Filings Under the Public Utility Holding Company Act of 1935, as Amended (``Act'')

[Federal Register Volume 63, Number 33 (Thursday, February 19, 1998)]
[Notices]
[Pages 8505-8508]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-4204]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-26825]


Filings Under the Public Utility Holding Company Act of 1935, as 
Amended (``Act'')

February 12, 1998.
    Notice is hereby given that the following filing(s) has/have been 
made with the Commission pursuant to provisions of the Act and rules 
promulgated thereunder. All interested persons are referred to the 
application(s) and/or declaration(s) for complete statements of the 
proposed transaction(s) summarized below. The application(s) and/or 
declaration(s) and any amendments thereto is/are available for public 
inspection through the Commission's Office of Public Reference.
    Interested persons wishing to comment or request a hearing on the 
application(s) and/or declaration(s) should submit their views in 
writing by March 9, 1998, to the Secretary, Securities and Exchange 
Commission, Washington, D.C. 20549, and serve a copy on the relevant 
applicant(s) and/or declarant(s) at the address(es) specified below. 
Proof of service (by affidavit or, in case of an attorney at law, by 
certificate) should be filed with the request. Any request for hearing 
shall identify specifically the issues of fact or law that are 
disputed. A person who so requests will be notified of any hearing, if 
ordered, and will receive a copy of any notice or order issued in the 
matter. After said date, the application(s) and/or declaration(s), as 
filed or as amended, may be granted and/or permitted to become 
effective.

Entergy Corporation, et al. (70-9123)

    Entergy Corporation (``Entergy''),\1\ of 639 Loyola Avenue, New 
Orleans, Louisiana 70113, a registered holding company, and its wholly 
owned nonutility subsidiary companies, Entergy Enterprises, Inc.,\2\ 
Entergy Global Power Operations Corporation and Entergy Power 
Operations U.S., Inc.,\3\ each of 4 Park Plaza, Irvine, California 
92614, Entergy Power, Inc.\4\ and Entergy Power Marketing Corp.,\5\ 
each of 10055 Grogan's Mill Road, The Woodlands, Texas 77380, Entergy 
Integrated Solutions, Inc.,\6\ 4740 Shelby Drive, Memphis, Tennessee 
38118, Entergy Nuclear, Inc.,\7\ 1340 Echelon

[[Page 8506]]

Parkway, Jackson, Mississippi 39213 and Entergy Operations Services, 
Inc.,\8\ 110 James Parkway West, St. Rose, Louisiana 70087 
(collectively, ``Applicants''), have filed an application-declaration 
(``Application'') under sections 6(a), 7, 9(a), 10, 12(b), 12(c), 
12(f), 13(b), 32 and 33 of the Act and rules 42, 45, 46, 53, 54, 58, 
83, 87, 90 and 91 under the Act requesting authorization to engage in 
various financing and related transactions involving Entergy and/or 
certain of its nonutility subsidiaries.
---------------------------------------------------------------------------

