy Gulf States has appealed this decision to the Louisiana Supreme Court. In October 1996, Entergy Gulf States reached a settlement with the LPSC on one of the issues presented in this appeal, resulting in a refund to ratepayers of $5.7 million plus interest. See "October 1996 LPSC Settlement" below. In February 1997, the Louisiana Supreme Court rendered a decision on the remaining $8.7 million, affirming the LPSC's order insofar as it requires a refund of $8.2 million plus interest, which Entergy Gulf States will record in 1997, and reversing the LPSC's order insofar as it would have required an additional $0.5 million refund.

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In September 1996, the LPSC completed the second phase of its review of Entergy Gulf States' fuel costs, which covered the period October 1991 through December 1994 (Phase II). On October 7, 1996, the LPSC issued an order requiring a $34.2 million refund. The ordered refund includes a disallowance of $14.3 million of capital costs (including interest) related to certain gas transportation and storage facilities, which were recovered through the fuel clause, and which have been refunded pursuant to the October 1996 LPSC Settlement. Entergy Gulf States will be permitted to recover these costs in the future through base rates. On October 23, 1996, Entergy Gulf States appealed and received an injunction to stay this order, except insofar as the order requires the $14.3 million refund.

See "October 1996 LPSC Settlement" below.

October 1996 LPSC Settlement In October 1996, Entergy Gulf States and the LPSC reached an agreement whereby Entergy Gulf States agreed to (i) refund certain capital costs related to gas transportation and storage facilities that were at issue in the Phase I and Phase U fuel cost reviews and (ii) refund similar costs recovered subsequent to the Phase UIfuel cost review. This resulted in a total refiuid to customers of approximately $32.1 million, including interest In the future, Entergy Gulf States will be permitted to recover through base rates the capital costs related to such gas transportation and storage facilities. As a part of the settlement, which covered post-Phase 11 costs of such facilities in addition to the costs addressed by the LPSC's order for the second post-Merger earnings analysis, Entergy Gulf States will be permitted to recover through base rates $1.3 million annually in addition to the $6.8 million annual recovery provided in the order, for a total annual base rate recovery of $8.1 million. The settlement provides that this amount will be applied as an offset against whatever refund, if any, may be required by a final judgment in Entergy Gulf States' appeal of the second post-Merger earnings review order.

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

In October 1996, Entergy Gulf States and Entergy Louisiana filed proposals with the LPSC designed to achieve an orderly transition to retail electric competition in Louisiana, while protecting certain classes of ratepayers from possibly unfairly bearing the burden of cost shifting. The proposals do not increase rates for any customer class. However, these proposals do provide for a universal service charge for customers that remain connected to Entergy Gulf States' or Entergy Louisiana's electric facilities but choose to purchase their electricity from another source. In addition, the proposals include a base rate freeze, which would be put into effect for seven years in the Louisiana areas serviced by Entergy Gulf States and Entergy Louisiana. Although these proposals allow for the complete recovery of the remaining plant investment associated with River Bend, Waterford 3, and Entergy Louisiana's portion of Grand Gulf I (excluding the portion retained - see below) as of December 31, 1996, over a seven year period, the NRC operating licenses for these plants permit continued operation until the years 2025, 2024, and 2022, respectively.

In February 1997, the LPSC identified certain issues embodied in the Entergy Gulf States and Entergy Louisiana proposals that will be included in those companies' annual rate filings expected to be made on May 31, 1997 and April 15, 1997, respectively, and other issues that now will be included in an ongoing generic regulatory proceeding examining electric industry restructuring.

(Entergy Corporation and Entergy Louisiana)

On June 2, 1995, as a result of a review of the earnings of Entergy Louisiana, a $49.4 million reduction in base rates was ordered. In the same order, the LPSC adopted for Entergy Louisiana a performance-based formula rate plan. The formula rate plan provides a financial incentive to reduce costs while maintaining high levels of customer satisfaction and system reliability. The plan allows Entergy Louisiana the opportunity to earn a higher rate of return if it improves performance over time. Conversely, if performance declines, the rate of return Entergy Louisiana could earn is lowered. On June 9, 1995, Entergy Louisiana appealed the rate reduction and sought injunctive relief from implementation of $14.7 million of the reduction. The $14.7 million portion of the rate

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conclusion that the rates reduction represents revenue imputed to Entergy Louisiana as a result of the LPSC's for a $14.7 million rate charged to three industrial customers were unreasonably low. Subsequently, a request preliminary injunction increase was filed by Entergy Louisiana. On July 13, 1995, Entergy Louisiana was granted a on appeal. In an order by the District Court enjoining $14.7 million of the rate reduction pending a final decision million portion of the rate reduction issued on January 31, 1996, the LPSC approved a settlement reducing the $14.7 the rate reduction to $12.35 million. Refunds issued pursuant to this settlement had the effect of implementing 1996. The refunds and related effective April 27, 1995, and were made in the months of January and February District Court case discussed above was interest resulting from the settlement amounted to $8.9 million. The dismissed as part of the settlement.

rate plan filing based On April 15, 1996, Entergy Louisiana made its first annual performance-based formula reduction in base rates effective on the 1995 test year. On June 19, 1996, the LPSC approved a $12 million annual and reflected the the formula rate plan July 1, 1996. This reduction was based upon the 1995 test year results under by the recovery of the expiration of the Waterford 3 phase-in plan discussed below, which was partially offset Subsequently, additional issues were property taxes on Waterford 3 and the related deferral discussed below.

million to $16.5 million.

resolved by means of a settlement conference, increasing the base rate reduction from $12 to address certain other Hearings have been conducted to review Entergy Louisiana's allowed return on equity and only. The LPSC's disputed issues. This may result in an additional rate reduction which would be prospective ruling is expected in the second quarter of 1997.

was required to The property tax exemption for Waterford 3 ended in December 1995 and Entergy Louisiana March 1996 LPSC order, pay $19.3 million in property taxes to St. Charles Parish for the 1996 tax year. In a period January 1996 through June Entergy Louisiana was permitted to defer the rate recovery of these taxes for the also for the recovery, from 1996. The order allowed for the recovery of the property tax beginning in July 1996, and phase-in plan for Waterford 3 July 1996 through June 1997, of the related deferral. In addition, Entergy Louisiana's of approximately $28.4 million.

will expire in June 1997. Entergy Louisiana is recovering deferred costs annually Filings with the MPSC (Entergy Corporation and Entergy Mississippi)

MPSC under its formula On March 15, 1996, Entergy Mississippi filed its annual earnings review with the order approving and adopting a joint rate plan for the 1995 test year. On April 18, 1996, the MPSC issued an May 1, 1996.

stipulation and placing the prospective rate reduction of $5.9 million into effect on transition to a more Entergy Mississippi has initiated discussions with the MPSC regarding an orderly with the MPSC for a rate competitive market for electricity. In August 1996, Entergy Mississippi filed a proposal would maintain current rates rider to assure recovery of all Grand Gulf costs incurred to serve customers. The rider Entergy Mississippi's to customers within for electric service provided by Entergy Mississippi and would apply Mississippi. Entergy Mississippi service area who obtain electricity in the future from a source other than Entergy are honored and that cost designed this rider to assure that commitments made under the current system of regulation remain on the Entergy Mississippi burdens are not unfairly transferred from departing customers to those who established a generic docket to consider system. On August 22, 1996, the MPSC remanded this proposal and competition for retail electric service.

Filings with the Council (Entergy Corporation and Entergy New Orleans) filings with the Pursuant to the 1991 NOPSI Settlement, Entergy New Orleans is required to make earnings for the test year ending Council for the 1995 and 1996 rate years. A review of Entergy New Orleans' earnings over a 12-month period which September 30, 1995, required Entergy New Orleans to credit customers $6.2 million began in March 1996.

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On October 31, 1996, Entergy New Orleans filed with the Council an analysis of its earnings for the test year ended September 30, 1996. Based upon this earnings review, the Council ordered a refund of $18.4 million which is being credited to customers over a 12 month period which began in February 1997.

On December 19, 1996, the Council ordered an increase in Entergy New Orleans' franchise fee from 2.5% to 5% of gross revenues. The increase in the 1997 franchise fee is estimated to be $12 million. The franchise fee is collected by Entergy New Orleans as a separate line item on customer bills and is not a component of base rates.

In January 1997, Entergy New Orleans unilaterally proposed to the Council to reduce rates by annual amounts of $15 million. This offer was accepted by the Council and, effective February 1, 1997, Entergy New Orleans implemented this base rate reduction.

The Council issued a resolution in February 1997 indicating that it will conduct an investigation of the justness and reasonableness of Entergy New Orleans' allowed rate of return, base rates, and adjustment clauses. The Council contemplates a bifurcated review and has established hearing dates in April 1997 on the issue of rate of return. The Council also directed Entergy New Orleans to make a cost of service and revenue requirement filing on May 1, 1997. A procedural schedule has not been set with respect to these other issues.

Pursuant to a settlement reached in February 1997 with the Council as to Entergy New Orleans' deferred integrated resource planning expenses, the Council has conditionally allowed Entergy New Orleans to begin recovering $5 million, subject to a hearing to determine the prudence of such expenses. Entergy New Orleans has agreed not to seek recovery of the remaining $6.8 million of expenses incurred.

Deregulated Asset Plan (Entergy Corporation and Entergy Gulf States)

A deregulated asset plan representing an unregulated portion (approximately 25%) of River Bend (plant costs, generation, revenues, and expenses) was established pursuant to a January 1992 LPSC order. The plan allows Entergy Gulf States to sell such generation to Louisiana retail customers at 4.6 cents per kWh or off-system at higher prices, with certain provisions for sharing such incremental revenue above 4.6 cents per kWh between ratepayers and shareholders.

River Bend Cost Deferrals (Entergy Corporation and Entergy Gulf States)

Entergy Gulf States deferred approximately $369 million of River Bend operating and purchased power costs, depreciation, and accrued carrying charges, pursuant to a 1986 PUCT accounting order. Approximately $182 million of these costs are being amortized over a 20-year period, and the remaining $187 million was written off in the first quarter of 1996 in accordance with SFAS 121, as discussed above. As of December 31, 1996, the unamortized balance of the remaining costs was $117 million. Entergy Gulf States deferred approximately $400.4 million of similar costs pursuant to a 1986 LPSC accounting order, of which approximately $40 million was unamortized as of December 31, 1996, and is being amortized over a 10-year period ending in February 1998.

In accordance with a phase-in plan approved by the LPSC, Entergy Gulf States deferred $294 million of its River Bend costs related to the period February 1988 through February 1991. Entergy Gulf States has amortized

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

Grand Gulf I and Waterford 3 Deferrals (Entergy Corporation and Entergy Arkansas)

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

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1990, and Entergy Arkansas interest in Grand Gulf 1 costs and recovers the remaining 78%. The deferrals ceased in 1998. As of December 31, 1996, the is recovering a portion of the previously deferred costs each year through to recover on a current basis the balance of deferred costs was $228 million. Entergy Arkansas is permitted is not able to sell its retained incremental costs of financing the unrecovered deferrals. In the event Entergy Arkansas to its avoided energy cost, which share to third parties, it may sell such energy to its retail customers at a price equal is currently less than Entergy Arkansas' cost of energy from its retained share.

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

its costs related to the years 1985-1988 to be recovered frorn April 1988 through retain and not recover from With respect to Grand Gulf 1, in November 1988, Entergy Louisiana agreed to Grand Gulf I capacity and energy.

retail ratepayers, 18% of its 14% share (approximately 2.52%) of the costs of per kWh for the energy related Entergy Louisiana is allowed to recover through the fuel adjustment clause 4.6 cents such energy to nonaffiliated parties at to its retained portion of these costs. Alternatively, Entergy Louisiana may sell approval.

prices above the fuel adjustment clause recovery amount, subject to the LPSC's (Entergy Corporation and Entergy Mississippi) things, for the recovery Entergy Mississippi entered into a plan with the MPSC that provides, among other October 1, 1988, of all Grand Gulf by Entergy Mississippi, in equal annual installments over ten years beginning the MPSC. Additionally, the plan 1-related costs deferred through September 30, 1988, pursuant to a final order by its Grand Gulf 1-related costs over four provides that Entergy Mississippi defer, in decreasing amounts, a portion of Mississippi over a six-year period years beginning October 1, 1988. These deferrals are being recovered by Entergy 31, 1996, the uncollected balance of beginning in October 1992 and ending in September 1998. As of December also allows for the current recovery Entergy Mississippi's deferred costs was approximately $247 million. The plan of carrying charges on all deferred amounts.

(Entergy Corporation and Entergy New Orleans) 1988, and 1991, Entergy Under Entergy New Orleans' various rate settlements with the Council in 1986, million of its Grand Gulf I costs.

New Orleans agreed to absorb and not recover from ratepayers a total of $96.2 each year through decreasing amounts Entergy New Orleans was permitted to implement annual rate increases in extending from 1991 through 1995, and to defer certain costs and related carrying charges for recovery on a schedule was $136 million.

2001. As of December 31, 1996, the uncollected balance of Entergy New Orleans' deferred costs Mississippi)

February 1994 Ice Storm/Rate Rider (Entergy Corporation and Entergy without electric power A February 1994 ice storm left more than 80,000 Entergy Mississippi customers and facilities totaled equipment, poles, across the service area. Damage to transmission and distribution lines, costs. The remaining approximately $77.2 million, with $64.6 million of these amounts capitalized as plant-related balances were recorded as a deferred debit.

MPSC approved a stipulation in Subsequent to a request by Entergy Mississippi for rate recovery, the through April 30, 1994. Under the September 1994 with respect to the recovery of ice storm costs recorded increased rates approximately $8 million stipulation, Entergy Mississippi implemented an ice storm rate rider, which end of the five-year period, the revenue for a period of five years beginning on September 29, 1994. At the

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requirement associated with the undepreciated ice storm capitalized costs will be included in Entergy Mississippi's base rates to the extent that this revenue requirement does not result in Entergy Mississippi's rate of return on rate base being above the benchmark rate of return under Entergy Mississippi's formula rate plan. The MPSC approved a second stipulation in September 1995 which allows for a $2.5 million rate increase for a period of four years beginning September 28, 1995, to recover costs related to the ice storm that were recorded after April 30, 1994. The stipulation also allows for undepreciated ice storm capital costs recorded after April 30, 1994, to be treated as described above.

Proposed Rate Increase (System Energy)

System Energy filed an application with FERC on May 12, 1995, for a $65.5 million rate increase. The request seeks changes to System Energy's rate schedule, including increases in the revenue requirement associated with decommissioning costs, the depreciation rate, and the rate of return on common equity. The request also includes a proposed change in the accounting recognition of nuclear refueling outage costs from that of expensing those costs as incurred to the deferral and amortization method described in Note I with respect to Entergy Arkansas.

On December 12, 1995, System Energy implemented a $65.5 million rate increase, subject to refund. Management has decided to record a reserve for a portion of the rate increase. Hearings on System Energy's request began in January 1996 and were completed in February 1996. On July 11, 1996, the AUJ issued an initial decision in this proceeding that agreed with certain of System Energy's proposals, including the change in accounting for nuclear refueling outage costs, while rejecting a proposed increase in return on common equity and recommending a slight decrease. The ALJ also rejected the proposed change in the decommissioning cost methodology. The decision of the ALJ is preliminary and may be modified in the final decision from FERC which is expected in the first quarter of 1997. Management is unable to predict the final outcome of the rate increase request or the amount of any refunds in excess of reserves that may be required.

(Entergy Mississippi)

Entergy Mississippi's allocation of the proposed System Energy wholesale rate increase is $21.6 million. In July 1995, Entergy Mississippi filed a schedule with the MPSC that will defer the ultimate amount of the System Energy rate increase. The deferral plan, which was approved by the MPSC, began in December 1995, the effective date of the System Energy rate increase, and will end after the issuance of a final order by FERC. The deferred rate increase is to be amortized over 48 months beginning October 1998.

(Entergy New Orleans)

Entergy New Orleans' allocation of the proposed System Energy wholesale rate increase is $9.6 million. In February 1996, Entergy New Orleans filed a plan with the City to defer 50% of the amount of the System Energy rate increase. The deferral began in February 1996 and will end after the issuance of a final order by FERC.

FERC Settlement (Entergy Corporation and System Energy)

In November 1994, FERC approved an agreement settling a long-standing dispute involving income tax allocation procedures of System Energy. In accordance with the agreement, System Energy refunded approximately

$61.7 million to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans, each of which in turn has made refunds or credits to its customers (except for those portions attributable to Entergy Arkansas' and Entergy Louisiana's retained share of Grand Gulf I costs). Additionally, System Energy will refund a total of approximately $62 million, plus interest, to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans over the period through June 2004. The settlement also required the write-off of certain related unamortized balances of deferred investment tax credits by Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans. The settlement reduced Entergy Corporation's consolidated net income for

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the year ended December 31, 1994, by approximately $68.2 million, offset by the write-off of the unamortized

($2.9 million for Entergy balances of related deferred investment tax credits of approximately $69.4 million

$6 million for Entergy Corporation; $27.3 million for Entergy Arkansas; $31.5 million for Entergy Louisiana; also reclassified from utility plant to other Mississippi; and $1.7 million for Entergy New Orleans). System Energy costs are excluded from rate deferred debits, approximately $81f million of other Grand Gulf 1 costs. Although such refund and the loss of the base, System Energy is recovering them over a 10-year period. Interest on the $62 million System Energy's net income by return on the $81 million of other Grand Gulf 1 costs will reduce Entergy's and approximately $10 million annually over the next 8 years.

NOTE 3. INCOME TAXES Entergy Corporation's and its subsidiaries' income tax expenses for 1996, 1995, and 1994 consist of the following (in thousands):

Edffv Enter gy Entergy Entery Eteg Systum M-96 Enmy Arkansas GulfSates Louisiana Mississipi New Orleans Energy OCurnt:

510 $ 78,629 $ 64,35S S 23,860 $ 19,637 S 272,036 $ 108,583 S Federal 9,635 4,631 130,50 72,204 21,888 201 21,122 State 28&491 33,145 Total 344,240 130,471 711 99,751 73,993 106,715 24,656 (29,390) (11,587) 52,447 Deferred - net 100,572 (41,261)

Investment tax credt (687) (3,471)

(23,653) (4,766) (5,335) (5,847) (3,497) adjustments - not 118,560 $ 41,106 $ 16z217 V 1,21

$ý 421,159 $ 84,444 S 102,091 S Recordd income tax expense Entergy Entergy Entergy Entergy System 1995 Enfergy Arkansas Gulf States Louisiana Mssissippi New Odeans Ene Entey Current 62,436 $ 19,071 S 109,920

$ 306,910 S 87,937 $ 13 S 93,670 $

Federal 9,215 3,394 11,910 60,278 18,027 - 20,994 State 22,465 120,830 Total 367,188 105,964 13 114,664 71,651 67.703 8,148 (35,224) (1,364) (41,871) 13,333 (5,363)

Deferred- net Investment tax credit (634) (3,466)

(21,478) (5,658) (4,472) (5,698) (1,550) adjustments - net 117,114 S 34,877 S 20,467 $ 75,493 359,043 S 94,943 S 63,244 $

Recorded incom tax epes 22,861$ - $ - $ - $

Charged to cumulative effect Entergy Entergy Entergy Entedgy System 1994 Entergy Arkansas Gulf Staes Louiian Mississip*i New Orteam Enery Enty current 71 S 68,891 S 39.505 S 19,557 S 54,295 Federal $ 227,046 S 64,238 S 14 10,369 7,379 3,049 13,182 State 50,300 19,062 85 79,260 46,884 22,606 67,477 Total 277,346 83,300 (57,911) 21,580 (26,763) (15,674) (27,375)

Deferred - net (54,429) (17,939)

Investment tax credit (681) (3,265)

(24,739) (8,814) (4,260) (6,048) (1,673) adjustments - net Invesunent tax credit (5,973) (1,651)

(66,454) (27V,327) Q (31,504) axmtizafion - FERC Settlement 4,600$ 837 S 131,724 $ 29,220 $ 62,0 $ 63,288$ 12,475 S Recoded income tax expense

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Entergy Corporation's and its subsidiaries' total income taxes differ from the amounts computed by applying the statutory federal income tax rate to income before taxes. The reasons for the differences for the years 1996, 1995, and 1994 are (amounts in thousands):

Entergy Enterg, Entergy Entergy Eatery System Enter&y Arkansas Gulf States Louisiana Mississippi New Orleans EnerV, 1996 Computed at statutory rate (35%) S 319,103 S 84,785 S 34,371 S 108,262 S 42,111 $ 15,048 S 63,626 Increases (reductions) in tax resulting from:

State income taxes net of federal income tax effect 54,801 10,796 19,389 11,535 4,188 1,449 7,444 15,829 (2,102) (6,305) 6,722 1,604 402 15,508 Depredation 1,973 1,115 5,537 (1,829) (3,430) 580 Rate deferrals - net Amortization of investment tax credits (20,349) (4,608) (4,380) (5,664) (1,582) (635) (3,480)

Flow-througWpermanent 1,059 (845) 2,792 (449) (275) (164) differences SWAS 121 write-off 48,265 48,265 478 (4,697) 2,422 (17) (1,510) (463) (977)

Other - net Total income taxes $S421,159 S 84,444 $ 102,091 S 118,560 S 41,106 S 16,217 S 82,121 Effective Income Tax Rate 46.2% 34.4% 105.5% 37.6% 34.2% 37.7% 45.4%

Exterg Fmzta Eteagy Ente, &Yrkm EýM7 Arkase OiffStates LdInuha Missisipi It-wcklas R=V C at s ay rae(35%) S 334,944 S 93,458 S 65,157 S 111,528 S 36,240 s 19,198 $ 58,986 Iases (reixaim) intax

-esu firn State inowe taxws net of federal imme tax effet 42,599 11,551 &,I3n5 11,532 3,344 1,971 7,036 1,670 (1,510) (13,073) 2,693 739 (661) 13,482 Rate def.ats 1,699 975 6,20 (2,626) (3,465) 575 Ammfozatim f nveamet taxcrecits (20,549) (5,658) (4,475) (5,711) (1,548) (634) (3,480)

Odwr -net 1,3M) (3,873) 1,020 (302) (433) 18 (531)

TOal irne taxes $ 359,043 S 94,943 S 63,244 S 117,114 S 34,877 $ 20,467 $ 75,493 Effectiv Inxme Tax Rate 37.5% 35.5% 34.00/ 36.7% 33.70/ 37.30/a 44.8%

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Entae Eant Enta& Entcrugrter System LAVýW I Adnsms Gulf States Lomia -sis tLW Oremu Enr~g

$ 194,448 $ 60,017 $ (50,694) $ 96,994 S 21,438 $ 6,234 $ 14,785 Coupted at stabutxy ride (35%)

jrýases (rechkcras) in tax restain fivin State injni txes nt of 13,766 7,821 (6,571) 5,147 2,465 456 7,65 federal immue tax effect 3,219 1,930 (586) 14,541 9,995 (921) (8,188)

Dep=Wcala 6,551 (3,810) 714 1,435 729 (2,749)

Rate defenrals - net Annlizatian offmwglnart tax treits (27,337) (10,220) (4,472) (6,305) (1,674) (681) (3,476)

Ammfati~ion ofhwshc (66,454) (27,327) (31,504) (5,973) (1,651) tax credilt -FEIQ Setleimt (2,460) (1,954) (423) 2,947 9,425 (208)

A~tjmtopcrI ewr taxes 3.748 (1.514) 53 537 475

( IS' (671)

Otlw- it 131,724jS 29,22 $ (L62,086 $ 63,288M 12,475 $ 4,600$ 36,837 Total imaM taxM 17.1% 42.9% 22.90/6 20.4% 25.9% 87.2%

Effecte In TaxRate 23.7%

and its subsidiaries' net deferred tax liabilities as of Significant components of Entergy Corporation's December 31, 1996 and 1995, are as follows (in thousands):

Entergy Entergy Entergy Entergy Enteray System Arkansas Gulf States Louisiana Mississippi New Orleans Energy Entergy Deferred Tax Liabilities:

S (1,406,921) S (287,217) $ (434,380) S (349,667) S (21,537) S (9,717) S (304,403)

Net regulatory asets/loiabilities) (512,519)

(2,986,993) (476,364) (1,016,616) (716,974) (185,038) (50,435)

Plait-related basis differences (52,914)

(322,530) (84,826) (68,282) (2,839) (113,669)

Rate deferrals (24,917)

(143,792) (59,592) (9,243) (31,433) (7,604) (6,193)

Other

$ (4,860,236) S (907,999) S (1,528,521) S (1,100,913) S (327,848) S 119,259) S (841,839)

Total Dehrred Tax Assets:

Acinmulatl defrred investment 42,450 61,563 53,831 9,724 3,666 39,645 tax Credit 210,879 138,779 - 138,779 - -.

Investment tax credit caryforwards "

NOL carrforward 24,990 24,990 -

40,658 - 40,658 Altemative minimum tax credit 125,433

- 108,390 -

Sale and leasebac 233,823 102,268 27,391 61,716 2,454 10,707 Removal cost 37,692 17,824 14,965 (343) 5,246 Unbilled revenues 11,291 8,838 2,008 5,987 2,745 Pension-related items 30,869 7,077 18,332 Rate rdimd 25,409

- - 19,079 FERC Settlement 19,079 147,020 9,049 61,804 23,545 5,4 8,097 12,585 Other 1,011,466 51,499 S 384,300 $ 271,285 S 19,692 S 40,780 S 217,819 Total $

S (856,500) S (1,144,221) S (829,628) S (308,156) S (78,479) S (624,020)

Net deferred tax liability $ (3,848,770)

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Entergy Enfter Entergy Entergy Entergy Sse Symm Enterr Arkanmsas GulfStates Louisiana Mssissippi New Orleans Energy Deferrod Tax Lia"itics:

Net regulatory assets/(lialbilities) S (1,494,000) S (264,166) S (512,281) S (357,528) S (17,147) S (10,723) $ (332,154)

Plant-related basis differences (3,071,519) (480,465) (1,060,241) (722,680) (181,792) (50,820) (538,215)

Rate deferrals (467,691) (131,261) (104,695) (12,652) (157,168) (61,915)

Oter (117,510) (69,475) (1,814) (35,22) (9,339) (3,134) (10,365)

Total $ (5,150,720) $ (945,367) S (1,679,031) S (1,128,132) S (365,446) $ (126,592) S (!880734)

Deferred Tax Ass,"t Accumulated deferred investment tax credit 214,505 44,260 58,653 5008 10,702 3,910 40,973 1nvernent tax credit carnYfor& 167,713 167,713 Vahuation allovAnce (44,597) - (44,597)

NOL 151,141 - 151,141 Alteuative inhmum tax credit 130,760 - 39,709 27,409 63,642 Sale and keasebac 225,620 - - 105,788 - - 119,832 Removal cost 97,184 - 25,701 59,148 2,316 10,019 Unbilled revenues 42,923 - 22,384 16,850 3,689 Penvion-related items 21,003 - 14,472 - 2,342 4,189 Operating provsions 6,795 - - - 6,795 Provision - FASB 5 contingencies 7,250 7,250 -

FERC Settlement 19,978 - - - 459 19,519 Otber 259,954 21,394 110,176 52285 17,415 6,703 34,586 Total $ 1,300,229 $ 72,904 $ 545,352 S 317,488 S 32,775 S 35,764 $ 278,552 Net dekrd tax liability S (3,850,491) $ (872,463) S (1,133,679) S (810,644) $ (332,671) S (90,828) $ (6 182)

As of December 31, 1996, Entergy has investment tax credit (ITC) carryforwards of $138.8 million, federal net operating loss (NOL) carryforwards of $50.8 million, and state NOL carryforwards of $105.2 million, all related to Entergy Gulf States operations. The ITC carryforwards include the 35% reduction required by the Tax Reform Act of 1986 and may be applied solely against federal income tax liability of Entergy Gulf States and, if not utilized, will expire between 1997 and 2002. At December 31, 1995, the projected amount of ITC carryforwards which would expire unutilized was estimated to be $44.6 million, which was based upon projections of estimated taxable income of Entergy Gulf States and, accordingly, a valuation reserve was recorded for this amount. At December 31, 1996, management estimated that none of the remaining ITC carryforwards would expire unutilized, and the valuation reserve was eliminated. The alternative minimum tax (AMT) credit carryforwards as of December 31, 1996 were

$40.7 million, all related to Entergy Gulf States operations. This AMT credit can be carried forward indefinitely and may be applied solely against the federal income tax liability of Entergy Gulf States.

In accordance with the System Energy FERC Settlement, the domestic utility companies wrote off $66.6 million of unamortized deferred investment tax credits in 1994, including $27.3 million at Entergy Arkansas, $31.5 million at Entergy Louisiana, $6.0 million at Entergy Mississippi, and $1.7 million at Entergy New Orleans.

In August 1994, Entergy received an IRS report covering the federal income tax audit of Entergy Corporation and subsidiaries for the years 1988-90. The report asserted an $80 million tax deficiency for the 1990 tax return related primarily to the utilization of accelerated investment tax credits associated with the Waterford 3 and Grand Gulf nuclear plants. Changes to the initial report, made in the IRS Appeal process, have reduced the assessment related to the issue by $22 million to $58 million. Entergy Corporation and the Appeals Officer agreed to pursue a 'rechnical Advice" ruling from the IRS National Office to address the remainder of the issue. Entergy Corporation believes there is no material tax deficiency and is confident that a satisfactory resolution of the matter will be achieved.

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LINES OF CREDIT AND RELATED SHORT-TERM BORROWINGS (Entergy NOTE 4.

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

States, Entergy In November 1996, SEC authorization was received by Entergy Arkansas, Entergy Gulf borrowing limits to Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy increasing short-term and $140 million, respectively (for a total of

$235 million, $340 million, $225 million, $103 million, $35 million, Of these companies, Entergy

$1,078 billion). These authorizations are effective through November 30, 2001.

Entergy Louisiana and Louisiana and Entergy Mississippi had borrowings outstanding as of December 31, 1996.

outstanding under the money Entergy Mississippi had $31.1 million and $50.3 million, respectively, of borrowings dependence on pool, an intra-system borrowing arrangement designed to reduce the domestic utility companies' had undrawn lines external short-term borrowings. Entergy Arkansas, Entergy Louisiana, and Entergy Mississippi of credit as of December 31, 1996, of $25 million, $64.2 million, and $30 million, respectively.

bank credit facility.

In July 1995, Entergy Corporation received SEC authorization for a $300 million 1995 to provide up to $300 Thereafter, a three-year credit agreement was signed with a group of banks in October acquisition of CitiPower in million of loans to Entergy Corporation. $230 million was drawn on this facility for the 13 for a discussion of the January 1996 and was subsequently repaid throughout the course of the year. See Note In January 1997, Entergy acquisition. As of December 31, 1996, no amounts were outstanding against the facility.

million to $500 million.

Corporation filed an amendment with the SEC to increase the authorization from $300

$100 million bank line of On September 13, 1996, Entergy Corporation and ETHC obtained a three-year Corporation or ETHC (with a credit that may be increased up to $300 million and can be drawn by either Entergy telecommunication guarantee from Entergy Corporation). The proceeds are to be used exclusively for exempt by Entergy Corporation was outstanding under this investments. As of December 31, 1996, $20 million borrowed facility.

pool, from Entergy Other Entergy companies have SEC authorization to borrow through the money up to $265 million, of which $88.4 Corporation, and from commercial banks in the aggregate principal amounts million was outstanding as of December 31, 1996. Some of these borrowings are restricted as to use, and are secured by certain assets.

of December 31, 1996, of In total, Entergy had short-term commitments in the amount of $607.6 million as borrowings as of December which $575.2 million was unused. The weighted-average interest rate on the outstanding fees on the lines of credit for 31, 1996, and Decemnber 31, 1995, was 6.10% and 6.35%, respectively. Commitment the undrawn amounts. The Entergy Arkansas, Entergy Louisiana, and Entergy Mississippi are 0.125% of and ETHC's $100 million credit facility are commitment fees for Entergy Corporation's $300 million credit facility companies. See Note 7 currently 0. 170/e, but can fluctuate depending on the senior debt ratings of the domestic utility for a discussion of commitments for long-term financing arrangements.

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NOTE 5. PREFERRED, PREFERENCE, AND COMMON STOCK (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans)

The number of shares, authorized and outstanding, and dollar value of preferred and preference stock for Entergy, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans as of December 31, 1996, and 1995 were:

Sham CaH Price Per Aumorized Total Slare amof and Outstandig Dohwar Va Decewber 31, 1996 1995 1996 1995 1996 (Dollars in Thwusmds)

Eantom Arkwsw Prekrred Stock Without shikbkg liawk Curmuative, $100 per value:

4.32% Series 70,000 70,000 $7,000 $7,000 $103.647 4.72% Series 93,500 93,500 9,350 9,350 $107.000 4.56% Series 75,000 75,000 7,500 7,500 $102.830 4.56% 1965 Series 75,000 75,000 7,500 7,500 $102.500 6.08% Series 100,000 100,000 10,000 10,000 $102.830 7.32% Series 100,000 100,000 10,000 10,000 $103.170 7.80% Series 150,000 150,000 15,000 15,000 $103.250 7.40% Series 200,000 200,000 20,000 20,000 S102.800 7.88% Series 150,000 150,000 15,000 15,000 $103.000 Cumuaive, $25 par value:

8.84% Series 400,000 10,000 Cunulative, $0.01 par value:

S2.40 Series (a) 2,000,000 50,000

$1.96 Series (a)(b) 600,000 600,000 15,000 15,000 Total witwut sinking find 1,613,500 4,013,500 $116,350 $176,350 WiA sbhm and:

Cumulative, $100 par value:

8.52% Series 300,000 350,000 $30,000 $35,000 $104.260 Cumulative, $25 par value:

9.92% Series 401,085 561,085 10,027 14,027 $26.320 Total vith sinking fund 701,085 911,085 $40,027 $49,027 Fair Vahie of Prefrred Stock with shdkkg fatd (d) $41,835 $51,476

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Cdl PrPer Total Shareas of DolaR Vable Deceni 31,

=W Oustandin~g 1995 1996 1996 1995 (DoI s inThoumhds)

Ptenrav Go te prsen* nd Prmeree Stock Cimiilative, mithi par value $150,000 $150,000 7% Series (a) (b) 6,000,000 6,000,000 Prdenle Stock Adolxrized6,000, 0 00, $100 par valu ctrwai*

Wmhout **ddag IMl:

51,173 $5,117 $5,117 $108.00 4.400/a Series 51,173 583 583 $105.00 4.50 0/ Seies 5,830 5,830 166 166 $103.00 4.400/.- 1949 Series 1,655 1,655 975 975 $102.82 4.20% Series 9,745 9,745 1,480 1,480 $103.75 4.44% Series 14,804 14,804 1,099 1,099 $104.25 5.00*% Series 10,993 10,993 2,685 2,685 $104.63 5.080/o Series 26,845 26,845 1,056 1,056 $103.57 4.5r/9 Series 10,564 10,564 3,283 3,283 $103.34 6.08% Series 32,829 32,829 35,000 35,000 $101.80 7.56% Series 350,000 350,000 50,000 50,000 $102.43 8.52? Series 500,000 500,000 35,000 35,000 $102.64 9.96% Series 350,000 350,000 $136,444 $136,444 Total v*iolt sinking fund 1,364,438 1,364,438 Wih mkbg InA $18,459 $20,450 $100.00 8.80% Series 184,595 204,495 1,954 $100.00 9.75% Series - 19,543 14,000 16,800 $101.00 8.64% Series 140,000 168,000 18,000 19,200 $100.00 A4ugtabLe Rate - A, 7.39% (c) 180,000 192,000 27,000 29,250 $100.00 Aciutat4 e Rate - B, 7.44% (c) 270,000 292,500 $77,459 $87,654 Tota w&ith sining fund 774,595 876,538 FmdrVdA of Pnerawe Stodkad

$214,475 $219,191 Prekmd Stockwh ukki lAwd (d)

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Sham Cal Price Per Authorized Total Share w of and Outstanding DoMar Value December 31, 1996 1995 1996 1995 1996 Eater Laouid a PFrerred Stock (Dollars in Thousands)

Wihout sbikldg Amd:

Cunuelative, $100 par value:

4.96% Series 60,000 60,000 $6,000 $6,000 $104.25 4.16% Series 70,000 70,000 7,000 7,000 $104.21 4.44% Series 70,000 70,000 7,000 7,000 $104.06 5.16% Series 75,000 75,000 7,500 7,500 $104.18 5.40% Series 80,000 80,000 8,000 8,000 $103.00 6.44% Series 80,000 80,000 8,000 8,000 $102.92 7.84% Series 100,000 100,000 10,000 10,000 $103.78 7.36% Series 100,000 100,000 10,000 10,000 $103.36 8.56% Series 100,000 10,000 COmulative $25 par value:

8.00%/. Series (b) 1,480,000 1,480,000 37,000 37,000 9.68% Series _ 2,000,000 50,000 Total without sinking fund 2,115,000 4,215,000 $100,500 $160,500 With swlkhg hiad Cunmxative, $100 par value:

7.00% Series (b) 500,000 500,000 $50,000 $50,000 8.00% Series (b) 350,000 350,000 35,000 35,000 Ctmulative, $25 per value:

12.64% Series 300,000 600,370 7,500 15,009 $26.58 Total with sinking fund 1,150,000 1,450,370 $92,500 $100,009 Fair Value of Preferred Stock with s&ing fAid (d) $93,825 $103,135 Entergv Misssliuil EPkrrld Stock W*ou skldg Imn:

Cumalative, $100 par value:

4.36% Series 59,920 59,920 $5,992 $5,992 $103.86 4.56% Series 43,888 43,888 4,389 4,389 $107.00 4.92% Series 100,000 100,000 10,000 10,000 $102.88 7.44% Series 100,000 100,000 10,000 10,000 $102.81 8.36% Series (b) 200,000 200,000 20,000 20,000 9.16% Series 75,000 75,000 7,500 7,500 $104.06 Total witino sinng fund 578,808 578,808 $57,881 $57,881 With skdng find:

Cumulative, $100 par value:

9.76% Series 70,000 140,000 $7,000 $14,000 $100.00 12.00% Series _ 27,700 2,770 Total with sinking fund 70,000 167,700 $7,000 $16,770 Fair Value of Prelfed Stock with sidnug fid (d) $7,000 $16,936

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CA Price Per Sha as of Authorind Total Decenmber 31, Dollar Value ard Outstmding 1995 1996 1996 1996 1995 (Donlars in Tbousaxis)

Entepriy New Oleain Preferred Stock WViihout sinking "Ad:

QCiative, $100 par vaue: $105.00 77,798 $7,780 $7,780 $104.58 4 75% Series 77,798 6,000 6,000 4.36% Series 60,000 60,000 6,000 6,000 $SK59 5.56%/O Series 60,000 60,000 $19,780 $19,8 Total withot siking f"nd 197,798 197,798 Subs idiamies' Pefer ence Stock (a) 6L000000 6000,000 $125,0000 $150000 Subsidiaries' Preferred Stock:

VAthout sinkig bid -- 5,,869,644 $430,955 $539055

,695,680_ 3,405,693, $216,986 , $23i7ao With skinngfinmd Fair Value oflserence Stock and Peferned Stock midi sinking fuid (d) $357,135 $390,738 (a) The total dollar value represents the involuntary liquidation value of $25 per share.

(b) These series are not redeemable as of December 31, 1996.

(c) Represents weighted-average annualized rates for 1996.

and by nationally recognized (d) Fair values were determined using bid prices reported by dealer markets investment banking firms. See Note 1 for additional disclosure of fair value of financial instruments.

stock; and common stock of Changes in the preferred stock, with and without sinking fund, preference and Entergy New Orleans during Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, the last three years were:

Ntimher of Shares 1996 1995 19(0 1995 1994 Preferred stock retirements Entergy Arkansas (45,000)

$100 par value (50,000) (25,000) (280,000)

(560,000) (280,000)

$25 par value (2,000,000)

$0.01 par value Entergy Gulf States (72,834) (60,667)

(101,943)

$100 par value Entergy Louisiana (100,000)

$100 par value (450,211) (601,537)

(2,300,370)

$25 par value Entergy Mississippi (150,000) (150,000)

(97,700)

$100 par value Entergy New Orleans (34,495) (15,000)

$100 par value

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Cash sinking fund requirements and mandatory redemptions for the next five years for preferred and preference stock, outstanding as of December 31, 1996, are:

Entergy Entergy Entergy Entergy Enterry Arkansas Gulf States Louisiana Mississippi (In Thousands) 1997 $21,216 $4,500 $5,966 $3,750 $7,000 1998 14,225 4,500 5,966 3,759 1999 60,466 4,500 5,966 50,000 2000 160,466 4,500 155,966 -

2001 45,466 4,500 5,966 35,000 Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and Entergy Mississippi have the annual noncumulative option to redeem, at par, additional amounts of certain series of their outstanding preferred stock.

Entergy Corporation repurchased and retired (returned to authorized but unissued status) 1,230,000 shares of common stock at a cost of $30.7 million in 1994. There were no stock repurchases in 1995 or 1996.