    \1\ Through its five domestic retail public utility companies, 
Entergy Arkansas, Inc., Entergy Gulf States, Inc., Entergy 
Louisiana, Inc., Entergy Mississippi, Inc. and Entergy New Orleans, 
Inc. (collectively, ``System Operating Companies''), Entergy 
provides electric service to approximately 2.4 million customers 
located in the states of Arkansas, Louisiana, Mississippi, Tennessee 
and Texas, and retail gas service in portions of Louisiana.
    \2\ By Commission order dated June 30, 1995, Holding Co. Act 
Release No. 26322 (``June 1995 Order'') Entergy Enterprises, Inc. 
(``EEI'') is authorized, among other things, to engage in 
development activities with respect to potential investments by 
Entergy in various energy, energy-related and other nonutility 
businesses. The June 1995 Order also authorized EEI to provide 
various management, administrative and support services to certain 
of its associate companies, other than Excepted Companies, as 
defined below, to provide consulting services to associate and 
nonassociates companies and to provide operations and maintenance 
services (``O&M Services'') directly, or indirectly, through other 
subsidiaries of Entergy (``O&M Subs''), to nonassociate companies 
and to certain of its associate companies, using the skills and 
resources of other Entergy system companies.
    \3\ Entergy Global Power Operations Corporation and its wholly 
owned subsidiary, Entergy Power Operations U.S., Inc., were recently 
organized by Entergy as O&M Subs under the June 1995 Order. 
Applicants represent that to date, neither company has entered into 
any agreements for the provision of O&M services.
    \4\ Since 1990, Entergy Power, Inc. (``EPI'') has been engaged 
in the business of marketing and selling its capacity and related 
energy at wholesale to nonassociate bulk power purchasers on market 
based terms and conditions. EPI currently owns a 21.5% undivided 
ownership interest in Unit No. 2 of the Independence Steam Electric 
Generating Station (``Independence 2'') and a 100% ownership 
interest in Unit No. 2 of the Ritchie Steam Electric Generating 
Station (``Ritchie 2''), at 544 megawatt (``MW'') oil- and gas-fired 
generating facility. Together, EPI's interest in Independence 2 and 
Ritchie 2 represents an aggregate of 809 MW of generating capacity. 
EPI is presently authorized by the Federal Energy Regulatory 
Commission (``FERC'') to sell, at market based rates, up to an 
aggregate of 1,500 MW of capacity and energy. To facilitate these 
sales, EPI receives electric transmission service under the Entergy 
system's open access transmission tariff.
    \5\ Entergy Power Marketing Corp. (``EPMC'') was originally 
organized in 1995 as an EWG, defined below, to engage in the 
marketing and brokering of electric power at wholesale. Coincident 
with Commission order dated January 6, 1998, Holding Co. Act Release 
No. 26812, EPMC relinquished its EWG status. EPMC currently engages 
in the brokering and marketing of energy commodities in wholesale 
and retail markets in the United States, and risk management and 
other activities related to its energy commodities business. 
Applicants assert that EPMC does not own or operate any facility 
that would cause it to fall within the definition of an ``electric 
utility company'' or a ``gas utility company'' under the Act.
    \6\ By Commission order dated December 28, 1992, Holding Co. Act 
Release No. 25718, Entergy Integrated Solutions, Inc. (``EIS'') was 
formed as a wholly owned subsidiary of EEI to engage in, among other 
things, the energy management services business and the provision of 
related consulting services. EIS's primary business is the 
installation and maintenance of high efficiency lighting equipment 
through multiyear sales contracts for small to medium size 
commercial customers. Under Commission order dated July 27, 1995, 
Holding Co. Act Release No. 26342, EIS recently broadened its 
product offerings to include the design, installation, operation and 
maintenance of high efficiency air conditioning, refrigeration and 
energy management systems for commercial, institutional and 
government customers.
    \7\ Entergy Nuclear, Inc. (``ENI''), a wholly owned subsidiary 
of EEI, was formed as an O&M Sub to engage in the business of 
operating and managing nuclear power facilities under the June 1995 
Order. ENI has entered into a contract to provide services to Maine 
Yankee Atomic Power Company through September 30, 1998 in connection 
with the decommissioning of the Maine Yankee Nuclear Plant. ENI may 
enter into agreements with other utility systems to provide O&M 
Services.
    \8\ Entergy Operations Services, Inc. (``EOSI''), a wholly owned 
subsidiary of EEI was formed as an O&M Sub under the June 1995 Order 
to engage in the business of operating and maintaining fossil-fueled 
generation, transmission and distribution assets of utility 
companies, municipalities and large commercial and industrial 
customers, primarily in the United States. EOSI's current business 
activities include the sale to nonaffiliates of various O&M 
Services, including services related to the design and construction 
of fossil-fueled generating facilities and other power projects. 
EOSI currently provides services to, or on behalf of, the City of 
Austin and ESKOM, a South African utility, with respect to the 
management and operations of certain coal-fired generating units and 
nuclear generating units owned and/or operated by these customers. 
Recently, EOSI has performed substation maintenance and construction 
work for several industrial customers.
---------------------------------------------------------------------------

New Subsidiaries

    Entergy proposes to acquire, directly or indirectly, the securities 
of one or more companies (``New Subsidiaries'') organized for the 
purposes of (a) performing service and development activities currently 
authorized by the Commission \9\ and/or (b) acquiring, owning and 
holding the securities of one or more associate companies. These 
associate companies would include exempt wholesale generators 
(``EWGs''),\10\ foreign utility companies (``FUCOs''),\11\ exempt 
telecommunications companies (``ETCs''),\12\ energy-related companies 
(``ERCs''),\13\ O&M Subs, other New Subsidiaries and certain 
subsidiaries of Entergy (``Authorized Subsidiary Companies'').\14\ 
EWGs, FUCOs, ETCs, ERCs, O&M Subs, New Subsidiaries and Authorized 
Subsidiary Companies are referred to in this Application collectively 
as ``Nonutility Companies''.
---------------------------------------------------------------------------