Entergy Corporation from time to time reissues treasury shares to meet the requirements of the Stock Plan for Outside Directors (Directors' Plan), the Equity Ownership Plan of Entergy Corporation and Subsidiaries (Equity Plan), and certain other stock benefit plans. Entergy Corporation repurchased in the market 2,805,000 shares of its common stock in 1994 at a cost of $88.8 million. The Directors' Plan awards nonemployee directors a portion of their compensation in the form of a fixed number of shares of Entergy Corporation common stock. Shares awarded under the Directors' Plan were 6,750, 9,251, and 18,757 during 1996, 1995, and 1994, respectively.

During 1996, Entergy Corporation issued 755,200 shares of its previously repurchased common stock, reducing the amount held as treasury stock by $22.2 million. Entergy Corporation issued these shares to meet the requirements of its various stock plans. In addition, Entergy Corporation received proceeds of $118 million from the issuance of 4,438,972 shares of common stock under its new dividend reinvestment and stock purchase plan during 1996.

The Equity Plan grants stock options, equity awards, and incentive awards to key employees of the domestic utility companies. The costs of awards are charged to income over the period of the grant or restricted period, as appropriate. Amounts charged to compensation expense in 1996 were immaterial. Stock options, which comprise 50%/ of the shares targeted for distribution under the Equity Plan, are granted at exercise prices not less than market value on the date of grant. The options are generally exercisable no less than six months nor more than 10 years after the date of grant.

Entergy sponsors the Employee Stock Ownership Plan of Entergy Corporation and Subsidiaries (ESOP) and the Savings Plan of Entergy Corporation and Subsidiaries (Savings Plan). Both plans are defined contribution plans covering eligible employees of Entergy and its subsidiaries who have completed certain service requirements.

Entergy's subsidiaries' contributions to the ESOP and the Savings Plan, and any income thereon, are invested in shares of Entergy Corporation common stock. The allowed contributions to the ESOP are accrued based on the expected utilization of additional investment tax credits in the applicable Federal income tax return of Entergy and its subsidiaries, and on expected voluntary participant contributions. Entergy's subsidiaries contributed $22.8 million to the ESOP for the year ended December 31, 1995. There were no contributions in the years ended December 31, 1996 and 1994.

The Savings Plan provides that the employing Entergy subsidiary may make matching contributions to the plan in an amount equal to 50 percent of the participant's basic contribution. In 1996, 1995, and 1994, Entergy's subsidiaries contributed $13.2 million, $13.2 million, and $11.7 million, respectively, to the Entergy Savings Plan.

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(GSU Entergy Gulf States sponsors the Gulf States Utilities Company Employee Stock Ownership Plan are both defined ESOP) and the Gulf States Utilities Company Employees' Thrift Plan (GSU Thrift Plan), which Gulf States employees, pre-Merger Entergy Gulf contribution plans. The GSU ESOP is available to all Entergy work location is River Bend, States employees and post-Merger employees of Entergy Operations, whose primary shares of Entergy upon completion of certain eligibility requirements. All contributions to the plan are invested in on expected Corporation common stock. Entergy Gulf States makes contributions to the GSU ESOP based States Federal tax return and on expected utilization of additional investment tax credits in the Entergy Gulf and 1994.

during 1996, 1995, participants' contributions. No additional contributions were made to the GSU ESOP location is River The GSU Thrift Plan is available to certain Entergy Operations employees whose primary work to 50 percent of a Bend. Entergy Gulf States makes matching contributions to the GSU Thrift Plan equal discretion, in shares of Entergy participant's basic contribution which may be invested, at the participant's for the years ended Corporation common stock. Entergy Gulf States' contributions to the GSU Thrift Plan December 31, 1996, 1995, and 1994 were $.3 million, $1.1 million, and $3.9 million, respectively.

in Entergy applies APB Opinion 25, "Accounting for Stock Issued to Employees," and related interpretations stock options accounting for stock options. Accordingly, no compensation cost is required to be recognized for the the exercise prices are not less than market value on the described above until such options are exercised because had share would have been immaterial date of grant. The impact on Entergy's net income and earnings per awards under grant dates for compensation cost for the stock options been determined based on the fair value at the the option plans consistent with the method prescribed by SFAS 123.

is estimated on the In applying the disclosure provisions of SFAS 123, the fair value of each option grant price volatility of 18%, 240, and date of grant using the Black-Scholes option-pricing model with expected stock risk-free those years as follows:

19% in 1996, 1995, and 1994, respectively, and additional assumptions for each of interest rates of 6%, expected lives of 10 years, and dividends of $1.80 per share.

Nonstatutory stock option transactions are summarized as follows:

1996 1995 1994 Average Average Average Number Option Number Option Number Option of Options Price of Options Price of Options Price 457,909 $25.98 170,409 $34.86 102,909 $33.46 Beginning-of-year balance 82,500 29.38 315,000 21.39 67,500 37.00 Options granted (7,500) 23.38 (12,500) 23.38 -

Options exercised (5,000) 35.88 (15,000) 32.75 -

Opticns expiring utised 5$26.45 .457=90 $25.98 170,409 $34.86 End-of-year balance 277,909 207,909 170,409 Options exercisable at year-end Weighted-average fair value of

$ 2.67 $ 5.48 $ 2.45 options granted

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The following table summarizes information about stock options outstanding as of December 31, 1996:

Options Outstanding Options Exercisable Weighted-Avg Remaining Weighted Weighted Range of As of Contractual A'vg. Exercise As of Avg. Exercise Exercise Prices 12/31/96 Life-Yrs. Price 12/31/96 Price

$20-$30 404,302 8.2 $23.51 154,302 $27.77

$30 - $40 123,607 6.6 $36.09 123,607 $36.09

$20-$40 527,909 7.8 $26.45 "277,909 $31.47 To meet the requirements of the Employee Stock Investment Plan (ESIP), Entergy Corporation is authorized to issue or acquire, through March 31, 1997, up to 2,000,000 shares of its common stock to be held as treasury shares. Under the ESIP, employees may be granted the opportunity to purchase (for up to 10% of their regular annual salary, but not more than $25,000) common stock at 85% of the market value on the first or last business day of the plan year, whichever is lower. Through this program, employees purchased 247,122 and 329,863 shares for the 1995 and 1994 plan years, respectively. The 1996 plan year runs from April 1, 1996, to March 31, 1997. In February 1997, Entergy received authority from the SEC to extend the ESIP for an additional period of three years ending on March 31, 2000. Under the extended plan, Entergy Corporation may issue either treasury shares or previously authorized but unissued shares.

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NOTE 6. COMPANY-OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES (Entergy Arkansas)

Entergy Arkansas Capital I (Trust) was established as a financing subsidiary of Entergy Arkansas for the purpose of issuing common and preferred securities. On August 14, 1996, the Trust issued $60 million in aggregate liquidation preference amount of 8.5% Cumulative Quarterly Income Preferred Securities (Preferred Securities) in a public offering and $1.9 million of common securities to Entergy Arkansas. The Trust used the proceeds from the sale of the Preferred Securities and the common securities to purchase from Entergy Arkansas 8.5% junior subordinated deferrable interest debentures in the amount of $61.9 million (Debentures). The Debentures held by the Trust are its only asset and the Trust will use interest payments received on the Debentures to make cash distributions on the Preferred Securities.

The Preferred Securities of the Trust; as well as the Debentures, mature on September 30, 2045. The Preferred Securities are redeemable, however, at the option of Entergy Arkansas beginning in 2001 at 100% of their principal amount, or earlier under certain limited circumstances, including the loss of the tax deduction arising out of the interest paid on the Debentures. Entergy Arkansas has, pursuant to certain agreements taken together, fully and unconditionally guaranteed payment of distributions on the Preferred Securities. Entergy Arkansas is the owner of all of the common securities of the Trust, which constitute 3% of the Trust's total capital.

(Entergy Louisiana)

Entergy Louisiana Capital I (Trust) was established as a financing subsidiary of Entergy Louisiana for the purpose of issuing common and preferred securities. On July 16, 1996, the Trust issued $70 million in aggregate liquidation preference amount of 9% Cumulative Quarterly Income Preferred Securities (Preferred Securities) in a public offering and $2.2 million of common securities to Entergy Louisiana. The Trust used the proceeds from the sale of the Preferred Securities and the common securities to purchase from Entergy Louisiana 9% junior subordinated deferrable interest debentures in the amount of $72.2 million (Debentures). The Debentures held by the Trust are its only asset and the Trust will use interest payments received on the Debentures to make cash distributions on the Preferred Securities.

The Preferred Securities of the Trust, as well as the Debentures, mature on September 30, 2045. The Preferred Securities are redeemable, however, at the option of Entergy Louisiana beginning in 2001 at 100% of their principal amount, or earlier under certain limited circumstances, including the loss of the tax deduction arising out of the interest paid on the Debentures. Entergy Louisiana has, pursuant to certain agreements taken together, fully and unconditionally guaranteed payment of distributions on the Preferred Securities. Entergy Louisiana is the owner of all of the common securities of the Trust, which constitute 3% of the Trust's total capital.

(Entergy Gulf States)

Entergy Gulf States Capital I (Trust) was established as a financing subsidiary of Entergy Gulf States for the purpose of issuing common and preferred securities. On January 28, 1997, the Trust issued $85 million in aggregate liquidation preference amount of 8.75% Cumulative Quarterly Income Preferred Securities (Preferred Securities) in a public offering and $2.6 million of common securities to Entergy Gulf States. The Trust used the proceeds from the sale of the Preferred Securities and the common securities to purchase from Entergy Gulf States 8.75% junior subordinated deferrable interest debentures in the amount of $87.6 million (Debentures). The Debentures held by the Trust are its only asset and the Trust will use interest payments received on the Debentures to make cash distributions on the Preferred Securities.

The Preferred Securities of the Trust; as well as the Debentures, mature on March 31, 2046. The Preferred Securities are redeemable, however, at the option of Entergy Gulf States beginning in 2002 at 100% of their principal amount, or earlier under certain limited circumstances, including the loss of the tax deduction arising out of the interest paid on the Debentures. Entergy Gulf States has, pursuant to certain agreements taken together, fully and

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unconditionally guaranteed payment of distributions on the Preferred Securities. Entergy Gulf States is the owner of all of the common securities of the Trust, which constitute 3% of the Trust's total capital.

NOTE 7. LONG - TERM DEBT (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)

The long-term debt of Entergy Corporation's subsidiaries, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy, as of December 31, 1996, was:

Fateu FEaa y Fitew b FFat E Synm Frxm To From To Ftargy Adm ff&ae Ltoanimn Nelaw En (InThxmis)

Firt MmW Bmds 1997 1999 5.375% 11.375% $687,000 $45,000 $321,000 $69,000 $12,000 $240,000 2000 2004 6.0000/. 8250% 1,355,270 180,000 608,750 361,520 205,000 2005 2009 6.650% 7.500% 325,000 215,000 110,000 2010 2019 9.750%/. 75,000 75,000 2020 2026 7.000% 10.000% 1,031,648 376,648 450,000 205,000 G&RBonds 1997 1999 6.950% 11.2% 96,000 96,000 2000 2023 6.625% 8.800% 525,000 355,000 170,000 Govtam1 bipatims (a) 1997 2008 5.9000%0 10.000% 108,267 49,655 45,875 11,837 900 2009 2026 5.950% 9.875% 1,551,235 240,700 435,735 412,170 46,030 416,600 1997 2000 7.380% 9.720%/o 175,000 100,000 75,000 LU-Tam DXDE CGbligtim (No 9) 117,270 117,270 Wda-rd 3 Lse Ubfiptiu 8.76% (ote 10) 353,600 353,600 Gram Gulfeas OWaim 7.02%/(4te 10) 496,480 496,480 IUe ficredit, vaial rate due 1998 65,000 CikPaa Creo Lim, avg. rate 8.31% due 2000 921,553 SýLang-TermDebt 83,411 9,938 Unnie Praniumn and Discod -Net (30,310) (11,420) (5,087) (5.619) (2.861) (1.112) (4,211)

Tota Lang-Tam Debt 7,936,424 1,287,853 2,076,211 1,407,508 495,069 180,888 1,428,869 LeCss Armmnt Due W~fim One Y=a 345,620 32,465 160,865 34,275 96,015 12,000 10,000 LagTermDdA Dcif Anmw Due W thin One YeW Y S7,590,W4 $1,255,388 $1,915,346 $1,373,233 $399,054 $168,888 $1,418,869 Fair Valhe fwIg.-TamDebt (b) $7,087,027 $1,160,377 $2,142,389 $1,104,891 $503,461 $175,566 $982,423

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The long-term debt of Entergy Corporation's subsidiaries, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy, as of December 31, 1995, was:

)& rities Interest Rates EntkW Etag ELoeWs Fisisy Fiewrl System Fromn To From To E11terRY Arkansas Gulf States man M~ssissippi Ikw Odeam Energy Frc... From TO - -

(In T&xmnds)

First Mxtgqe Bonds 1996 1999 5% 10.5% $1,064,410 $75,160 $445,000 $104,000 $35,000 $35,250 $370,000 9.75% 1,282,320 180,800 670,000 361,520 70,000 2000 2004 6%

11.375% 355,319 215,000 120,000 20,319 2005 2009 6.25%

50,000 50,000 2010 2014 11.375%

11.375% 95,000 75,000 20,000 2015 2019 9.75%

2020 2024 7% 10.375% 1,008,818 373,818 450,000 185,000 G&RBonds 1996 1999 6.95% 11.2% 152,000 122,000 30,000 8.8% 485,000 355,000 130,000 2000 2023 6.625%

GCxrutalC*9tions(a) 1996 1998 5.9% 10%0 110,868 51,495 46,300 12,158 915 12.50% 1,551,235 240,700 435,735 412,170 46,030 416,600 2009 2023 5.95%

1996 1998 9.72% 150,000 150,000 2000 7.380/9 30,000 30,000 Lcn-Term D*E cbl*igation 0(ote 9) 111,536 111,536 Watrford 3 Lease Obligetim 8.76% (Note 10) 353,600 353,600 Grand Gulf Lease Cftigatim 7.02% (Note 10) 500,0 500,000 Line ofCredit, variable rate, due 1998 65,000 Or Loa*-Term Debt 9,156 9,156 Lkanr1 Premium and Discoat -Net (38A84g (13.606C (5295) (8,017) (3,526) (1,042) (7,002)

Total Lng-Term Debt 7,335,774 1,309,903 2,320,896 1,420,431 555,419 194,208 1,469,917 Less Amount Due Wifin Ore Year 558,650 28,700 145,425 35,260 61,015 38,250 250,000 Long-Term Debt Fxchxii Aont Due Wi*t* One Year $6,777,124 $1,281,203 $2,175,471 $1,385,171 $494,404 $155,958 $1,219,917 Fair Value of Loiag-Tenn Deb (b) $6,666,420 $1,213,511 $2,416,932 $1,136,246 $594,365 $198,785 $1,041,581 (a) Consists of pollution control bonds, certain series of which are secured by non-interest bearing first mortgage bonds.

(b) The fair value excludes lease obligations, long-term DOE obligations, and other long-term debt and includes debt due within one year. It is determined using bid prices reported by dealer markets and by nationally recognized investment banking firms. See Note I for additional information on disclosure of fair value of financial instruments.

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The annual long-term debt maturities (excluding lease obligations) and annual cash sinking fund requirements for debt outstanding as of December 31, 1996, for the next five years follow:

Entergy Entergy Entergy Entergy Entergy System Entere-y(a) Arkansas(b) Gulf States(c) Louisiana(d) Mississippi New Orleans Energy (In Thousands)

$32,465 $160,865 $34,275 $96,015 $12,000 $10,000 1997 $345,620 15,510 190,890 35,300 20 - 70,000 1998 311,720 1,025 71,915 238 20 160,000 1999 233,198 1,245 945 100,225 20 75,000 2000 1,098,988 1,535 123,725 18,925 25 135,000 2001 279,210 may be (a) Not included are other sinking fund requirements of approximately $17.5 million annually which satisfied by cash or by certification of property additions at the rate of 167% of such requirements.

may be (b) Not included are other sinking fund requirements of approximately $0.62 million annually which satisfied by cash or by certification of property additions at the rate of 167% of such requirements.

may be (c) Not included are other sinking fund requirements of approximately $12.8 million annually which satisfied by cash or by certification of property additions at the rate of 167% of such requirements.

be (d) Not included are other sinking fund requirements of approximately $4.15 million annually which may satisfied by cash or by certification of property additions at the rate of 167% of such requirements.

Entergy Gulf States has two outstanding series of pollution control bonds collateralized by irrevocable letters of credit of credit, which are scheduled to expire before the scheduled maturity of the bonds. The letter 2015, expires in September 1999 and the letter collateralizing the $28.4 million variable rate series, due December 1, in February 1999.

of credit collateralizing the $20 million variable rate series, due April 1, 2016, expires An Entergy subsidiary signed an agreement with several banks on January 5, 1996, to obtain a revolving of credit facility in the aggregate amount of 1.2 billion Australian dollars (870 million US dollars) for the acquisition annual rate of CitiPower. The facility was partially drawn down on the same date, bears interest at an average have 8.046%/o, and is non-recourse to Entergy. This facility is collateralized by all of CitiPower's assets. Borrowings day periods at the subsidiary's option maturities of 30 to 180 days, and are continuously renewable for 30 to 180 date to be until the facility matures on June 30, 2000, unless certain events occur which would cause the maturity the extended to a date no later than December 31, 2000. The subsidiary intends to renew obligations incurred under balance-sheet date. As part of the CitiPower acquisition, agreement for a period extending beyond one year from the totaling Entergy Corporation provided credit support; in the form of a bank letter of credit and other agreements, approximately $70 million, which was subsequently released in January 1997.

The subsidiary entered into several interest rate swaps to reduce the impact of interest rate changes on its involve the debt related to the CitiPower acquisition. The interest rate swap agreements which hedge this debt the exchange of fixed and floating rate interest payments periodically over the life of the agreements without the movements in interest rates. If the exchange of the underlying principal amounts. Market risks arise from the subsidiary could be counterparties to an interest rate swap agreement were to default on contractual payments, does not anticipate exposed to increased costs related to replacing the original agreement. However, the subsidiary swap in effect at December 31, 1996. At December 31, nonperformance by any counterparty to any interest rate of interest rate swaps with 1996, this subsidiary was a party to a notional amount of $900 million Australian dollars maturity dates ranging from February 1999 to December 2000.

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Entergy Power UK plc, an Entergy subsidiary, executed a credit facility with several banks on December 17, 1996, to obtain credit facilities in the aggregate amount of approximately 1.25 billion British Pounds (2.1 billion US dollars). Proceeds of this facility, which is in three tranches, have been used, together with $392 million of cash provided by Entergy, to fund the acquisition of London Electricity plc and are available to replace London Electricity plc's currently outstanding short-term credit lines and to provide working capital for London Electricity pic. No borrowings were outstanding under this credit facility at December 31, 1996. The credit facility is non-recourse to Entergy and is collateralized by the assets of Entergy Power UK pic, consisting of all shares of London Electricity 17, 1998 to pic owned by it. The maturity dates of the various tranches of the credit facility range from December 1.50%

December 17, 2001. The interest rate on these facilities is the London Interbank Offered Rate plus up to depending on the capitalization ratio of Entergy Power UK plc and its subsidiaries.

Under Entergy Mississippi's G&R Mortgage, G&R Bonds are issuable based upon 70% of bondable property additions, based upon 50% of accumulated deferred Grand Gulf I related costs, based upon the retirement of certain bonds previously outstanding, or based upon the deposit of cash with the trustee. Entergy Mississippi's purposes) under G&R Mortgage prohibits the issuance of additional first mortgage bonds (including for refunding Entergy Mississippi's first mortgage indenture, except such first mortgage bonds as may hereafter be issued from time to time at Entergy Mississippi's option to the corporate trustee under the G&R Mortgage to provide additional security for Entergy Mississippi's G&R Bonds.

Under Entergy New Orleans' G&R Mortgage, G&R Bonds are issuable based upon 70% of bondable property additions or based upon 50% of accumulated deferred Grand Gulf 1-related costs. The G&R Mortgage precludes the issuance of any additional bonds based upon property additions if the total amount of outstanding Rate Recovery Mortgage Bonds issued on the basis of the uncollected balance of deferred Grand Gulf 1-related costs had no exceeds 66 2/3% of the balance of such deferred costs. As of December 31, 1996, Entergy New Orleans outstanding Rate Recovery Mortgage Bonds.

Gulf NOTE 8. DIVIDEND RESTRICTIONS - (Entergy Corporation, Entergy Arkansas, Entergy States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)

Provisions within the Articles of Incorporation or pertinent indentures and various other agreements related to the long-term debt and preferred stock of certain of Entergy Corporation's subsidiaries restrict the payment of cash dividends or other distributions on their common and preferred stock. Additionally, PUHCA prohibits Entergy Corporation's subsidiaries from making loans or advances to Entergy Corporation. Detailed below are the restricted retained earnings unavailable for distribution to Entergy Corporation by subsidiary.

Restricted Earnings (in millions)

Entergy Arkansas $ 291.3 Entergy Gulf States Entergy Louisiana Entergy Mississippi 135.7 Entergy New Orleans 4.0 System Energy 6.7 In During 1996, cash dividends paid to Entergy Corporation by its subsidiaries totaled $554.2 million. $66.9 payments from its subsidiaries totaling February 1997, Entergy Corporation received common stock dividend million.

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NOTE 9. COMMITMENTS AND CONTINGENCIES Caiun - River Bend (Entergy Corporation and Entergy Gulf States)

Entergy Gulf States and Cajun, respectively, own 70% and 30% undivided interests in River Bend (operated by Entergy Gulf States), and 42% and 58% undivided interests in Big Cajun 2, Unit 3 (operated by Cajun). These relationships have spawned a number of long-standing disputes and claims between the parties. An agreement setting forth terms for the resolution of all such disputes has been reached by Entergy Gulf States, the Cajun bankruptcy trustee, and the RUS, and approved by the United States District Court for the Middle District of Louisiana (District Court) on August 26, 1996 (Cajun Settlement). On September 6, 1996, the Committee of Unsecured Creditors in the Cajun bankruptcy proceeding filed a Notice of Appeal to the United States Court of Appeals for the Fifth Circuit (Fifth Circuit), objecting that the order approving the Cajun Settlement was separate from the approval of a plan of reorganization and, therefore, improper. The Cajun Settlement is subject to this appeal and approvals by the appropriate regulatory agencies. Entergy Gulf States expects to make filings with FERC and the SEC seeking approval for the transfer of certain Cajun transmission assets to Entergy Gulf States. Management believes that it is probable that the Cajun Settlement will ultimately be approved and consummated.

The Cajun Settlement resolves Cajun's civil action against Entergy Gulf States, in which Cajun sought to rescind or terminate the Joint Ownership Participation and Operating Agreement (Operating Agreement) entered into on August 28, 1979, relating to River Bend. In that suit, Cajun also sought to recover its alleged $1.6 billion investment in the unit plus attorneys' fees, interest, and costs. A trial on the portion of the suit by Cajun to rescind the Operating Agreement was completed in March 1995. On October 24, 1995, the District Court issued a memorandum opinion rejecting Cajun's fraud claims and denying rescission. An appeal to the Fifth Circuit by the Cajun bankruptcy trustee was stayed pending the Court's trial of the breach of contract phase of the case. The Cajun Settlement resolves both the issues on appeal and the breach of contract claims, which have not been tried.

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

The Cajun Settlement, agreed to in principle on April 26, 1996, by Entergy Gulf States, the Cajun bankruptcy trustee, and the RUS, Cajun's largest creditor, was approved by the District Court on August 26, 1996.

The terms include, but are not limited to, the following: (i) Cajun's interest in River Bend will be turned over to the RUS, which will have the option to retain the interest, sell it to a third party, or transfer it to Entergy Gulf States at no cost; (ii) Cajun will set aside a total of $125 million for its share of the decommissioning costs of River Bend; (iii)

Cajun will transfer certain transmission assets to Entergy Gulf States; (iv) Cajun will settle transmission disputes and be released from claims for payment under transmission arrangements with Entergy Gulf States as discussed under "Cajun - Transmission Service" below; (v) all funds paid by Entergy Gulf States into the registry of the District Court will be returned to Entergy Gulf States; (vi) Cajun will be released from its unpaid past, present, and future liability for River Bend costs and expenses; and (vii) all litigation between Cajun and Entergy Gulf States will be dismissed. Based on the District Court's approval of the Cajun Settlement, the litigation accrual established in 1994 for possible losses associated with the Cajun-River Bend litigation was reversed in September 1996.

Cajun has not paid its full share of capital costs, operating and maintenance expenses, and other costs for repairs and improvements to River Bend since 1992. In view of Cajun's failure to fund its share of River Bend related operating, maintenance, and capital costs, Entergy Gulf States has (i) credited Entergy Gulf States' share of expenses for Big Cajun 2, Unit 3 against amounts due from Cajun to Entergy Gulf States, and (ii) sought to market Cajun's share of power from River Bend and apply proceeds to the amounts due from Cajun to Entergy Gulf States.

As a result, on November 2, 1994, Cajun discontinued supplying Entergy Gulf States with its share of power from Big Cajun 2, Unit 3. Entergy Gulf States requested an order from the District Court requiring Cajun to supply Entergy Gulf States with this energy and allowing Entergy Gulf States to credit amounts due to Cajun for Big

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1994, by Cajun 2, Unit 3 energy against amounts Cajun owed to Entergy Gulf States for River Bend. In December States with its share of means of a preliminary injunction, the District Court ordered Cajun to supply Entergy Gulf energy from Big Cajun 2, Unit 3 Ind ordered Entergy Gulf States to make payments for its share of Big Cajun 2, affirmed the District Court's Unit 3 expenses to the registry of the District Court. In October 1995, the Fifth Circuit Gulf States into the preliminary injunction. As of December 31, 1996, $70.4 million had been paid by Entergy (including registry of the District Court. Cajun's unpaid portion of River Bend operating and maintenance expenses cost to Entergy Gulf States nuclear fuel) and capital costs for 1996 was approximately $55 million. The cumulative sale proceeds from the resulting from Cajun's failure to pay its full share of River Bend-related costs, reduced by the District Court for by Entergy Gulf States of Cajun's share of River Bend power and payments into the registry of the

$4.9 million as of December 31, 1996.

Entergy Gulf States' portion of expenses for Big Cajun 2, Unit 3, was with an offsetting reserve Cajun's unpaid portion of the River Bend-related costs is reflected in long-term receivables regarding the non in other deferred credits. As discussed above, the Cajun Settlement will conclude all disputes decommissioning of payment by Cajun of operaing and m=an qc expenses. Cajun continues to pay its share costs for River Bend.

District On December 21, 1994, Cajun filed a petition in the United States Bankruptcy Court for the Middle proceedings, Cajun filed a of Louisiana seeking relief under Chapter 11 of the Bankruptcy Code. In its bankruptcy contract. Entergy Gulf motion on January 10, 1995, to reject the Operating Agreement as a burdensome executory discussed above, this States responded on January 10, 1995, with a memorandum opposing Cajun's motion. As of the plans of reorganization submitted to matter will be ended as a result of the Cajun Settlement. Proponents of all effectiveness of their the Bankruptcy Court have incorporated the Cajun Settlement as an integral condition to the and any required plan. The timing and completion of the reorganization plan depends on Bankruptcy Court approval proposals by three groups seeking to acquire the non regulatory approvals. The Bankruptcy Court has approved Cajun's creditors will vote on the three nuclear assets of Cajun and has signed an order that establishes rules for how and the plan that will be plans. On December 16, 1996, the Bankruptcy Court began hearings on the balloting adopted.

Caiun - Transmission Service (Entergy Corporation and Entergy Gulf States) service charge Entergy Gulf States and Cajun are parties to FERC proceedings relating to transmission States and Cajun disputes. In April 1992, FERC issued a final order in these disputes. In May 1992, Entergy Gulf FERC. In June 1992, Entergy filed motions for rehearings on certain portions of the order, which are still pending at Circuit of Columbia Gulf States filed a petition for review in the United States Court of Appeals for the District rendered an opinion regarding certain of the other issues decided by FERC. In August 1993, the Court of Appeals reversing FERC's order regarding the portion of such disputes relating to the calculations of certain credits and remanded the issues to equalization charges under Entergy Gulf States' service schedules with Cajun. The opinion from the an issue FERC for further proceedings consistent with its opinion. In February 1995, FERC eliminated In orders issued on remand that Entergy Gulf States believes the Court of Appeals directed FERC to reconsider.

the remanded portion of August 3, 1995, and October 2, 1995, FERC affirmed an April 1995 ruling by an ALJ in Both Entergy Gulf Entergy Gulf States' and Cajun's ongoing transmission service charge disputes before FERC.

pending States and Cajun have petitioned for appeal. The Court of Appeals has stayed the appellate proceedingthe Cajun above, for a further discussion of implementation of the Cajun Settlement (see Cajun - River Bend Settlement).

orders issued on Under Entergy Gulf States' interpretation of a 1992 FERC order, as modified by FERC's Cajun would owe Entergy August 3, 1995, and October 2, 1995, and as agreed to by the Cajun bankruptcy trustee, further estimates that if it Gulf States approximately $70.2 million as of December 31, 1996. Entergy Gulf States adversely to Entergy Gulf were to prevail in its May 1992 motion for rehearing and on certain other issues decided Entergy Gulf States has appealed, States in the February 1995, August 1995, and October 1995 FERC orders, which 31, 1996. If Cajun were to Cajun would owe Entergy Gulf States approximately $157.3 million as of December were not to prevail in its May prevail in its May 1992 motion for rehearing to FERC, and if Entergy Gulf States August and October 1995 1992 motion for rehearing to FERC, and if Cajun were to prevail in appealing FERC's

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orders, Entergy Gulf States estimates it would owe Cajun approximately $110.9 million as of December 31, 1996.

The above amounts are exclusive of a $7.3 million payment by Cajun on December 31, 1990, which the parties agreed to apply to the disputed transmission service charges. Pending FERC's ruling on the May 1992 motions for rehearing, Entergy Gulf States has continued to bill Cajun utilizing the historical billing methodology and has recorded underpaid transmission charges, including interest, in the amount of $144 million as of December 31, 1996.

This amount is reflected in long-term receivables with an offsetting reserve in other deferred credits. FERC has determined that the collection of the pre-petition debt of Cajun is an issue properly decided in the bankruptcy proceeding. Refer to "Cajun - River Bend" above for a discussion of the Cajun Settlement.

Capital Requirements and Financing (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)

Construction expenditures (excluding nuclear fuel) for the domestic utility companies and System Entergy for the years 1997, 1998, and 1999 are estimated to total, $510 million, $547 million, and $565 million, respectively.

Entergy will also require $986 million during the period 1997-1999 to meet long-term debt and preferred stock maturities and cash sinking fund requirements. Entergy plans to meet the above requirements primarily with internally generated funds and cash on hand, supplemented by the issuance of debt and company-obligated mandatorily redeemable preferred securities and the use of outstanding credit facilities. Certain domestic utility companies and System Energy may also continue with the acquisition or refinancing of all or a portion of certain outstanding series of preferred stock and long-term debt. See Notes 5, 6, and 7 for further information.

Grand Gulf I-Related Agreements Capital Funds Agreement (Entergy Corporation and System Energy)

Entergy Corporation has agreed to supply System Energy with sufficient capital to (i) maintain System Energy's equity capital at an amount equal to a minimum of 35% of its total capitalization (excluding short-term debt), and (ii) permit the continued commercial operation of Grand Gulf 1 and pay in full all indebtedness for borrowed money of System Energy when due under any circumstances. In addition, under supplements to the Capital Funds Agreement assigning System Energy's rights as security for specific debt of System Energy, Entergy Corporation has agreed to make cash capital contributions to enable System Energy to make payments on such debt when due.

System Energy has entered into various agreements with Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans whereby they are obligated to purchase their respective entitlements of capacity and energy from System Energy's 90% ownership and leasehold interest in Grand Gulf 1, and to make payments that, together with other available funds, are adequate to cover System Energy's operating expenses.

System Energy would have to secure funds from other sources, including Entergy Corporation's obligations under the Capital Funds Agreement, to cover any shortfalls from payments received from Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans under these agreements.

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

System Energy has agreed to sell all of its 90% owned and leased share of capacity and energy from Grand Gulf 1 to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans in accordance with specified percentages (Entergy Arkansas-36%, Entergy Louisiana-14%, Entergy Mississippi-33% and Entergy New Orleans-17%) as ordered by FERC. Charges under this agreement are paid in consideration for the purchasing companies' respective entitlement to receive capacity and energy and are payable irrespective of the quantity of energy delivered so long as the unit remains in commercial operation. The agreement will remain in effect until terminated by the parties and approved by FERC, most likely upon Grand Gulf l's retirement from service. Monthly obligations for payments, including the rate increase which was placed into effect in December 1995, subject to

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Entergy refund, under the agreement are approximately $21 million, $8 million, $19 million, and $10 million for Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans, respectively.

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

Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans are individually obligated to make payments or subordinated advances to System Energy in accordance with stated percentages (Entergy Arkansas-17.1%/o, Entergy Louisiana-26.9 /o, Entergy Mississippi-31.3%, and Entergy New Orleans-24.7%)

0 to in amounts that when added to amounts received under the Unit Power Sales Agreement or otherwise, are adequate an amount sufficient to amortize Grand Gulf 2 cover all of System Energy's operating expenses as defined, including its rights to payments and over 27 years. (See Reallocation Agreement terms below.) System Energy has assigned advances to certain creditors as security for certain obligations. Since commercial operation of Grand Gulf 1, payments under the Unit Power Sales Agreement have exceeded the amounts payable under the Availability to Agreement. Accordingly, no payments have ever been required. If Entergy Arkansas or Entergy Mississippi fails other sources, make its Unit Power Sales Agreement payments, and System Energy is unable to obtain funds from Entergy Louisiana and Entergy New Orleans could become subject to claims or demands by System Energy or its creditors for payments or advances under the Availability Agreement (or the assignments thereof) equal to the difference between their required Unit Power Sales Agreement payments and their required Availability Agreement payments.

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

System Energy, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans related entered into the Reallocation Agreement relating to the sale of capacity and energy from Grand Gulf and the costs, in which Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans agreed to assume all of Entergy Arkansas' responsibilities and obligations with respect to Grand Gulf under the Availability Agreement. FERC's decision allocating a portion of Grand Gulf 1 capacity and energy to Entergy Arkansas supersedes the Reallocation Agreement as it relates to Grand Gulf 1. Responsibility for any Grand Gulf 2 amortization amounts has been 0/o, and Entergy New Orleans-29.8 0 %)

individually allocated (Entergy Louisiana-26.23%, Entergy Mississippi-43.97 under the terms of the Reallocation Agreement. However, the Reallocation Agreement does not affect Entergy Arkansas' obligation to System Energy's lenders under the assignments referred to in the preceding paragraph.

and Entergy Arkansas would be liable for its share of such amounts if Entergy Louisiana, Entergy Mississippi, Entergy New Orleans were unable to meet their contractual obligations. No payments of any amortization amounts other will be required as long as amounts paid to System Energy under the Unit Power Sales Agreement, including under the Availability Agreement, which is expected to funds available to System Energy, exceed amounts required be the case for the foreseeable future.

Reimbursement Agreement (System Energy) the In December 1988, System Energy entered into two entirely separate, but identical, arrangements for 10). In sales and leasebacks of an approximate aggregate 11.5% ownership interest in Grand Gulf 1 (see Note arrangements, letters of credit are required to be connection with the equity funding of the sale and leaseback by System Energy under the maintained to secure certain amounts payable for the benefit of the equity investors leases. The current letters of credit are effective until January 15, 2000.

agreed to a Under the provisions of a bank letter of credit reimbursement agreement, System Energy has ratios. System number of covenants relating to the maintenance of certain capitalization and fixed charge coverage than 33% of its Energy agreed, during the term of the reimbursement agreement, to maintain its equity at not less adjusted capitalization (defined in the reimbursement agreement to include certain amounts not included in with respect to each capitalization for financial statement purposes). In addition, System Energy must maintain,

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fiscal quarter during the term of the reimbursement agreement, a ratio of adjusted net income to interest expense (calculated, in each case, as specified in the reimbursement agreement) of at least 1.60 times earnings. As of December 31, 1996, System Energy's equity approximated 34.79% of its adjusted capitalization, and its fixed charge coverage ratio was 2.25.

Fuel Purchase Agreements (Entergy Arkansas and Entergy Mississippi)

Entergy Arkansas has long-term contracts with mines in the State of Wyoming for the supply of low-sulfur coal for the White Bluff Steam Electric Generating Station and Independence (which is 25% owned by Entergy Mississippi). These contracts, which expire in 2002 and 2011, provide for approximately 85% of Entergy Arkansas' expected annual coal requirements. Additional requirements are satisfied by annual spot market purchases.

(Entergy Gulf States)

Entergy Gulf States has a contract for a supply of low-sulfur Wyoming coal for Nelson Unit 6, which should be sufficient to satisfy the fuel requirements at Nelson Unit 6 through 2010. Cajun has advised Entergy Gulf States that Cajun has contracts that should provide an adequate supply of coal until 1999 for the operation of Big Cajun 2, Unit 3.

Entergy Gulf States has long-term gas contracts, which will satisfy approximately 50% of its annual requirements. Such contracts generally require Entergy Gulf States to purchase in the range of 20% of expected total gas needs. Additional gas requirements are satisfied under less expensive short-term contracts. Entergy Gulf States has a transportation service agreement with a gas supplier that provides flexible natural gas service to the Sabine and Lewis Creek generating stations. This service is provided by the supplier's pipeline and salt dome gas storage facility, which has a present capacity of 12.7 billion cubic feet of natural gas.

(Entergy Louisiana)

In June 1992, Entergy Louisiana agreed to a renegotiated 20-year natural gas supply contract. Entergy Louisiana agreed to purchase natural gas in annual amounts equal to approximately one-third of its projected annual fuel requirements for certain generating units. Annual demand charges associated with this contract are estimated to be $8.6 million through 1997, and a total of $116.6 million for the years 1998 through 2012. Entergy Louisiana recovers the cost of fuel consumed during the generation of electricity through its fuel adjustment clause.

Sales Agreements/Power Purchases (Eutergy Gulf States)

In 1988, Entergy Gulf States entered into a joint venture with a primary term of 20 years with Conoco, Inc.,

Citgo Petroleum Corporation, and Vista Chemical Company (Industrial Participants) whereby Entergy Gulf States, Nelson Units 1 and 2 were sold to a partnership (NISCO) consisting of the Industrial Participants and Entergy Gulf States. The Industrial Participants supply the fuel for the units, while Entergy Gulf States operates the units at the discretion of the Industrial Participants and purchases the electricity produced by the units. Entergy Gulf States is continuing to sell electricity to the Industrial Participants. For the years ended December 31, 1996, 1995, and 1994, the purchases by Entergy Gulf States of electricity from the joint venture totaled $62.0 million, $58.5 million, and

$59.4 million, respectively.

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(Entergy Louisiana)

Entergy Louisiana has an agreement extending through the year 2031 to purchase energy generated by a hydroelectric facility. During 1996, 1995, and 1994, Entergy Louisiana made payments under the contract of approximately $56.3 million, $55.7 million, and $56.3 million, respectively. If the maximum percentage (94%) of the energy is made available to Entergy Louisiana, current production projections would require estimated payments of approximately $54 million in 1997, and a total of $3.5 billion for the years 1998 through 2031. Entergy Louisiana recovers the costs of purchased energy through its fuel adjustment clause.

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

Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans have interests in System Fuels of 35%o, 33%, 19 0/a, and 130/, respectively. The parent companies of System Fuels agreed to make loans to System Fuels to finance its fuel procuree*t, delivery, and storage activities. As of December 31, 1996, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans had, respectively, approximately $11 million, $14.2 million, $5.5 million, and $3.3 million in loans outstanding to System Fuels which mature in 2008.

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

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

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

Protection for this liability is provided through a combination of private insurance (currently $200 million each for Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy) and an industry assessment program. Under the assessment program, the maximum payment requirement for each nuclear incident would be

$79.3 million per reactor, payable at a rate of $10 million per licensed reactor per incident per year. Entergy has five licensed reactors. As a co-licensee of Grand Gulf I with System Energy, SMEPA would share 10% of this obligation. With respect to River Bend, any assessments pertaining to this program are allocated in accordance with the respective ownership interests of Entergy Gulf States and Cajun. In addition, each owner/licensee of Entergy's five nuclear units participates in a private insurance program which provides coverage for worker tort claims filed for bodily injury caused by radiation exposure. The program provides for a maximum assessment of approximately

$16 million for the five nuclear units in the event losses exceed accumulated reserve funds.

Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy are also members of certain insurance programs that provide coverage for property damage, including decontamination and premature decommissioning expense, to members' nuclear generating plants. As of December 31, 1996, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy each was insured against such losses up to $2.75 billion.

In addition, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans are members of an insurance program that covers certain replacement power and business interruption costs incurred due to prolonged nuclear unit outages. Under the property damage and replacement power/business interruption insurance programs, these Entergy subsidiaries could be subject to assessments if losses exceed the accumulated funds available to the insurers. As of December 31, 1996, the maximum amounts of such possible assessments were: Entergy Arkansas - $31.1 million; Entergy Gulf States - $11.5 million; Entergy Louisiana

$24.8 million; Entergy Mississippi - $0.7 million; Entergy New Orleans - $0.4 million; and System Energy - $21.3 million. Under its agreement with System Energy, SMEPA would share in System Energy's obligation. Cajun has no share of Entergy Gulf States' obligation.

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The amount of property insurance maintained for each Entergy nuclear unit exceeds the NRC's minimum requirement for nuclear power plant licensees of $1.06 billion per site. NRC regulations provide that the proceeds of this insurance must be used, first, to place and maintain the reactor in a safe and stable condition and, second, to complete decontamination operations. Only after proceeds are dedicated for such use and regulatory approval is secured would any remaining proceeds be made available for the benefit of plant owners or their creditors.

Spent Nuclear Fuel and Decommissionin2 Costs (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy)

Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy provide for estimated fiture disposal costs for spent nuclear fuel in accordance with the Nuclear Waste Policy Act of 1982. The affected Entergy companies entered into contracts with the DOE, whereby the DOE will furnish disposal service at a cost of one mill per net kWh generated and sold after April 7, 1983, plus a onetime fee for generation prior to that date. Entergy Arkansas, the only Entergy company that generated electricity with nuclear fuel prior to that date, elected to pay the onetime fee plus accrued interest, no earlier than 1998, and has recorded a liability as of December 31, 1996, of approximately $117 million for generation subsequent to 1983. The fees payable to the DOE may be adjusted, in the future to assure full recovery. Entergy considers all costs incurred or to be incurred, except accrued interest, for the disposal of spent nuclear fuel to be proper components of nuclear fuel expense, and provisions to recover such costs have been or will be made in applications to regulatory authorities.

Delays have occurred in the DOE's program for the acceptance and disposal of spent nuclear fuel at a permanent repository. In a statement released February 17, 1993, the DOE asserted that it does not have a legal obligation to accept spent nuclear fuel without an operational repository for which it has not yet arranged. Entergy Operations and System Fuels joined in lawsuits against the DOE, seeking clarification of the DOE's responsibility to receive spent nuclear fuel beginning in 1998. The original suits, filed June 20, 1994, asked for a ruling stating that the Nuclear Waste Policy Act requires the DOE to begin taking titde to the spent fuel and to start removing it from nuclear power plants in 1998, a mandate for the DOE's nuclear waste management program to begin accepting fuel in 1998 and court monitoring of the program, and the potential for escrow of payments to a nuclear waste fund instead of directly to the DOE. Argument in the case before a three-judge panel of the U.S. Court of Appeals was made on.January 17, 1996. On July 23, 1996, the court reversed the DOE's interpretation of the 1998 obligation and unanimously ruled that the Nuclear Waste Policy Act creates an unconditional obligation to begin acceptance of spent fuel by 1998, but did not make a ruling on the remedies.

On December 17,, 1996, the DOE notified contract holders that it anticipates it will not be able to begin such acceptance until after that date. Subsequently, on January 31, 1997, Entergy Operations and a coalition of 36 electric utilities and 46 state agencies filed lawsuits to suspend payments to the Nuclear Waste Fund. The lawsuits ask the court to (i) find that the December 17, 1996 DOE letter demonstrates breach of contract on the part of the DOE; (ii) order utilities to place the Nuclear Waste Fund payments in an escrow account and not provide the funds to the DOE until it fulfills its obligation, (mii)prevent the DOE from taking adverse action against utilities that withhold payments; and (iv) order the DOE to submit a plan to the court describing how the agency intends to fulfill its obligation on an ongoing basis.

In the meantime, all Entergy companies are responsible for their spent fuel storage. Current on-site spent fuel storage capacity at River Bend, Waterford 3, and Grand Gulf 1 is estimated to be sufficient until 2003, 2000, and 2004, respectively. Thereafter, the affected companies will provide additional storage. Current on-site spent fuel storage capacity at ANO is estimated to be sufficient until 2000. An ANO storage facility using dry casks began operation in 1996. This facility may be expanded further as required. The initial cost of providing the additional on-site spent fuel storage capability required at ANO, River Bend, Waterford 3, and Grand Gulf 1 is expected to be approximately $5 million to $10 million per unit. In addition, about $3 million to $5 million per unit will be required every two to three years subsequent to 2000 for ANO and every four to five years subsequent to 2003, 2000, and

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2004 for River Bend, Waterford 3, and Grand Gulf 1, respectively, until the DOE's repository or storage facility begins accepting such units' spent fuel.

Total decommissioning costs at December 31, 1996, for the Entergy nuclear power plants, excluding co owner shares, have been estimated as follows:

Total Estimated DecommsonanM Costs (in Mllions)

ANO 1 andANO 2 (based ona 1994 interim update to the 1992 cost study) $ 806.3 River Bend (based on a 1996 cost study reflecting 1996 dollars) 293.3 Waterford 3 (based on a 1994 updated study in 1993 dollars) 320.1 Grand Gulf 1 (based on a 1994 cost study using 1993 dollars) 365.9

$ 1,785.6 Entergy Arkansas and Entergy Louisiana are authorized to recover in rates amounts that, when added to estimated investment income, should be sufficient to meet the above estimated decommissioning costs for ANO and Waterford 3, respectively. In the Texas retail jurisdiction, Entergy Gulf States is recovering in rates River Bend decommissioning costs (based on the 1991 cost study that totaled $267.8 million) that, with adjustments, total $204.9 million. In the Louisiana retail jurisdiction, Entergy Gulf States is currently recovering in rates decommissioning costs (based on a 1985 cost study) which total $141 million. Entergy Gulf States included decommissioning costs (based on the 1991 study) in the LPSC rate review filed in May 1995. In October 1996, the LPSC approved Entergy order has Gulf States rates that include decommissioning costs based on the 1991 study. The October 1996 LPSC been appealed and the decommissioning costs based on the 1991 study have not yet been implemented. Entergy Gulf and in States included decommissioning costs, based on the 1996 study, in the LPSC rate review filed in May 1996 System Energy was previously the PUCT rate -review filed in November 1996. Those reviews are still ongoing.

recovering in rates amounts sufficient to fund $198 million (in 1989 dollars) of its Grand Gulf I decommissioning costs. System Energy included decommissioning costs (based on the 1994 study) in its rate increase filing with has FERC. Rates requested in this proceeding were placed into effect in December 1995, subject to refund. FERC not yet issued an order in the System Energy rate case. Entergy Arkansas, Entergy Gulf States, Entergy LoUisiana, and System Energy periodically review and update estimated decommissioning costs. Although Entergy is presently underrecovering for Grand Gulf and River Bend based on the above estimates, applications are periodically made to the appropriate regulatory authorities to reflect in rates any future change in projected decommissioning costs. The amounts recovered in rates are deposited in trust funds and reported at market value as quoted on nationally traded markets or as determined by widely used pricing services. These trust fund assets largely offset the accumulated States, decommissioning liability that is recorded as accumulated depreciation for Entergy Arkansas, Entergy Gulf and Entergy Louisiana, and as other deferred credits for System Energy.

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The cumulative liabilities and actual decommissioning expenses recorded in 1996 by Entergy were as follows:

Cumulative 1996 Cumulative Liabilities as of 1996 Trust Decommissioning Liabilities as of December 31, 1995 Earnings Expenses December 31. 1996 (In Millions)

ANO I andANO2 $ 169.0 $ 11.5 $ 20.1 $ 200.6 River Bend 31.7 1.5 6.0 39.2 Waterford 3 37.4 2.8 8.8 49.0 Gaand Gulf 1 39.4 2.3 19.0 60,7

$ 277.5 $ 18.1 $ 53.9 $ 349.5 In 1995 and 1994, ANO's decommissioning expense was $17.7 million, and $12.2 million, respectively, River Bend's decommissioning expense was $8.1 million and $3.0 million, respectively; Waterford 3's decommissioning expense was $7.5 million and $4.8 million, respectively; and Grand Gulf l's decommissioning expense was $5.4 million and $5.2 million, respectively. The actual decommissioning costs may vary from the estimates because of regulatory requirements, changes in technology, and increased costs of labor, materials, and equipment. Management believes that actual decommissioning costs are likely to be higher than the estimated amounts presented above.

The SEC has questioned certain of the financial accounting practices of the electric utility industry regarding the recognition, measurement, and classification of decommissioning costs for nuclear plants in the financial statements of electric utilities. In response to these questions, the FASB has been reviewing the accounting for decommissioning and has expanded the scope of its review to include liabilities related to the closure and removal of all long-lived assets. An exposure draft of the proposed SFAS (which proposed a 1997 effective date) was issued in February 1996. The proposed SFAS would require measurement and recognition of the liability for closure and removal of long-lived assets (including decommissioning) based on the amount of discounted future cash flows related to closure and removal costs at the time the liability was initially incurred. Those future cash flows should be determined by estimating current costs for closure and removal and adjusting for inflation, efficiencies that may be gained from experience with similar activities, and consideration of reasonable future advances in technology.

The initial liability would be offset by an asset that should be presented with other plant costs on the financial statements because the cost of decommissioning/closing the plant would be recognized as part of the total cost of the plant asset. Changes in the decommissioning/closure cost liability resulting from changes in assumptions would be recognized with a corresponding adjustment to the plant asset, and depreciation revised prospectively.

Additional increases to the liability would be recognized to reflect the increase in the discounted cash flows resulting from the passage of time. Such increases would be offset by a regulatory asset, to the extent such costs are deemed probable of future recovery.

After receiving comments on the exposure draft, the FASB has decided that the effective date for the proposed SFAS will be later than 1997, although a final effective date has not yet been announced. The FASB is expected to issue an additional document on this issue in the second quarter of 1997, although it has not yet been decided if that document will be in the form of a final accounting standard or a revised exposure draft. If current electric utility industry accounting practices with respect to nuclear decommissioning and other closure costs are changed, annual provisions for such costs could increase, the estimated cost for decommissioning/closure could be recorded as a liability rather than as accumulated depreciation, and trust fund income from decommissioning trusts could be reported as investment income rather than as a reduction to decommissioning expense.

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The EPAct has a provision that assesses domestic nuclear utilities with fees for the decontamination and decommissioning of the DOE's past uranium enrichment operations. The decontamination and decommissioning assessments are being used to set up a fund into which contributions from utilities and the federal government will be placed. Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy's annual assessments, which will be adjusted annually for inflation, are approximately $3.6 million, $0.9 million, $1.4 million, and $1.5 million (in 1996 dollars), respectively, for approximately 15 years. At December 31, 1996, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy had recorded liabilities of $36.4 million, $6.3 million, $13.8 million, and $13.6 million, respectively, for decontamination and decommissioning fees in other current liabilities and other noncurrent liabilities, and these liabilities were offset in the consolidated financial statements by regulatory assets.

FERC requires that utilities treat these assessments as costs of fuel as they are amortized and are recovered through rates in the same manner as other fuel costs.

ANO Matters (Entergy Corporation and Entergy Arkansas)

Cracks in certain steam generator tubes at ANO 2 were discovered and repaired during an outage in March 1992. Further inspections and repairs were conducted at subsequent refueling and mid-cycle outages, including the most recent forced outage in November 1996. ANO 2's output has been reduced by 23 MW due to steam generator fouling and tube plugging. The unit may be approaching the current limit for the number of steam generator tubes that can be plugged with the unit in operation. If the established limit is reached during a future outage, Entergy Operations could be required to insert sleeves in steam generator tubes that were previously plugged.

On October 25, 1996, Entergy Corporation's Board of Directors authorized Entergy Operations to negotiate a contract, with appropriate cancellation provisions, for the fabrication and replacement of the steam generators at ANO 2. Entergy estimates the cost of fabrication and replacement of the steam generators to be approximately $150 million. A letter of intent for the fabrication has been signed by Entergy Operations, which includes a commilment for not more than $3.2 million, and a contract is expected to be entered into in 1997. If a formal contract to purchase the steam generators is not canceled, the steam generators will be installed during a planned refueling outage in 2000.

Entergy Operations periodically meets with the NRC to discuss the results of inspections of the steam generator tubes, as well as the timing of future inspections.

Environmental Issues (Entergy Arkansas)

In May 1995, Entergy Arkansas was named as a defendant in a suit by Reynolds Metals Company (Reynolds), seeking to recover a share of the costs associated with the clean-up of hazardous substances at a site south of Arkadelphia, Arkansas. Reynolds alleges that it has spent $11.2 million to clean-up the site, and that the site was contaminated in part with PCBs for which Entergy Arkansas bears some responsibility. Entergy Arkansas, voluntarily, at its expense, has already completed remediation at a nearby substation site and believes that it has no liability for contamination at the site that is subject to the Reynolds suit and is contesting the lawsuit. An August 1997 trial date has been tentatively scheduled. Regardless of the outcome, Entergy Arkansas does not believe this matter would have a materially adverse effect on its financial condition or results of operations.

(Entergy Gulf States)

Entergy Gulf States has been designated as a PRP for the clean-up of certain hazardous waste disposal sites.

Entergy Gulf States is currently negotiating with the EPA and state authorities regarding the clean-up of these sites.

Several class action and other suits have been filed in state and federal courts seeking relief firo Entergy Gulf States and others for damages caused by the disposal of hazardous waste and for asbestos-related disease allegedly resulting from exposure on Entergy Gulf States premises. While the amounts at issue in the clean-up efforts and suits may be substantial, Entergy Gulf States believes that its results of operations and financial condition will not be materially adversely affected by the outcome of the suits. As of December 31, 1996, a remaining recorded liability of $21.4 million existed relating to the clean-up of seven sites at which Entergy Gulf States has been designated a PRP.

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(Entergy Louisiana)

During 1993, the LDEQ issued new rules for solid waste regulation, including regulation of wastewater impoundments. Entergy Louisiana has determined that certain of its power plant wastewater impoundments were affected by these regulations and has chosen to upgrade or close them. As a result, a remaining recorded liability in the amount of $6.7 million existed at December 31, 1996, for wastewater upgrades and closures to be completed in 1997. Cumulative expenditures relating to the upgrades and closures of wastewater impoundments were $7.1 million as of December 31, 1996.

City Franchise Ordinances (Entergy New Orleans)

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

Employment Litigation (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and Entergy New Orleans)

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

(Entergy Corporation and Entergy Arkansas)

Entergy Corporation and Entergy Arkansas are defendants in five suits filed in federal court on behalf of approximately 62 plaintiffs who claim they were illegally terminated from their jobs due to discrimination on the basis of age or race. One of these suits seeks class certification. A trial date is scheduled in March 1997 for one suit comprised of approximately 29 plaintiffs, and a trial date is scheduled in May 1997 for another suit comprised of approximately 18 plaintiffs. Trial dates have not been set in the other suits.

(Entergy Corporation and Entergy Gulf States)

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

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

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

(Entergy Louisiana and Entergy New Orleans)

Entergy Louisiana and Entergy New Orleans are defendants in a suit filed in state court in Louisiana by 110 plaintiffs who seek to certify a class on behalf of all employees who allegedly were terminated or required to resign

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no trial date has on the basis of age. The court has set a hearing for certification of the class for March 13, 1997; filed in been set. Entergy Louisiana and/or Entergy New Orleans also are defendants in approximately 27 other suits of age, race, or sex.

federal or state court by plaintiffs who claim they were wrongfully discharged on the basis Financial Instruments In accordance with the debt covenants included in the financing provisions of the CitiPower acquisition, is to hedge approximately CitiPower must hedge at least 80% of its energy purchases. CitiPower's current strategy These contracts 100% of its forecasted energy purchases through contracts entered into with certain generators.

mature through the year 2000.

NOTE 10. LEASES General As of December 31, 1996, Entergy had capital leases and noncancelable operating leases for equipment, leaseback transactions) buildings, vehicles, and fuel storage facilities (excluding nuclear fuel leases and the sale and with minimum lease payments as follows:

Entergy Enterm Arkcansas Gulf States Year (In Thousands) 1997 $ 27,312 $ 10,953 $ 12,475 1998 27,294 10,953 12,475 27,268 10,953 12,475 1999 25,530 9,646 12,049 2000 2001 23,400 9,646 11,623 99,877 52,209 47,418 Years thaeafter 230,681 104,360 108,515 Minimum lease payments Less: Amount 83,741 45,151 36,104 reptesatng int est Present value of net

$ 146,940 $ 59,209 $ 72,411

-lease payumets

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O-rtn Leases Fidety EnterVy Year FierU Arkansas Gulf States Louisiana (In Thousands) 1997 $ 56,232 $ 23,248 $ 8,040 $ 5,383 1998 55,358 20,999 11,867 4,778 1999 52,060 19,104 11,865 4,382 2000 47,125 17,136 11,354 3,925 2001 43,505 17,219 11,355 504 Years thereafter 211,238 29,495 67,816 2,210 Mbirniamleasepaymnts $465,518 $ 127,201 $ 122,297 $ 21,182 Rental expense for Entergy's leases (excluding nuclear fuel leases and the sale and leaseback transactions) and 1994, respectively.

amounted to approximately $59.7 million, $61.1 million, and $64.8 million in 1996, 1995, Arkansas, $11.8 These amounts include $26.0 million, $26.0 million, and $26.4 million, respectively, for Entergy and million, $13.0 million, and $15.3 million, respectively for Entergy Gulf States, and $13.7 million, $13.6 million,

$12.1 million, respectively, for Entergy Louisiana.

Nuclear Fuel Leases Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy each has arrangements to lease nuclear fuel in an aggregate amount up to $385 million as of Decemrber 31, 1996. The lessors finance the acquisition and ownership of nuclear fuel through credit agreements and the issuance of notes. These agreements are subject to annual renewal with, in Entergy Louisiana's and Entergy Gulf States' case, the consent of the lenders. The credit agreements for Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy have been extended and now have termination dates of December 1999, Ddcember 1999, January 2000, and February 2000, respectively. The debt securities issued pursuant to these fuel lease arrangements have varying maturities through January 31, 1999. It is expected that the credit agreements will be extended or alternative financing will be secured by each lessor upon the maturity of the current arrangements. If extensions or alternative financing cannot be arranged, the lessee in each case must purchase sufficient nuclear fuel to allow the lessor to retire such borrowings.

Lease payments are based on nuclear fuel use. Nuclear fuel lease expense charged to operations by the domestic utility companies in 1996, 1995, and 1994 was $158.5 million (including interest of $21.7 million), $153.5 million (including interest of $22.1 million), and $163.4 million (including interest of $27.3 million), respectively.

Specifically, in 1996, 1995, and 1994 Entergy Arkansas' expense was $53.9 million, $46.8 million, and $56.2 million (including interest of $7.1 million, $6.7 million, and $7.5 million), respectively; Entergy Gulf States' expense was $27.1 million, $41.4 million, and $37.2 million (including interest of $4.2 million, $6.0 million, and $8.7 million), respectively; Entergy Louisiana's expense was $39.8 million, $30.8 million, and $32.2 million (including interest of $4.9 million, $3.7 million, and $4.3 million), respectively; System Energy's expense was $37.7 million,

$34.5 million, and $37.8 million (including interest of $5.5 million, $5.7 million, and $6.8 million), respectively.

Sale and Leaseback Transactions Waterford 3 Lease Obligations (Entergy Louisiana)

On September 28, 1989, Entergy Louisiana entered into three transactions for the sale (for an aggregate cash consideration of $353.6 million) and leaseback of three undivided portions of its 100% ownership interest in Waterford 3. The three undivided interests in Waterford 3 sold and leased back exclude certain transmission,

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equivalent pollution control, and other facilities that are part of Waterford 3. The interests sold and leased back are in Waterford 3. Entergy Louisiana is leasing on an aggregate cost basis to approximately a 9.3% undivided interest Louisiana has options back the interests on a net lease basis over an approximate 28-year basic lease term. Entergy basic lease term.

to terminate the lease and to repurchase the interests in Waterford 3 at certain intervals during the repurchase the Further, at the end of the basic lease term, Entergy Louisiana has an option to renew the lease or to undivided interests in Waterford 3.

sale by the Interests were acquired from Entergy Louisiana with funds obtained from the issuance and to be made by purchasers of intermediate-term and long-term secured lease obligation bonds. The lease payments Entergy Louisiana will be sufficient-to service such debt.

3 in Entergy Louisiana did not exercise its option to repurchase the undivided interests in Waterford for the equity portion of certain September 1994. As a result, Entergy Louisiana was required to provide collateral ammnts payable by Entergy Louisiana under the leases. Such collateral was in the form of a new series of non interest-bearing first mortgage bonds in the aggregate principal amount of $208.2 million issued by Entergy Louisiana in September 1994.

Upon the occurrence of certain adverse events (including lease events of default, events of loss, deemed loss obligated events or certain adverse "Financial Events" with respect to Entergy Louisiana), Entergy Louisiana may be and may be required to assume the to pay amounts sufficient to permit the termination of the lease transactions outstanding indebtedness issued to finance the acquisition of the undivided interests in Waterford 3. "Financial grace Events" include, among other things, failure by Entergy Louisiana, following the expiration of any applicable stock) at or cure periods, to maintain (1) as of the end of any fiscal quarter, total equity capital (including preferred period ending on the last day of any least equal to 30% of adjusted capitalization, or (2) in respect of the 12-month Entergy Louisiana's total fiscal quarter, a fixed charge coverage ratio of at least 1.50. As of December 31, 1996, ratio equity capital (including preferred stock) was 46.9% of adjusted capitalization and its fixed charge coverage was 3.18.

an overall As of December 31, 1996, Entergy Louisiana had future minimum lease payments (reflecting recorded as implicit rate of 8.76%) in connection with the Waterford 3 sale and leaseback transactions, which are long-term debt, as follows (in thousands):

1997 $ 39,805 1998 41,447 1999 50,530 2000 47,510 2001 46,015 Years thereafter 582,689 Total 807,996 Less: Amount representing interest 454,396 Present value of net minimum lease payments $ 353,600 Grand Gulf 1 Lease Obligations (System Energy) of an On December 28, 1988, System Energy entered into two arrangements for the sale and leaseback of $500 million.

aggregate 11.5% undivided ownership interest in Grand Gulf I for an aggregate cash consideration basic lease term. System System Energy is leasing back the undivided interest on a net lease basis over a 26 1/2-year Energy has options to terminate the leases and to repurchase the undivided interest in Grand Gulf 1 at certain option to intervals during the basic lease term. Further, at the end of the basic lease term, System Energy has an respect to certain other renew the leases or to repurchase the undivided interest in Grand Gulf 1. See Note 9 with terms of the transactions.

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In accordance with SFAS 98, "Accounting for Leases," due to "continuing involvement" by System Energy, the sale and leaseback arrangements of the undivided portions of Grand Gulf 1, as described above, are required to be reflected for financial reporting purposes as financing transactions in System Energy's financial statements. The amounts charged to expense for financial reporting purposes include the interest portion of the lease obligations and depreciation of the plant. However, operating revenues include the recovery of the lease payments because the transactions are accounted for as sales and leasebacks for rate-making purposes. The total of interest and depreciation expense exceeds the corresponding revenues realized during the early part of the lease term. Consistent with a recommendation contained in a FERC audit report, System Energy recorded as a deferred asset the difference between the recovery of the lease payments and the amounts expensed for interest and depreciation and is recording such difference as a deferred asset on an ongoing basis. The amount of this deferred asset was $93.2 million and

$85.8 million as of December 31, 1996, and 1995, respectively.

As of December 31, 1996, System Energy had future minimum lease payments (reflecting an implicit rate of 7.02%), which are recorded as long-term debt as follows (in thousands):

1997 $ 42,753 1998 42,753 1999 42,753 2000 42,753 2001 46,803 Years thereafter 713,264 Total 931,079 Less: Amount representing interest 434,599 Present value of net minimum lease payments $ 496,480 NOTE 11. POSTRETIREMENT BENEFITS (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)

Pension Plans Entergy has two postretirement benefit plans, "Entergy Corporation Retirement Plan for Non-Bargaining Employees" and "Entergy Corporation Retirement Plan for Bargaining Employees", covering substantially all of its employees. The pension plans are noncontributory and provide pension benefits that are based on employees' credited service and compensation during the final years before retirement. Entergy Corporation and its subsidiaries fund pension costs in accordance with contribution guidelines established by the Employee Retirement Income Security Act of 1974, as amended, and the Internal Revenue Code of 1986, as amended. The assets of the plans include common and preferred stocks, fixed income securities, interest in a money market fund, and insurance comtracts. Prior to January 1, 1995, all of Entergy's non-bargaining employees were generally included in a plan sponsored by the Entergy company where they were employed. However, Entergy New Orleans was a participating employer in a plan sponsored by Entergy Louisiana. Effective January 1, 1995, these employees became participants in a new plan with provisions substantially identical to their previous plan.

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Total 1996, 1995, and 1994 pension cost of Entergy Corporation and its subsidiaries, including amounts capitalized, included the following components (in thousands):

1996 FAterks Ftergy Fitery FnteWg Entergy System

-Orea New Arkansas Gulf Service cost - benefits earned

$31,584 $7,605 $5,852 $4,684 $2,157 $1,147 $2,658 Interest cost on projected bmefit obligation 84,303 24,540 20,952 15,735 9,462 2,973 2,645 (41,183) (47,416) (41,219) (17,767) (1,826) (4,146)

Actual return on plan assets (163,520) 71 9A0 14015 18.732 20.313 6,382 88 526 Net aneetition and definal Net pension cost (incom) L $23,6277$497 ($1,880) ($487) $234 $2,382 $1,683 1995 Entergy Fntg Entergy Entery Ete Systn SArkansas GulfStates ia ssimip" New Orleans Dam

$29,282 $7,786 $6,686 $4,143 $2,152 $1,158 $2,260 Service cost - benefits earned during h perod 80,794 24,372 21,098 15,111 9,240 2,680 2,230 Interest cost on projected bewfit obligation (261,864) (71,807) (82,624) (53,348) (30,443) (1,614) (8,827)

Actual return n plan assets 178,345 47,766 53,921 34,902 20,081 64 5,510 Net am'rtization and defera

$26,557 $8,117 ($919) $808 $1,030 $2,288 $1,173 Net penmsn cost (ncome) 1994 Enterg Entergy Ezterg Eaterg Entergy Systemn E _ Arkansas Gulf States o Missssppi New Orleans _gy

$35,712 $8,854 $9,497 $5,441 $2,484 $1,502 $2,619 Service cost - benefits earned durig t perod 77,943 22,651 21,335 14,473 8,648 2,740 2,148 Interest cost on projected benefit obligation.

10,381 365 6,785 2,024 1,507 - 498 Actual return on plan assets (96,893) (24,474) (39,405) (19,981) (11,843) (970) (3,535)

Net anxriation and deferral Other 17,963 - 17,963 - - -

$45,106 $7,396 $16,175 $1,957 $796 $3,272 $1,730 Net pension cost

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The funded status of Entergy's various pension plans as of December31, 1996, and 1995 was (in thousands):

EWa' Fziter Emtc EiraW Etag Systea rOX tor BMW Actuarial presat vahe cf

,camaWni pLan &Hgthi&

Vesteld $1,027,307 $296,181 $287,201 $193,183 $117,142 $34,466 $25,195 4.775 1.345 748 697 154 29 655 camiilate benefft obliptim 1,032,0Z82 297,526 287.949 193,880 117,296 34,495 25,850 plan matat fair ialue 1,359,614 374,849 397,749 282,470 150,616 22,017 43,943 Pad befit oN fn 1,196,925 338,307 315,781 217,711 129,578 41,511 38,401 Plan asses in acc=cf 162,689 36,542 81,968 64,759 21,038 (19,494) 5,542 Os than) ltqectd beret 36,131 14,882 11,964 5,911 4,894 1,965 1,100 (39,504) (11,679) (9,550) (14,037) (6,252) (767) (5,291)

(180,525) (55,536) (132,832) (61,130) (23,769) 9,897 (4,502)

($21,209) ($15,791) ($48,450) ($4,497) ($4,089) ($8,399) ($3,151)

FEaf aei E Eae F EitctW Sy&jA=

1ue cf servI rrt oMfs G fStat Lzisiana ED=

Adum izl r AVues uted pecu

$989,509 $298,358 $256,173 $192,697 $116,851 $44,324 $23,692 4,555 1,342 792 705 147 29 640 994,064 299,700 256,965 193,402 116,998 44,353 24,332 Pan amata fair i*1 1,224,594 337,929 374,010 245,521 140,513 18,658 41,951 PA=aa tei t fgaf 1,156,831 341,946 289,666 218,715 129,180 51,699 36,491 Plaassets in coe f 67,763 (4,017) 84,344 26,806 11,333 (33,041) 5,460 35,946 15,042 12,021 6,469 4,883 2,224 1,180

-~oia trlt m asse (46.856) (14.015) (11,937) (16,845) (7.502) . (963) (5.887)

UnkrpizaJied kdJos (gpin) (94,618) (23,545) (135,) (28,060) (13,832) 22,751 (3,074)

($37,765) ($26,535) ($50,875) ($11,630) ($5,118) ($9,029) 2,321)

The significant actuarial assumptions used in computing the information above for 1996, 1995, and 1994 were as follows: weighted-average discount rate, 7.75% for 1996, 7.5% for 1995, and 8.5% for 1994, weighted average rate of increase in future compensation levels, 4.6% for 1996 and 1995, and 5.1% for 1994; and expected long-term rate of return on plan assets, 9.0% for 1996, and 8.5% for 1995 and 1994. Transition assets of Entergy are being amortized over the greater of the remaining service period of active participants or 15 years.

In 1994, Entergy Gulf States recorded an $18.0 million charge related to early retirement programs in connection with the Merger, of which $15.2 million was expensed.

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Other Postretirement Benefits all Entergy also provides certain health care and life insurance benefits for retired employees. Substantially employees may become eligible for these benefits if they reach retirement age while still working for Entergy.

method to an Effective January 1, 1993, Entergy adopted SFAS 106 which required a change from a cash and Entergy accrual method of accounting for postretirement benefits other than pensions. Entergy Arkansas continues to fund a portion Louisiana continue to fund these benefits on a pay-as-you-go basis. Entergy Gulf States basis. During 1994, pursuant to regulatory of these benefits regulated by the LPSC and FERC on a pay-as-you-go benefit obligations. In directives, Entergy Mississippi and Entergy New Orleans began to fund their postretirement obligations pursuant to 1995 1996, Entergy Gulf States and System Energy began to fund their postretirement benefit funding on behalf of Entergy regulatory directives issued by the PUCT and FERC, respectively. System Energy is Operations those postretirement benefits associated with Grand Gulf 1. The assets of the various postretiremet and a money market fund. At benefit plans other than pensions include commnn stocks, fixed income securities, (APBO) earned by retirees January 1, 1993, the actuarially determined accumulated postretirement benefit obligation million and $128 million for Entergy (other than and active employees was estimated to be approximately $241.4 being amortized over a 20-year Entergy Gulf States) and for Entergy Gulf States, respectively. Such obligations are period beginning in 1993.

jurisdictions, to The domestic utility companies have sought approval, in their respective regulatory purposes. Entergy Arkansas implement the appropriate accounting requirements related to SFAS 106 for ratemaking its annual cash expenditures has received an order permitting deferral, as a regulatory asset, of the difference between 106 accrual, for up to a five-year period commencing for postretirement benefits other than pensions and the SFAS which are reflected in rates pursuant to an January 1, 1993. Entergy Mississippi is expensing its SFAS 106 costs, rate plan (see Note 2). The order from the MPSC in connection with Entergy Mississippi's formulary incentive the pay-as-you-go method for LPSC ordered Eiitergy Gulf States and Entergy Louisiana to continue the use of the flexibility to examine ratemaking purposes for postretirement benefits other than pensions, but the LPSC retains to this order are individual companies' accounting for postretrement benefits to determine if special exceptions adopted in November warranted. Entergy New Orleans is expensing its SFAS 106 costs. Pursuant to resolutions expenses through October 31, 1996, 1993 by the Council related to the Merger, Entergy New Orleans' SFAS 106 New Orleans' rates. Pursuant were allowed by the Council for purposes of evaluating the appropriateness of Entergy its SFAS 106 costs in rates.

to the PUCT's May 26, 1995, amended order, Entergy Gulf States is currently collecting and its subsidiaries, Total 1996, 1995, and 1994 postrefirement benefit cost of Entergy Corporation (in thousands):

including amounts capitalized and deferred, included the following components Entergy Entergy Entergy Entergy Entergy 1996 Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Service cost - benefits earned

$14,351 $3,128 $3,476 $2,155 $1,081 $661 during the period 26,133 5,580 8,164 4,283 2,171 3,085 Interest cost on APBO (1,654) (388) - (479) (681)

Actual return on plan assets 14,214 3,397 5,370 2,694 1,458 1,977 Net amortization and deferral

$53,044 $12,105 $16,622 $9,132 $4,231 $5,042 Net postretirement benefit cost

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1995 Entergy Entergy Entergryr Entergy Entergy Entergy Arknas Gulf States Louisiai n Mississippi New Orleans Service cost - benefits earned $10,797 $2,777 $1,864 $2,04 7 $909 $650 during the period Interest cost on APBO 25,629 5,398 8,526 4,21 5 1,969 3,258 Actual return on plan assets (759) - (245) (514)

Net amortization and deferral 11,023 2,702 4,477 2,12 1 988 1,876 Net postretirement benefit cost $46,690 $10,877 $14,867 $8,383 $3,621 $5,270 1994 Entergy Entergy Entergy Entergy Entergy Entergy Mansw Gulf States Louisana Mississippi New Odi0n Service cost - benefits earned $11,863 $3,080 $2,169 $2,433 $876 $813 during the period Interest cost on APBO 23,312 5,510 6,449 4,422 1,833 3,502 Net amortization and deferral 9,891 3,833 2,832 3,066 1,122 2,569 Net postretirnent benefit cost $45,066 $12,423 $11,45011 $9,921 .$3,831 $6,884

=i. i 1 The funded status of Entergy's postretirement plans as of December 31, 1996, and 1995, was (in thousands):

1996 Fzmi IEfter rmw*y rzftw rmwV Arkm=

twil xmm vatm of acc adated pmtwm bmcn& &bpd

$263,504 $5694 $90,450 $44,083 $21,639 $36,613 2A507 5,599 5,728 4,063 2,753 1,694 Odg actv -fco 73,188 15,505 16,623 11,553 5,837 3,630 Acwmued beefit do knm 365,199 78,049 1JZ8O1 59,699 30,22 41,937 Plan sets at far 1112 37,970 - 15,528 7,517 12,647 Pln assets em thmAPBO (327,229) (78,0"9 (97,273) (59,W9 (22,712) (29,2M0 183,557 63,252 92,853 47,546 24,031 42,861 tlwopizad trt km(MnYfim (5,032) (13,414) (13,89) (7,726) (3,221) (11,704) kA~w -wtv bmxf aset O~iy 1470) ) ($189) ($19,879) ($1,902) $1867

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1995 rtaw Eztas' Edffw Fateu EitrU Falr 14Wc~u

.cuw1 p*t milue cf'sxmiatd

$244,192 $46,633 $101,698 $36,6 $15,957 $33,652 7,614 4,619 3,215 A*iadbar& Mobm 48,393 9,161 17,334 Odff fuly te - tc d 16.745 15980 13,288 5,692 4,306 364,049 72,539 135,012 57,164 26,2A 41,173 15,494 - - 5,151 10,343 Pmass& at fr imuue (AM0)

(348,555) (72,539) (135,012) (57,164) (21,117)

Pbnas km irsx APff0 204,348 67,M6 107,975 50,517 25,533 45,539

• (1,614 (16,M) (617) 15,) (6,1,7) (13,5)

U*axpiwdpi kam b* ss ($145.846"9 (ZQ,90) (S27,654) ($15,2Pl3 ($1,763) $874 A~cdwt~~u meftasaOdLY)

The assumed health care cost trend rate used in measuring the APBO of Entergy was 7.6% for 1997, in the gradually decreasing each successive year until it reaches 5.0% in 2005. A one percentage-point increase assumed health care cost trend rate for each year would have increased the APBO of Entergy, as of December 3 1, Entergy 1996, by 11.5% (Entergy Arkansas-11.8 /o, Entergy Gulf States-10.4%/6, Entergy Louisiana-11.8%,

service cost and interest cost by Mississippi-12.2% and Entergy New Orleans-10.0%), and the sum of the Entergy approximately 14.2% (Entergy Arkansas-15.0%, Entergy Gulf States-12.84, Entergy Louisiana-14.4%,

of increase in fiture Mississippi-14.4% and Entergy New Orleans-12.8%). The assumed discount rate and rate compensation used in determining the APBO were 7.75% for 1996, 7.5% for 1995, and 8.5% for 1994, and 4.6% for return on plan assets was 9.0% for 1996 and 1995, and 5.1% for 1994, respectively. The expected long-term rate of 1996, and 8.5% for 1995 and 1994.

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NOTE 12. RESTRUCTURING COSTS (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans)

In 1994, 1995, and 1996, Entergy implemented various restructuring programs to reduce the number of employees and consolidate offices and facilities. The programs were designed to reduce costs and improve operating efficiencies in order to enable Entergy to become a low-cost producer. The balances as of December 31, 1994, 1995, and 1996, for restructuring liabilities associated with these programs are shown below by company along with the actual termination benefits paid under the programs.

v PAmmb IkW AdW** Udky asf 199 Mdle- =of 1996 MWain uf

_12_gm ch1os 1995 LJ31aws 996 2 BhzeAilaw $122 $162 ($2.1) u.3 S.3 (S7.8) S THEinf*Sim 6.5 13.1 (142) 5.4 0.8 (5.4) 0.8 Fem usa 6.8 6.4 (11.0) 22 0.4 (2-6)

• a5vN i 6.2 29 (6.6) 25 (1.7) (0.8) 3.4 02 (3.0) 0.6 - (.6)

Ohr - 9.6 (4.4) 52 1.6 (52) 1.6 Tctu $35.1 $48.4 ($59.3) $242 $1.4 (=4) $32 The restructuring charges shown above primarily included employee severance costs related to the expected termination of approximately 2,774 employees in various groups. As of December 31, 1996, 2,723 employees had either been terminated or accepted voluntary separation packages under the restructuring plan.

In December 1996, Entergy recorded $21.3 million of restructuring charges (of which $18 million was recorded by Entergy Services) associated with the transition to competition.

Additionally, Entergy recorded $24.3 million in 1994 (of which $23.8 million was recorded by Entergy Gulf States) and $1.6 million in 1996 for remaining severance and augmented retirement benefits related to the Merger.

Actual termination benefits paid under the program during 1995 and 1996 amounted to $21.6 million, and $3.4 million, respectively. At December 31, 1996, the total remaining liability for expected future Merger-related outlays was approximately $1 million.

NOTE 13. ACQUISITIONS (Entergy Corporation)

CitiPower On January 5, 1996, Entergy Corporation finalized its acquisition of CitiPower, an electric distribution company serving Melbourne, Australia, and surrounding suburbs. The purchase price of CitiPower was approximately $1.2 billion, of which $294 million represented an equity investment by Entergy Corporation, and the remainder represented debt. Entergy Corporation funded the majority of the equity portion of the investment by drawing down $230 million of its $300 million bank revolving credit facility, which was subsequently repaid throughout the course of the year.

CitiPower is one of five electric distribution businesses in the state of Victoria. CitiPower's distribution area covers approximately 10% of Victoria's population. During the twelve months ended December 31, 1996, CitiPower

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or to over 238,000 customer sites. Approximately 37,000, supplied approximately 4.2 million MWh of electricity 15%, of these sites were commercial customers.

straight-line basis over a 40 year period beginning The cost of the CitiPower license is being amortized on a balance of the license was $606 million.

January 5, 1996. As of December 31, 1996, the unamortized the results of operations for Entergy Corporation In accordance with the purchase method of accounting, for Cash Flows do not reflect CitiPower's results of operations reported in its Statements of Consolidated Income and per common share combined revenues, net income, earnings any period prior to January 5, 1996. The pro forma earnings per common share of Entergy Corporation presented before the cumulative effect of accounting change, and is not on January 1, 1995. This pro forma information below give effect to the acquisition as if it had occurred been consummated for have occurred had the acquisition necessarily indicative of the results of operations that would the period for which it is being given effect.

Twelve Months Ended December 31, 1995 (In Thousands of U.S. dollars, Except Share Data)

$6,690,406 Operating revenues

$ 503,880 Net income Earnings per average common share before cumulative 2.06 effect of accounting change 2.21 Earnings per average common share December 31, 1996, (beginning on January 5, CitiPower's results of operations for the twelve months ended are Corporation's Consolidated Financial Statements and 1996, at the date of acquisition) are included in Entergy stated separately below:

Twelve Months Ended December 31, 1996 (In Thousands of U.S. dollars)

$ 384,803 Operating revenues

$ 308,916 Operating expenses

$ 77,545 Interest charges Other for a companies and assets of other security companies During 1996, Entergy acquired several security purchase price of approximately $83 million.

Arkansas, Entergy Gulf States, Entergy NOTE 14. TRANSACTIONS WITH AFFILIATES (Entergy Orleans, and System Energy)

Louisiana, Entergy Mississippi, Entergy New from and/or sell electricity to other domestic The various domestic utility companies purchase electricity filed (in the case of Entergy Arkansas) under rate schedules utility companies, System Energy, and Entergy Power Fuels, and System Energy purchase fuel from System with FERC. In addition, the domestic utility companies and receive management and from Entergy Services, receive technical, advisory, and administrative services operating services from Entergy Operations.

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As described in Note 1, all of System Energy's operating revenues consist of billings to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans.

The tables below contain the various affiliate transactions among the domestic utility companies and System Entergy (in millions).