    \9\ See note 15 below.
    \10\ EWGs are defined in section 32 of the Act.
    \11\ FUCOs are defined in section 33 of the Act.
    \12\ ETCs are defined in section 34 of the Act.
    \13\ ERCs are defined in rule 58 under the Act.
    \14\ The Authorized Subsidiary Companies are the Applicants, 
other than Entergy.
---------------------------------------------------------------------------

    New Subsidiaries may be direct or indirect subsidiaries of Entergy, 
and may perform development activities and administrative services and/
or consulting services, as described below. Investments by Entergy in 
New Subsidiaries may take the form of any combination of: (i) purchases 
of capital shares, partnership interests, member interests in limited 
liability companies, trust certificates or other forms of equity 
interests (collectively, ``Capital Stock''); (ii) capital 
contributions; (iii) open account advances without interest; (iv) 
loans; and (v) Guarantees, as defined below, issued in support of 
securities or other obligations of New Subsidiaries. The source of 
funds for direct or indirect investments by Entergy in any New 
Subsidiary include (a) borrowings authorized by Commission orders dated 
February 26, 1997 (HCAR No. 26674); (b) proceeds from the sale of 
Entergy common stock authorized by Commission order dated March 25, 
1997 (HCAR No. 26693) and June 6, 1996 (HCAR No. 26528); (c) proceeds 
derived from securities issuances authorized by the Commission in 
future orders; and (d) other available cash resources. Loans by Entergy 
to a New Subsidiary will have interest rates and maturity dates that 
are designed to provide a return to Entergy of not less than Entergy's 
effective cost of capital. To the extent not exempt or otherwise 
authorized by the Commission, initial investments in the Capital Stock 
of New Subsidiaries will be included in the Aggregate Authorization, as 
described below.
    To the extent that Entergy provides funds to a New Subsidiary which 
are used to invest in any EWG or FUCO, the amount of the investment 
will be included in the calculation of ``aggregate investment'' 
required under rule 53. Moreover, to the extent that Entergy provides 
funds to a New Subsidiary which are used to invest in an ERC, the 
amount of the investment will be included in the calculation of 
``aggregate investment'' required under rule 58.
    From time to time, Entergy proposes to consolidate or reorganize 
all or any part of its ownership interests in Nonutility Companies and/
or New Subsidiaries to the extent these restructuring activities are 
not exempt or otherwise authorized by the Commission.

Guarantees

    Entergy and Nonutility Companies also propose to issue guarantees 
or provide other forms of credit support or enhancements (collectively, 
``Guarantees'') to or for the benefit of Nonutility Companies in an 
aggregate amount not to exceed $750 million (``Aggregate 
Authorization''), through December 31, 2002. Guarantees may take the 
form of Entergy or a Nonutility Company agreeing to guarantee, 
undertake reimbursement obligations, assume liabilities or other 
obligations with respect to or act as surety on, bonds, letters of 
credit, evidences of indebtedness, equity commitments, performance and 
other obligations undertaken by Entergy or its associate Nonutility 
Companies. Entergy represents that the terms and conditions of 
Guarantees will be established through arm's length negotiations based 
upon current market conditions. Entergy further undertakes that any 
Guarantee it or any Nonutility Company issues will be without recourse 
to any System Operating Company.
    In determining what portion of the Aggregate Authorization is 
available for use, the amount of any guarantee previously issued and 
outstanding under the June 1995 Order will reduce Aggregate 
Authorization by an equal amount.\15\ However, the amount of any 
Guarantee exempt from the Act or otherwise authorized by the Commission 
would not reduce the Aggregate Authorization.
---------------------------------------------------------------------------

    \15\ The June 1995 Order authorizes Entergy to finance the 
performance of certain services and the organization of O&M Subs 
through purchases of common stock, capital contributions, open 
account advances, loans and guarantees provided by EWGs, FUCOs and 
other Nonutility Companies in an aggregate amount not to exceed $350 
million. This authorization expired on December 31, 1997.
---------------------------------------------------------------------------

    To the extent that Entergy provides Guarantees in support of its 
investment in any EWG or FUCO, the amount of the investment will be 
included in the calculation of ``aggregate investment'' required under 
rule 53. Moreover, to the extent that Entergy provides Guarantees in 
support of its investment in an ERC, the amount of the investment will 
be included in the calculation of ``aggregate investment'' required 
under rule 58.