Intercompany Revenues Entergy Entergy Entergy Entergy Entergy System Arkansas Gulf States Louisiana MwhsissidDI New Orleans Enerry 1996 $ 282.7 $ 21.2 $ 5.6 $ 65.9 $ 623.6 1995 $ 195.5 $ 62.7 $ 1.6 $ 43.3 $$ 2.6 3.2 $ 605.6 1994 $ 232.6 $ 44.4 $ 1.0 $ 45.8 $ 2.1 $ 475.0 Intercompany Operating Expenses Entergy Entergy Entergy Entergy Entergy System Arkansas(I) Gulf States Louisiana Mississiopi New Orleans Energy 1996 $346.7 $395.7 $331.3 $294.6 $ 185.9 $ 8.6 1995 $316.0 $266.5 $335.5 $262.6 $ 164.4 $ 6.5 1994 $310.7 $296.9 $365.8 $280.2 $ 170.1 $ 10.5 (1) Includes $38.8 million in 1996, $31.0 million in 1995, and $25.7 million in 1994 for power purchased from EnteWgy Power.

Overatine Expenses Paid or Reimbursed to Entergy Omerations Entergy Entergy Entergy System Arkansas Gulf States Louisiana Energy 1996 $ 163.3 $ 133.7 $ 97.7 $ 98.1 1995 $ 189.8 $ 129.1 $ 122.6 $ 116.9 1994 $ 221.2 $ 210.2 $ 152.5 $ 179.6 In addition, certain materials and services required for fabrication of nuclear fuel are acquired and financed by System Fuels and then sold to System Energy as needed. Charges for these materials and services, which represent additions to nuclear fuel, amounted to approximately $44.7 million in 1996, $51.5 million in 1995, and

$26.4 million in 1994.

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NOTE 15. BUSINESS SEGMENT INFORMATION (Entergy New Orleans)

Entergy New Orleans' segment Entergy New Orleans supplies electric and natural gas services in the City.

information follows:

1996 1995 1994 Electric Gas Electric Gas Electric Gas (In Thousands)

$403,254 $101,023 $390,002 $80,276 $360,430 $ 87,357 Operating rvenues Revenue from sales to $80,276 $ 358,369 $ 87,357

$400,605 $101,023 $386,785 unaffihiated customers (1)

Operating incm $ 23,976 $ 9,387

$ 51,937 $ 5,641 $ 61,092 $ 9,638 $209,901 $67,875 before in*me taxes $63,865 $204,407 $65,236

$214,106 "1 15,743 $ 3,310 Net utility plant $ 3,342 $ 15,858 $ 3,290

$ 16,525 $ 16,997 $ 5,780 Depreciation expense $ 21,729 $ 6,107

$ 23,411 $ 4,545 Constw ion expenditures of sales to unaffiliated (1) Entergy New Orleans' intersegment transactions are not material (less than 1%

customers).

NOTE 16. SUBSEQUENT EVENT (UNAUDITED)

Acquisition of London Electricity Vil (Entergy Corporation) acquire London Electricity for $2.1 billion.

On December 18, 1996, Entergy made a formal cash offer to two million customers in the metropolitan "LondonElectricity is a regional electric company serving approximately Kingdom and as of February 7, 1997, area of London, England. The offer was approved by authorities in tho United subsidiary, controlled over 90% of the common the offer was made unconditional and Entergy, through an Eni under applicable law, Entergy expects to gain control of shares of London Electricity. Through procedures available acquisition was financed with $1.7 billion of debt that is 100% of the common shares of London Electricity. The provided by Entergy Corporation from available non-recourse to Entergy Corporation, and $392 million of equity cash and borrowings under its $300 million line of credit.

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NOTE 17. QUARTERLY FINANCIAL DATA (UNAUDITED)

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

The business of the domestic utility companies and System Energy is subject to seasonal fluctuations with the peak period occurring during the third quarter. Operating results for the four quarters of 1996 and 1995 were:

Overatin! Revenue Entergy Entergy Entergy Entergy Entergy System Enterey Arkansas Gulf States Louisiana Mississippi New Orleans Enerev (In Thousands) 1996:

First Quarter $ 1,603,384 $383,081 $456,631 $417,767 $ 203,902 $127,280 $156,424 Second Quarter 1,82,525 467,990 525,567 457,847 247,479 127,829 160,369 Third Quarter 2,138,273 529,276 592,130 549,295 297,118 150,937 154,467 Fourth Quarter 1,569,344 363,086 444,853 403,958 209,931 98,231 152,360 1995:

First Quarter 1,337,400 339,596 399,346 353,462 180,559 104,494 151,664 Second Quarter 1,564,917 412,164 479,609 406,575 223,156 112,666 158,632 Thrd Quarter 1,955,019 530,448 540,287 529,458 280,339 146,720 144,758 Fourth Quarter 1,429,870 366,025 442,732 385,380 205,789 106,398 150,585 Overatinr Income (L, Entergy Entergy Entergy Entergy Entergy System Enter2v Arkansas(a) Gulf States(a) Louisiana Mississippi New Orleans Enera' (In Thousands) 1996:

First Quarter $ 342,403 S 41,955 S 77,058 S 95,166 S 30,470 $ 15,752 S 82,938 Second Quarter 500,017 105,237 118,420 119,736 57,283 19,608 82,894 Third Quarter 599,704 131,319 152,022 155,755 54,696 28,319 75,270 Fourth Quarter 236,597 31,639 64,398 65,789 22,147 (6,101) 75,937 1995:

First Quarter 258,441 26,343 - 47,209 88,013 25,633 14,138 79,377 Second Quarter 434,623 91,180 111,918 "115,637 "43,523 17,420 80,704 Third Quarter 606,104 132,264 154,268 181,171 57,717 31,000 76,719 Fourth Quarter 218,158 22,080 48,269 63,934 23,515 8,172 76,905 Net Income (Loss)

Entergy Entergy Entergy Entergy Entergy System Entergv(b) Arkansas(a)(b) Gulf States(a) Louisiana Mississippi New Orleans Enerry (In Thousands) 1996:

First Quarter S (87,072) S 19,268 S(152,257) $ 40,530 $ 12,924 S 8,035 S 23,530 Second Qdarter 188,323 55,712 47,140 55,385 29,819 10,360 23,382 Third Quarter 279,881 70,791 "90,965 77,302 28,205 15,221 24,749 Fourth Quarter 38,895 12,027 10,265 17,545 8,263 (6,840) 27,007 1995:

First Quarter 90,392 46,129 3,635 36,062 9,774 6,245 22,565 Second Quarter 162,703 47,844 43,353 53,082 20,578 8,688 23,802 Third Quarter 263,118 73,963 68,112 .92,819 29,228 16,862 23,366 Fourth Quarter 3,767 4,144 7,819 19,574 9,087 2,591 23,306

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Earnins (Loss) per Avera2e Common Share (Entergy Corporation) 1996 1995

$(0.38) $ 0.40 First Quarter

$ 0.83 $ 0.71 Second Quarter

$ 1.22 $ 1.16 Third Quarter

$ 0.16 $ 0.02 Fourth Quarter (b) of certain restructuring costs in 1995.

(a) See Note 12 for information regarding the recording of $22.9 in net income of $35.4 million (net of income taxes (b) The fourth quarter of 1995 reflects an increase the recording of the cumulative effect of the change million) and an increase in earnings per share of S.15 due to outage maintenance costs. See Note 1 for a discussion in accounting method for incremental nuclear refueling of the change in accounting method.

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Item 9. Changes In and Disasreements With Accountants On Accounting and Financial Disclosure.

No event that would be described in response to this item has occurred with respect to Entergy, System Energy, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, or Entergy New Orleans.

PART IlII Item 10. Directors and Executive Officers of the Registrants (Entergy Corporation, Entergy Gulf States, Entergy Mississippi, Entergy New Orleans, and System Energy)

All officers and directors listed below held the specified positions with their respective companies as of the date of filing this report.

ENTERGY CORPORATION Directors Information required by this item concerning directors of Entergy Corporation is set forth under the heading "Election of Directors" contained in the Proxy Statement of Entergy Corporation, (the "Proxy Statement"), to be filed in connection with its Annual Meeting of Stockholders to be held May 9, 1997, ("Annual Meeting"), and is incorporated herein by reference. Information required by this item concerning officers and directors of the remaining registrants is reported as of December 31, 1996.

Name Position Period Omie Edwin Lupberger (a) 60 Chairman of the Board, Chief Executive Officer, and Director of 1985-Present Entergy Corporation Chairman of the Board and Chief Executive Officer of Entergy Arkansas, 1993-Present Entergy Louisiana, Entergy Mississippi and Entergy New Orleans Chairman of the Board, Chief Executive Officer and Director of Entergy 1994-Present Gulf States Chairman of the Board and Director of Entergy Integrated Solutions 1996-Present Chairman of the Board of System Energy and Entergy Enterprises 1986-Present Chairman of the Board ofEntergy Operations 1990-Present Chairman of the Board of Entergy Services 1985-Present Chief Executive Officer of Entergy Services 1991-Present Chief Executive Officer of Entergy Power, Entergy Power Development 1993-Present Corporation, and Entergy-Richmond Power Corporation Chief Executive Officer of Entergy Pakistan, Ltd. and Entergy Power 1994-Present Asia, Ltd.

Chief Executive Officer of EP Edegel, Inc., Entergy Power Development 1995-Present International Corporation, Entergy Power Holding IL Ltd., Entergy Power Marketing Corporation, Entergy Power Operations Corporation, Entergy Power Operations Holdings, Ltd., Entergy Power Operations Pakistan LDC, Entergy Victoria LDC, Entergy Victoria Holdings LDC, EPG Cayman Holding , EPG Cayman Holding 1I,Entergy Power CBA Holding, Ltd., and Entergy Power Edesur Holding, Ltd.

Chief Executive Officer of Entergy Power International Holdings 1996-Present Corporation and Entergy Mexico Ltd.

President of Entergy Corporation 1995-Present President of Entergy Services and Entergy Enterprises 1994-Present Director of Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, 1986-Present Entergy New Orleans, and System Energy Director of Entergy Operations and Entergy Services 1994-Present Director of Entergy Enterprises 1984-Present Chief Executive Officer of Entergy Edegel L,Inc., Entergy Power 1995-1996 Holding I, Ltd., and Entergy Yacyreta L Inc.

Chairman of the Board of Entergy Power 1990-1993

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Position Period

&Mrn 1991-1994 Chief Executive Officer of Entergy Enterprise* 1986-1992 Director of System Fuels 1995-Present Jerry L. Maulden 60 Vice Chairman of Entergy Corporation 1993-Present Vice Chairman and Chief Operating Officer of Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans 1992-Present Vice Chairman ofEntergy Services 1979-Present Director of Entergy Arkansas 1993-Present Director of Entergy Gulf States 1991-Present Director of Entergy Louisiana and Entergy New Orleans 198g-Presont Director of Entergy Mississippi 1990-Present Director of Entergy Operations 1987-Present Drecor of System Energy 1979-Present Director of Entergy Services 1989-1993 Chairman of the Board of Entergy Arkansas 1991-1993 Chairman of the Board and Chief Executive Officer of Entergy Louisiana and Entergy New Orleans 1989-1993 Chairman of the Board and Chief Executive Officer of Entergy Mississippi 1979-1993 Chief Executive Officer of Entergy Arkansas 1993-1995 President and Chief Operating Officer of Entergy Corporation 1991-1993 Group President, System Executive - Transmission, Distribution, and Customer Service of EnterV Corporation 1991-1992 Group President, System Executive - Transmission, Distribution, and Customer Service of Entergy Services 1979-1992 Directorof System Fuels 1994-Present Jerry D. Jackson 52 Executive Vice President - External Affairs of Entergy Corporation 1995-Present Executive Vice President - External Affairs of Entegy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entegy New Orleans 1994-Present Executive Vice President - External Affairs of Entergy Services 1992-Present Director of Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans 1994-Present Director of Entergy Gulf States 1990-Present Directorof Entergy Services 1996-Present Dirctor ofEntergy Enterprises 1994-1995 Executive Vice President of Marketing for Entergy Corporation 1995-1995 Executive Vice President -Marketing of Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans 1994-1995 Executive Vice President - Marketing of Entergy Services 1992-1994 President and Chief Administrative Officer of Entergy Services 1991-1992 President of Entergy Enterprises 1990-1994 Executive Vice President - Finance and External Affairs of Entrgy corporation 1992-1994 of Executive Vice President - Finance and External Affairs and Secretary Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans 1993-1994 Executive Vice President - Finance and External Affairs of Entergy Gulf States 1990-1992 Executive Vice President - Finance and External Affairs of Entergy Services 1991-1994 Secretary of Entergy Corporation 1994-1995 Secretary of Entergy Gulf States 1993-1995 Dirtorof System Energy 1990-1992 Director of Entergy Power and Entergy Enterprises

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Name An !Position Donald C. Hintz 54 Executive Vice President and Chief Nuclear Officer of Entergy 1994-Present Corporation Executive Vice President - Nuclear of Entergy Arkansas, Entergy Gulf 1994-Present States, and Entergy Louisiana Executive Vice President of Nuclear for Entergy Services 1996-Present Chief Executive Officer and President of System Energy and Entergy 1992-Present Operations Director of Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, 1992-Present System Energy, System Fuels, and Entergy Services Director of Entergy Gulf States 1993-Present Director of Entergy Operations 1990-Present Director of GSG&T, Prudential Oil & Gas, Southern Gulf Railway, and 1994-Present Varibus Corporation Senior Vice President and ChiefNuclear Officer of Entergy Corporation 1993-1994 Senior Vice President - Nuclear of Enter" Arkansas 1990-1994 Senior Vice President - Nuclear of Entergy Gulf States. 1993-1994 Senior Vice President - Nuclear of Entergy Louisiana 1992-1994 President ofEntergy Operations 1992-1992 Director of Entergy New Orleans 1992-1994 Chief Operating Officer and Executive Vice President of Entergy 1990-1992 Operations Group Vice President - Nuclear of Entergy Louisiana 1990-1992 Gerald D. McInvale 53 Executive Vice President and Chief Financial Officer of Entergy 1995-Present Corporation, Entergy Services, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, System Energy, Entergy Enterprises, Entergy Operations, System Fuels Inc.,

Entergy Integrated Solutions, GSG&T, Prudential Oil & Gas, Southern Gulf Railway, and Varibus Corporation Executive Vice President, Chief Financial Officer and Director of 1996-Present Entergy Technology Holding Company Executive Vice President and Chief Financial Officer of Entergy 1996-Present Operations Services, Inc.

Senior Vice President, Treasurer, and Director of Entergy Pakistan, Ltd. 1994-Present and Entergy Power Asia, Ltd.

Senior Vice President, Treasurer, and Director of Entergy Power 1993-Present Development Corporation and Entergy-Richmond Power Corporation Senior Vice President, Treasurer, and Director of EP Edegel, Inc., 1995-Present Entergy Power Development Internatictal Corporation, Entergy Power Holding IL Ltd., Entergy Power Marketing Corporation, Entergy Power Operatons Corporation, Entergy Power Operations Holdings, Ltd., Entergy Power Operations Pakistan LDC, Entergy Victoria LDC, Entergy Victoria Holdings LDC, EPG Cayman Holding L EPG Cayman Holding IL,Entergy Power CBA Holding, Ltd., and Entergy Power Edesur Holding, Ltd.

Senior Vice President, Treasurer, and Director of Entergy Power 1996-Present International Holdings Corporation Senior Vice President, Treasurer, and Director of Entergy Power 1993-Present Senior Vice President and Director or Entergy Mexico, Ltd. 1996-Present Senior Vice President and Treasurer of Entergy Peru S.A. 1996-Present Director of Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, 1995-Present Entergy Mississippi, Entergy New Orleans, Entergy Services, System Energy, Entergy Operations, GSG&T, Prudential Oil & Gas, Southern Gulf Railway, and Varibus Corporation Director of System Fuels 1992-Present Director of Entergy Integrated Solutions 1993-Present Director of Entergy Power International Corporation 1996-Present Senior Vice President, Treasurer, and Director of Entergy Edegel I, Inc., 1995-1996 Entergy Power Holding I, Ltd., and Entergy Yacyreta I, Inc.

Chairman of the Board of Entergy Integrated Solutions 1994-1995

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P03osii Perid NMC~

Senior Vice President and Chief Financial Officer of Entergy 1991-1995 Corporation, Entergy Arkansas, Entergy Lo Entegy Mississippi, Entergy New Orleans, System Energy, Entergy Operations, Entergy Services, and Entergy Enterprises Gulf States 1993-1995 Senior Vice President and Chief Financial Officer of Entergy Senior Vice President and Chief Financial Office of System Fuels 1994-1995 1994-1995 Director and Acting Chief Operating Officer of Entergy Enterprises 1992-1996 Treasurer of Entergy Enterprises 1992-Present and Michael G. Thompson 56 Senior Vice President and General Counsel of Entergy Corporation Entergy Services Senior Vice President, General Counsel and Secretary of Entergy 1995-Present Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans 1992-Present Senior Vice President-Law and Secretary of Entergy Enterprises Ltd 1994-Present Senior Vice President, Secretary, and Director of Entergy Pakistan, and Entergy Power Asia, Ltd 1994-Present Senior Vice President, Secretary, and Director of Entergy Power and Maretig Corporation, Entergy Power Operations Holding Ltd.,

EP Edegel, Inc.

1995-Present Senior Vice President, Secretary, and Director of Entergy Power 11, Development International Corporation, Entergy Power Holding Ltd., Entergy Power Operations Corporation, Entergy Power Operations Pakistan LDC, Entergy Victoria LDC, Entergy Victoria IL Holdings LDC, EPG Cayman Holding L EPO Cayman Holding Entergy Power CBA Holding, Ltd., and Entergy Power Edesur Holding, Ltd.

1996-Present Senior Vice President, Secretary and Director of Entergy Power International Holdings Corporation and Entergy Mexico Ltd.

1992-Present Senior Vice President, Secretary, and Director of Entergy Power Development Corporation and Entergy-Richmond Power Corporation 1994-Present Vice President, Secretary, and Director of Entergy Power 1993-Present Vice President and Secretary of Entergy Integrated Solutions.

1994-Present Secretary of Entergy Corporation Director of Entergy Integrated Solutions 1992-Present Director of Entergy Power International Cororation and Entergy 1996-Present Operations Services, Inc.

I, Inc., 1994-1996 Senior Vice President, Secretary and Director of Entergy Edegel and Entergy Yacyreta L Inc.

Holding 1995-1996 Senior Vice President, Secretary, and Director of Entergy Power L Ltd.

of 1993-1994 Senior Vice President, Chief Legal Officer, Director and Secretary Entergy Power 1993-1994 Assistant Secretary of Entergy Cporation 1987-1992 Senior Paftner of Friday, Eldredge & Clark (law firm) 1989-Present S. Ki Henry Brown, Jr. 58 Vice President - Federal Governmental Affairs of Entergy Corporation and Entergy Services 1995-Present William .Regan, Jr. 50 Vice President and Treasurer of Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mssissippi, Entergy New Orleans, System Energy, Entergy Operations, Entergy Services, Gulf System Fuels Inc., GSG&T, Prudential Oil & Gas, Southern Railway, and Varibus Corporation 1996-Present Vice President and Treasurer of Entergy Technology Holding Company and Entergy Operations Services, Inc. 1996-Present Treasurer of Entergy Mexico Ltd 1995-Present Oil & Gas, Assistant Secretary of System Fuels Inc., GSG&T, Prudential Southern Gulf Railway, and Varibus Corporation 1989-1995 Senior Vice President and Corporate Treasurer of United Services Automobile Association 1995-Present Louis E. Bucký Jr. 48 Vice President and Chief Accounting Officer of Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, System Energy, Entergy

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Agee Position Operations, and Entergy Services Assistant Secretary of Entergy Arkansas, Entergy Gulf States, Entergy 1995-Present Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Operations, and Entery Services Director of Entergy Operations Services 1996-Preset Assistant Secretary of Entergy Corporation and System Energy Resources 1996-Present Vice President and Chief Financial Officer of North Carolina Electric 1992-1995 Membership Corporation Manager of Finance of Texas Utilities Services 1988-1992 John A. Brayman 50 Executive Vice President and Director of Enterg Enterprises 1995-Present Chairman of the Board, President, Chief Executive Officer and 1996-Present Director of Entergy Technology Holding Company Executive Vice President of Business Development of Entergy 1996-Present Corporation Independent consultant 1994-1995 Senior Executive of Ameritech 1990-1994 Terry L. Ogletree 53 Executive Vice President-International of Entergy Corporation 1996-Present Chief Operating Officer, President and Director of Entergy Power 1993-Present Development Corporation, Entergy Power, and Entergy-Richmond Power Corporation Chief Operating Officer, President and Director of Entergy Pakistan Ltd., 1994-Present and EP Edegel Inc.

Chief Operating Officer, President and Director of Entergy Power 1995-Presemt Development Internaional Corporation, and Entergy Power Marketing Corporation Chief Controlling Officer, President and Director of EPG Cayman 1995-Present Holding I, EPG Cayman Holding IL,Entergy Victoria LDC, and Entergy Victoria Holdings LDC Chief Operating Officer, President and Director of Entergy Power 1996-Present International Holdings Corporation President and Director of-Entergy S.A. and Entergy Transener S.A. 1993-Present President and Director of Entergy Power Operations Corporation, 1995-Present Entergy Power Holding H,Ltd., Entergy Power Operation Holdings, Ltd., Entergy Power Operations Pakistan LDC, Entergy Power CBA Holding, Ltd., and Entergy Power Edesur Holding, Ltd.

President and Director of Entergy Power Asia 1994-Present Presiden and Director of Entergy Mexico Ltd. 1996-Preset Executive Vice President of Entergy Peru SA. 1996-Present Director of Entergy Power International Corporation and Entergy 1996-Present Operations Services, Inc.

President and Director of Entergy Argentina and Entergy Argentina S.A., 1993-1996 Ltd.

President and Director of Entergy Edegel I, Entergy Power Holding I, 1995-1996 Ltd., and Entergy Yacyreta I, Inc.

Executive Vice President and Director ofEntergy Enterprises 1994-1995 President of Constellation Energy 1989-1993 Michael B. Bemis (b) 49 Executive Vice President of Retail Services for Entergy Corporation 1996-Present Executive Vice President - Retail Services and Director of Entergy 1992-Present Arkansas, Entergy Louisiana, and Entergy Mississippi Executive Vice President - Retail Services of Entergy Gulf States 1993-Present Executive Vice President - Retail Services of Entergy New Orleans and 1992-Present Entergy Services Director of Entergy Gulf States 1994-Present Director of System Fuels 1992-Present Director of Varibus Corporation, Prudential Oil & Gas, Inc., GSG&T, 1994-Present and Southern Gulf Railway Company Director of Entergy Services, Entergy Enterprises, and Entergy Integrated 1996-Present Solutions President and Chief Operating Officer of Entergy Louisiana and Entergy 1992-1992 New Orleans Director of Entergy New Orleans 1992-1994

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Period Position Name Aee 1996-Present Frank F. Gallaher 51 Executive Vice President of Operations for Entergy Corporation 1992-Present Chairman of the Board of System Fuels 1993-Present Prudential Chairman of the Board and Direct of Varibus Corporation, Oil & Gas, Inc., GSG&T, and Southern Gulf Railway Company 1996-Preset Services, Inc.

Chairman of the Board and Director of Entergy Operations 1993-Present of Entergy Arkansas, Entergy Executive Vice President - Operations Mississippi, Entergy New Orleans, and Entergy Louisiana, Entergy Services 1993-Present Director of Entergy Gulf States 1992-Present Director of Entergy Services and System Fuels 1992-1993 Entergy Senior Vice President - Fossil Operations of Entergy Arkansas, Mississippi, Enterg New Orleans, and Entergy iouisiana, Entergy Services 1994-1996 President of Entergy Gulf States 1996-Present Richard J. Landy 51 Senior Vice President and Chief Administrative Officer of Entergy Corporation 1996-Present Integrated President, Chief Executive Officer and Director of Entergy Solutions 1995-Present Senior Vice President and Chief Administrative Officer of Entergy States, Arkansas, Entergy Operations, Entergy Services, Entergy Gulf and Entergy New Orleans 1996-Present Entergy Louisiana, Entergy Mississippi, Director of Entergy Enterprises, Entergy Operations, and Entergy Operations Services, Inc. 1991-1995 Vice President - Human Resources and Administration of Entergy New Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy Orleans, Entergy Services, and Entergy Operations 1993-1995 Gulf Vice President - Human Resources and Administration of Entergy States ENTERGY ARKANSAS, INC.

1989-Present 1989-1992 61 President and Director of Entergy Arkansas Chief Operating Officer of Entergy Arkansas 1991-1992 Secretary of Entergy Arkansas above.

Michael B. Bemis See infomation under the Entergy Cmpoation Officers Section Corporation Officers Section above.

Donald C. Hintz See information under the Entergy Corporation Officers Section above.

Jerry D. Jackson See information under the Entergy the Entergy Corporation Officefs Section above.

Edwin Lupberger See information under the Entergy Corporation Officers Section above.

Jerry L. Maulden See information under the Entergy Corporation Officers Section above.

Gerald D. Mclnvale See information under 1996-Present Michael R. Niggli 47 Senior Vice President - Customer Accoumts for Etergy Arkansas, Entergy Entergy Gulf States, Enter Louisiana, Entergy Mississippi, New Orleans, and Enterg Services 1993-1996 Gulf Senior Vice President - Marketing of Entergy Arkansas, Entergy Entergy Mississippi, Entergy New Orleans, States, Entergy Louisiam, and Entergy Services 1993-1993 New Vice President - Customer Services of Entergy Louisiana, Entergy Orleans, and Entergy Services 1990-1992 Vice President - Strategic Planning of Entergy Services 1991-1992 Vice President and Director of Entergy Enterprises 1991-Present Cecil L. Alexander 61 Vice President - Governmental Affairs ofEntergy Arkansas 1994-Present 1993-1994 James S. Pilgrim 61 Vice President - Customer Service of Entergy Arkansas Director, Central Region, TDCS Customer Service 1991-1993 Central Division Manager of Mississippi 1993-Present C. Hiram Walters 60 Vice President - Customer Service of Entergy Arkansas

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Name Position Vice President - Customer Service of Entergy Louisiana 1994-Present Vice President - Customer Service, Central Region of Entergy Services 1993-Present Senior Vice President - Customer Service of Entergy Services 1991-1992 Edwin Lupberger See information under the Entergy Corporation Officers Section above.

Jerry L. Maulden See information under the Entergy Corporation Officers Section above.

R. Drake Keith See information under the Entergy Corporation Officers Section above.

Michael B. Bemis See information under the Entergy Corporation Officers Section above.

Jerry D. Jackson See information under the Entergy Corporation Officers Section above.

Frank F. Gallaher See information under the Entergy Corporation Officers Section above.

Donald C. Hintz See information under the Entergy Corporation Officers Section above.

Gerald D. McInvale See information under the Entergy Corporation Officers Section above.

Michael G. Thompson See infcmation under the Entergy Corporation Officers Section above.

Richard . Landy See information under the Entergy Corporation Officers Section above.

William J. Regan, Jr. See information under the Entergy Corporation Officers Sectian above.

Louis E. Buck, Jr. See information under the Entergy Corporation Officers Section above.

EN'TERGY GULF STATES, INC.

Karen Johnson 52 State President - Texas and Director of Entergy Gulf States 1996-Present Vice President - Governmental Affairs of Entergy Gulf States - Texas 1994-Present Executive Director of State Bar of Texas (state agency) 1990-1994 John I. Cordaro 63 State President - Louisiana, and Director for Entergy Gulf States and 1996-Present Entergy Louisiana President and Director of Entergy Louisiana and Entergy New Orleans 1992-1996 Group Vice President - External Affairs of Entergy Louisiana and 1989-1992 Entergy New Orleans Michael B. Bemis See information under the Entergy Corporation Officers Section above.

Frank F. Gallaher See information under the Entergy Corporation Officers Section above.

Donald C. Hintz See information under the Entergy Corporation Officers Section above.

Jerry D. Jackson See information under the Entergy Corporation Officers Section above.

Edwin Lupberger See information under the Entergy Corporation Officers Section above.

JerryL. Maulden See information under the Entergy Corporation Officers Section above.

Gerald D. McInvale See information under the Entergy Corporation Officers Section above.

Offiem William E. Colston 61 Vice President - Customer Service of Entergy Gulf States 1994-Present Vice President - Customer Service of Entergy Louisiana 1993-Present Vice President - Customer Service of Southern Region of Entergy 1993-Present Services Regional Director of Entergy Louisiana 1992-1993 S. G. Cunningham, Jr. 56 Vice President - Regulatory and Governmental Affairs of Entergy 1996-Present Louisiana and Entergy Gulf States Vice President - State Regulatory Affairs of Entergy Services 1994-1996 Vice President - Entergy Corporation, Entergy Gulf States Transition 1993-1994 Regulatory Affairs of Entergy Services Vice President - Rates and Regulatory Affairs of Entergy Louisiana and 1991-1994 Entergy New Orleans Vice President - Regulatory Affairs of Etktergy Services 1992-1993 J. Parker McColloaugh 46 Vice President - State Governmental Affairs of Entergy Gulf States 1996-Present Vice President - Governmental Affairs, Texas Association of Retailors 1996-1996 Member- Texas House of Representatives 1989-1996 Wright & Greenhill, PC (law firm) 1991-1993 Edwin Lupberger See information under the Entergy Corporation Officers Section above.

Jerry L. Maulden See information under the Entergy Corporation Officers Section above.

Frank F. Gallaher See information under the Entergy Corporation Officers Section above.

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Position Period Name Michael B. Bemis See information under the Entergy Corporation Officers Section above.

Section above.

Jerry D. Jackson See information under the Entergy Corporation Officers Corporation Officers Section above.

Donald C. Hintz See information under the Entergy Corporation Officers Section above.

Gerald D. Mclnvale See information under the Entergy Corporation Officers Section above.

Michael G. Thompson See information under the Entergy Arkansas Officers Section above.

See information under the Entergy Michael R. Niggli Corporation Officers Section above.

Richard J. Landy See information under the Entergy Gulf Sates Director section above.

Karen Johnson See information under the Entergy above.

John J. Cordaro See information under the Entergy Gulf Sates Director section Corporation Officers Section above.

William I. Regan, Jr. See information under the Entergy Corporation Officers Section above.

Louis E. Buck, Jr.

See information under the Entergy NMTERGY LOUISIANA, INC.

above.

Michael B. Bemis See information under the Entergy Corporation Officers Section Director section above.

John J. Cordaro See information under the Entergy Gulf Sates Section above.

Donald C. Hintz See information under the Entergy Corporation Officers Officers Section above.

Jerry D. Jackson See information under the Entergy Corporation Officers Section above.

Edwin Lupberger See information under the Entergy Corporation Officers Section above.

Jerry L. Maulden See information under the Entergy Corporation Corporation Officers Section above.

Gerald D. Mclnvale See information under the Entergy and Entergy 1994-Present James D. Bruno 57 Vice President - Customer Service ofEntergy Louisiana New Orleans 1993-Present Vice President -Metro Region of Entergy Services 1991-1993 Region Director - Metro Region of Entergy Services Section above.

Edwin Lupberger See information under the Entergy Corporation Officers Section above.

Jerry L. Maulden See information under the Entergy Corporation Officers section above.

John J. Cordaro See information under the Entergy Gulf Sates Director Section above.

Michael B. Bemis See information under the Entergy Corporation Officers Section above.

Jerry D. Jacksm See information under the Entergy Corporation Officers Section above.

Frank F. Gallaher See information under the Entergy Cao ation Officers Officers Section above.

Donald C. Hintz See information under the Entergy Corporation Officers Section above.

Gerald D. McInvale See infomaon under the Entergy Corporation Officers Section above.

Michael G. Thompson See information under the Entergy Corporation Officers Section above.

Michael R.- Niggli See information under the Entergy Arkansas Section above.

Richard J. Landy See information under the Entergy Corporation Officers Sates Officers section above.

William E. Colston See information under the Entergy Gulf Officers Section above.

William J. Regan, Jr. See information.under the Entergy Coporation Officers Section above.

LouisE. Buck, Jr. See information under the Entergy Corporation Officers Section above.

C. Hiram Walters See information under the Entergy Arkansas above.

S. G.Cunningham, Jr. See information under the Entergy Gulf Sates Officers section ENTERGY MISSISSPPI, INC.

Directors 1992-Present 1992-992 Donald E. Meiners (c) 61 President and Director of Entergy Mississippi Chief Operating Officer and Secretary ofEntergy Mississippi Section above.

Michael B. Bemis See informatin under the Entergy Corporation Officers the Entergy Corporation Officers Section above.

Donald C. Hintz See information under Entergy Corporation Officers Section above.

Jerry D. Jackson See information under the Entergy Corporation Officers Section above.

Edwin Lupberger See information under the

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Name 8&e Position Jerry L. Maulden See information under the Entergy Corporation Officers Section above.

Gerald D. McInvale See information under the Entergy Corporation Officers Section above.

Oftiens Bill F. Cossar 58 Vice President - Governmental Affairs of Entergy Mississippi 1987-Present Edwin Lupberger See infonration ureder the Entergy Corporation Officers Section above.

Jerry L. Maulden See information under the Entergy Corporation Officers Section above.

Donald E. Meiners See information under the Entergy Mississippi Directors Section above.

Michael B. Benis See information under the Entergy Corporation Officers Section above.

Jerry D. Jackson See infonnation under the Entergy Corporation Officers Section above.

Frank F. Gallaher See information under the Entergy Corporation Officers Section above.

Gerald D. Mclavale See information under the Entergy Corporation Officers Section above.

Michael G. Thompson See information under the Entergy Corporation Officers Section above.

Michael R. Niggli See informatio under the Entergy Arkansas Officers Section above.

Richard . Landy See information under the Entergy Corporation Officers Section above.

William I. Regan, Jr. See information under the Entergy Corporation Officers Section above.

Louis E. Buck, Jr. See information under the Entergy Corporation Officers Section above.

ENTERGY NEW ORLEANS, INC.

Daniel F. Packer 49 State President - City of New Orleans 1996-Present Vice President - Regulatory and Governmental Affairs of Entergy New 1994-1996 Orleans General Manager - Plant Operations at Waterford 3 1991-1994 Jerry D. Jackson See information under the Entergy Corporation Officers Section above.

EdwinLwberger See information under the Entergy Corporation Officers Section above.

Jerry L. Maulden See information under the Entergy Corporation Officers Section above.

Gerald D. McInvale See information under the Entergy Corporation Officers Section above.

2fflrs Edwin Lupberger See information under the Entergy Corporation Officers Section above.

Jerry L. Maulden See information under the Entergy Corporation Officers Section above.

Michael B. Bemis See information under the Entergy Corporation Officers Section above.

Jerry D. Jackson See information under the Entergy Caiporation Officers Section above.

Frank F. Gallaher See information under the Entergy Corporation Officers Section above.

Gerald D. Mclnvale See information under the Entergy Corporation Officers Section above.

Michael G. Thompson See information under the Entergy Corporation Officers Section above.

Michael R. Niggli See information under the Entergy Arkansas Officers Section above.

Daniel F. Packer See information under the Entergy New Orleans Directors Section above.

Richard I. Landy See information under the Entergy Corporation Officers Section above.

James D. Bruno See information under the Entergy Louimsiana Officers Section above.

William J. Regan, Jr. See information under the Entergy Corporation Officers Section above.

Louis E. Buck, Jr. See information under the Entergy Corporation Officers Section above.

SYSTEM ENERGY RESOURCES, INC.

Donald C. Hintz See information under the Entergy Corporation Officers Section above.

Edwin Lupberger See information under the Entergy Corporation Officers Section above.

Jerry L. Maulden See information under the Entergy Corporation Officers Section above.

Gerald D. Mclnvale See information under the Entergy Corporation Officers Section above.

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-i. , Position Period Secretary of System Energy and Entergy Operations 1991 -Present Joseph L. Blount 50 Vice President Legal and External Affairs of Entergy Operations 1990-1993 Edwin Lupberger See information under the Entergy Corporation Officers Section above.

Donald C. Hintz See infownation under the Entergy Corpoation Officers Section above.

Gerald D. Mclnvale See information under the Entergy Corporation Officers Section above.

William I. Regan, Jr. See information under the Entergy Corporation Officers Section above.

Louis E. Buck, Jr. See information under the Entergy corporation Officers Section above.

(a) Mr. Lupberger is a director of First Commerce Corporation, New Orleans, LA, International Shipholding Corporation, New Orleans, LA, and First National Bank of Commerce, New Orleans, LA.

(b) Mr. Bemis is a director of Deposit Guaranty National Bank, Jackson, MS and Deposit Guaranty Corporation, Jackson, MS.

Corporation, (c) Mr. Meiners is a director of Trustmark National Bank, Jackson, MS, and Trustmark Jackson, MS.

to serve by the unanimous Each director and officer of the applicable Entergy company is elected yearly be held on May 5, consent of the sole stockholder, Entergy Corporation, in lieu of an annual meeting scheduled to 1997.

12 or 15(d) of the Securities Directorships shown above are generally limited to entities subject to Section and Exchange Act of 1934 or to the Investment Company Act of 1940.

Section 16(a) Beneficial Ownership Reporting Compliance of Entergy Corporation is set forth Information called for by this item concerning the directors and officers with its Annual Meeting of Stockholders to in the Proxy Statement of Entergy Corporation to be filed in cmnection 16(a) of the Exchange Act", which be held on May 9, 1997, under the heading "Compliance with Section information is incorporated herein by reference.

Item 11. Executive Compensation ENTERGY CORPORATION Entergy is set forth in the Proxy Information called for by this item concerning the directors and officers of and "Compensation of Directors", which Statement under the headings "Executive Compensation", "Nominees",

information is incorporated herein by reference.

LOUISIANA, ENTERGY ENTERGY ARKANSAS, ENTERGY GULF STATES, ENTERGY MISSISSIPPI, ENTERGY NEW ORLEANS, AND SYSTEM ENERGY Summary Compensation Table other most highly compensated The following table includes the Chief Executive Officer and the four Arkansas, Entergy Gulf States, Entergy Louisiana, executive officers in office as of December 31, 1996 at Entergy (collectively, the "Named Executive Officers").

Entergy Mississippi, Entergy New Orleans, and System Energy, all Entergy sources earned by each This determination was based on total annual base salary and bonuses from of the Registrants," for information on officer for the year 1996. See Item 10, "Directors and Executive Officers the principal positions of the Named Executive Officers in the table below.

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New Orleans, and Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy System Energy As shown in Item 10, most Named Executive Officers are employed by several Entergy companies.

the table below Because it would be impracticable to allocate such officers' salaries among the various companies, includes the aggregate compensation paid by all Entergy companies.

lona-Term Compensation Annual Compensation Awards Restricted Securities (b) LTIP All (d)

Other Other Annual Stock Underlying (a)

Awards OotioS- Payouts Compnesation YAr $12,813 1996 $297,115 $168,125 S 43,884 (e) 5,000 shares S 0 12,063 Michael B. Bemis 22,844 (e) 27,500 294,282 1995 290,000 216,909 (e) 2,500 28,275 8,596 1994 288,846 76,923 32,940 (e) o shares S 0 S 20,683 1996 $ 153,558 S 66,187 S 26,132 7,529 LouisE. Buck, Jr. 9,151 (e) 0 0 1995 49,039 21,280 (e) 0 0 0 0 0 0 1994 (e) 5,000 shares $ 0 $14,197 1996 $343,269 $231,299 $ 12,516 9,750 Donald C. Hintz* 13,394 (e) 30,000 t09,414 1995 325,000 265,049 (e) 5,000 48,379 9,710 320,769 142,749 52,389 1994 (e) 5,000 shares $ 0 S13,862 1996 $332,115 $209,489 $. 37,928 422,438 9,750 Jerry D. Jackson 43,054 (e) 30,000 1995 325,000 256,838 (e) 5,000 56,550 9,634 323,711 106,155 29,598 1994 (e) 10,000 shares $ 0 $ 23,567 1996 $735,577 $448,794 $123,601 21,000 Edwin Lupberger** (e) 60,000 781,337 700,000 568,400 89,163 20,446 1995 (e) 10,000 139,525 681,539 218,789 93,816 1994 (e) 5,000 shares $ 0 $14,550 1996 $435,000 $260,301 $ 27,056 13,050 Jerry L. Maulden (e) .30,000 422,438 435,000 353,220 26,248 12,859 1995 (e) 5,000 56,550 426,134 135,962 63,994 1994 0 $12,051 1996 $271,730 $ 179,576 $ 13,995 5,000 shares $ 294,282 7,664 Gerald D. Mcdnvale 12,525 (e) 1995 255,481 186,739 (e) 27,500 28,275 7,275 244,165 66,227 14,146 (e). 2,500 1994 0 S 8,852

$ 190,000 $ 81,132 $ 20,684 0 shares,$ 7,821 William J. Regan, Jr. 1996 21,141 (e) 2,000 0 1995 120,577 54,727 (e) 0 0 0 1994 0 0 0 (e)

• Chief Executive Officer of System Energy.

• • Chief Executive Officer of Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans (a) Includes bonuses earned pursuant to the Annual Incentive Plan.

(b) Amounts used in the calculation of perquisites were previously reported in the column titled "All Other Compensation".

below)

(c) Amounts include the value of restricted shares that vested in 1996, 1995, and 1994 (see note (e) under Entergy's Equity Ownership Plan.

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(d) Includes the following:

(1) 1996 benefit accruals under the Defined Contribution Restoration Plan as follows: Mr. Bemis

$4,414; Mr. Hintzý$5,798; Mr. Jackson $5,463; Mr. Lupberger $17,567; Mr. Maulden $8,550; Mr. McInvale $3,652; Mr. Regan $1,200.

(2) 1996 employer contributions to the System Savings Plan as follows: Mr. Bemis $4,500; Mr. Buck

$1,431; Mr. Hintz $4,500; Mr. Jackson $4,500; Mr. Lupberger $4,500; Mr. Maulden $4,500; Mr. McInvale $4,500; Mr. Regan $4,500.

(3) 1996 employer contributions to the Employee Stock Ownership Plan as of November 30, 1996 are as follows: Mr. Bemis $3,899; Mr. Hintz $3,899; Mr. Jackson $3,899; Mr. Lupberger $1,500; Mr. Maulden $1,500; Mr. McInvale $3,899.

(4) 1996 reimbursements for moving expenses as follows: Mr. Buck $19,252; Mr. Regan $3,152.

(e) Restricted stock awarded under the Equity Ownership Plan will vest at the end of a three year period subject to the attainment of approved performance goals. Restricted stock awards in 1996 are reported under the "Long-Term Incentive Plan Awards" table, and reference is made to this table for information on the aggregate number of restricted shares awarded during 1996 and the vesting schedule for such shares.

Accumulated dividends are paid on restricted stock when vested. The value of stock for which restrictions were lifted in 1996, 1995, and 1994, and the applicable portion of accumulated cash dividends, are reported in the LTIP Payouts column in the above table.

Option Grants in 1996 The following table summarizes option grants during 1996 to the Named Executive Officers. The absence, in the table below, of any Named Executive Officer indicates that no options were granted to such officer.

New Orleans, and Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy System Entergy Individual Grants Potential Realizable

% of Total Value Number of Options at Assumed Annual Securities Granted to Exercise Rates of Stock Underlying Employees Price Price Appreciation Options in (per Expiration for Option Term(b) 1996 share) Date 5% 10%

Name Granted 5,000 (a) 6.1% $29.375 (a) 1/25/06 $ 92,369 $ 234,081 Michael B. Bemis 5,000 (a) 6.1% 29.375 (a) 1/25/06 92,369 234,081 Donald C. Hintz 5,000 (a) 6.1% 29.375 (a) 1M25/06 92,369 234,081 Jerry D. Jackson 10,000 (a) 12.1% 29.375 (a) 1/25/06 184,738 468,162 Edwin Lpberger 5,000 (a) 6.1% 29.375 (a) 1/25/06 92,369 234,081 JeryL. Maulden 5,000 (a) 6.1% 29.375 (a) 1/25/06 92,369 234,081 Gerald D. Mclnvale on (a) Options were granted on January 25, 1996, pursuant to the Equity Ownership Plan. All options granted Corporation common stock on the this date have an exercise price equal to the closing price of Entergy

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New York Stock Exchange Composite Transactions on January 25, 1996. These options became exercisable on July 25, 1996.

over (b) Calculation based on the market price of the underlying securities assuming the market price increases estimates of potential a ten-year option period and assuming annual compounding. The column presents values based on simple mathematical assumptions. The actual value, if any, a Named Executive Officer may realize is dependent upon the market price on the date of option exercise.

Aggregated Option Exercises in 1996 and December 31, 1996 Option Values "The following table summarizes the number and value of all unexercised options held by the Named Executive Officers. In 1996, no options were exercised by any Named Executive Officer.

Number of Securities Value of Unexercised Underlying Unexercised Options ln-tbe-Money Options as of December 31, 1996 as of December 31. 1996(a)

Name Exercisable Unexercisable Exercisable Unexercisable Michael B. Bemis 15,000 25,000 $10,625 $ 168,750 Donald C. Hintz 22,500 25,000 21,250 168,750 Jerry D. Jackson 19,411 25,000 0 168,750 Edwin Lupberger 48,824 50,000 42,500 337,500 Jerry L. Maulden 25,000 25,000 21,250 168,750 Gerald D. McInvale 15,000 25,000 10,625 168,750 William J. Regan, Jr. 0 2,000 0 13,500 (a) Based on the difference between the closing price of Entergy Corporation's common stock on the New York Stock Exchange Composite Transactions on December 31, 1996, and the option exercise price.

Long-Term Incentive Plan Awards in 1996 The following Table summarizes awards of restricted shares of Entergy Corporation common stock granted under the Equity Ownership Plan in 1996 to the Named Executive Officers.

Estimated Future Payouts Under Non-Stock Price-Based Plans(af(b)

Number of Performance Period Until Shares Maturation or Parut Threshold Taet Maximum AME Edwin Lupberger 60,000 1/1/96-12/31/98 20,000 40,000 60,000 Jerry L. Maulden 37,500 1/1/96-12/31/98 12,500 25,000 37,500 Michael B. Bemis 30,000 111/96-12/31/98 10,000 20,000 30,000 Donald C. Hintz 30,000 /1/96-12/31/98 10,000 20,000 30,000 Jerry D. Jackson 30,000 /1/96-12/31/98 10,000 20,000 30,000 Gerald D. McInvale 30,000 1/1/96-12/31/98 10,000 20,000 30,000 Louis E. Buck, Jr. 4,500 1/11/96-12/31/98 1,500 3,000 4,500 William J. Regan, Jr. 4,500 1/1/96-12/31/98 1,500 3,000 4,500 (a) Restricted shares awarded will vest at the end of a three-year period, subject to the attainment of approved performance goals for Entergy. Restrictions are MWed based upon the achievement of the cumulative result of these goals for the performance period. The value any Named Executive Officer may realize is dependent upon both the number of shares that vest and the future market price of Entergy Corporation common stock.

(b) The threshold, target, and maximum levels correspond to the achievement of 50O/o, 100%, and 150%,

respectively, of Equity Ownership Plan goals. Achievement of a threshold, target, or maximum level would

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Achievement of a level result in the award of the number of shares indicated in the respective column.

calculated by means of between these three specified levels would result in the award of a number of shares interpolation.

Pension Plan Tables Entergy Mississippi, Entergy New Orleans, and Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, System Energy Retirement Income Plan Table Annual Covered Years of Service 15 20 25 30 35 Compnation

$ 22,500 $ 30,000 $ 37,500 $ 45,000 $ 52,000

$100,000 45,500 60,000 75,000 90,000 105,000 200,000 67,500 90,000 112,500 135,000 157,500 300,000 90,000 120,000 150,000 180,000 210,000 400,000 112,500 150,000 187,500 225,000 262,500 500,000 191,250 255,000 318,750 382,500 446,250 850,000 a defined benefit plan, that All of the Named Executive Officers participate in a Retirement Income Plan, all years of service beginning provides a benefit for employees at retirement from Entergy based upon (1) generally by (2) 1.50/6, multiplied by (3) the final at age 21 through termination, with a forty-year maximum, multiplied consecutive 60 months of covered average compensation. Final average compensation is based on the highest for a single employee is a lifetime compensation in the last 120 months of service. The normal form of benefit Other actuarially equivalent options are annuity and for a married employee is a 50% joint and survivor annuity.

any deduction for Social Security or other offset available to each retiree. Retirement benefits are not subject to covered by the plan as of amounts. The amount of the Named Executive Officers' annual compensation Compensation Table above.

December 31, 1996, is represented by the salary column in the Summary December 31, 1996, for the Named The credited years of service under the Retirement Income Plan, as of Maulden 31, and Mr. Regan 1. ;The credited Executive Officers is as follows: Mr. Bemis 14; Mr. Buck 1, Mr.

31, 1996 for the following Named years of service under the respective Retirement Income Plan, as of December retirement agreements, is as follows: Mr. Hintz 25; Executive Officers, as a result of entering into supplemental Mr. Jackson 17; Mr. Lupberger 33; and Mr. McInvale 24.

by Sections 401 and 415 of the The maximum benefit under each Retirement Income Plan is limited Gulf States, Entergy Louisiana, Internal Revenue Code of 1986, as amended; however, Entergy Arkansas, Entergy have elected to participate in the Pension Entergy Mississippi, Entergy New Orleans, and System Energy plan, certain executives, including the Named Equalization Plan sponsored by Entergy Corporation. Under this that would have been payable under the Executive Officers, would receive an additional amount equal to the benefit discussed above.

Retirement Income Plan, except for the Sections 401 and 410 limitations Arkansas, Louisiana, Mississippi, New In addition to the Retirement Income Plan discussed above, Entergy Retirement Plan of Entergy Corporation and Orleans, and System Energy participate in the Supplemental and Subsidiaries (PRP). Participation is Subsidiaries (SRP) and the Post-Retirement Plan of Entergy Corporation of Entergy Arkansas, Entergy Louisiana, Entergy limited to one of these two plans and is at the invitation participant may receive from the appropriate Entergy Mississippi, Entergy New Orleans, and System Energy. The (under the SRP) or .0333 (under the PRP) times the company a monthly benefit payment not in excess of .025 for a maximum of 120 months. Mr. Hintz has participantfs average basic annual salary (as defined in the plans)

Named Executive Officers, (except for Mr. Buck, entered into a SRP participation contract, and all of the other

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Mr. McInvale and Mr. Rxgan) have entered into PRP participation contracts. Current estimates indicate that the annual payments to the Named Executive Officers under the above plans would be less than the payments to that officer under the System Executive Retirement Plan discussed below.

System Executive Retirement Plan Table (1)

Annual Covered Years of Service Compensation 15 20 25 30+

$ 200,000 $ 90,000 $ 100,000 $ 110,000 $120,000 300,000 135,000 150,000 165,000 180,000 400,000 180,000 200,000 220,000 240,000 500,000 225,000 250,000 275,000 300,000 600,000 270,000 300,000 330,000 360,000 700,000 315,000 350,000 385,000 420,000 1,000,000 450,000 500,000 550,000- 600,000 (1) Benefits shown are based on a target replacement ratio of 50% based on the years of service and covered compensation shown. The benefits for 10, 15, and 20 or more years of service at the 45% and 55%

replacement levels would decrease (in the case of 45%) or increase (in the case of 55%) by the following percentages: 3.0%, 4.5%, and 5.0%, respectively.

In 1993, Entergy Corporation adopted the System Executive Retirement Plan (SERP). Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Systgm Energy are participating employers in the SERP. The SERP is an unfunded defined benefit plan offered at retirement to certain senior executives, which would currently include all the Named Executive Officers. Participating executives choose, at retirement, between the retirement benefits paid under provisions of the SERP or those payable under the executive retirement benefit plans discussed above. Covered pay under the SERP includes final annual base salary (see the Summary Compensation Table above for the base salary covered by the SERP as of December 31, 1996) plus the Target Incentive Award (i.e., a percentage of final annual base salary) for the participant in effeqt.at retirement. Benefits paid under the SERF are calculated by multiplying the covered pay times target pay replacement ratios (45%, 500/%, or 55%, dependent on job rating at retirement) that are attained, according to plan design, at 20 years of credited service. The target ratios are increased by 1% for each year of service over 20 years, up to a maximum of 30 years of service. In accordance with the SERP formula, the target ratios are reduced for each year of service below 20 years. The credited years of service under this plan are identical to the years of service for Named Executive Officers (other than Mr. Berms, Mr. Jackson, and Mr. McInvale) disclosed above in the section entitled "Pension Plan Tables-Retirement Income Plan Table". Mr. Bemis, Mr. Jackson, and Mr.

MeInvale have 24 years, 23 years, and 15 years, respectively, of credited service under this plan.

The normal form of benefit for a single employee is a lifetime annuity and for a married employee is a.50%

joint and survivor annuity. All SERP payments are guaranteed for ten years. Other actuarially equivalent options are available to each retiree. SERF benefits are offset by any and all defined benefit plan payments from Entergy and from prior employers. SERP benefits are not subject to Social Security offsets.

Eligibility for and receipt of benefits under any of the executive plans described above are contingent upon several factors. The participant must agree, without the specific consent of the Entergy company for which such participant was last employed, not to take employment after retirement with any entity that is in competition with, or similar in nature to, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy or any affiliate thereof. Eligibility for benefits is forfeitable for various reasons, including violation of an agreement with Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy, resignation of employment, or termination of employment without Company permission.

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In addition to the non-bargaining unit employees Retirement Income Plan discussed above, Entergy Gulf States provides, among other benefits to officers, an Executive Income Security Plan for key managerial personnel.

The plan provides participants with certain retirement, disability, termination, and survivors' benefits. To the extent that such benefits are not funded by the employee benefit plans of Entergy Gulf States or by vested benefits payable by the participants' former employers, Entergy Gulf States is obliga*ed to make supplemental payments to his participants or their survivors. The plan provides that upon the death or disability of a participant during an employment, he or his designated survivors will receive (i) during the first year following his death or disability a number of years until the participant attains or amount not to exceed his annual base salary, and (ii) thereafter for would have attained age 65, but not less than nine years, an amount equal to one-half of the participant's annual base salary. The plan also provides supplemental retirement benefits for life for participants retiring after reaching benefit upon the age 65 equal to one-haff of the participant's average final compensation rate, with one-half of such death of the participant being payable to a surviving spouse for life.

for Entergy Gulf States amended and restated the plan effective March 1, 1991, to provide such benefits (as life upon termination of employment of a participating officer or key managerial employee without cause defined in the plan) or if the participant separates from employment for good reason (as defined in the plan), with 1/2 of such benefits to be payable to a surviving spouse for life. Further, the plan was amended to provide medical benefits for a participant and his family when the participant separates from service. These medical benefits generally continue until the participant is eligible to receive medical benefits firn a subsequent employer, but in the case of a participant who is over 50 at the time of separation and was participating in the plan on March 1, 1991, medical benefits continue for life. By virtue of the 1991 amendment and restatement, benefits for a participant under such plan cannot be modified once he becomes eligible to participate in the plan.

Compensation of Directors For information regarding compensation of the directors of Entergy Corporation, see the Proxy Statement under the heading "Compensation of Directors", which information is incorporated herein by reference. Entergy and System Energy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, responsibilities currently have no non-employee directors, and none of the current directors is compensated for his as director.

and Entergy Retired non-employee directors of Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Boards of Directors are paid $200 a month New Orleans with a minimum of five years of service on the respective for a term of years corresponding to the number of years of active service as directors. Retired non-employee advisory directors with over ten years of service receive a lifetime benefit of $200 a month. Years of service as an directors.

director are included in calculating this benefit. System Energy has no retired non-employee Retired non-employee directors of Entergy Gulf States receive retirement benefits under a plan in which all directors who served continuously for a period of years will receive a percentage of their retainer fee in effect at the time of their retirement for life. The retirement benefit is 30 percent of the retainer fee for service of not less than five nor more than nine years, 40 percent for service of not less than ten nor more than fourteen years, and 50 their percent for fifteen or more years of service. For those directors who retired prior to the retirement age, benefits are reduced. The plan also provides disability retirement and optional hospital and medical coverage if the pays one-third of the premium for director has served at least five years prior to the disability. The retired director two-thirds. Years of such optional hospital and medical coverage and Entergy Gulf States pays the remaining service as an advisory director are included in calculating this benefit.

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Employment Contracts and Termination of Employment and Change-in-Control Arrangements Entergy Gulf States As a result of the Merger, Entergy Gulf States is obligated to pay benefits under the Executive Income Security Plan to those persons who were participants at the time of the Merger and who later terminated their employment under circumstances described in the plan. For additional description of the benefits under the Executive Income Security Plan, see the "Pension Plan Tables-System Executive Retirement Plan Table" section noted above.

Personnel Committee Interlocks and Insider Participation The compensation of Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy executive officers was set by the Personnel Committee of Entergy Corporation's Board of Directors, composed solely of Directors of Entergy Corporation. No officers or employees of any Entergy company participated in deliberations concerning compensation during 1996.

Item 12. Security Ownership of Certain Beneficial Owners and Management Entergy Corporation owns 100% of the outstanding common stock of registrants Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New, Orleans, and System Energy. The information with respect to persons known by Entergy Corporation to be beneficial owners of more than 5% of Entergy Corporation's outstanding common stock is included under the heading "Voting Securities Outstanding" in the Proxy Statement, which information is incorporated herein by reference. The registrants know of no contractual arrangements that may, at a subsequent date, result in a change in control of any of the registrants.

The directors, the Named Executive Officers, and the directors and officers as a group for Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy, respectively, beneficially owned directly or indirectly common stock of Entergy Corporation as indicated:

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Entergy Corporation Common Stock Amount and Nature of Beneficial Ownership(a)

Sole Voting and Other Investment Beneficial Power Ownership(b)

Name Entergy Corporation 10,000 Michael B. Bemis ** 11,480 4,434 W. Frank Blount* 6,934 John A. Cooper, Jr.* 3,384 Lucie J. Fjeldstad* 1,200 Dr. Norman C. Francis* 8,779 7,500 Donald C. Hintz** 11,615 14,411 Jerry D. Jackson** 3,684 Robert v.d. Luft* 34,392 41,324 (c)

Edwin Lupberger*** 20,000 25,015 Jerry L. Maulden** 2,467 Adm. Kinnaird R. McKee* 2,917 Paul W. Murrill* 5,078 James R, Nichols* 3,092 Eugene H. Owen* 16,481 John N. Palmer, Sr.* 6,700 6,500 (c)

Robert D. Pugh* 8,750 4,950 (d)

H. Duke Shackelford* 5,600 Wm. Clifford Smith* 7,637 Bismark A. Steinhagen*

All directors and executive 263,181 149,685 officers Entergy Arkansas 11,480 10,000 Michael B. Bemis*** 8,779 7,500 Donald C. Hintz*** 11,615 14,411 Jerry D. Jackson*** 13,189 7,174 R. Drake Keith* 34,392 41,324 (c)

Edwin Lupberger*** 25,015 20,000 Jerry L. Maulden*** 10,000 16,030 Gerald D. Mclnvale*

All directors and executive 189,117 137,909 officers

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Entergy Corporation Common Stock Amount and Nature of Beneficial Ownership(a)

Sole Voting and Other Investment Beneficial Name Power Ownershiinb)

Entergy Gulf States Michael B. Bemis*** 11,480 10,000 John J. Cordaro

• 6,833 5,000 Frank F. Gallaher* 20,401 7,500 Donald C. Hintz*** 8,779 7,500 Jerry D. Jackson*** 11,615 14,411 Karen R. Johnson

• 349 Edwin Lupberger*** 34,392 41,324 (c)

Jerry L. Maulden*** 25,015 20,000 Gerald D. Mclnvale

• 16,030 10,000 All directors and executive officers 180,976 135,735 Entergy Louisiana Michael B. Bemis*** 11,480 10,000 "JohnJ. Cordaro* 6,833 5,000 Donald C. Hintz*** 8,779 7,500 Jerry D. Jackson*** 11,615 14,411 Edwin Lupberger*** 34,392 41,324 (c)

Jerry L. Maulden*** 25,015 20,000 Gerald D. McInvale

• 16,030 10,000 All directors and executive officers 187,772 135,735 Entergy Mississippi Michael B. Bemis*** 11,480 10,000 Donald C. Hintz* 8,779 7,500 Jerry D. Jackson*** 11,615 14,411 Edwin Lupberger*** 34,392 41,324 (c)

Jerry L. Maulden*** 25,015 20,000 Gerald D. Mclnvale*** 16,030 10,000 Donald E. Meiners* 11,982 10,000 All directors and executive officers 177,804 140,735

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Entergy Corporation

.Common Stock Amount and Nature of Beneficial Ownership(a)

Sole Voting and Other Investment Beneficial Name Power Ownership(b)

Entergy New Orleans Michael B. Bemis* 11,480 10,000 Jerry D. Jackson*** 11,615 14,411 Edwin Lupberger*** 34,392 41,324 (c)

Jerry L. Maulden*** 25,015 20,000 ferald D. McInva1e*** 16,030 10,000 Daniel F. Packer

• 3,164 All directors and executive officers 160,465 123,235 System Energy Louis E. Buck, Jr.** 80 Donald C. Hintz*** 8,779 7,500 Edwin Lupberger*** 34,392 41,324 (c)

Jerry L. Maulden* 25,015 20,000 Gerald D. Mclnvale*** 16,030 10,000 William J. Regan ** 202 All directors and executive officers 89,185 78,824

• Director of the respective Company

• • Named Executive Officer of the respective Company

• ** Director and Named Executive Officer of the respective Company (a) Based on information furnished by the respective individuals. Except as noted, each individual has sole voting and investment power. The amount owned by each individual and by all directors and executive officers as a group does not exceed one percent of the outstanding securities of any class of security so owned.

(b) Includes, for the Named Executive Officers, shares of Entergy Corporation common stock in the form of unexercised stock options awarded pursuant to the Equity Ownership Plan as follows: Michael B. Bemis, 10,000 shares; John J. Cordaro 5,000 shares; Frank F. Gallaher, 7,500 shares; Donald C. Hintz, 7,500 shares; Jerry D. Jackson, 14,411 shares; R. Drake Keith, 7,174 shares; Edwin Lupberger, 38,824 shares; Jerry L. Maulden, 20,000 shares; Gerald D. McInvale, 10,000 shares; and Donald E. Meiners, 10,000 shares.

(c) Includes, for the Named Executive Officers, shares of Entergy Corporation common stock held by their spouses. The named persons disclaim beneficial ownership in these shares as foilows: Edwin Lupberger, 2,500 shares; and Robert D. Pugh, 6,500 shares.

(d) Includes 4,950 shares owned by the estate of Mrs. Shackelford, of which H. Duke Shackelford disclaims beneficial ownership.

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Item 13. Certain Relationships and Related Transactions Information called for by this item concerning the directors and officers of Entergy Corporation is set forth under the heading "Certain Transactions" in the Proxy Statemwit, which information is incorporated herein by reference.

See Item 10, "Directors and Executive Officers of the Registrants," for information on certain relationships and transactions required to be reported under this item.

Other than as provided under applicable corporate laws, Enteiry does not have policies whereby transactions involving executive officers and directors are approved by a majority of disinterested directors.

However, pursuant to the Entery Corporation Code of Conduct, transctions involving an Entergy and its executive officers must have prior approval by the next higher reporting level of that individual, and transactions involving an Entergy company and its directors must be reported to the secretary of the appropriate company.

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PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

(a)l. Financial Statements and Independent Auditors' Reports for Entergy, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy are listed in the Index to Financial Statements (see pages 38 and 39)

(a)2. Financial Statement Schedules Reports of Independent Accmuntants o* FinanciaW S nt.Schedules (see page 214)

Financial Statement Schedo a amre sd m the nLdx to Finamcial Statement Schedules (see page S-I)

(a)3. Exhibits Exhibits for Entergy, Entergy Arkansas, Entey Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy are le -i ndx (see page E-1). Each management contract or eonpensatory plan or arrangement required to be filed as an exhibit hereto is identified as such by lbotnote in the Exhibit Index.

(b) Reports on Form 8-K

- _ntprRV Corporation A current report on Form 8-K, dated October 11, 1996, was filed with the SEC on October 11, 1996, reporting information under Item 5. "Other Events".

A current report on Form 8-K dated December 18, 1996, was filed with the SEC on December 18, 1996, reporting information under Item 5. "Other Events".

A current report on Form 8-K, dated February 7, 1997, was filed with the SEC on February 18, 1997, reporting information under Item 2. "Acquisition of Assets" and Item 5. "Other Events".

Entermv Corporation and Entergy Arkansas A current report on Form 8-K, dated October 23, 1996, was filed with the SEC on October 29, 1996, reporting information under Item 5. "Other Events".

Enteray Corporation and Enteray Gulf States A current report on Form 8-K, dated November 27, 1996, was filed with the SEC on November 27, 1996, reporting information under Item 5. "Other Events".

EXPERTS The statements attributed to Sandlin Associates regarding the analysis of River Bend Construction costs of Entergy Gulf States under Item 1. "Rate Matters and Regulation - Rate Matters - Retail Rate Matters - Entergy Gulf States' and in Note 2 to Entergy Corporation and Subsidiaries Consolidated Financial Statements and Entergy Gulf States' Financial Statements, "Rate and Regulatory Matters," have been reviewed by such firm and are included herein upon the authority of such firm as experts.

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ENTERGY CORPORATION SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.

ENTERGY CORPORATION By /s/,Louis E. Buck Louis E. Buck, Vice President

--- and Chief Accounting Officer Date: March 10,97 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed belowby the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.

Sianature Title Date

/s/ Louis E. Buck Louis E. Buck Vice President and March 10, 1997 Chief Accounting Officer (Principal Accounting Officer)

Edwin Lupberger (Chairman of the Board, Chief Executive Officer and Director; Principal Executive Officer); Gerald D. McInvale (Executive Vice President and Chief Financial Officer; Principal Financial Officer); W. Frank Blount, John A. Cooper, Jr., Lucie J. Fjeldstad, N. C. Francis, Kaneaster Hodges, Jr., Robert v.d. Luf, Kinnaird R. McKee, Paul W. Murrill, James R. Nichols, Eugene H. Owen, John N. Palmer, Sr., Robert D. Pugh, H. Duke Shackelford, Wm. Clifford Smith, and Bismark A. Steinhagen (Directors).

By: /s/ Louis E. Buck March 10, 1997 (Louis E. Buck, Attorney-in-fact)

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ENTERGY ARKANSAS, INC.

SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant The signature has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

reference to such company and any of the undersigned company shall be deemed to relate only to matters having subsidiaries thereof.

ENTERGY ARKANSAS, INC.

By /s/ Louis E. Buck Louis E. Buck, Vice President, Chief Accounting Officer and Assistant Secretary Date: March 10, 1997 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by of the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature company and each of the undersigned shall be deemed to relate only to matters having reference to the above-named any subsidiaries thereof.

Sianature Title Date

/s/Louis E. Buck Louis E. Buck Vice President, Chief Accounting March 10, 1997 Officer and Assistant Secretary (Principal Accounting Officer)

Edwin Lupberger (Chairman of the Board, Chief Executive Officer and Director; Principal Executive Officer); Gerald D. McInvale (Executive Vice President, Chief Financial Officer, and Director; Principal Financial Officer); Michael B. Bemis, Donald C. Hintz, Jerry D.

Jackson, R. Drake Keith, and Jerry L. Maulden (Directors).

By: Is/Louis E. Buck March 10, 1997 (Louis E. Buck, Attorney-in-fact)

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ENTERGY GULF STATES, INC.

SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.

ENTERGY GULF STATES, INC.

By /s/ Louis E. Buck Louis E. Buck, Vice President, Chief Accounting Officer and Assistant Secretary Date: March 10, 1997 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.

Sifnature Title Date

/s/ Louis E. Buck Louis E. Buck Vice President, Chief Accounting March 10, 1997 Officer and Assistant Secretary (Principal Accounting Officer)

Edwin Lupberger (Chairman of the Board, Chief Executive Officer and Director, Principal Executive Officer); Gerald D. McInvale (Executive Vice President, Chief Financial Officer, and Director; Principal Financial Officer); Michael B. Bemis, John J. Cordaro, Frank F.

Gallaher, Donald C. Hlntz, Jerry D. Jackson, Karen R- Johnson, and Jerry L. Maulden (Directors).

By: Is/Louis E. Buck March 10, 1997 (Louis E. Buck, Attorney-in-fact)

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ENTERGY LOUISIANA, INC.

SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.

ENTERGY LOUISIANA, INC.

By /s/Louis E. Buck Louis E. Buck, Vice President, Chief Accounting Officer and Assistant Secretary Date: March 10, 1997 Pursuant to the requirenments of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.

Title Date

/s/ Louis E. Buck Louis E. Buck Vice President, Chief Accounting March 10, 1997 Officer and Assistant Secretary (Principal Accounting Officer)

Edwin Lupberger (Chairman of the Board, Chief Executive Officer and Director; Principal Executive Officer); Gerald D. Mclnvale (Executive Vice President, Chief Financial Officer, and Director, Principal Financial Officer); Michael B. Bemis, John J. Cordaro, Donald C.

Hintz, Jerry D. Jackson, and Jerry L. Maulden (Directors).

By: /s/ Louis E. Buck March 10, 1997 (Louis E. Buck, Attorney-in-fact)

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ENTERGY MISSISSIPPI, INC.

SIGNATURES Pursuant to the requireaents of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.

ENTERGY MISSISSIPPI, INC.

By /W Louis E. Buck Louis E. Buck, Vice President, Chief Accounting Officer and Assistant Secretary Date: March 10, 1997 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.

Sifnature Title Date

/s/ Louis E. Buck Louis E. Buck Vice President, Chief Accounting March 10, 1997 Officer and Assistant Secretary (Principal Accounting Officer)

Edwin Lupberger (Chairman of the Board, Chief Executive Officer and Director; Principal Executive Officer); Gerald D. McInvale (Executive Vice President, Chief Financial Officer, and Director, Principal Financial Officer); Michael B. Bemis, Donald C. Hintz, Jerry D.

Jackson, Jerry L. Maulden, and Donald E. Meiners (Directors).

By: /s/ Louis E. Buck March 10, 1997 (Louis E. Buck, Attorney-in-fact)

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ENTERGY NEW ORLEANS, INC.

SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.

ENTERGY NEW ORLEANS, INC.

By /s/LouisE. Buck Louis E. Buck, Vice President, Chief Accounting Officer and Assistant Secretuy Date: March 10, 1997 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.

Sienature Title Date

/s/ Louis E. Buck Louis E. Buck Vice President, Chief Accounting March 10, 1997 Officer and Assistant Secretary (Principal Accounting Officer)

Edwin Lupberger (Chairman of the Board, Chief Executive Officer and Director; Principal Executive Officer); Gerald D. Mclnvale (Executive Vice President, Chief Financial Officer, and Director; Principal Financial Officer); Jerry D. Jackson, Jerry L. Maulden, and Daniel F.

Packer (Directors).

By: /s/Louis E. Buck March 10, 1997 (Louis E. Buck, Attorney-in-fact)

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SYSTEM ENERGY RESOURCES, INC.

SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.

SYSTEM ENERGY RESOURCES, INC.

By /s/ Louis E. Buck Louis E. Buck, Vice President and Chief Accounting Officer Date: March 10, 1997 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the fbllowing persons on behalf of the registrant and in the capacities and on the dates indicated. The signature each of the undersigned shall be deemed to relate only to of matters having reference to the above-named company and any subsidiaries thereof.

Siviature Title Date

/s/ Louis E. Buck Louis E. Buck Vice President and March 10, 1997 Chief Accounting Officer (Principal Accounting Officer)

Donald C. Hintz (Presidet, Chief Executive Officer and Director, Principal Executive Officer); Gerald D. Mclnvale (Executive Vice President Chief Financial Officer, and Director; Principal Financial Officer); Edwin Lupberger (Chairman of the Board), and Jerry L. Maulden (Directors).

By- 1/3/LouisE. Buck (Louis E. Buck, Attomey-in-fact) March 10, 1997

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r.,.,2-Lnivii2 jka)

CONSENT OF INDEPENDENT ACCOUNTANTS 5A on Form We consent to the incorporation by reference in Post-Effective Amendment Nos. 2, 3, 4A, and Corporation on Form S-4 (File Number 33 S-8 and the related Prospectuses to the registration statement of Entergy February 13, 1997, on our 54298) and on Form S-3 (File Numbers 333-02503 and 333-22007) of our reports dated Corporation audits of the consolidated financial statements and consolidated financial statement schedules of Entergy three years in the period ended December 31, 1996, which as of December 31, 1996 and 1995, and for each of the an explanatory paragraph related to reports include an emphasis paragraph related to a rate-related contingency and disposed of and changes in accounting methods for the impairment of long-lived assets and for long-lived assets to be by certain of the Corporation's subsidiaries, and are included in incremental nuclear plant outage maintenance costs this Annual Report on Form 10-K.

of We consent to the incorporation by reference in the registration statements and the related Prospectuses 33 Entergy Arkansas, Inc. (formerly Arkansas Power & Light Company) on Form S-3 (File Numbers 33-36149, on our audits of the financial 48356, 33-50289, 333-00103 and 333-05045) of our reports dated February 13, 1997, and for statements and financial statement schedule of Entergy Arkansas, Inc. as of December 31, 1996 and 1995, paragraph each of the three years in the period ended December 31, 1996, which reports include an explanatory for incremental nuclear plant outage maintenance related to the Company's 1995 change in its method of accounting costs, and are included in this Annual Report on Form 10-K.

of We consent to the incorporation by reference in the registration statements and the related Prospectuses on Form S-3 (File Numbers 33-49739 and 33 Entergy Gulf States, Inc. (formerly Gulf States Utilities Company) our reports 51181), Form S-8 (File Numbers 2-76551 and 2-98011) and on Form S-2 (File Number 333-17911), of of Entergy Gulf dated February 13, 1997, on our audits of the financial statements and financial statement schedule December 31, States, Inc. as of December 31, 1996 and 1995 and for each of the three years in the period ended contingency and an explanatory 1996, which reports include an emphasis paragraph related to a rate-related and long-lived assets to be paragraph related to a change in accounting for the impairment of long-lived assets disposed of, and are included in this Annual Report on Form 10-K.

of We consent to the incorporation by reference in the registration statements and the related Prospectuses (File Numbers 33-46085, 33 Entergy Louisiana, Inc. (formerly Louisiana Power & Light Company) on Form S-3 on our audits of 39221, 33-50937, 333-00105, 333-01329 and 333-03567) of our reports dated February 13, 1997, 31, 1996 and the financial statements and financial statement schedule of Entergy Louisiana, Inc. as of December included in this Annual 1995, and for each of the three years in the period ended December 31, 1996, which are Report on Form 1-OK.

of We consent to the incorporation by reference in the registration statements and the related Prospectuses S-3 (File Numbers 33-53004, Entergy Mississippi, Inc. (formerly Mississippi Power & Light Company) on Form statements and 33-55826 and 33-50507) of our reports dated February 13, 1997, on our audits of the financial for each of the financial statement schedule of Entergy Mississippi, Inc. as of December 31, 1996 and 1995, and Report on Form 10-K.

three years in the period ended December 31, 1996, which are included in this Annual of We consent to the incorporation by reference in the registration statements and the related Prospectuses on Form S-3 (File Numbers 33-57926 and Entergy New Orleans, Inc. (formerly New Orleans Public Service Inc.)

statement 333-00255) of our reports dated February 13, 1997, on our audits of the financial statements and financial years in the schedule of Entergy New Orleans, Inc. as of December 31, 1996 and 1995, and for each of the three period ended December 31, 1996, which are included in this Annual Report on Form 10-K.

-211 -

We consent to the incorporation by reference in the registration statements and the related Prospectuses of System Energy Resources, Inc. on Form S-3 (File Numbers 33-47662, 33-61189 and 333-06717) of our report dated February 13, 1997, on our audits of the financial statements of System Energy Resources, Inc. as of December 31, 1996 and 1995, and for each of the three years in the period ended December 31, 1996, which report includes an explanatory paragraph related to the Company's 1996 change in its method of accounting for incremental nuclear plant outage maintenance costs, and is included in this Annual Report on Form 10-K.

COOPERS & LYBRAND L.L.P.

New Orleans, Louisiana March 7, 1997

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EXHIBIT 23(b)

CONSENT and to the inclusion in this Annual We consent to the reference to our firm under the heading "Experts" statements (Statements) regarding the analysis by our Report on Form 10-K of Entergy Gulf States, Inc. of the Matters and made herein under Part I, Item 1. Business - "Rate Firm of River Bend construction costs which are matters set forth in Note 2 to Entergy Gulf States' Regulation" and in the discussion of Texas jurisdictional Subsidiaries' Consolidated Financial Statements Financial Statem ts and Note 2 to Entergy Corporation and have been prepared or reviewed by us (Sandlin appearing as Item 8. of Part Ui of this Form 10-K, which Statements in the registration statements of Entergy Gulf States Associates). We also consent to the incorporation by reference Form S-8 (File Numbers 2-76551 and 2-98011) and on on Form S-3 (File Numbers 33-49739 and 33-51181),

Statements.

Form S-2 (File Number 333-17911) of such reference and SANDLIN ASSOCIATES Management Consultants Pasco, Washington March 10, 1997

-213-

REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES To the Board of Directors and the Shareholders of Entergy Corporation We have audited the consolidated financial statements of Entergy Corporation and Subsidiaries and the financial statements of Entergy Arkansas, Inc. (formerly Arkansas Power & Light Company), Entergy Gulf States, Inc. (formerly Gulf States Utilities Company), Entergy Louisiana, Inc. (formerly Louisiana Power & Light Company), Entergy Mississippi, Inc. (formerly Mississippi Power & Light Company) and Entergy New Orleans, Inc. (formerly New Orleans Public Service Inc.) as of December 31, 1996 and 1995, and for each of the three years in the period ended December 31, 1996, and have issued our reports, included elsewhere in this Form 10-K, thereon dated February 13, 1997, which reports as to Entergy Corporation and Entergy Gulf. States, Inc. include an emphasis paragraph related to a rate-related contingency and an explanatory paragraph related to a change in accounting for impairment of long-lived assets and long-lived assets to be disposed of; and which reports as to Entergy Corporation and Entergy Arkansas, Inc. include an explanatory paragraph related to changes in accounting for incremental nuclear plant outage maintenance expenses. In connection with our audits of such statements, we have also audited the related financial statement schedules included financial in Item 14(a)2 of this Form 10-K.

In our opinion the financial statement schedules referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly, in all material respects, the information required to be included therein.

COOPERS & LYBRAND L.L.P.

New Orleans, Louisiana February 13, 1997

-214-

INDEX TO FINANCIAL STATEMENT SCHEDULES Paze Schedule I Financial Statements of Entergy Corporation:

Statements of Income - For the Years Ended December 31, 1996, S-2 1995, and 1994 Statements of Cash Flows - For the Years Ended December 31, 1996, S-3 1995, and 1994 S4 Balance Sheets, December 31, 1996 and 1995 Statements of Retained Earnings and Paid-In Capital - For the Years Ended S-5 December 31, 1996, 1995, and 1994 II Valuation and Qualifying Accounts 1996, 1995, and 1994: S-6 Entergy Corporation and Subsidiaries S-7 Entergy Arkansas, Inc. S-9 Entergy Gulf States, Inc. S-9 Entergy Louisiana, Inc. S-10 Entergy Mississippi, Inc. S-11 EnteWgy New Orleans, Inc..

because they are not required, not applicable or the Schedules other than those listed above are omitted thereto.

required information is shown in the financial statements or notes the information is not applicable.

Columns have been omitted from schedules filed because S-1

ENTERGY CORPORATION SCHEDULE I-FINANCIAL STATEMENTS OF ENTERGY CORPORATION STATEMENTS OF INCOME For the Years Ended December 31, 1996 1995 1994 (In Thosands)

Income:

Equity in income of subsidiaries $459,350 $549,144 $369,701 Interest on temporary investments 4,840 25,4%

Total -20"641 569,7*5 464,190 395,197 Expenses and Other Deductions:

Administrative and general expenses 34,402 53,872- 57,846 Income taxes (credit) (1,558) (5,383) (6,350)

Taxes other than income (credit) 828 1,102 465 Interest (credit) 10,491 214 1,395 Total 44,163 49,805 53356 Net Income $420,027 $519,980 $341,841 See Entergy Corporation and Subsidiaries Notes to Financial Statements in Part 11, Item 8.

S-2

ENTERGY CORPORATION SCHEDULE I - FINANCIAL STATEMENTS OF ENTERGY CORPORATION STATEMENTS OF CASH FLOWS For the Years Ended December 31, 1996 1996 1994 (IN Thomm )

Operating Activities:

Net income $420,027 S519,980 $341,241 Noncash tfmB inchuled in net incame: (369,701)

(459,350) (549,144)

Equty in comings ofubsidiaries 7,007 8,499 (2,024)

Deffed income tamn 959 1,628 1,421 changes in waking ca l: (5,085) 3,232 2,161 Receivables (11,945) 9,919 (3.776)

PaYmbias (1,170) (1,701)

Other workig carw Wour (2,563) 554,200 565,589 763,400 Cwmo stock dividends received from subsidiares (12137)

(3,524) 8,652 Other Net cash fow provided by operating activities 533,461 541,158 711,776 lnvesin Aotivities:

(266,681) (477,709) (49,892)

Inveshnt in msbsidiaries (3.178) 26,000 Proceeds received fm the ale ofproperty (11,240)

Advance to xubsidiary 221,540 (38,910)

(266,681) (256,169) i [ i i Financing Activtiea:

20,000 (43,000)

Changes in sheet-team borrowings. (410,223)

(405,346) (408,553)

Common dock dividands paid (119,486) 118,087 Issuance of common Aock (267,259) (408,553) (572,709)

Net cash flow used in financing activities (479) (123,564) 100,157 Net increase (decrease) in cash aid cash equivatents Cash and cash equivaleb at beginming ofperiod 129,144 252,708 152,551

$128,665 $129,144 $252,708 Cash and cash equivalents at end of period See Edergy Coporton and Subsidiaries Noes to Financial Statements in Part I, Item 8.

S-3

ENTERGY CORPORATION SCHEDULE I - FINANCIAL STATEMENTS OF ENTERGY CORPORATION BALANCE SHEETS December 31, 19% 1995 (In Thousands)

ASSETS Current Assets:

Cash and cash equivalents:

Cash $23 $25 Temporary cash investments - at cost, which approximates market:

Associated companies 57,986 29,180 Other 70,656 .99,939 Total cash and cash equivalents 128,665 129,144 Accounts receivable:

Associated companies 5,940 8,697 Other 356 Interest receivable 378 497 Other 20,389 9,511 Total 155,372 148,205 Investment in Wholly-owned Subsidiaries 6,531,729 6,354,267 Deferred Debits 74,891 47,381 TOTAL $6,761,992 $6,549,853 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities:

Notes Payable $20,000 Accounts payable:

Associated companies 11,613 762 Other 22 1,142 Interest Accrued 188 Other current liabilities 15,638 5,930 Total 47,461 7,834 Deferred Credits and Noncurrent Liabilities 73,616 70,299 Shareholders' Equity:

Common stock, S.01 par value, authorized 500,000,000 shares; issued 234,456,457 shares in 1996 and 230,017,485 shares in 1995 2,345 2,300 Paid-in capital 4,320,591 4,201,483 Retained earnings 2,341,703 2,335,579 Cumulative foreign currency translation adjustment 21,725 Less cost of treasury stock 1,496,118 shares in 1996 and 2,251,318 shares in 1995) (45,449) (67,642)

Total common shareholders' equity 6,640,915 6,471,720 Total $6,761,992 $6,549,853 See Entergy Corporation and Subsidiaries Notes to Financial Statements in Part II, Item 8.

S-4

ENTERGY CORPORATION SCHEDULE I - FINANCIAL STATEMENTS OF ENTERGY CORPORATION STATEMENTS OF RETAINED EARNINGS AND PAID-IN CAPITAL For the Years Ended December 31, 1996 1995 1994 (In Thousands)

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

420,027 519,980 341,841 Net income 2,755,606 2,743,719 2,651,923 Total Deduct: 412,250 409,801 411,806 Dividends declared on common stock 13,940 Common stock retirements 1,653 (1,661) 2,438 Capital stock and other expenses 413,903 408,140 428,184 Total $2,341,703 $2,335,579 $2,223,739 Retained Earnings, December 31

$4,201,483 $4,202,134 $4,223,682 Paid-in Capital, January I Add:

Gain (loss) on rewquisition of 1,795 (26) (23) subsidiaries' preferred stock 117,560 (3,002)

Common stock issuances related to stock plans 4,320,838 4,199,106 4,223,659 Total Deduct 22,468 Common stock retirements 247 (2,377) (943)

Capital stock discounts and other expenses 247 (2,377) 21,525 Total $4,320,591 $4,201,483 $4,202,134 Paid-in Capital, December 31 See Entergy Corporation and Subsidiaries Notes to Consolidated Financial Statements inPart IL Item 8.

S-5

ENTERGY CORPORATION AND SUBSIDIARIES SCHEDULE H - VALUATION AND QUALIFYING ACCOUNTS Years Ended December 31,1996, 1995, and 1994 (in Thousands)

Celm.n A Columan B Column C Co&enn D Cohmn E Other Addiions Changes Deductions Balance at from Balance Beghing Charged to Prwoos at End Descro"~ of Period Income (Note 1) of Period Year ended December 31, 1996 Accumulated Provisions Deducted fiom Assets Doubtful Accounts S7,109 $18,403 $17,690 S7,822 Other 12,337 - 12,337

$19,446 $18,403 $30-,027 S7,822 Total Accumulated Provisions Not Deducted from Assets Property insurance $36,733 $26,136 $27,843 S35,026 Injuries and damages (Note 2) 19,981 23,373 17,209 26,145 Environmental 40,262 2,599 5,142 37,719 Total $96,976 $52,108 $50,194 $98,890 Year ended December 31, 1995 Accumulated Provisions Deducted from Assets Doubtful Accounts $6,740 $14,586 $14,217 £7,109 Other $0 12,337 - $12,337 Total $6,740 $26,923 S14,217 S19,446 Accumulated Provisions Not Deducted ffi-n Assets:

Property insurance $32,871 $16,263 $12,401 $36,733 Injuries and damages (Note 2) 22,066 11,667 13,752 19,981 Environmental 42,739 7,639 10,116 40,262 Total $97,676 $35,569 36,2699 S96,976 Year ended December 31, 1994 Accumulated Provisions Deducted from Assets Doubtful Accounts $8,808 $8,266 $10,334 $6,740 Accumulated Provisions Not Deducted from Assets:

Property insurance $34,546 $25,592 $27,267 $32,871 Injuries and damages (Note 2) 23,096 10,993 12,023 22,066 Environmental 26,753 21,292 5,306 42,739 Total $84,395 $5,7 4, $97,676 "Notes:

(1) Deductions from provisions represent losses or expenses for which the respective provisions were created. In the case of the provision for doubtful accounts, such deductions are reduced by recoveries of amounts previously written ofE (2) Injuries and damages provision is provided to absorb all current expenses as appropriate and for the estimated cost of settling claims for injuries and damages.

S-6

ENTERGY ARKANSAS, INC.

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS Years Ended December 31, 1996, 1995, and 1994 (In Thousands)

Colkumn A Colunn B Cohann C Cohmn D Cohnun E Odter Additions Changes Deductims Balance at from Balance Begiming Charged to Provisios at End Description of Period Income (Note 1) of Period Year ended December 31, 1996 Accumulated Provisions Deducted from Assets Doubtful Accounts $2,058 $5,341 S5,073 $2,326 Accumulated Provisions Not Deducted from Assets:

$900 $8,808 $9,694 $14 Property insurance 1,980 2,810 1,810 2,980 Injuries and damages (Note 2) 2,671 5,163 6,514 1,320 Environmental $13,108 $14,345 $7,987

$9,224 Total Year ended December 31, 1995 Accumulated Provisions Deducted from Assets

$1,950 $3,997 $3,889 $2,058 Doubtful Accounts Accumulated Provisions Not Deducted from Assets:

$1,916 $4,810 $5,826 $900 Property insuracme 2,660 710 1,560 1,810 Injuries and damages (Note 2) 5,350 4,435 3,271 6,514 Environmental

$9,926 $9,955 10,67 $9,224 Total Year ended December 31, 1994 Accumulated Provisions Deducted from Assets

$2,050 $1,967 $2,067 $1,950 Doubtful Accounts Accumulated Provisions Not Deducted firom Assets:

$2,821 $18,782 $19,687 $1,916 Property insurance 3,259 1,316 1,915 .2,660 Injuries and damages (Note 2) 6,825 1,510 2,985 5,350 Environmental

$12,905 $21,608 $24,587 $9,926 Total Notes:

were created. In the case of the (1) Deductions from provisions represent losses or expenses for which the respective provisions provision for doubtful accounts, such deductions are reduced by recoveries of amounts previously written off.

of settling claims (2) Injuries and damages provision is provided to absorb all current expenses as appropriate and for the estimated.cost for injuries and damages.

S-7

ENTERGY GULF STATES, INC.

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS Years Ended December 31, 1996, 1995, and 1994 (In Thousands)

Column A Column B Cohnmn C Colmn D Column E Other Additions Chan"s Deductions Balance at from Balance Begemlng Cargd to Previskmn at End of Period 1.come (Note 1)

Year ended December 31, 1996 of Period Accumulated Provisions Deducted fium Assets Doubtful Accounts

$1,608 $4,709 $4,320 $1,997 Accumulated Provisions W M Not Deducted firon Assets Property insuranoe

$14,141 $5,899 $3,037 Injuries and damages (Note 2) $17,003 5,199 7,955 3,560 Environmental 9,594 21,864 365 400 Total 21,829

,. 2 S14,219 $6,997 $48,426 Year ended December 31, 1995 Accumulated Provisions Deducted from Assets Doubtfid Accounts

$715 $3,715 $2,822 Accumulated Provisions $1,608 Not Deducted from Assets Property mrewuc

$10,451 $6,396 $2,706 Injuries and damages (Note 2) $14,141 6,922 6,243 7,966 Environmental 5,199 20,314 2,483 933 Total 21,864

$37,687 I $15,122 -$11,605 $41,204 Year ended December 31, 1994 Accumulated Provisions Deducted from Assets Doubtful Accounts

$2,383 $701 $2,369 Accunulated Provisions $715 Not Deducted from Assets Propety isunce

$10,872 $2,170 $2,591 Injuries and damages (Note 2) $10,451 9,469 2,970 5,517 Environmental 6,922 18,151 2,589 426 Total 20,314

$38,492 $7,729 $8,534 $37,687

- $3,8 Notes:

(1) Deductions from provisions represent losses or expenses for which the respective provisions were create4 In the case of the provision for doubtful accounts, such deductions are reduced by recoveries of amounts previously written off.

(2) Injuries and damages provision is provided to absorb all current expenses as appropriate and for the estimated cost of settling claims for injuries and damages.

S-8

ENTERGY LOUISIANA, INC.

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS Years Ended December 31, 1996, 1995, and 1994 (In Thousands)

Cob-nn A Column B Column C Colunn D Column E:

Other Addidom changes Deductkas Balance Balance at from at End oeghfmr Cirged to Provoision of Period of Period Income (Note 1)

Descripfion Year ended Decebet 31, 1996 Accumulated Provisions Deducted from Assets $3,241_ S3,202 S1,429

$1,390 Doubtful Accounts Accumulated Provisions Not Deducted from Assets: $5,335 S261

$1,013 $4,583 Property insurance 10,646 9,617 9,443 8,414 Injuries and damages (Note 2) 495 1,895 9,979 11,379 Environmental $16,847 $19,683

$20,806 s15,724 Total Year ended December 31, 1995 Accumulated Provisions Deducted from Assets $1,175 $2,450 $2,235 $1,390 Doubtful Accounts Accumulated Provisions Not Deducted from Assets: $814 $3,537 $3,338 $1,013 Property mwace 4,486 3,422 8,414 7,350 Injuries and damages (Note 2) (89) 4,926 11,379 16,394 Environmental $7,934 $ S20,806

$24,558 Total Year ended December 31, 1994 Accumulated Provisions Deducted from Assets $1,075 $2,023 $1,923 $1,175 Doubtful Accounts Accumulated Provisions Not Deducted from Assets: $3,120 $4,694 $814

$2,388 Property insurance 5,848 3,277 7,350 4,779 Injuries and damages (Note 2) 16,868 1,711 16,394 1,237 Environmental $$,404 S25,836 $9,682 $24,558 Total Notes:

respective provisions were created. In the case of the (1) Deductions from provisions represent losses or expenses for which the of amounts previously written off.

provision for doubtful accounts, such deductions are reduced by recoveries expenses as appropriate and for the estimated cost of settling claims (2) Injuries and damages provision is provided to absorb all current for injuries and damages.

S-9

ENTERGY MISSISSIPPI, INC.

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS Years Ended December 31, 1996, 1995, and 1994 (In Thousands)

Cobuna A Column B Colunm C Cohmm D Column E Other Additions Changes Deduction Balance at from Balance Beginning Charged to Provisions at End Description of Period Income (Note 1) of Period Year ended December 31, 1996 Accumulated Provisions Deducted from Assets Doubtful Accotmts $1,585 $2,996 $3,207 $1,374 Accumulated Provisions Not Deducted firom Assets:

Property insurance $5,013 $6,846 $9,777 $2,082 Injuries and damages (Note 2) 2,565 928 588 2,905 Environmental 467 ° 330 104 693 Total $8.045 . $8.104 $10,469 $5,680 Year ended December 31, 1995 Accumulated Provisions Deducted from Assets Doubtful Accounts $2,070 $1,691 $2,176 $1,585 Accumulated Provisions Not Deducted from Assets:

Property insurance $3,779 $1,520 $286 $5,013 Injuries and damages (Note 2) 3,725 (1,154) 6 2,565 Environmental 684 735 952 467 Total $8,188 $1,101 $1,244 $8,045 Year ended December 31, 1994 Accumulated Provisions Deducted fiom Assets Doubtful Accounts $2,470 $1,897 $2,297 $2,070 Accumulated Provisions Not Deducted from Assets:

Property insurance $2,554 $1,520 $295 $3,779 Injuriks and damages (Note 2) 3,478 365 118 3,725 Environmental "500 300 116 684 Total $6,532 $2.185 $529 $8,188 Notes:

(1) Deductions from provisions represent losses or expenses for which the respective provisions were created. In the case of the provision for doubtful accounts, such deductions are reduced by recoveries of amounts previously written off.

(2) Injuries and damages provision is provided to absorb all current expenses as appropriate and for the estimated cost of settling claims for injuries and damages.

S-10

ENTERGY NEW ORLEANS, INC.

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS Years Ended December 31, 1996, 1995, and 1994 (In Thousands)

Column A Cohama B Column C Cohmm D Column E Other Additions Changes Deductions Balance at from Balance Beginning Charged to Provisions at End Description of Period Income (Note 1) of Period Year ended December 31, 1996 Accumulated Provisions Deducted from Assets

$468 $2,116 $1,888 $696 Doubtful Accounts Accumulated Provisions Not Deducted from Assets:

Property insurance $15,666 $15,666 1,993 1,464 1,393 Injuries and damages (Note 2) 864 38 89 72 55 Environmental $1,536 $17,114

$17,697 $953 Total Year ended December 31, 1995 Accumulated Provisions Deducted from Assets Doubtful Accounts $830 $2,733 $3,095 $468 Accumulated Provisions Not Deducted from Assets:

$15,911 - $245 $15,666 Propety insance 1,409 1,382 798 1,993 Injuries and damages (Note 2)

(3) 75 34 38 Environmental Total $17,317 $1,457 $1,077 $17,697 Year ended December 31, 1994 Accumulated Provisions Deducted firom Assets

$830 $1,678 $1,678 $830 Doubtfud Accounts Accumulated Provisions Not Deducted from Assets:

Property insurance $15,911 $15,911 Injuries and damages (Note 2) 2,111 494 1,196 1,409 40 25 68 (3)

Environmental Total $18,062 $519 S1264 $17,317 Notes:

(1) Deductions from provisions represent losses or expenses for which the respective provisions were created. In the case of the provision for doubtful accounts, such deductions are reduced by recoveries of amounts previously written off.

(2) Injuries and damages provision is provided to absorb all current expenses as appropriate and for the estimated cost of settling claims for injuries and damages.

S-11

EXHIBIT INDEX herewith. The The following exhibits indicated by an asterisk preceding the exhibit number are filed respectively, as the exhibits and in the file balance of the exhibits have heretofore been filed with the SEC, marked with a (+) are numbers indicated and are incorporated herein by reference. The exhibits herewith and required to management contracts or compensatory plans or arrangements required to be filed list of exhibits being filed be identified as such by Item 14 of Form 10-K. Reference is made to a duplicate S-T of the Item 102 of Regulation as a part of this Form 10-K, which list, prepared in accordance with Form 10-K.

SEC, immediately precedes the exhibits being physically filed with this (3) (i) Articles of Incorporation Entergy Corporation (A-1(a) to Rule (a) 1 - Certificate of Incorporation of Entergy Corporation dated December 31, 1993, 24 Certificate in 70-8059).

System Energy thereto (b) 1 - Amended and Restated Articles of Incorporation of System Energy and amendments through April 28, 1989 (A-1(a) to Form U-1 in 70-5399).

Entergy Arkansas thereto (c) 1 - Amended and Restated Articles of Incorporation of Entergy Arkansas and amendments in 1-10764).

through April 22, 1996 (3(a) to Form 10-Q for the quarter ended March 31, 1996 Entergy Gulf States thereto through (d) 1 - Restated Articles of Incorporation of Entergy Gulf States and amendments in 1-2703).

April 22, 1996 (3(b) to Form 10-Q for the quarter ended March 31, 1996 Entergy Louisiana April (e) 1 - Restated Articles of Incorporation of Entergy Louisiana and amendments thereto through 22, 1996 (3(c) to Form 10-Q for the quarter ended March 31, 1996 in 1-8474).

Entergy Mississippi thereto through

• (f) 1 - Restated Articles of Incorporation of Entergy Mississippi and amendments January 28, 1997 Entergy New Orleans amendments thereto (g) 1 - Restatement of Articles of Incorporation of Entergy New Orleans and 1996 in 0-5807).

through April 22, 1996 (3(e) to Form 10-Q for the quarter ended March 31, E-1

(3) (ii) By-Laws (a) - By-Laws of Entergy Corporation effective August 25, 1992, and as presently in effect (A-2(a) to Rule 24 Certificate in 70-8059).

(b) - By-Laws of System Energy effective May 4, 1989, and as presently in effect (A-2(a) in 70 5399).

(c) - By-Laws of Entergy Arkansas as amended effective May 5, 1994, and as presently in effect (3(d) to Form 10-Q for the quarter ended June 30, 1994).

(d) - By-Laws of Entergy Gulf States as amended effective May 5, 1994, and as presently in effect (A-12 in 70-8059).

(e) - By-Laws of Entergy Louisiana effective January 23, 1984, and as presently in effect (A-4 in 70-6962).

(f) - By-Laws of Entergy Mississippi effective April 5, 1995, and as presently in effect (3(iiXf) to Form 10-K for the year ended December 31, 1995 in 0-320).

(g) - By-Laws of Entergy New Orleans effective May 5, 1994, and as presently in effect (3(g) to Form 10-Q for the quarter ended June 30, 1994 in 0-5807).

(4) Instruments Defining Rights of Security Holders, Including Indentures Entergy Corporation (a) 1 - See (4)(b) through (4 )(g) below for instruments defining the rights of holders of long-term debt of System Energy, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi and Entergy New Orleans.

(a) 2 - Credit Agreement, dated as of October 3, 1989, between System Fuels and The Yasuda Trust and Banking Co., Ltd., New York Branch, as agent (B-l(c) to Rule 24 Certificate, dated October 6, 1989, in 70-7668).

(a) 3 - First Amendmentdated as of March l, 19 92, to Credit Agreement, dated as ofOctober 3, 1989, between System Fuels and The Yasuda Trust and Banking Co., Ltd., New York Branch, as agent (4(a)5 to Form 10-K for the year ended December 31, 1991 in 1-3517).

(a) 4 - Second Amendment, dated as of September 30, 1992, to Credit Agreement dated as of October 3, 1989, between System Fuels and The Yasuda Trust and Banking Co., Ltd., New York Branch, as agent (4(a)6 to Form 10-K for the year ended December 31, 1992 in 1-3517).

(a) 5 - Security Agreement, dated as of October 3, 1989, as amended, between System Fuels and The Yasuda Trust and Banking Co., Ltd., New York Branch, as agent (B-3(c) to Rule 24 Certificate, dated October 6, 1989, in 70-7668), as amended by First Amendment to Security Agreement, dated as of March 14, 1990 (A to Rule 24 Certificate, dated March 7, 1990, in 70-7668).

E-2

Trust (a) 6 - Consent and Agreement, dated as of October 3, 1989, among System Fuels, The Yasuda and Banking Co., Ltd., New York Branch, as agent, Entergy Arkansas, Entergy Louisiana, and System Energy (B-5(c) to Rule 24 Certificate, dated October 6, 1989, in 70-7668).

and (a) 7 - Guaranty of Entergy Corporation dated October 12, 1995 of Entergy Enterprises' payment performance under Guaranty of Entergy Enterprises dated October 12, 1995, of amounts on Letter of payable by EP Edegel, Inc. to reimburse Union Bank of Switzerland for drawings year ended Credit in amount of $10 million (filed as Exhibit C-1Q) to Form U5S for the December 31, 1995).

1995, by Entergy (a) 8 - Guaranty and Guaranty Agreement, each dated as of November 27, Corporation to Union Bank of Switzerland, as Agent, of payment and performance of the by EP Edegel, Guaranty and Guaranty Agreement, by Entergy Enterprises of amounts payable Inc. pursuant to Union Bank of Switzerland Credit Agreement, each as amended by First of Amendment, dated as of March 12, 1996 between Entergy Corporation and Union Bank December 31, 1995).

Switzerland (filed as Exhibit C-1(j) to Form U5S for the year ended of CitiPower (a) 9 - Share Sale Agreement (Revised) of December 12, 1995, relating to acquisition Limited, among State Electricity Commission of Victoria, the State of Victoria, Entergy (filed as Exhibit C Victoria LDC, Entergy Victoria Holding LDC and Entergy Corporation 1(o) to Form U5S for the year ended December 31, 1995 pursuant to Rule 104).

among CitiPower (a) 10- Multi-Option Syndicated Facility Agreement, dated as of January 5, 1996, of America Limited as Borrower, Commonwealth Bank of Australia as Facility Agent, Bank Trustee (filed as N.T. & S.A. as Arranger, and Commonwealth Bank of Australia as Security Exhibit C-i(p) to Form U5S for the year ended December 31, 1995).

(a) 11- Undertaking Agreement, dated as of March 7, 1996, of Entergy Corporation to Commonwealth up to maximum of Bank of Australia as Facility-Agent, of CitiPower Limited's obligations as Exhibit C-l(q) to

$7,367,000 under the Multi-Option Syndicated Facility Agreenent (filed Form USS for the year ended December 31, 1995).

Corporation, Entergy

• (a) 12- Credit Agreement, dated as of September 13, 1996, among Entergy of America NT &

Technology Holding Company, the Banks (The Bank of New York, Bank The First SA, The Bank of Nova Scotia, Banque Nationale de Paris (Houston Agency),

Agency, and National Bank of Chicago, The Fuji Bank Ltd., Societe Generale Southwest CIBC Inc.) and The Bank of New York, as Agent (the "Entergy-ETHC Credit Agreement").

Entergy-ETHC Credit

• (a) 13 - Amendment No. 1, dated as of October 22, 1996 to Credit Agreement Agreement.

3, 1996, by Entergy

• (a) 14- Guaranty and Acknowledgment Agreement, dated as of October in Corporation to The Bank of New York of certain promissory notes issued by ETHC connection with acquisition of 280 Equity Holdings, Ltd.

Agreement by

• (a) 15 - Amendment, dated as of November 21, 1996, to Guaranty and Acknowledgment by MTHC in Entergy Corporation to The Bank of New York of certain promissory notes issued connection with acquisition of 280 Equity Holdings, Ltd.

E-3

• (a) 16- Guaranty and Acknowledgment Agreement, dated as of November 21, 1996, by Entergy Corporation to The Bank of New York of certain promissory notes issued by ETHC in connection with acquisition of Sentry.

• (a) 17 - Amended and Restated Credit Agreement, dated as of December 12, 1996, among Entergy, the Banks (Bank of America National Trust & Savings Association, The Bank of New York, The Chase Manhattan Bank, Citibank, N.A., Union Bank of Switzerland, ABN Amro Bank N.V.,

The Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Mellon Bank, N.A., First National Bank of Commerce and Whitney National Bank) and Citibank, N.A., as Agent.

System Energy (b) I - Mortgage and Deed of Trust, dated as of June 15, 1977, as amended by twenty-one Supplemental Indentures (A-1 in 70-5890 (Mortgage); B and C to Rule 24 Certificate in 70-5890 (First); B to Rule 24 Certificate in 70-6259 (Second); 20(a)-5 to Form 10-Q for the quarter ended June 30, 1981, in 1-3517 (Third); A-l(e)-I to Rule 24 Certificate in 70-6985 (Fourth); B to Rule 24 Certificate in 70-7021 (Fifth); B to Rule 24 Certificate in 70-7021 (Sixth); A-3(b) to Rule 24 Certificate in 70-7026 (Seventh); A-3(b) to Rule 24 Certificate in 70-7158 (Eighth); B to Rule 24 Certificate in 70-7123 (Ninth); B-i to Rule 24 Certificate in 70-7272 (Tenth); B-2 to Rule 24 Certificate in 70-7272 (Eleventh); B-3 to Rule 24 Certificate in 70-7272 (Twelfth); B-I to Rule 24 Certificate in 70-7382 (Thirteenth); B-2 to Rule 24 Certificate in 70-7382 (Fourteenth); A-2(c) to Rule 24 Certificate in 70-7946 (Fifteenth);

A-2(c) to Rule 24 Certificate in 70-7946 (Sixteenth); A-2(d) to Rule 24 Certificate in 70-7946 (Seventeenth); A-2(e) to Rule 24 Certificate dated May 4, 1993 in 70-7946 (Eighteenth); A 2(g) to Rule 24 Certificate dated May 6, 1994, in 70-7946 (Nineteenth); A-2(aXl) to Rule 24 Certificate dated August 8, 1996 in File No. 70-8511 (Twentieth); and A-2(aX2) to Rule 24 Certificate dated August 8, 1996 in File No. 70-8511 (Twenty-first)).

(b) 2 - Facility Lease No. 1, dated as of December 1, 1988, between Meridian Trust Company and Stephen M. Carta (Steven Kaba, successor), as Owner Trustees, and System Energy (B-2(cXl) to Rule 24 Certificate dated January 9, 1989 in 70-7561), as supplemented by Lease Supplement No. I dated as of April 1, 1989 (B-22(b) (1) to Rule 24 Certificate dated April 21, 1989 in 70-7561) and Lease Supplement No. 2 dated as of January 1, 1994 (B-3(d) to Rule 24 Certificate dated January 31, 1994 in 70-8215).

(b) 3 -Facility Lease No. 2, dated as of December 1, 1988 between Meridian Trust Company and Stephen M. Carta (Steven Kaba, successor), as Owner Trustees, and System Energy (B-2(cX2) to Rule 24 Certificate dated January 9, 1989 in 70-7561), as supplemented by Lease Supplement No. 1 dated as of April 1, 1989 (B-22(b) (2) to Rule 24 Certificate dated April 21, 1989 in 70-7561) and Lease Supplement No. 2 dated as of January 1, 1994 (B-4(d)

Rule 24 Certificate dated January 31, 1994 in 70-8215).

(b) 4 - Indenture (for Unsecured Debt Securities), dated as of September 1, 1995, between System Energy Resources, Inc., and Chemical Bank (B-10(a) to Rule 24 Certificate in 70-8511).

Entergy Arkamas (c) 1 - Mortgage and Deed of Trust, dated as of October 1, 1944, as amended by fifty-three Supplemental Indentures (7(d) in 2-5463 (Mortgage); 7(b) in 2-7121 (First); 7(c) in 2-7605 (Second); 7(d) in 2-8100 (Third); 7(a)-4 in 2-8482 (Fourth); 7(a)-5 in 2-9149 (Fifth); 4(a)-6 in E-4

2-9789 (Sixth); 4(a)-7 in 2-10261 (Seventh); 4(a)-8 in 2-11043 (Eighth); 2(b)-9 in 2-11468 (Ninth); 2(b)-10 in 2-15767 (Tenth); D in 70-3952 (Eleventh); D in 70-4099 (Twelfth); 4(d) in 2-23185 (Thirteenth); 2(c) in 2-24414 (Fourteenth); 2(c) in 2-25913 (Fifteenth); 2(c) in 2-28869 (Sixteenth); 2(d) in 2-28869 (Seventeenth); 2(c) in 2-35107 (Eighteenth); 2(d) in 2-36646 (Nineteenth); 2(c) in 2-39253 (Twentieth); 2(c) in 2-41080 (Twenty-first); C-1 to Rule 24 Certificate in 70-5151 (Twenty-second); C-I to Rule 24 Certificate in 70-5257 (Twenty-third); C to Rule 24 Certificate in 70-5343 (Twenty-fourth); C-I to Rule 24 Certificate in 70-5404 (Twenty-fifth); C to Rule 24 Certificate in 70-5502 (Twenty-sixth); C-1 to Rule 24 Certificate in 70-5556 (Twenty-seventh); C-I to Rule 24 Certificate in 70-5693 (Twenty-eighth); C-i to Rule 24 Certificate in 70-6078 (Twenty-ninth); C-I to Rule 24 Certificate in 70-6174 (Thirtieth); C-1 to Rule 24 Certificate in 70-6246 (Thirty-first); C-i to Rule 24 Certificate in 70-6498 (Thirty-second); A-4b-2 to Rule 24 Certificate in 70-6326 (Thirty-third); C-i to Rule 24 Certificate in 70-6607 (Thirty-fourth); C-i to Rule 24 Certificate in 70-6650 (Thirty-fifth); C-1 to Rule 24 Certificate, dated December 1, 1982, in 70-6774 (Thirty-sixth); C-i to Rule 24 Certificate, dated February 17, 1983, in 70-6774 (Thirty-seventh); A-2(a) to Rule 24 Certificate, dated December 5, 1984, in 70-6858 (Thirty-eighth); A-3(a) to Rule 24 Certificate in 70-7127 (Thirty-ninth); A-7 to Rule 24 Certificate in 70-7068 (Fortieth); A-8(b) to Rule 24 Certificate dated July 6, 1989 in 70-7346 (Forty-first); A-8(c) to Rule 24 Certificate, dated February 1, 1990 in 70-7346 (Forty-second);

4 to Form 10-Q for the quarter ended September 30, 1990 in 1-10764 (Forty-third); A-2(a) to Rule 24 Certificate, dated November 30, 1990, in 70-7802 (Forty-fourth); A-2(b) to Rule 24 Certificate, dated January 24, 1991, in 70-7802 (Forty-fifth); 4(d)(2) in 33-54298 (Forty-sixth); 4(cX2) to Form 10-K for the year ended December 31, 1992 in 1-10764 (Forty seventh); 4(b) to Form 10-Q for the quarter ended June 30, 1993 in 1-10764 (Forty-eighth);

4(c) to Form I0-Q for the quarter ended June 30, 1993 in 1-10764 (Forty-ninth); 4(b) to Form 10-Q for the quarter ended September 30, 1993 in 1-10764 (Fiftieth); 4(c) to Form 10-Q for the quarter ended September 30, 1993 in 1-10764 (Fifty-first); 4(a) to Form 10-Q for the quarter ended June 30, 1994 (Fifty-second); and C-2 to Form U5S for the year ended December 31, 1995 (Fifty-third)).

(c) 2 - Indenture for Unsecured Subordinated Debt Securities relating to Trust Securities between Entergy Arkansas and Bank of New York (as Trustee), dated as of August 1, 1996 (filed as Exhibit A-1(a) to Rule 24 Certificate dated August 26, 1996 in File No. 70-8723).

(c) 3- Amended and Restated Trust Agreement of Entergy Arkansas Capital I, dated as of August 14, 1996 (filed as Exhibit A-3(a) to Rule 24 Certificate dated August 26, 1996 in File No. 70 8723).

(c) 4- Guarantee Agreement between Entergy Arkansas (as Guarantor) and The Bank of New York (as Trustee), dated as of August 14, 1996, with respect to Entergy Arkansas Capital I's obligations on its 8 1/2% Cumulative Quarterly Income Prefered Securities, Series A (filed as Exhibit A-4(a) to Rule 24 Certificate dated August 26, 1996 in File No. 70-8723).

Entergy Gulf States (d) 1 - Indenture of Mortgage, dated September 1, 1926, as amended by certain Supplemental Indentures (B-a-I-i in Registration No. 2-2449 (Mortgage); 7-A-9 in Registration No. 2-6893 (Seventh); B to Form 8-K dated September 1, 1959 (Eighteenth); B to Form 8-K dated February 1, 1966 (Twenty-second); B to Form 8-K dated March 1, 1967 (Twenty-third); C to Form 8-K dated March 1, 1968 (Twenty-fourth); B to Form 8-K dated November 1, 1968 E-5

(Twenty-fifth); B to Form 8-K dated April 1, 1969 (Twenty-sixth); 2-A-8 in Registration No.

2-66612 (Thirty-eighth); 4-2 to Form 10-K for the year ended December 31, 1984 in 1-2703 (Forty-eighth); 4-2 to Form 10-K fbr the year ended December 31, 1988 in 1-2703 (Fifty second); 4 to Form 10-K for the year ended December 31, 1991 in 1-2703 (Fifty-third); 4 to Form 8-K dated July 29, 1992 in 1-2703 (Fifth-fourth); 4 to Form 10-K dated December 31, 1992 in 1-2703 (Fifty-fifth); 4 to Form 10-Q for the quarter ended March 31, 1993 in 1-2703 (Fifty-sixth); and 4-2 to Amendment No. 9 to Registration No. 2-76551 (Fifty-seventh)).

(d) 2 - Indenture, dated March 21, 1939, accepting resignation of The Chase National Bank of the City of New York as trustee and appointing Central Hanover Bank and Trust Company as successor trustee (B-a-1-6 -in Registration No. 24076).

(d) 3 - Trust lndenture for 9.72% Debentures due July 1, 1998 (4 in Registration No. 33-40113).

(d) 4 - Indenture for Unsecured Subordinated Debt Securities relating to Trust Securities, dated as of January 15, 1997 (filed as Exhibit A-1I(a) to Rule 24 Certificate dated February 6, 1997 in File No. 70-8721).

(d) 5 - Amended and Restated Trust Agreement of Entergy Gulf States Capital I dated January 28, 1997 of Series A Preferred Securities (filed as Exhibit A-13(a) to Rule 24 Certificate dated February 6, 1997 in File No. 70.8721).

(d) 6- Guaratee Agreement between Entergy Gulf States, Inc. (as Guarantor) and The Bank of New York (as Trustee) dated as of January 28, 1997 with respect to Entergy Gulf States Capital I's obligation on its 8.75% Cumulative Quarterly Income Preferred Securities, Series A (filed as Exhibit A-14(a) to Rule 24 Certificate dated February 6, 1997 in File No. 70-8721).

Entergy Louisiana (e) 1 - Mortgage and Deed of Trust, dated as of April 1, 1944, as amended by fifty-one Supplemental Indentures (7(d) in 2-5317 (Mortgage); 7(b) in 2-7408 (First); 7(c) in 2-8636 (Second); 4(b)-3 in 2-10412 (Third); 4(b)-4 in 2-12264 (Fourth); 2(b)-5 in 2-12936 (Fifth); D in 70-3862 (Sixth); 2(b)-7 in 2-22340 (Seventh); 2(c) in 2-24429 (Eighth); 4(c)-9 in 2-25801 (Ninth);

4(c)-10 in 2-26911 (Tenth); 2(c) in 2-28123 (Eleventh); 2(c) in 2-34659 (Twelfth); C to Rule 24 Certificate in 70-4793 (Thirteenth); 2(b)-2 in 2-38378 (Fourteenth); 2(b)-2 in 2-39437 (Fifteenth); 2(b)-2 in 2-42523 (Sixteenth); C to Rule 24 Certificate in 70-5242 (Seventeenth);

C to Rule 24 Certificate in 70-5330 (Eighteenth); C-1 to Rule 24 Certificate in 70-5449 (Nineteenth); C-I to Rule 24 Certificate in 70-5550 (Twentieth); A-6(a) to Rule 24 Certificate in 70-5598 (Twenty-first); C-1 to Rule 24 Certificate in 70-5711 (Twenty-second); C-i to Rule 24 Certificate in 70-5919 (Twenty-third); C-i to. Rule 24 Certificate in 70-6102 (Twenty-fourth); C-1 to Rule 24 Certificate. in 70-6169 (Twenty-fifth); C-I to Rule 24 Cetificate in 70-6278 (Twenty-sixth); C-I to Rule24 Certificate in 70-6355 (Twenty-seventh); C-1 to Rule 24 Certificate in 70-6508 (Twenty-eighth); C-i to Rule 24 Certificate in 70-6556 (Twenty-ninth); C-1 to Rule 24 Certificate in 70-6635 (Thirtieth); C-1 to Rule 24 Certificate in 70-6834 (Thirty-first); C-1 to Rule 24 Certificate in 70-6886 (Thirty-second); C-I to Rule 24 Certificate in 70-6993 (Thirty-third); C-2 to Rule 24 Certificate in 70-6993 (Thirty-fourth); C-3 to Rule 24 Certificate in 70-6993 (Thirty-fifth);

A-2(a) to Rule 24 Certificate in 70-7166 (Thirty-sixth); A-2(a) in 70-7226 (Thirty-seventh);

C-i to Rule 24 Certificate in 70-7270 (Thirty-eighth); 4(a) to Quarterly Report on Form 10-Q for the quarter ended June 30, 1988, in 1-8474 (Thirty-ninth); A-2(b) to Rule 24 Certificate in E-6

A-3(a) to Rule 24 70-7553 (Fortieth); A-2(d) to Rule 24 Certificate in 70-7553 (Forty-first);

(Forty-third);

Certificate in 70-7822 (Forty-second); A-3(b) to Rule 24 Certificate in 70-7822 A-3(c) to Rule 24 Certificate A-2(b) to Rule 24 Certificate in File No. 70-7822 (Forty-fourth);

in 70-7822 (Forty in 70-7822 (Forty-fifth); A-2(c) to Rule 24 Certificate dated April 7, 1993 A-3(e) to sixth); A-3(d) to Rule 24 Certificate dated June 4, 1993 in 70-7822 (Forth-seventh);

A-3(f) to Rule 24 Rule 24 Certificate dated December 21, 1993 in 70-7822 (Forty-eighth);

to Rule 24 Certificate dated Certificate dated August 1, 1994 in 70-7822 (Forty-ninth); A-4(c)

September 28, 1994 in 70-7653 (Fiftieth) and A-2(a) to Rule 24 Certificate dated April 4, 1996 in File No. 70-8487 (Fifty-first)).

National Bank of (e) 2 - Facility Lease No. 1, dated as of September 1, 1989, between First No. 33-30660).

Commerce, as Owner Trustee, and Entergy Louisiana (4(c)-i in Registration National Bank of (e) 3 - Facility Lease No. 2, dated as of September 1, 1989, between First No. 33-30660).

Commerce, as Owner Trustee, and Entergy Louisiana (4(c)-2 in Registration National Bank of (e) 4 - Facility Lease No. 3, dated as of September 1, 1989, between First Registration No. 33-30660).

Commerce, as Owner Trustee, and Entergy Louisiana (4(c)-3 in dated as of (e) 5 - Indenture for Unsecured Subordinated Debt Securities relating to Trust Securities, dated July 25, 1996 in File No.

July 1, 1996 (filed as Exhibit A-14(a) to Rule 24 Certificate 70-8487).

I dated July 16, 1996 of (e) 6 - Amended and Restated Trust Agreement of Entergy Louisiana Capital Series A Preferred Securities (filed as Exhibit A-16(a) to Rule 24 Certificate dated July 25, 1996 in File No. 70-8487).

and The Bank of New (e) 7 - Guarantee Agreement between Entergy Louisiana, Inc. (as Guarantor)

Entergy Louisiana Capital I's York (as Trustee) dated as of July 16, 1996 with respect to Series A (filed as obligation on its 9% Cumulative Quarterly Income Preferred Securities, Exhibit A-19(a) to Rule 24 Certificate dated July 25, 1996 in File No. 70-8487).

Entergy Mississippi by twenty-five (f) 1 - Mortgage and Deed of Trust, dated as of September 1, 1944, as amended in 2-7051 (First); 7(c) in 2-7763 Supplemental Indentures (7(d) in 2-5437 (Mortgage); 7(b) 2-13942 (Fifth); A-II (Second); 7(d) in 2-8484 (Third); 4(b)-4 in 2-10059 (Fourth); 2(b)-5 in in 2-24234 (Eighth);

to FormU-1 in 70-4116 (Sixth); 2(b)-7 in 2-23084 (Seventh); 4(c)-9 A-12(a) to Form U-I 2(b)-9(a) in 2-25502 (Ninth); A- 11(a) to Form U-i in 70-4803 (Tenth);

A-14(a) to FormU-1 in in 704892 (Eleventh); A-13(a) to FormU-1 in 70-5165 (Twelfth);

A-16(a) to Form U-1 in 70-5286 (Thirteenth); A-15(a) to Form U-1 in 70-5371 (Fourteenth);

2(a)-19 in 2-54234 70-5417 (Fifteenth); A-17 to FormU-1 in 70-5484 (Sixteenth);

(Eighteenth); A-2(c) to Rule24 (Seventeenth); C-1 to Rule24 Certificate in 70-6619 70-6672 (Twentieth);

Certificate in 70-6672 (Nineteenth); A-2(d) to Rule 24 Certificate in to Rule 24 Certificate in C-i(a) to Rule 24 Certificate in 70-6816 (Twenty-first); C-i(a)

(Twenty-third); C-l(a) to 70-7020 (Twenty-second); C-l(b) to Rule 24 Certificate in 70-7020 24 Certificate in 70-7419 Rule 24 Certificate in 70-7230 (Twenty-fourth); and A-2(a) to Rule (Twenty-fifth)).

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(f) 2 - Mortgage and Deed of Trust, dated as of February 1, 1988, as amended by tenth Supplemental Indentures (A-2(a)-2 to Rule 24 Certificate in 70-7461 (Mortgage); A-2(b)-2 in 70-7461 (First); A-5(b) to Rule 24 Certificate in 70-7419 (Second); A-4(b) to Rule 24 Certificate in 70-7554 (Third); A-l(b)-1 to Rule 24 Certificate in 70-7737 (Fourth); A-2(b) to Rule 24 Certificate dated November 24, 1992 in 70-7914 (Fifth); A-2(e) to Rule 24 Certificate dated January 22, 1993 in 70-7914 (Sixth); A-2(g) to Form U-1 in 70-7914 (Seventh); A-2(i) to Rule 24 Certificate dated November 10, 1993 in 70-7914 (Eighth); A-2(j) to Rule 24 Certificate dated July 22, 1994 in 70-7914 (Ninth); and (A-20) to Rule 24 Certificate dated April 21, 1995 in File 70-7914 (Tenth)).

Entergy New Orleans (g) 1 - Mortgage and Deed of Trust, dated as of July 1, 1944, as amended by eleven Supplemental Indentures (B-3 in 2-5411 (Mortgage); 7(b) in 2-7674 (First); 4(a)-2 in 2-10126 (Second);

4(b) in 2-12136 (Third); 2(b)-4 in 2-17959 (Fourth); 2(b)-5 in 2-19807 (Fifth); D to Rule 24 Certificate in 70-4023 (Sixth); 2(c) in 2-24523 (Seventh); 4(c)-9 in 2-26031 (Eighth); 2(a)-3 in 2-50438 (Ninth); 2(a)-3 in 2-62575 (Tenth); and A-2(b) to Rule 24 Certificate in 70-7262 (Eleventh)).

(g) 2 - Mortgage and Deed of Trust, dated as of May 1, 1987, as amended by six Supplemental Indentures (A-2(c) to Rule 24 Certificate in 70-7350 (Mortgage); A-5(b) to Rule 24 Certificate in 70-7350 (First); A-4(b) to Rule 24 Certificate in 70-7448 (Second); 4(f)4 to Form 10-K for the year ended December 31, 1992 in 0-5807 (Third); 4(a) to Form 10-Q for the quarter ended September 30, 1993 in 0-5807 (Fourth); 4(a) to Form 8-K dated April 26, 1995 in File No. 0 5807 (Fifth); and 4(a) to Form 8-K dated March 22, 1996 in File No. 0-5 807 (Sixth)).

(10) Material Contracts Entergy Corporation (a) 1 - Agreement, dated April 23, 1982, among certain System companies, relating to System Planning and Development and Intra-System Transactions (10(a)l to Form 10-K for the year ended December.31, 1982, in 1-3517).

(a) 2 - Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a)-2 in 2-41080).

(a) 3 - Aiendment, dated February 10, 1971, to Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a)-4 in 2-41080).

(a) 4 - Amendment, dated May 12, 1988, to Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a)-4 in 2-41080).

(a) 5 - Middle South Utilities System Agency Coordination Agreement, dated December 11, 1970 (5(a)-3 in 2-41080).

(a) 6 - Service Agreement with Entergy Services, dated as of April 1, 1963 (5(a)-5 in 241080).

(a) 7 - Amendment, dated January 1, 1972, to Service Agreement with Entergy Services (5(a)-6 in 2-43175).

E-8

(a) 8 - Amendment, dated April 27, 1984, to Service Agreement with Entergy Services (10(a)-7 to Form 10-K for the year ended December 31, 1984, in 1-3517).

(a) 9 - Amendment, dated August 1, 1988, to Service Agreement with Entergy Services (10(a)-8 to Form 10-K for the year ended December 31, 1988, in 1-3517).

(a) 10- Amwenment, dated January 1, 1991, to Service Agreement with Entergy Services (10(a)-9 to Form 10-K for the year ended December 31, 1990, in 1-3517).

(a) 11- Amendment, dated January 1, 1992, to Service Agreement with Entergy Services (10(a)-lI for the year ended December 31, 1994 in 1-3517).

(a) 12 - Availability Agreement, dated June 21, 1974, among System Energy and certain other System companies (B to Rule 24 Certificate, dated June 24, 1974, in 70-5399).

(a) 13- First Amendment to Availability Agreement, dated as of June 30, 1977 (B to Rule 24 Certificate, dated June 24, 1977, in 70-5399).

(a) 14- Second Amendment to Availability Agreement, dated as of June 15, 1981 (E to Rule 24 Certificate, dated July 1, 1981, in 70-6592).

(a) 15 - Third Amendment to Availability Agreement, dated as of June 28, 1984 (B-13(a) to Rule 24 Certificate, dated July 6, 1984, in 70-6985).

(a) 16- Fourth Amendment to Availability Agreement, dated as of June 1, 1989 (A to Rule 24 Certificate, dated June 8, 1989, in 70-5399).

(a) 17 - Ffteenth Assignment of Availability Agreement, Consent and Agreement, dated as of May 1, 1986, with Deposit Guaranty National Bank, United States Trust Company of New York and Malcolm J. Hood, as Trustees (B-3(b) to Rule 24 Certificate, dated June 5, 1986, in 70-7158).

(a) 18- Eighteenth Assignment of Availability Agreement, Consent and .Agreement, dated as of September 1, 1986, with United States Trust Company of New York and Gerard F. Ganey, as Trustees (C-2 to Rule 24 Certificate, dated October 1, 1986, in 70-7272).

(a) 19- Nineteenth Assignment of Availability Agreement, Consent and Agreement, dated as of September 1, 1986, with United States Trust Company of New York and Gerard F. Ganey, as Trustees (C-3 to Rule 24 Certificate, dated October 1, 1986, in 70-7272).

(a) 20- Twenty-sixth Assignment of Availability Agreement, Consent and Agreement, dated as of October 1, 1992, with United States Trust Company of New York and Gerard F. Ganey, as Trustees (B-2(c) to Rule 24 Certificate, dated November 2, 1992, in 70-7946).

(a) 21 - Twenty-seventh Assignment of Availability Agreement, Consent and Agreement, dated as of April 1, 1993, with United States Trust Company of New York and Gerard F. Ganey as Trustees (B-2(d) to Rule 24 Certificate dated May 4, 1993 in 70-7946).

E-9

(a) 22- Twenty-eighth Assignment of Availability Agreement, Consent and Agreement, dated as of December 17, 1993, with Chemical Bank, as Agent (B-2(a) to Rule 24 Certificate dated December 22, 1993 in 70-7561).

(a) 23- Twenty-ninth Assignment of Availability Agreement, Consent and Agreement, dated as of April 1, 1994, with United States Trust Company of New York and Gerard F. Ganey as Trustees (B-2(f) to Rule 24 Certificate dated May 6, 1994, in 70-7946).

(a) 24- Thirtieth Assignment of Availability Agreement, Consent and Agreement, dated as of August 1, 1996, among System Energy, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi and Entergy New Orleans, and United States Trust Company of New York and Gerard F. Ganey, as Trustees (filed as Exhibit B-2(a) to Rule 24 Certificate dated August 8, 1996 in File No. 70-8511).

(a) 25- Thirty-first Assignment of Availability Agreement, Consent and Agreement, dated as of August 1, 1996, among System Energy, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans, and United States Trust Company of New York and Gerard F. Ganey, as Trustees (filed as Exhibit B-2(b) to Rule 24 Certificate dated August 8, 1996 in File No. 70-8511).

(a) 26- Thirty-second Assignment of Availability Agreement, Consent and Agreement, dated as of December 27, 1996, among System Energy, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans, and The Chase Manhattan Bank (filed as Exhibit B-2(a) to Rule 24 Certificate dated January 13, 1997 in File No. 70-7561).

(a) 27- Capital Funds Agreement, dated June 21, 1974, between Entergy Corporation and System Energy (C to Rule 24 Certificate, dated June 24, 1974, in 70-5399).

(a) 28- First Amedment to Capital Funds Agreement, dated as of June 1, 1989 (B to Rule 24 Certificate,, dated June 8, 1989, in 70-5399).

(a) 29- Fifteenth Supplementary Capital Funds Agreement and Assignment, dated as of May 1, 1986, with Deposit Guaranty National Bank, United States Trust Company of New York and Malcolm J. Hood, as Trustees (B-4(b) to Rule 24 Certificate, dated June 5, 1986, in 70-7158).

(a) 30- Eighteenth Supplementary Capital Funds Agreement and Assignment, dated as of September 1, 1986, with United States Trust Company of New York and Gerard F. Ganey, as Trustees (D-2 to Rule 24 Certificate, dated October 1, 1986, in 70-7272).

(a) 31- Nineteenth Supplementary Capital Funds Agreement and Assignment, dated as of September 1, 1986, with United States Trust Company of New York and Gerard F. Ganey, as Trustees (D-3 to Rule 24 Certificate, dated October 1, 1986, in 70-7272).

(a) 32- Twenty-sixth Supplementary Capital Funds Agreement and Assignment, dated as of October 1, 1992, with United States Trust Company of New York and Gerard F. Ganey, as Trustees (B-3(c) to Rule 24 Certificate dated November 2, 1992 in 70-7946).

(a) 33 - Twenty-seventh Supplementary Capital Funds Agreement and Assignment, dated as of April 1, 1993, with United States Trust Company of New York and Gerard F. Ganey, as Trustees (B 3(d) to Rule 24 Certificate dated May 4, 1993 in 70-7946).

E-10

(a) 34- Twenty-eighth Supplementary Capital Funds Agreement and Assignment, dated as of December 17, 1993, with Chemical Bank, as Agent (B-3(a) to Rule 24 Certificate dated December 22, 1993 in 70-7561).

(a) 35 - Twenty-ninth Supplementary Capital Funds Agreement and Assignment, dated as of April 1, 1994, with United States Trust Company of New York and Gerard F. Ganey, as Trustees (B 3(f) to Rule 24 Certificate dated May 6, 1994, in 70-7946).

(a) 36- Thirtieth Supplementary Capital Funds Agreement and Assignment, dated as of August 1, 1996, among Entergy Corporation, System Energy and United States Trust Company of New York and Gerard F. Ganey, as Trustees (filed as Exhibit B-3(a) to Rule 24 Certificate dated August 8, 1996 in File No. 70-85 11).

(a) 37- Thirty-first Supplementary Capital Funds Agreement and Assignment, dated as of August 1, New 1996, among Entergy Corporation, System Energy and United States Trust Company of York and Gerard F. Ganey, as Trustees (filed as Exhibit B-3(b) to Rule 24 Certificate dated August 8, 1996 in File No. 70-8511).

(a) 38- Thirty-second Supplementary Capital Funds Agreement and Assignment, dated as of December 27, 1996, among Entergy Corporation, System Energy and The Chase Manhattan Bank (filed as Exhibit B-l(a) to Rule 24 Certificate dated January 13, 1997 in File No.

70-7561).

as of (a) 39- First Amendment to Supplementary Capital Funds Agreements and Assignments, dated June 1, 1989, by and between Entergy Corporation, System Energy, Deposit Guaranty National Bank, United States Trust Company of New York and Gerard F. Ganey (C to Rule 24 Certificate, dated June 8, 1989, in 70-7026).

dated as of (a) 40- First Amendment to Supplementary Capital Funds Agreements and Assignpments, Energy, United States Trust June 1, 1989, by and between Entergy Corporation, System Company of New York and Gerard F. Ganey (C to Rule 24 Certificate, dated June 8, 1989, in 70-7123).

(a) 41- First Amendment to Supplementary Capital.Funds Agreement and Assignment, dated as of Chemical Bank (C to June 1, 1989, by and between Entergy Corporation, System Energy and Rule 24 Certificate, dated June 8, 1989, in 70-7561).

10-K for

+(a) 42- Agreement between Entergy Corporation and Edwin Lupberger (10(a)-42 to Form the year ended December 31, 1985, in 1-3517).

other (a) 43 - Reallocation Agreement, dated as of July 28, 1981, among System Energy and certain System companies (B-l(a).in 70-6624).

(a) 44- Joint Construction, Acquisition and Ownership Agreement, dated as of May 1, 1980, between System Energy and SMEPA (B-1(a) in 70-6337), as amended by Amendment No. 1, dated as (1 to of May 1, 1980 (B-l(c) in 70-6337) and Amendment No. 2, dated as of October 31, 1980 Rule 24 Certificate, dated October 30, 1981, in 70-6337).

E-I1

(a) 45 - Operating Agreement dated as of May 1, 1980, between System Energy and SMEPA (B(2)(a) in 70-6337).

(a) 46 - Assignment, Assumption and Further Agreement No. 1, dated as of December 1, 1988, among System Energy, Meridian Trust Company and Stephen M. Carta, and SMEPA (B-7(c)(1) to Rule 24 Certificate, dated January 9, 1989, in 70-7561).

(a) 47 - Assignment, Assumption and Further Agreement No. 2, dated as of December 1, 1988, among System Energy, Meridian Trust Company and Stephen M. Carta, and SMEPA (B-7(c)(2) to Rule 24 Certificate, dated January 9, 1989, in 70-7561).

(a) 48 - Substitute Power Agreement, dated as of May 1, 1980, among Entergy Mississippi, System Energy and SMEPA (B(3Xa) in 70-6337).

(a) 49 - Grand Gulf Unit No. 2 Supplementary Agreement, dated as of February 7, 1986, between System Energy and SMEPA (10(aaa) in 33-4033).

(a) 50 - Compromise and Settlement Agreement, dated June 4, 1982, between Texaco, Inc. and Entergy Louisiana (28(a) to Form 8-K, dated June 4, 1982, in 1-3517).

+(a) 51 - Post-Retirement Plan (10(a)37 to Form 10-K for the year ended December 31, 1983, in 1-3517).

(a) 52 - Unit Power Sales Agreement, dated as of June 10, 1982, between System Energy and Entergy Arkansas, Entergy Louisiana, Entergy Mississippi and Entergy New Orleans (10(a)-39 to Form 10-K for the year ended December 31, 1982, in 1-3517).

(a) 53 - First Amendment to Unit Power Sales Agreement, dated as of June 28, 1984, between System Energy and Entergy Arkansas, Entergy Louisiana, Entergy Mississippi and Entergy New Orleans (19 to Form 10-Q for the quarter ended September 30, 1984, in 1-3517).

(a) 54 - Revised Unit Power Sales Agreement (10(ss) in 33-4033).

(a) 55- Middle South Utilities Inc. and Subsidiary Companies Intercompany Income Tax Allocation Agreement, dated April 28, 1988 (Exhibit D-1 to Form U5S for the year ended December 31, 1987).

(a) 56- First Amendment, dated January 1, 1990, to the Middle South Utilities Inc. and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-2 to Form U5S for the year ended December 31, 1989).

(a) 57- Second Amendment dated January 1, 1992, to the Entergy Corporation and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-3 to Form U5S for the year ended December 31, 1992).

(a) 58- Third Amendment dated January 1, 1994 to Entergy Corporation and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-3(a) to Form U5S for the year ended December 31, 1993).

E-12

dated as of (a) 59- Guaranty Agreement between Entergy Corporation and Entergy Arkansas,in 70-7757).

Certificate, dated September 27, 1990, September 20, 1990 (B-l(a) to Rule 24 Entergy Louisiana, dated as of (a) 60- Guarantee Agreement between Entergy Corporation and 27, 1990, in 70-7757).

September 20, 1990 (B-2(a) to Rule 24 Certificate, dated September as of (a) 61 - Guarantee Agreement between Entergy Corporation and System Energy,in dated 70- 7757).

27, 1990, September 20, 1990 (B-3(a) to Rule 24 Certificate, dated September (a) 62- Loan Agreement between Entergy Operations and Entergy Corporation, dated as of 1990, in 70-7679).

September 20, 1990 (B-12(b) to Rule 24 Certificate, dated June 15, dated as of August 28, (a) 63- Loan Agreement between Entergy Power and Entergy Corporation, 1990 (A-4(b) to Rule 24 Certificate, dated September 6, 1990, in 70-7684).

Systems and Service, Inc., dated (a) 64 - Loan Agreement between Entergy Corporation and Entergy as of December 29, 1992 (A-4(b) to Rule 24 Certificate in 70-7947).

and Subsidiaries (10(a) 52 to

+(a) 65 - Executive Financial Counseling Program of Entergy Corporation Form 10-K for the year ended December 31, 1989, in 1-3517).

for the year ended

+(a) 66- Entergy Corporation Annual Incentive Plan (10(a) 54 to Form 10-K December 31, 1989, in 1-3517).

(A-4(a) to Rule 24

+(a) 67- Equity Ownership Plan of Entergy Corporation and Subsidiaries Certificate, dated May 24, 1991, in 70-7831).

for the year ended December 31,

+(a) 68 - Retired Outside Director Benefit Plan (10(a)63 to Form 10-K 1991, in 1-3517).

(10(a) 67 to Form 10-K for the

+(a) 69 - Agreement between Entergy Corporation and Jerry D. Jackson.

year ended December 31, 1992 in 1-3517).

of Entergy Corporation, and Gerald

+(a) 70- Agreement between Entergy Services, Inc., a subsidiary 31, 1992 in 1-3517).

D. Mclnvale (10(a) 68 to Form 10-K for the year ended December year ended December 31, 1992

+(a) 71 - Supplemental Retirement Plan (10(a) 69 to Form 10-K for the in 1-3517).

and Subsidiaries (10(a)53 to

+(a) 72- Defined Contribution Restoration Plan of Entergy Corporation Form 10-K for the year ended December 31, 1989 in 1-3517).

Corporation and Subsidiaries

+(a) 73- Amendment No. 1 to the Equity Ownership Plan of Entergy (10(a) 71 to Form 10-K for the year ended December 31, 1992 in 1-3517).

(10(a) 72 to Form 10-K for

+(a) 74 - Executive Disability Plan of Entergy Corporation and Subsidiaries the year ended December 31, 1992 in 1-3517).

(10(a) 73 to Form 10-K for

+(a) 75 - Executive Medical Plan of Entergy Corporation and Subsidiaries the year ended December 31, 1992 in 1-3517).

E-13

+(a) 76 - Stock Plan for Outside Directors of Entergy Corporation and Subsidiaries, as amended (10(a) 74 to Form 10-K for the year ended December 31, 1992 in 1-35 17).

+(a) 77- Summary Description of Private Ownership Vehicle Plan of Entergy Corporation and Subsidiaries (10(a) 75 to Form 10-K for the year ended December 31, 1992 in 1-3517).

(a) 78 - Agreement and Plan of Reorganization Between Entergy Corporation and Gulf States Utilities Company, dated June 5, 1992 (1 to Current Report on Form 8-K dated June 5, 1992 in 1-3517).

+(a) 79 - Anmndment to Defined Contribution Restoration Plan of Entergy Corporation and Subsidiaries (10(a)81 to Form 10-K for the year ended December 31, 1993 in 1-11299).

+(a) 80 - System Executive Retirement Plan (10(a) 82 to Form 10-K for the year ended December 31, 1993 in 1-11299).

System Energy (b) 1 through (b) 15 - See 10(a)-12 through 10(a)-26 above.

(b) 16 through (b) 30- See 10(a)-27 through 10(a)-41 above.

(b) 31 - Reallocation Agreement, dated as of July 28, 1981, among System Energy and certain other System companies (B-1(a) in 70-6624).

(b) 32- Joint Construction, Acquisition and Ownership Agreement, dated as of May 1, 1980, between System Energy and SMEPA (B-1(a) in 70-6337), as amended by Amendment No. 1, dated as of May 1, 1980 (B-l(c) in 70-6337) and Amendment No. 2, dated as of October 31, 1980 (1 to Rule 24 Certificate, dated October 30, 1981, in 70-6337).

(b) 33- Operating Agreement, dated as of May 1, 1980, between System Energy and SMEPA (B(2Xa) in 70-6337).

(b) 34- Installment Sale Agreement, dated as of December 1, 1983 between System Energy and Claiborne County, Mississippi (B-1 to First Rule 24 Certificate in 70-6913).

(b) 35 - Installment Sale Agreement, dated as of June 1, 1984, between System Energy and Claiborne County, Mississippi (B-2 to Second Rule 24 Certificate in 70-6913).

(b) 36- Installment Sale Agreement, dated as of December 1, 1984, between System Energy and Claiborne County, Mississippi (B-i to First Rule 24 Certificate in 70-7026).

(b) 37 - Installment Sale Agreement, dated as of May 1, 1986, between System Energy and Claiborne County, Mississippi (B-l(b) to Rule 24 Certificate in 70-7158).

(b) 38- Amended and Restated Installment Sale Agreement, dated as of May 1, 1995, between System Energy and Claiborne County, Mississippi (B-6(a) to Rule 24 Certificate in 70-8511).

E-14

15, 1996, between (b) 39 - Amended and Restated Installment Sale Agreement, dated as of February Exhibit B-6(a) to Rule 24 System Energy and Claiborne County, Mississippi (filed as Certificate dated March 4, 1996 in File No. 70-8511).

Trust Company and (b) 40- Facility Lease No. 1, dated as of December 1, 1988, between Meridian and System Energy Stephen M. Carta (Stephen J. Kaba, successor), as Owner Trustees, as supplemented by (B-2(cXl) to Rule 24 Certificate dated January 9, 1989 in 70-7561),

24 Certificate dated Lease Supplement No. I dated as of April 1, 1989 (B-22(b) (1) to Rule of January 1, 1994 (B-3(d)

April 21, 1989 in 70-7561) and Lease Supplement No. 2 dated as to Rule 24 Certificate dated January 31, 1994 in 70-8215).

Trust Company and (b) 41 - Facility Lease No. 2, dated as of December 1, 1988 between Meridian and System Energy Stephen M. Carta (Stephen J. Kaba, successor), as Owner Trustees, in 70-7561), as supplemented by (B-2(cX2) to Rule 24 Certificate dated January 9, 1989 24 Certificate dated Lease Supplement No. 1 dated as of April 1, 1989 (B-22(b) (2) to Rule as of January 1, 1994 (B-4(d)

April 21, 1989 in 70-7561) 4ad Lease Supplement No. 2 dated Rule 24 Certificate dated January 31, 1994 in 70-8215).

1, 1988, among (b) 42- Assignment, Assumption and Further Agreement No. 1, dated as of December and SMEPA (B-7(cXI) to System Energy, Meridian Trust Company and Stephen M. Carta, Rule 24 Certificate, dated January 9, 1989, in 70-7561).

December 1, 1988, among (b) 43- Assignment, Assumption and Further Agreement No. 2, dated as of and SMEPA (B-7(c)(2) to System Energy, Meridian Trust Company and Stephen M. Carta, Rule 24 Certificate, dated January 9, 1989, in 70-756 1).

System Energy, GGIB (b) 44- Collateral Trust Indenture, dated as of January 1, 1994, among to Rule 24 Certificate Funding Corporation and Bankers Trust Company, as Trustee (A-3(e)

Indenture No. 1 dated dated January 31, 1994, in 70-8215), as supplemented by Supplemental 1994; 70-8215).

in January 1, 1994, (A-3(f) to Rule 24 Certificate dated January 31, Mississippi, System (b) 45 - Substitute Power Agreement, dated as of May 1, 1980, among Entergy Energy and SMEPA (B(3Xa) in 70-6337).

February 7, 1986, between (b) 46- Grand Gulf Unit No. 2 Supplementary Agreement, dated as of System Energy and SMEPA (10(aaa) in 33-4033).

Energy and Entergy (b) 47 - Unit Power Sales Agreement, dated as of June 10, 1982, between System New Orleans (10(a)-39 to Arkansas, Entergy Louisiana, Entergy Mississippi and Entergy Form 10-K for the year ended December 31, 1982, in 1-3517).

of June 28, 1984, between (b) 48 - First Amendment to the Unit Power Sales Agreement, dated as Entergy Mississippi and Entergy System Energy and Entergy Arkansas, Entergy Louisiana, 30, 1984, in 1-3517).

New Orleans (19 to Form 10-Q for the quarter ended September (b) 49 - Revised Unit Power Sales Agreement (10(ss) in 33-4033).

Funding Company #3, Inc. and (b) 50 - Fuel Lease, dated as of February 24, 1989, between River Fuel 1989, in 70-7604).

System Energy (B-1(b) to Rule 24 Certificate, dated March 3, E-15

(b) 51 - System Energy's Consent, dated January 31, 1995, pursuant to Fuel Lease, dated as of February 24, 1989, between River Fuel Funding Company #3, Inc. and System Energy (B-1(c) to Rule 24 Certificate, dated February 13, 1995 in 70-7604).

(b) 52 - Sales Agreement, dated as of June 21, 1974, between System Energy and Entergy Mississippi (D to Rule 24 Certificate, dated June 26, 1974, in 70-5399).

(b) 53- Service Agreement, dated as of June 21, 1974, between System Energy and Entergy Mississippi (E to Rule 24 Certificate, dated June 26, 1974, in 70-5399).

(b) 54 - Partial Termination Agreement, dated as of December 1, 1986, between System Energy and Entergy Mississippi (A-2 to Rule 24 Certificate, dated January 8, 1987, in 70-5399).

(b) 55- Middle South Utilities, Inc. and Subsidiary Companies Intercompany Income Tax Allocation Agreement, dated April 28, 1988 (D-1 to Form U5S for the year ended December 31, 1987).

(b) 56- First Amendment, dated January 1, 1990 to the Middle South Utilities Inc. and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-2 to Form U5S for the year ended December 31, 1989).

(b) 57- Second Amendment dated January 1, 1992, to the Entergy Corporation and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-3 to Form USS for the year ended December 31, 1992).

(b) 58- Third Amendment dated January 1, 1994 to Entergy Corporation and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-3(a) to Form U5S for the year ended December 31, 1993).

(b) 59 - Service Agreement with Entergy Services, dated as of July 16, 1974, as amended (10(b)-43 to Form 10-K for the year ended December 31, 1988, in 1-9067).

(b) 60- Amendment, dated January 1, 1991, to Service Agreement with Entergy Services (10(b)-45 to Form 10-K for the year ended December 31, 1990, in 1-9067).

(b) 61- Amendment, dated January 1, 1992, to Service Agreement with Entergy Services (10(a) -11 to Form 10-K for the year ended December 31, 1994 in 1-3517).

(b) 62- Operating Agreement between Entergy Operations and System Energy, dated as of June 6, 1990 (B-3(b) to Rule 24 Certificate, dated June 15, 1990, in 70-7679).

(b) 63- Guarantee Agreement between Entergy Corporation and System Energy, dated as of September 20, 1990 (B-3(a) to Rule 24 Certificate, dated September 27, 1990, in 70-7757).

+(b) 64- Agreement between System Energy and Donald C. Hintz (10(b)47 to Form 10-K for the year ended December 31, 1991, in 1-9067).

+(b) 65- Agreement between Entergy Corporation and Edwin Lupberger (10(a)-42 to Form 10-K for the year ended December 31, 1985 in 1-3517).

E-16

to Form 10o-K for the

+(b) 66 - Agreement between Entergy Services and Gerald D. McInvale (10(a)-69 year ended Deember 31, 1992 in 1-3517).

1988 as amended (b) 67- Amended and Restated Reimbursement Agreement, dated as of December 1, and restated as of December 27, 1996, among System Energy Resources, Inc., The Bank of by Tokyo-Mitsubishi, Ltd., as Funding Bank and The Chase Manhattan Bank (as successor as merger with Chemical Bank), as administrating bank, Union Bank of California, N.A.,

Banks (B-3(a) to Rule 24 documentation agent, and the Banks named therein, as Participating Certificate dated January 13, 1997 in 70-7561).

Entergy Arkansas (c) 1 - Agreement, dated April 23, 1982, among Entergy Arkansas and certain other System Transactions companies, relating to System Planning and Development and Intra-System (10(a) I to Form 10-K for the year eaded December 31, 1982, in 1-3517).

11, 1970 (5(a)2 in (c) 2 - Middle South Utilities System Agency Agreeent, dated December 2-41080).

Agency Agreement, (c) 3 - Amendment, dated February 10, 1971, to Middle South Utilities System dated December 11, 1970 (5(a)-4 in 2-41080).

Agreement, dated (c) 4 - Amendment, dated May 12, 1988, to Middle South Utilities System Agency December 11, 1970 (5(a) 4 in 2-41080).

dated December 11, 1970 (c) 5 - Middle South Utilities System Agency Coordination Agreement, (5(a)-3 in 2-41080).

(5(a)-5 in 2-41080).

(c) 6 - Service Agreement with Entergy Services, dated as of April 1, 1963 Services (5(a)- 6 in (c) 7 - Amendment, dated January 1, 1972, to Service Agreement with Entergy 2-43175).

(10(a)- 7 to (c) 8 - Amendment, dated April 27, 1984, to Service Agreement, with Entergy Services Form 10-K for the year ended December 31, 1984, in 1-3517).

(0(c)- 8 to (c) 9 - A dated August 1, 1988, to Service Agree-ent with Entergy Services Form 10-K for the year ended December 31, 1988, in 1-10764).

Services (10(c)-9 to (c) 10- Amaendent, dated January 1, 1991, to Service Agreement with Entergy Form 10-K for the year ended December 31, 1990, in 1-10764).

(10(a)-ll to (c) 11 - Amendment, dated January 1, 1992, to Service Agreement with Entergy Services Form 10-K for the year ended December 31, 1994 in 1-3517).

(c) 12 through (c) 26- See 10(a)-12 through 10(a)-26 above.

the United States of (c) 27- Agreement, dated August 20, 1954, between Entergy Arkansas and America (SPA)(13(h) in 2-11467).

E-17

(c) 28 - Amendment, dated April 19, 1955, to the United States of America (SPA) Contract, dated August 20, 1954 (5(d)-2 in 2-41080).

(c) 29-- Amendment, dated January 3, 1964, to the United States of America (SPA) Contract, dated August 20, 1954 (5(d)-3 in 2-41080).

(c) 30 - Amendment, dated September 5, 1968, to the United States of America (SPA) Contract, dated August 20, 1954 (5(d)-4 in 2-41080).

(c) 31- Amendment, dated November 19, 1970, to the United States of America (SPA) Contract, dated August 20, 1954 (5(d)-5 in 2-41080).

(c) 32- Amendment, dated July 18, 1961, to the United States of America (SPA) Contract, dated August 20, 1954 (5(d)-6 in 2-41080).

(c) 33- Amendment, dated December 27,. 1961, to the United States of America (SPA) Contract, dated August 20, 1954 (5(d)-7 in 2-41080).

(c) 34- Anmdment, dated January 25, 1968, to the United States of America (SPA) Contract, dated August 20, 1954 (5(d)-8 in 2-41080).

(c) 35- Amendment, dated October 14, 1971, to the United States of America (SPA) Contract, dated August 20, 1954 (5(d)-9 in 2-43175).

(c) 36- Amendment, dated January 10, 1977, to the United States of America (SPA) Contract, dated August 20, 1954 (5(d)-10 in 2-60233).

(c) 37- Agreement, dated May 14, 1971, between Entergy Arkansas and the United States of America (SPA) (5(e) in 2-41080).

(c) 38- Amendment, dated January 10, 1977, to the United States of America (SPA) Contract, dated May 14, 1971 (5(e)-I in 2-60233).

(c) 39- Contract, dated May 28, 1943, Amendment to Contract, dated July 21, 1949, and Supplement to Amendment to Contract, dated December 30, 1949, between Entergy Arkansas and McKamie Gas Cleaning Company; Agreements, dated as of September 30, 1965, between Entergy Arkansas and former stockholders of McKamie Gas Cleaning Company; and Letter Agreement, dated June 22, 1966, by Humble Oil & Refining Company accepted by Entergy Arkansas on June 24, 1966 (5(k)-7 in 2-41080).

(c) 40- Agreement, dated April 3, 1972, between Entergy Services and Gulf United Nuclear Fuels Corporation (50)-3 in 2-46152).

(c) 41- Fuel Lease, dated as of December 22, 1988, between River Fuel Trust #1 and Entergy Arkansas (B-1(b) to Rule 24 Certificate in 70-7571).

(c) 42- White Bluff Operating Agreement, dated June 27, 1977, among Entergy Arkansas and Arkansas Electric Cooperative Corporation and City Water and Light Plant of the City of Jonesboro, Arkansas (B-2(a) to Rule 24 Certificate, dated June 30, 1977, in 70-6009).

E-18

Arkansas and (c) 43- White Bluff Ownership Agreement, dated June 27, 1977, among Entergy and Light Plant of the City of Arkansas Electric Cooperative Corporation and City Water in 70-6009).

Jonesboro, Arkansas (B-l(a) to Rule 24 Certificate, dated June 30, 1977, Arkansas (c) 44- Agreement, dated June 29, 1979, between Entergy Arkansas and City of Conway, (5(r)-3 in 2-66235).

City Water (c) 45 - Transmission Agreement, dated August 2, 1977, between Entergy Arkansas and and Light Plant of the City of Jonesboro, Arkansas (5(r)-3 in 2-60233).

as of June 27, (c) 46- Power Coordination, Interchange and Transmission Service Agreement, dated and Entergy Arkansas (5(r)-4 in 1977, between Arkansas Electric Cooperative Corporation 2-60233).

1979, among (c) 47- Independence Steam Electric Station Operating Agreement, dated July 31, and City Water and Light Entergy Arkansas and Arkansas Electric Cooperative Corporation in 2-66235).

Plant of the City of Jonesboro, Arkansas and City of Conway, Arkansas (5(r)-6 Station Operating (c) 48 - Amendment, dated December 4, 1984, to the Independence Steam Electric 31, 1984, in 1-10764).

Agreement (10(c) 51 to Form 10-K for the year ended December 1979, among (c) 49- Independence Steam Electric Station Ownership Agreement, dated July 31, Corporation and City Water and Light Entergy Arkansas and Arkansas Electric Cooperative Arkansas (5(r)-7 in 2-66235).

Plant of the City of Jonesboro, Arkansas and City of Conway, Station Ownership (c) 50 - Amendment, dated December 28, 1979, to the Independence Steam Electric Agreement (5(r)-7(a) in 2-66235).

Ownership (c) 51 - Amendment, dated December 4, 1984, to the Independence Steam Electric Station Agreement (10(c) 54 to Form 10-K for the year ended December 31, 1984, in 1-10764).

Entergy (c) 52- Owner's Agreement, dated November 28, 1984, among Entergy Arkansas, 10-K for the year Mississippi, other co-owners of the Independence Station (10(c) 55 to Form ended December 31, 1984, in 1-10764).

Entergy Arkansas, (c) 53- Consent, Agreement and Assumption, dated December 4, 1984, among States Trust Entergy Mississippi, other co-owners of the Independence Station and United Company of New York, as Trustee (10(c) 56 to Form 10-K for the year ended December 31, 1984, in 1-10764).

as of July 31, (c) 54- Power Coordination, Interchange and Transmission Service Agreement, dated 1979, between Entergy Arkansas and City Water and Light Plant of the City of Jonesboro, Arkansas (5(r)-8 in 2-66235).

as of June 29, 1979, (c) 55- Power Coordination, Interchange and Transmission Agreement, dated between City of Conway, Arkansas and Entergy Arkansas (5(r)-9 in 2-66235).

E. Ritchie ((10)(b)-90 (c) 56 - Agreement, dated June 21, 1979, between Entergy Arkansas and Reeves to Form 10-K for the year ended December 31, 1980, in 1-10764).

E-19

(c) 57- Reallocation Agreement, dated as of July 28, 1981, among System Energy and certain other System companies (B-l(a) in 70-6624).

+(c) 58- Post-Retirement Plan (10(b) 55 to Form 10-K for the year ended December 31, 1983, in 1-10764).

(c) 59 - Unit Power Sales Agreement, dated as of June 10, 1982, between System Energy and Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans (10(a) 39 to Form 10-K for the year ended December 31, 1982, in 1-3517).

(c) 60- First Amendment to Unit Power Sales Agreement, dated as of June 28, 1984, between System Energy, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans (19 to Form 10-Q for the quarter ended September 30, 1984, in 1-3517).

(c) 61- Revised Unit Power Sales Agreement (10(ss) in 33-4033).

(c) 62- Contract For Disposal of Spent Nuclear Fuel and/or High-Level Radioactive Waste, dated June 30, 1983, among the DOE, System Fuels and Entergy Arkansas (10(b)-57 to Form 10-K for the year ended December 31, 1983, in 1-10764).

(c) 63- Middle South Utilities, Inc. and Subsidiary Companies Intercompany Income Tax Allocation Agreement, dated April 28, 1988 (D-1 to Form U5S for the year ended December 31, 1987).

(c) 64- First Amendment, dated January 1, 1990, to the Middle South Utilities, Inc. and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-2 to Form U5S for the year ended December 31, 1989).

(c) 65- Second Amendment dated January 1, 1992, to the Entergy Corporation and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-3 to Form U5S for the year ended December 31, 1992).

(c) 66- Third Amendment dated January 1, 1994, to Entergy Corporation and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-3(a) to Form U5S for the year ended December 31, 1993).

(c) 67 - Assignment of Coal Supply Agreement, dated December 1, 1987, between System Fuels and Entergy Arkansas (B to Rule 24 letter filing, dated November 10, 1987, in 70-5964).

(c) 68 - Coal Supply Agreement, dated December 22, 1976, between System Fuels and Antelope Coal Company (B-I in 70-5964), as amended by First Amendment (A to Rule 24 Certificate in 70-5964); Second Amendment (A to Rule 24 letter filing, dated December 16, 1983, in 70-5964); and Third Amendment (A to Rule 24 letter filing, dated November 10, 1987 in 70-5964).

(c) 69 - Operating Agreement between Entergy Operations and Entergy Arkansas, dated as of June 6, 1990 (B-I(b) to Rule 24 Certificate, dated June 15, 1990, in 70-7679).

(c) 70- Guaranty Agreement between Entergy Corporation and Entergy Arkansas, dated as of September 20, 1990 (B-1(a) to Rule 24 Certificate, dated September 27, 1990, in 70-7757).

E-20

Entergy Arkansas and (c) 71- Agreement for Purchase and Sale of Independence Unit 2 between dated Entergy Power, dated as of August 28, 1990 (B-3(c) to Rule 24 Certificate, September 6, 1990, in 70-7684).

Entergy Arkansas and Entergy (c) 72 - Agreement for Purchase and Sale of Ritchie Unit 2 between 24 Certificate, dated September 6, 1990, Power, dated as of August 28, 1990 (B-4(d) to Rule in 70-7684).

Entergy Arkansas and (c) 73 - Ritchie Steam Electric Station Unit No. 2 Operating Agreement between Rule 24 Certificate, dated Entergy Power, dated as of August 28, 1990 (B-5(a) to September 6, 1990, in 70-7684).

Entergy Arkansas (c) 74- Ritchie Steam Electric Station Unit No. 2 Ownership Agreement between Rule 24 Certificate, dated and Entergy Power, dated as of August 28, 1990 (B-6(a) to September 6, 1990, in 70-7684).

between Entergy (c) 75- Power Coordination, Interchange and Transmission Service Agreement to Form 10-K for the Power and Entergy Arkansas, dated as of August 28, 1990 (10(c)-71 year ended December 31, 1990, in 1-10764).

and Subsidiaries (10(a)52 to

+(c) 76 - Executive Financial Counseling Program of Entergy Corporation Form 10-K for the year ended December 31, 1989, in 1-3517).

10-K for the year ended

+(c) 77- Entergy Corporation Annual Incentive Plan (10(a)54 to Form December 31, 1989, in 1-3517).

(A4(a) to Rule 24

+(c) 78- Equity Ownership Plan of Entergy Corporation and Subsidiaries Certificate, dated May 24, 1991, in 70-7831).

Drake Keith. (10(c) 78 to Form

+(c) 79- Agreement between Arkansas Power & Light Company and R-10-K for the year ended December 31, 1992 in 1-10764).

year ended December 31, 1992

+(c) 80 - Supplemental Retirement Plan (10(a)69 to Form 10-K for the in 1-3517).

and Subsidiaries (10(a)53 to

+(c) 81 - Defined Contribution Restoration Plan of Entergy Corporation Form 10-K for the year ended December 31, 1989 in 1-3517).

Corporation and Subsidiaries

+(c) 82- Amendment No. I to the Equity Ownership Plan of Entergy 1992 in 1-3517).

(10(a)71 to Form 10-K for the year ended December 31, (10(a)72 to Form 10-K for

+(c) 83 - Executive Disability Plan of Entergy Corporation and Subsidiaries the year ended Deember 31, 1992 in 1-3517).

(10(a)73 to Form 10-K for

+(c) 84 - Executive Medical Plan of Entergy Corporation and Subsidiaries the year ended December 31, 1992 in 1-3517).

and Subsidiaries, as amended

+(c) 85- Stock Plan for Outside Directors of Entergy Corporation 1992 in 1-3517).

(10(a)74 to Form 10-K for the year ended December 31, E-21

+(c) 86 - Sunmmary Description of Private Ownership Vehicle Plan of Entergy Corporation and Subsidiaries (10(a)75 to Form 10-K for the year ended December 31, 1992 in 1-3517).

+(c) 87- Agreement between Entergy Corporation and Edwin Lupberger (10(a)-42 to Form 10-K for the year ended December 31, 1985 in 1-3517).

+(c) 88 - Agreement between Entergy Corporation and Jerry D. Jackson (10(a)-68 to Form 10-K for the year ended December 31, 1992 in 1-3517).

+(c) 89 - Agreement between Entergy Services and Gerald D. McInvale (10(a)-69 to Form 10-K for the year ended December 31, 1992 in 1-3517).

+(c) 90 - Agreeement between System Energy and Donald C. Hintz (10(b)-47 to Form 10-K for the year ended December 31, 1991 in 1-9067).

+(c) 91 - Summary Description of Retired Outside Director Benefit Plan. (10(c) 90 to Form 10-K for the year ended December 31, 1992 in 1-10764).

+(c) 92 - Amendment to Defined Contribution Restoration Plan of Entergy Corporation and Subsidiaries (10(a) 81 to Form 10-K for the year ended December 31, 1993 in 1-11299).

+(c) 93 - System Executive Retirement Plan (10(a) 82 to Form 10-K fbr the year ended December 31, 1993 in 1-11299).

(c) 94- Loan Agreement dated June 15, 1993, between Entergy Arkansas and Independence Country, Arkansas (B-I (a) to Rule 24 Certificate dated July 9, 1993 in 70-8171).

(c) 95- Installment Sale Agreement dated January 1, 1991, between Entergy Arkansas and Pope Country, Arkansas (B-i (b) to Rule 24 Certificate dated January 24, 1991 in 70-7802).

(c) 96- Installment Sale Agreement dated November 1, 1990, between EntergyýArkansas and Pope Country, Arkansas (B-I (a) to Rule 24 Certificate dated November 30, 1990 in 70-7802).

(c) 97- Loan Agreement dated June 15, 1994, between Entergy Arkansas and Jefferson County, Arkansas (B-l(a) to Rule 24 Certificate dated June 30, 1994 in 70-8405).

(c) 98- Loan Agreement dated June 15, 1994, between Entergy Arkansas and Pope County, Arkansas (B-l(b) to Rule 24 Certificate in 70-8405).

(c) 99- Loan Agreement dated November 15, 1995, between Entergy Arkansas and Pope County, Arkansas (10(c) 96 to Form 10-K for the year ended December 31, 1995 in 1-10764).

(c) 100- Agreement as to Expenses and Liabilities between Entergy Arkansas and Entergy Arkansas Capital 1, dated as of August 14, 1996 (40) to Form 10-Q for the quarter ended' September 30, 1996 in 1-10764).

E-22

Entergy Gulf States (d) 1 - Guaranty Agreement, dated July 1, 1976, between Entergy Gulf States and American Bank and Trust Company (C and D to Form 8-K, dated August 6, 1976 in 1-2703).

Bank (d) 2 - Lease of Railroad Equipment, dated as of December 1, 1981, between The Connecticut and Trust Company as Lessor and Entergy Gulf States as Lessee and First Supplement, dated Cars as of December 31, 1981, relating to 605 One Hundred-Ton Unit Train Steel Coal Porter (4-12 to Form 10-K for the year ended December 31, 1981 in 1-2703).

Hibernia (d) 3 - Guaranty Agreement, dated August 1, 1992, between Entergy Gulf States and Industrial National Bank, relating to Pollution Control Revenue Refunding Bonds of the (Louisiana) (10-1 to Form 10-K for the Development Board of the Parish of Calcasieu, Inc.

year ended December 31, 1992 in 1-2703).

Hancock Bank (d) 4 - Guaranty Agreement, dated January 1, 1993, between Entergy Gulf States and Bonds of the Parish of Pointe of Louisiana, relating to Pollution Control Revenue Refunding 31, 1992 in 1-2703).

Coupee (Louisiana) (10-2 to Form 10-K for the year ended December States, Morgan (d) 5 - Deposit Agreement, dated as of December 1, 1983 between Entergy Gulf Receipts, relating to the Issue Guaranty Trust Co. as Depositary and the Holders of Depository Adjustable Rate of 900,000 Depositary Preferred Shares, each representing 1/2 share of year ended Cumulative Preferred Stock, Series E-$100 Par Value (4-17 to Form 10-K for the December 31, 1983 in 1-2703).

between Entergy (d) 6 - Letter of Credit and Reimbursement Agreement, dated December 27, 1985, Pollution Gulf States and Westpac Banking Corporation relating to Variable Rate Demand Feliciana, State of Louisiana, Series 1985-D (4 Control Revenue Bonds of the Parish of West in 1-2703) and l;etter Agreement 26 to Form 10-K for the year ended December 31, 1985 amending same dated October 20, 1992 (10-3 to Form 10-K for the year ended December 31, 1992 in 1-2703).

and between Entergy (d) 7 - Reimbursement and Loan Agreement, dated as of April 23, 1986, by Rate Demand Gulf States and The Long-Term Credit Bank of Japan, Ltd., relating to Multiple State of Louisiana, Series Pollution Control Revenue Bonds of the Parish of West Feliciana, 1986 in 1-2703) and Letter 1985 (4-26 to Form 10-K, for the year ended December 31, the year ended Agreement amending same, dated February 19, 1993 (10 to Form 10-K for December 31, 1992 in 1-2703).

(d) 8 Agreement effective February 1, 1964, between Sabine River Authority, State of Louisiana, Electric and Sabine River Authority of Texas, and Entergy Gulf States, Central Louisiana as supplemented (B to Form 8-K, Company, Inc., and Louisiana Power & Light Company, Form 8-K, dated May 5, dated May 6, 1964, A to Form 8-K, dated October 5, 1967, A to 1969, and A to Form 8-K, dated December 1, 1969, in 1-2708).

Unit 1 Nuclear (d) 9 - Joint Ownership Participation and Operating Agreement regarding River Bend Power Plant, dated August 20, 1979, between Entergy Gulf States, Cajun, and SRG&T; REA on Interconnection Agreement with Cajun, dated June 26, 1978, and approved by the Agreement regarding August 16, 1979, between Entergy Gulf States and Cajun; and Letter E-23

CEPCO buybacks, dated August 28, 1979, between Entergy Gulf States and Cajun (2, 3, and 4, respectively, to Form 8-K, dated September 7, 1979, in 1-2703).

(d) 10 - Ground Lease, dated August 15, 1980, between Statmont Associates Limited Partnership (Statmont) and Entergy Gulf States, as amended (3 to Form 8-K, dated August 19, 1980, and A-3-b to Form 10-Q for the quarter ended September 30, 1983 in 1-2703).

(d) 11 - Lease and Sublease Agreement, dated August 15, 1980, between Statmont and Entergy Gulf States, as amended (4 to Form 8-K, dated August 19, 1980, and A-3-c to Form 10-Q for the quarter ended September 30, 1983 in 1-2703).

(d) 12- Lease Agreement, dated September 18, 1980, between BLC Corporation and Entergy Gulf States (1 to Form 8-K., dated October 6, 1980 in 1-2703).

(d) 13 - Joint Ownership Participation and Operating Agreement for Big Cajun, between Entergy Gulf States, Cajun Electric Power Cooperative, Inc., and Sam Rayburn G&T, Inc, dated November 14, 1980 (6 to Form 8-K, dated January 29, 1981 in 1-2703); Amendment No. 1, dated December 12, 1980 (7 to Form 8-K, dated January 29, 1981 in 1-2703); Amendment No. 2, dated December 29, 1980 (8 to Form 8-K, dated January 29, 1981 in 1-2703).

(d) 14- Agreement of Joint Ownership Participation between SRMPA, SRG&T and Entergy Gulf States, dated June 6, 1980, for Nelson Station, Coal Unit #6, as amended (8 to Form 8-K, dated June 11, 1980, A-2-b to Form 10-Q For the quarter ended June 30, 1982; and 10-1 to Form 8-K, dated February 19, 1988 in 1-2703).

(d) 15 - Agreements between Southern Company and Entergy Gulf States, dated February 25, 1982, which cover the construction of a 140-mile transmission line to connect the two systems, purchase of power and use of transmission facilities (10-31 to Form 10-K, for the year ended December 31, 1981 in 1-2703).

+(d) 16- Executive Income Security Plan, effective October 1, 1980, as amended, continued and completely restated effective as of March 1, 1991 (10-2 to Form 10-K for the year ended December 31, 1991 in 1-2703).

(d) 17- Transmission Facilities Agreement between Entergy Gulf States and Mississippi Power Company, dated February 28, 1982, and Amendment, dated May 12, 1982 (A-2-c to Form 10 Q for the quarter ended March 31, 1982 in 1-2703) and Amendment, dated December 6, 1983 (10-43 to Form 10-K, for the year ended December 31, 1983 in 1-2703).

(d) 18 - Lease Agreement dated as of June 29, 1983, between Entergy Gulf States and City National Bank of Baton Rouge, as Owner Trustee, in connection with the leasing of a Simulator and Training Center for River Bend Unit I (A-2-a to Form 10-Q for the quarter ended June 30, 1983 in 1-2703) and Amendment, dated December 14, 1984 (10-55 to Form 10-K, for the year ended December 31, 1984 in 1-2703).

(d) 19- Participation Agreement, dated as of June 29, 1983, among Entergy Gulf States, City National Bank of Baton Rouge, PruFunding, Inc. Bank of the Southwest National Association, Houston and Bankers Life Company, in connection with the leasing of a Simulator and Training Center of River Bend Unit 1 (A-2-b to Form lO-Q for the quarter ended June 30, 1983 in 1-2703).

E-24

and (d) 20- Tax Indemnity Agreement, dated as of June 29, 1983, between Entergy Gulf States Center for River PruFunding, Inc., in connection with the leasing of a Simulator and Training Bend Unit I (A-2-c to Form 10-Q for the quarter ended June 30, 1993 in 1-2703).

(d) 21 - Agreement to Lease, dated as of August 28, 1985, among Entergy Gulf States, City National Bank of Baton Rouge, as Owner Trustee, and Prudential Interfunding Corp., as Trustor, in connection with the leasing of improvement to a Simulator and Training Facility for River Bend Unit 1 (10-69 to Form 10-K, for the year ended December 31, 1985 in 1-2703).

River (d) 22- First Amended Power Sales Agreement, dated December 1, 1985 between Sabine State of Texas, and Entergy Gulf Authority, State of Louisiana, and Sabine River Authority, and Light Company (10-72 States, Central Louisiana Electric Co., Inc., and Louisiana Power to Form 10-K for the year ended December 31, 1985 in 1-2703).

as

+(d) 23 - Deferred Compensation Plan for Directors of Entergy Gulf States and Varibus Corporation, 10-K for the year amended January 8, 1987, and effective January 1, 1987 (10-77 to Form (10-3 to ended December 31, 1986 in 1-2703). Amendment dated December 4, 1991 Amendment No. 8 in Registration No. 2-76551).

to the

+(d) 24- Trust Agreement for Deferred Payments to be made by Entergy Gulf States pursuant Trust Executive Income Security Plan, by and between Entergy Gulf States and Bankers 10-K for the year ended December 31, Company, effective November 1, 1986 (10-78 to Form 1986 in 1-2703).

+(d) 25 - Trust Agreement for Deferred Installments under Entergy Gulf States' Management Incentive States and Compensation Plan and Administrative Guidelines by and between Entergy Gulf 10-K for the year ended Bankers Trust Company, effective June 1, 1986 (10-79 to Form December 31, 1986 in 1-2703).

and

+(d) 26- Nonqualified Deferred Compensation Plan for Officers, Nonemployee Directors and Designated Key Employees, effective December 1, 1985, as amended, continued completely restated effective as of March 1, 1991 (10-3 to Amendment No. 8 in Registration No. 2-76551).

+(d) 27- Trust Agreement for Entergy Gulf States' Nonqualified Directors and Designated Key Employees by and between Entergy Gulf States and First City Bank, Texas-Beaumont, N.A.

(now Texas Commerce Bank), effective July 1, 1991 (10-4 to Form 10-K for the year ended December 31, 1992 in 1-2703).

States (d) 28 - Lease Agreement, dated as of June 29, 1987, among GSG&T, Inc., and Entergy Gulf to Form 10-K for the related to the leaseback of the Lewis Creek generating station (10-83 year ended December 31, 1988 in 1-2703).

Fuel Services, (d) 29- Nuclear Fuel Lease Agreement between Entergy Gulf States and River Bend 10-K for Inc. to lease the fuel for River Bend Unit 1, dated February 7, 1989 (10-64 to Form the year ended December 31, 1988 in 1-2703).

Morgan (d) 30- Trust and Investment Management Agreement between Entergy Gulf States and Guaranty and Trust Company of New York (the "Decommissioning Trust Agreement) with E-25

respect to decommissioning finds authorized to be collected by Entergy Gulf States, dated March 15, 1989 (10-66 to Form 10-K for the year ended December 31, 1988 in 1-2703).

(d) 31 - Amendment No. 2 dated November 1, 1995 between Entergy Gulf States and Mellon Bank to Deconunissioning Trust Agreement (10(d) 31 to Form 10-K for the year ended December 31, 1995).

(d) 32 - Credit Agreement, dated as of December 29, 1993, among River Bend Fuel Services, Inc. and Certain Commercial Lending Institutions and CIBC Inc. as Agent for the Lenders (10(d) 34 to Form 10-K for year ended December 31, 1994).

(d) 33 - Amendment No. 1 dated as of January 3 1, to Credit Agreement, dated as of December 31, 1993, among River Bend Fuel Services, Inc. and certain commercial lending institutions and CIBC Inc. as agent for Lenders (10(d) 33 to Form 10-K for the year ended December 31, 1995).

(d) 34- Partnership Agreement by and among Conoco Inc., and Entergy Gulf States, CITGO Petroleum Corporation and Vista Chemical Company, dated April 28, 1988 (10-67 to Form 10-K for the year ended December 31, 1988 in 1-2703).

+(d) 35- Gulf States Utilities Company Executive Continuity Plan, dated January 18, 1991 (10-6 to Form 10-K for the year ended December 31, 1990 in 1-2703).

+(d) 36 - Trust Agreement for Entergy Gulf States' Executive Continuity Plan, by and between Entergy Gulf States and First City Bank, Texas-Beaumont, N.A. (now Texas Commerce Bank),

effective May 20, 1991 (10-5 to Form 10-K for the year ended December 31, 1992 in 1-2703).

+(d) 37 - Gulf States Utilities Board of Directors' Retirement Plan, dated February 15, 1991 (10-8 to Form 10-K for the year ended December 31, 1990 in 1-2703).

+(d) 38 - Gulf States Utilities Company Employees' Trustee Retirement Plan effective July 1, 1955 as amended, contied and completely restated effective January 1, 1989; and Amendment No.1 effective January 1, 1993 (10-6 to Form 10-K for the year ended December 31, 1992 in 1 2703).

(d) 39- Agreement and Plan of Reorganization, dated June 5, 1992, between Entergy Gulf States and Entergy Corporition (2 to Form 8-K, dated June 8, 1992 in 1-2703).

+(d) 40- Gulf States Utilities Company Employee Stock Ownership Plan, as amended, continued, and completely restated effetive January 1, 1984, and January 1, 1985 (A to Form I1-K, dated December 31, 1985 in 1-2703).

+(d) 41 - Trust Agreement under the Gulf States Utilities Company Employee Stock Ownership Plan, dated December 30, 1976, between Entergy Gulf States and the Louisiana National Bank, as Trustee (2-A to Registration No. 2-62395).

+(d) 42- Letter Agreement dated September 7, 1977 between Entergy Gulf States and the Trustee, delegating certain of the Trustee's functions to the ESOP Committee (2-B to Registration Statement No. 2-62395).

E-26

continued and completely

+(d) 43 - Gulf States Utilities Company Employees Thrift Plan as amended, No. 8 to Registration No. 2 restated effective as of January 1, 1992 (28-1 to Amendment 76551).

Employees Thrift

+(d) 44- Restatement of Trust Agreement under the Gulf States Utilities Company States and First 1, 1989, between Entergy Gulf Plan, reflecting changes made through January Bank), as Trustee (2-A to Form 8 City Bank, Texas-Beaumont, N.A., (now Texas Commerce K dated October 20, 1989 in 1-2703).

Entergy Gulf States, dated as of (d) 45- Operating Agreement between Entergy Operations and December 31, 1993 (B-2(f) to Rule 24 Certificate in 70-8059).

Entergy Gulf States, dated as of (d) 46- Guarantee Agreement between Entergy Corporation and 70-8059).

December 31, 1993 (B-5(a) to Rule 24 Certificate in December 31, 1993 (B-6(c) to Rule 24 (d) 47 - Service Agreement with Entergy Services, dated as of Certificate in 70-8059).

and Entergy Gulf States, dated

+(d) 48 - Amendment to Employment Agreement between J. L. Donnelly December 31, 1993 in 1-2703).

December 22, 1993 (10(d) 57 to Form 10-K for the year ended of Credit and Reimbursement (d) 49- Assignment, Assumption and Amendment Agreement to Letter Bank of Commerce and Westpac Agreement between Entergy Gulf States, Canadian Imperial the year ended December 31, 1993 in 1 Banking Corporation (10(d) 58 to Form 10-K for 2703).

and Subsidiary Companies (d) 50- Third Amendment, dated January 1, 1994, to Entergy Corporation to Form, USS for the year ended Intercompany Income Tax Allocation Agreement (D-3(a)

December 31, 1993).

and West Feliciana Parish (dated (d) 51 Refimding Agreement between Entergy Gulf States 30, 1994 in 70-8375).

December 20, 1994 (B-12(a) to Rule 24 Certificate dated December Gulf States and Entergy Gulf States

• (d) 52 - Agreement as to Expenses and Liabilities between Entergy Capital I, dated as of January 28, 1997.

Entergy Louisiana Louisiana and certain other System (e) 1 - Agreement, dated April 23, 1982, among Entergy and Intra-System Transactions companies, relating to System Planning and Development3 1 , 1982, in 1-3517).

(10(a) I to Form 10-K for the year ended December dated December 11, 1970 (5(a)-2 in (e) 2 - Middle South Utilities System Agency Agreement, 2-41080).

South Utilities System Agency (e) 3 - Amendment, dated as of February 10, 1971, to Middle Agreement, dated December 11, 1970 (5(a)-4 in 2-41080).

System Agency Agreement, dated (e) 4 - Amendment, dated May 12, 1988, to Middle South Utilities December 11, 1970 (5(a) 4 in 2-41080).

E-27

(e) 5 - Middle South Utilities System Agency Coordination Agreement, dated December 11, 1970 (5(a)-3 in 2-41080).

(e) 6 - Service Agreement with Entergy Services, dated as of April 1, 1963 (5(a)-5 in 2-42523).

(e) 7 - Amendment, dated as of January 1, 1972, to Service Agreement with Entergy Services (4(a)-6 in 2-45916).

(e) 8 - Amendment, dated as of April 27, 1984, to Service Agreement with Entergy Services (10(a) 7 to Form 10-K for the year ended Deember 31, 1984, in 1-3517).

(e) 9 - Amendment, dated as of August 1, 1988, to Service Agreement with Entergy Services (10(d)-8 to Form 10-K for the year ended December 31, 1988, in 1-8474).

(e) 10- Amendment, dated January 1, 1991, to Service Agreement with Entergy Services (10(d)-9 to Form 10-K for the year ended December 31, 1990, in 1-8474).

(e) 11 - Amendment, dated January 1, 1992, to Service Agreement with Entergy Services (10(a)-lI to Form 10-K for the year ended December 31, 1994 in 1-3517).

(e) 12 through (e) 26- See 10(a)-12 through 10(a)-26 above.

(e) 27 - Fuel Lease, dated as of January 31, 1989, between River Fuel Company #2, Inc., and Entergy Louisiana (B-l(b) to Rule 24 Certificate in 70-7580).

(e) 28 - Reallocation Agreement, dated as of July 28, 1981, among System Energy and certain other System companies (B-1(a) in 70-6624).

(e) 29 - Compromise and Settlement Agreement, dated June 4, 1982, between Texaco, Inc. and Entergy Louisiana (28(a) to Form 8-K, dated June 4, 1982, in 1-8474).

+(e) 30- Post-Retirement Plan (10(c)23 to Form 10-K for the year ended December 31, 1983, in 1-8474).

(e) 31 - Unit Power Sales Agreement, dated as of June 10, 1982, between System Energy and Entergy Arkansas, Entergy Louisiana, Entergy Mississippi and Entergy New Orleans (10(a) 39 to Form 10-K for the year ended December 31, 1982, in 1-3517).

(e) 32- First Amendment to the Unit Power Sales Agreement, dated as of June 28, 1984, between System Energy and Entergy Arkansas, Entergy Louisiana, Entergy Mississippi and Entergy New Orleans (19 to Form 10-Q for the quarter ended September 30, 1984, in 1-3517).

(e) 33 - Revised Unit Power Sales Agreement (10(ss) in 334033).

(e) 34- Middle South Utilities, Inc. and Subsidiary Companies Intercompany Tax Allocation Agreement, dated April 28, 1988 (D-1 to Form U5S for the year ended December 31, 1987).

E-28

(e) 35- First Amendment, dated January 1, 1990, to the Middle South Utilities, Inc. and Subsidiary 1, 1990 (D-2 to Companies Intercompany Income Tax Allocation Agreement, dated January Form USS for the year ended December 31, 1989).

and Subsidiary (e) 36 - Second Amendment dated January 1, 1992, to the Entergy Corporation Companies Intercompany Income Tax Allocation Agreement (D-3 to Form U5S for the year ended December 31, 1992).

(e) 37 - Third Amendment dated January 1, 1994 to Entergy Corporation and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-3(a) to Form U5S for the year ended December 31, 1993).

Waste, dated (e) 38- Contract for Disposal of Spent Nuclear Fuel and/or High-Level Radioactive and Entergy Louisiana (10(d)33 to Form 10-K February 2, 1984, among DOE, System Fuels for the year ended December 31, 1984, in 1-8474).

dated as of June 6, (e) 39 - Operating Agreement between Entergy Operations and Entergy Louisiana, 1990 (B-2(c) to Rule 24 Certificate, dated June 15, 1990, in 70-7679).

dated as of (e) 40- Guarantee Agreement between Entergy Corporation and Entergy Louisiana, in 70-7757).

September 20, 1990 (B-2(a), to Rule 24 Certificate, dated September 27, 1990, (10(a) 52 to

+(e) 41 - Executive Financial Counseling Program of Entergy Corporation and Subsidiaries Form 10-K for the year ended December 31, 1989, in 1-3517).

for the year ended

+(e) 42- Entergy Corporation Annual Incentive Plan (10(a) 54 to Form 10-K December 31, 1989, in 1-3517).

(A-4(a) to Rule 24

+(e) 43- Equity Ownership Plan of Entergy Corporation and Subsidiaries Certificate, dated May 24, 1991, in 70-7831).

31, 1992

+(e) 44 - Supplemental Retirement Plan (10(a) 69 to Form 10-K for the year ended December in 1-3517).

Subsidiaries (10(a) 53 to

+(e) 45 - Defined Contribution Restoration Plan of Entergy Corporation and Form 10-K for the year ended December 31, 1989 in 1-3517).

and Subsidiaries

+(e) 46- Amendment No. 1 to the Equity Ownership Plan of Entergy Corporation (10(a) 71 to Form 10-K for the year ended December 31, 1992 in 1-3517).

(10(a) 72 to Form 10-K for

+(e) 47 - Executive Disability Plan of Entergy Corporation and Subsidiaries the year ended December 31, 1992 in 1-3517).

73 to Form 10-K for

+(e) 48- Executive Medical Plan of Entergy Corporation and Subsidiaries (10(a) 1 7).

the year ended December 3l, 1992 in 1-35 Subsidiaries (10(a) 74 to

+(e) 49- Stock Plan for Outside Directors of Entergy Corporation and Form 10-K for the year ended December 31, 1992 in 1-3517).

E-29

+(e) 50- Summary Description of Private Ownership Vehicle Plan of Entergy Corporation and Subsidiaries (10(a) 75 to Form 10-K for the year ended December 31, 1992 in 1-3517).

+(e) 51 - Agreement between Entergy Corporation and Edwin Lupberger (10(a) 42 to Form 10-K for the year ended December 31, 1985 in 1-3517).

+(e) 52 -- Agreement between Entergy Corporation and Jerry D. Jackson (10(a) 68 to Form 10-K for the year ended December 31, 1992 in 1-3517).

+(e) 53 - Agreement between Entergy Services and Gerald D. McInvale (10(a) 69 to Form 10-K for the year ended December 31, 1992 in 1-3517).

+(e) 54 - Agreement between System Energy and Donald C. Hintz (10(b) 47 to Form 10-K for the year ended December 31, 1991 in 1-9067).1

+(e) 55 - Summary Description of Retired Outside Director Benefit Plan (10(c)90 to Form 10-K for the year ended December 31, 1992 in 1-10764).

+(e) 56 - Amendment to Defined Contribution Restoration Plan of Entergy Corporation and Subsidiaries (10(a) 81 to Form 10-K for the year ended December 31, 1993 in 1-11299).

+(e) 57 - System Executive Retirement Plan (10(a) 82 to Form 10-K for the year ended December 31, 1993 in 1-11299).

(e) 58 -- Installment Sale Agreement, dated July 20, 1994, between Entergy Louisiana and St. Charles Parish, Louisiana (B-6(e) to Rule 24 Certificate dated August 1, 1994 in 70-7822).

(e) 59- Installment Sale Agreement, dated November 1, 1995, between Entergy Louisiana and St.

Charles Parish, Louisiana (B-6(a) to Rule 24 Certificate dated December 19, 1995 in 70 8487).

(e) 60- Agreement as to Expenses and Liabilities between Entergy Louisiana, Inc. and Entergy Louisiana Capital I dated July 16, 1996 (4(d) to Form 10-Q for the quarter ended June 30, 1996 in 1-8474).

Entergy Mississippi (f) I - Agreement dated April 23, 1982, among Entergy Mississippi and certain other System companies, relating to System Planning and Development and Intra-System Transactions (10(a) I to Form 10-K for the year ended December 31, 1982, in 1-3517).

(t) 2 - Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a)-2 in 2-41080).

(f) 3 - Amendment, dated February 10, 1971, to Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a) 4 in 2-41080).

(f) 4 - Amendment, dated May 12, 1988, to Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a) 4 in 2-41080).

E-30

11, 1970 (f) 5 - Middle South Utilities System Agency Coordination Agreement, dated December (5(a)-3 in 2-41080).

(f) 6 - Service Agreement with Entergy Services, dated as of April 1, 1963 (D in 37-63).

(f) 7 - Amendment, dated January 1, 1972, to Service Agreement with Entergy Services (A to Notice, dated October 14, 1971, in 37-63).

(10(a) 7 to (f) 8 - Amendment, dated April 27, 1984, to Service Agreement with Entergy Services Form 10-K for the year ended December 31, 1984, in 1-3517).

Services (10(e) 8 (f) 9 - Amendment, dated as of August 1, 1988, to Service Agreement with Entergy to Form 10-K for the year ended December 31, 1988, in 0-320).

(10(e) 9 to (f) 10- Amendment, dated January 1, 1991, to Service Agreement with Entergy Services Form 10-K for the year ended December 31, 1990, in 0-320).

(10(a)-il to (f) 11 - Amendment, dated January 1, 1992, to Service Agreement with Entergy Services Form 10-K for the year ended December 31, 1994 in 1-3517).

(f) 12 though (f) 26- See 10(a) 10(a)-26 above.

and (f) 27- Installment Sale Agreement, dated as of June 1, 1974, between Entergy Mississippi 1974, 70in Washington County, Mississippi (B-2(a) to Rule 24 Certificate, dated August 1, 5504).

Mississippi and (f) 28- Installment Sale Agreement, dated as of July 1, 1982, between Entergy 21, 1982, in 70 Independence County, Arkansas, (B-I(c) to Rule 24 Certificate dated July 6672).

Mississippi and (f) 29- Installment Sale Agreement, dated as of December 1, 1982, between Entergy 7, 1982, in independence County, Arkansas, (B-1(d) to Rule 24 Certificate dated December 70-6672).

1994, between (f) 30- Amended and Restated Installment Sale Agreement, dated as of April 1, (B-6(a) to Rule 24 Certificate dated Entergy Mississippi and Warren County, Mississippi, May 4, 1994, in 70-7914).

1, 1994, between (1) 31- Amended and Restated Installment Sale Agreement, dated as of April to Rule 24 Certificate dated Entergy Mississippi and Washington County, Mississippi, (B-6(b)

May 4, 1994, in 70-7914).

System (f) 32- Substitute Power Agreement, dated as of May 1, 1980, among Entergy Mississippi, Energy and SMEPA (B-3(a) in 70-6337).

Station Operating (f) 33- Amendment, dated December 4, 1984, to the Independence Steam Electric in 0-375).

Agreement (10(c) 51 to Form 10-K for the year ended December 31, 1984, E-3 1

(f) 34 -- Amendment, dated December 4, 1984, to the Independence Steam Electric Station Ownership Agreement (10(c) 54 to Form 10.-K for the year ended December 31, 1984, in 0-375).

(f) 35 - Owners Agreement, dated November 28, 1984, among Entergy Arkansas, Entergy Mississippi and other co- owners of the Independence Station (10(c) 55 to Form 10-K for the year ended December 31, 1984, in 0-375).

(f) 36 -- Consent, Agreement and Assumption, dated December 4, 1984, among Entergy Arkansas, Entergy Mississippi, other co-owners of the Independence Station and United States Trust Company of New York, as Trustee (10(c) 56 to Form 10-K for the year ended December 31, 1984, in 0-375).

(f) 37- Reallocation Agreement, dated as of July 28, 1981, among System Energy and certain other System companies (B-1(a) in 70-6624).

+(f) 38 - Post-Retirement Plan (10(d) 24 to Form 10-K for the year ended December 31, 1983, in 0-320).

(f) 39 - Unit Power Sales Agreement, dated as of June 10, 1982, between System Energy and Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans (10(a) 39 to Form 10-K for the year ended December 31, 1982, in 1-3517).

(f) 40 - First Amendment to the Unit Power Sales Agreement, dated as of June 28, 1984, between System Energy and Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans (19 to Form 10-Q for the quarter ended September 30, 1984, in 1-3517).

(f) 41 - Revised Unit Power Sales Agreement (10(ss) in 33-4033).

(f) 42 - Sales Agreement, dated as of June 21. 1974, between System Energy and Entergy Mississippi (D to Rule 24 Certificate, dated June 26, 1974, in 70-5399).

(f) 43- Service Agreement, dated as of June 21, 1974, between System Energy and Entergy Mississippi (E to Rule 24 Certificate, dated June 26, 1974, in 70-5399).

(f) 44- Partial Termination Agreement, dated as of December 1, 1986, between System Energy and Entergy Mississippi (A-2 to Rule 24 Certificate dated January 8, 1987, in 70-5399).

(f) 45 - Middle South Utilities, Inc. and Subsidiary Companies Intercompany Income Tax Allocation Agreement, dated April 28, 1988 (D-1 to Form U5S for the year ended December 31, 1987).

(f) 46- First Amendment dated January 1, 1990 to the Middle South Utilities Inc. and Subsidiary Companies Intercompany Tax Allocation Agreement (D-2 to Form U5S for the year ended December 31, 1989).

(f) 47 - Second Amendment dated January 1, 1992, to the Entergy Corporation and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-3 to Form U5S for the year ended December 31, 1992).

E-32

(f) 48 - Third Amendment dated January 1, 1994 to Entergy Corporation and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-3(a) to Form U5S for the year ended December 31, 1993).

+(f) 49 - Executive Financial Counseling Program of Entergy Corporation and Subsidiaries (10(a) 52 to Form 10-K for the year ended December 31, 1989, in 1-3517).

+(f) 50- Entergy Corporation Annual Incentive Plan (10(a) 54 to Form 10-K for the year ended December 31, 1989, in 1-3517).

+(f) 51- Equity Ownership Plan of Entergy Corporation and Subsidiaries (A-4(a) to Rule 24 Certificate, dated May 24, 1991, in 70-783 1).

+(f) 52- Supplemental Retirement Plan (10(a)69 to Form 10-K for the year ended December 31, 1992 in 1-3517).

+(f) 53 - Defined Contribution Restoration Plan of Entergy Corporation and Subsidiaries (10(a)53 to Form 10-K for the year ended December 31, 1989 in 1-3517).

+(f) 54 -- Amendment No. 1 to the Equity Ownership Plan of Entergy Corporation and Subsidiaries (10(a)71 to Form 10-K for the year ended December 31, 1992 in 1-3517).

for

+(f) 55 - Executive Disability Plan of Entergy Corporation and Subsidiaries (10(a)72 to Form 10-K the year ended December 31, 1992 in 1-3517).

for

+(f) 56- Executive Medical Plan of Entergy Corporation and Subsidiaries (10(a)73 to Form 10-K the year ended December 31, 1992 in 1-3517).

+(f) 57- Stock Plan for Outside Directors of Entergy Corporation and Subsidiaries, as amended (10(a)74 to Form 10-K for the year ended December 31, 1992 in 1-3517).

+(f) 58- Summary Description of Private Ownership Vehicle Plan of Entergy Corporation and Subsidiaries (10(a)75 to Form 10-K for the year ended December 31, 1992 in 1-3517).

4 2 to Form 10-K for

+(f) 59- Agreement between Entergy Corporation and Edwin Lupberger (10(a)-

the year ended December 31, 1985 in 1-3517).

+(f) 60 - Agreement between Entergy Corporation and Jerry D. Jackson (10(a)-68 to Form 10-K for the year ended December 31, 1992 in 1-3517).

+(f) 61 - Agreement between Entergy Services and Gerald D. Mclnvale (10(a)-69 to Form 10-K for the year ended December 31, 1992 in 1-3517).

the year

+(f) 62 - Agreement between System Energy and Donald C. -intz (10(b)-47 to Form 10-K for ended December 31, 1991 in 1-9067).

for the

+(f) 63 - Summary Description of Retired Outside Director Benefit Plan (10(c)-90 to Form 10-K year ended December 31, 1992 in 1-10764).

E-33

+(f) 64 -- Amendment to Defined Contribution Restoration Plan of Entergy Corporation and Subsidiaries (10(a) 81 to Form 10-K for the year ended December 31, 1993 in 1-11299).

+(f) 65 - System Executive Retirement Plan (10(a) 82 to Form 10-K for the year ended December 31, 1993 in 1-11299).

Entergy New Orleans (g) 1 - Agreement, dated April 23, 1982, among Entergy New Orleans and certain other System companies, relating to System Planning and Development and Intra-System Transactions (10(a)-i to Form 10-K for the year ended December 31, 1982, in 1-3517).

(g) 2 - Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a)-2 in 2-41080).

(g) 3 - Amendment dated as of February 10, 1971, to Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a)-4 in 2-41080).

(g) 4 - Amendment, dated May 12, 1988, to Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a) 4 in 2-41080).

(g) 5 - Middle South Utilities System Agency Coordination Agreement, dated December 11, 1970 (5(a)-3 in 2-41080).

(g) 6 -- Service Agreement with Entergy Services dated as of April 1, 1963 (5(a)-5 in 2-42523).

(g) 7 - Amendment, dated as of January 1, 1972, to Service Agreement with Entergy Services (4(a)-6 in 2-45916).

(g) 8 - Amendment, dated as of April 27, 1984, to Service Agreement with Entergy Services (10(a)7 to Form 10-K for the year ended December 31, 1984, in 1-3517).

(g) 9 - Amendment, dated as of August 1, 1988, to Service Agreement with Entergy Services (10(f)-8 to Form 10-K for the year ended December 31, 1988, in 0-5807).

(g) 10 - Amendment, dated January 1, 1991, to Service Agreement with Entergy Services (10(f)-9 to Form 10-K for the year ended December 31, 1990, in 0-5807).

(g) 11- Amendment, dated January 1, 1992, to Service Agreement with Entergy Services (10(a)-11 to Form 10-K for year ended December 31, 1994 in 1-3517).

(g) 12 (g) 26 - See 10(a) 10(a)-26 above.

(g) 27- Reallocation Agreement, dated as of July 28, 1981, among System Energy and certain other System companies (B-1(a) in 70-6624).

+(g) 28 - Post-Retirement Plan (10(e) 22 to Form 10-K for the year ended December 31, 1983, in 1-1319).

E-34

(g) 29 - Unit Power Sales Agreement, dated as of June 10, 1982, between System Energy and Entergy Arkansas, Entergy Louisiana, Entergy Mississippi and Entergy New Orleans (10(a) 39 to Form 10-K for the year ended December 31, 1982, in 1-3517).

(g) 30-- First Amendment to the Unit Power Sales Agreement, dated as of June 28, 1984, between System Energy and Entergy Arkansas, Entergy Louisiana, Entergy Mississippi and Entergy New Orleans (19 to Form 10-Q for the quarter ended September 30, 1984, in 1-3517).

(g) 31 - Revised Unit Power Sales Agreement (10(ss) in 33-4033).

(g) 32 - Transfer Agreement, dated as of June 28, 1983, among the City of New Orleans, Entergy New Orleans and Regional Transit Authority (2(a) to Form 8-K, dated June 24, 1983, in 1-1319).

(g) 33 - Middle South Utilities, Inc. and Subsidiary Companies Intercompany Income Tax Allocation Agrenent, dated April 28, 1988 (D-I to Form U5S for the year ended December 31, 1987).

(g) 34- First Amendment, dated January 1, 1990, to the Middle South Utilities, Inc. and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-2 to Form U5S for the year ended December 31, 1989).

(g) 35- Second Amendment dated January 1, 1992, to the Entergy Corporation and Subsidiary Companies Intercompany Income.Tax Allocation Agreement (D-3 to Form U5S for the year ended December 31, 1992).

(g) 36- Third Amendment dated January 1, 1994 to Entergy Corporation and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-3(a) to Form U5S for the year ended December 31, 1993).

+(g) 37- Executive Financial Counseling Program of Entergy Corporation and Subsidiaries (10(a)52 to Form 10-K for the year ended December 31, 1989, in 1-3517).

+(g) 38- Entergy Corporation Annual Incentive Plan (10(a)54 to Form 10-K for the year ended December 31, 1989, in 1-3517).

+(g) 39- Equity Ownership Plan of Entergy Corporation and Subsidiaries (A-4(a) to Rule 24 Certificate, dated May 24, 1991, in 70-7831).

+(g) 40- Supplemental Retirement Plan (10(a)69 to Form 10-K for the year ended December 31, 1992 in 1-3517).

+(g) 41 - Defined Contribution Restoration Plan of Entergy Corporation and Subsidiaries (10(a)53 to Form 10-K for the year ended December 31, 1989 in 1-3517).

+(g) 42-- Amendment No. I to the Equity Ownership Plan of Entergy Corporation and Subsidiaries (10(a)71 to Form 10-K for the year ended December 31, 1992 in 1-3517).

+(g) 43 - Executive Disability Plan of Entergy Corporation and Subsidiaries (10(a)72 to Form 10-K for the year ended December 31, 1992 in 1-3517).

E-35

+(g) 44- Executive Medical Plan of Entergy Corporation and Subsidiaries (10(a)73 to Form 10-K for the year ended December 31, 1992 in 1-3517).

+(g) 45- Stock Plan for Outside Directors of Entergy Corporation and Subsidiaries, as amended (10(a)74 to Form 10-K for the year ended December 31, 1992 in 1-3517).

+(g) 46- Summary Description of Private Ownership Vehicle Plan of Entergy Corporation and Subsidiaries (10(a)75 to Form 10-K for the year ended December 31, 1992 in 1-3517).

+(g) 47- Agreement between Entergy Corporation and Edwin Lupberger (10(a)-42 to Form 10-K for the year ended December 31, 1985 in 1-3517).

+(g) 48 - Agreement between Entergy Corporation and Jerry D. Jackson (10(a)-68 to Form 10-K for the year ended December 31, 1992 in 1-3517).

+(g) 49 - Agreement between Entergy Services and Gerald D. McInvale (10(a)-69 to Form 10-K for the year ended December 31, 1992 in 1-3517).

+(g) 50 - Agreement between System Energy and Donald C. Hintz (10(b)-47 to Form 10-K for the year ended December 31, 1991 in 1-9067).

+(g) 51 - Summary Description of Retired Outside Director Benefit Plan (10(c)-90 to Form 10-K for the year ended December 31, 1992 in 1-10764).

+(g) 52 - Amendment to Defined Contribution Restoration Plan of Entergy Corporation and Subsidiaries (10(a) 81 to Form 10-K for the year ended December 31, 1993 in 1-11299).

+(g) 53- System Executive Retirement Plan (10(a) 82 to Form 10-K for the year ended December 31, 1993 in 1-11299).

(12) Statement Re Computation of Ratios

• (a) Entergy Arkansas's Computation of Ratios of Earnings to Fixed Charges and of Earnings to Fixed Charges and Preferred Dividends, as defined.

• (b) Entergy Gulf States' Computation of Ratios of Earnings to Fixed Charges and of Earnings to Fixed Charges and Preferred Dividends, as defined.

• (e) Entergy Louisiana's Computation of Ratios of Earnings to Fixed Charges and of Earnings to Fixed Charges and Preferred Dividends, as defined.

• (d) Entergy Mississippi's Computation of Ratios of Earnings to Fixed Charges and of Earnings to Fixed Charges and Preferred Dividends, as defined.

• (e) Entergy New Orleans' Computation of Ratios of Earnings to Fixed Charges and of Earnings to Fixed Charges and Preferred Dividends, as defined.

• (f) System Energy's Computation of Ratios of Earnings to Fixed Charges, as definedL E-36

(18) Letter Re Change in Accounting Principles change in accounting principles for System Energy.

• (a) Letter from Coopers & Lybrand L.L.P. regarding change in accounting principles for Entergy.

• (b) Letter from Coopers & Lybrand L.L.P. regarding

• (21) Subsidiaries of the Registrants (23) Consents of Experts and Counsel contained herein at page 211.

• (a) The consent of Coopers & Lybrand L.L.P. is at page 213.

• (b) The consent of Sandlin Associates is contained herein

• (24) Powers of Attorney (27) Financial Data Schedule and Subsidiaries as of December 31, 1996.

• (a) Financial Data Schedule for Entergy Corporation as of December 31, 1996.

• (b) Financial Data Schedule for Entergy Arkansas as of December 31, 1996.

• (c) Financial Data Schedule for Entergy Gulf States as of December 31, 1996.

• (d) Financial Data Schedule for Entergy Louisiana as of December 31, 1996.

• (e) Financial Data Schedule for Entergy Mississippi as of December 31, 1996.

• (f) Financial Data Schedule for Entergy New Orleans as of December 31, 1996.

• (g) Financial Data Schedule for System Energy

• Filed herewith.

arrangements.

+ Management contracts or compensatory plans or E-37