O&M Subs

    Entergy also proposes to organize and acquire the Capital Stock of 
O&M Subs through December 31, 2002. O&M Subs will be formed as domestic 
or foreign corporations, partnership or other entities. Following the 
organization of an O&M Sub, investments in O&M Subs may take the form 
of (i) Additional purchases of Capital Stock; (ii) capital 
contributions or open account advances without interest; (iii) loans; 
(iv) Guarantees of the securities or other obligations of an O&M Sub; 
or (v) any combination of (i) to (iv) above. Loans by Entergy to O&M 
Subs will have

[[Page 8507]]

interest rates and maturity dates that are designed to provide a return 
to Entergy of not less than Entergy's effective cost of capital. To the 
extent not exempt or otherwise authorized by the Commission, initial 
investments in the Capital Stock of O&M Subs will be included in the 
Aggregate Authorization.
    Entergy proposes to continue to provide O&M Services,\16\ 
indirectly through one or more O&M Subs, to or for the benefit of 
associate and nonassociate developers, owners and operators of domestic 
and foreign power projects and other electric utility systems or 
facilities, including projects that Entergy may develop on its own, 
through an associate Nonutility Company, or in collaboration with third 
parties. O&M Subs proposes to charge fair market value for O&M Services 
performed. To the extent not exempt or otherwise authorized by the 
Commission, Entergy requests an exemption from the ``at-cost'' 
requirements of rules 90 and 91 for services rendered to associate 
companies, other than an Excepted Company,\17\ provided that no O&M 
Services will be rendered to an associate power project unless the 
project (i) Is a FUCO or an EWG that derives no part of its income, 
directly or indirectly, from the generation and sale of electric energy 
within the United States; (ii) is an EWG that sells electricity at 
market-based rates which have been approved by the FERC or the relevant 
state public utility commission, provided that the purchaser is not an 
Excepted Company; (iii) is a ``qualifying facility'' (``QF'') under the 
Public Utility Regulatory Policies Act of 1978, as amended (``PURPA''), 
that sells electricity exclusively at rates negotiated at arm's length 
to one or more industrial or commercial customers purchasing the 
electricity for their own use and not for resale, or to an electric 
utility company (other than an Excepted Company) at the purchaser's 
``avoided cost'' as determined under the regulations under PURPA; or 
(iv) is an EWG or QF that sells electricity at rates based upon its 
cost of services, as approved by the FERC or any state public utility 
commission having jurisdiction, provided that the purchaser of the 
electricity is not an Excepted Company.
---------------------------------------------------------------------------

    \16\ O&M Services would include, but not be limited to, 
development, engineering, design, construction and construction 
management, pre-operational start-up, testing and commissioning, 
long-term operations and maintenance, fuel procurement, management 
and supervision, technical and training, administrative support, 
market analysis, consulting, coordination and any other managerial, 
technical, administrative or consulting required in connection with 
the business of owning or operating facilities used for the 
generation, transmission or distribution of electric energy 
(including related facilities for the production, conversion, sale 
or distribution of thermal energy) or coordinating their operations 
in the power market.
    \17\ Excepted Companies include the System Operating Companies, 
System Energy Resources, Inc., System Fuels, Inc., Entergy Services, 
Inc., Entergy Operations, Inc. or any other subsidiary Entergy may 
create whose activities and operations are primarily related to the 
domestic sale of electric energy at retail or at wholesale or the 
provision of related goods or services to Entergy's affiliates.
---------------------------------------------------------------------------

Securities Issuances by Nonutility Companies

    Entergy requests authorization for Nonutility Companies to issue 
and/or sell securities of any type, including the issuance of 
Guarantees (collectively, ``Securities''), to Entergy, to other 
Nonutility Companies or to nonassociate companies, including banks, 
insurance companies and other financial institutions from time to time 
through the earlier to occur of December 31, 2002 or the effective date 
of any rule adopted by the Commission exempting the proposed sale and 
issuance of Securities from the requirements of prior approval under 
sections 6(a) and 7 of the Act.
    Equity Securities issued by a Nonutility Company may include 
capital shares, partnership interests, member interests in limited 
liability companies, trust certificates or the equivalent security 
under applicable foreign law. Equity Securities may be denominated in 
either U.S. dollars of foreign currencies. Entergy requests that the 
Commission reserve jurisdiction over the modification by Nonutility 
Companies of the terms of their charters or other governing documents 
to effect the issuance of equity Securities, pending completion of the 
record. Entergy undertakes that it will file a post-effective amendment 
in this proceeding describing the proposed charter modification and 
obtain a supplemental order of the Commission authorizing the charter 
modifications.
    Entergy also requests that the Commission reserve jurisdiction over 
the issuance of any equity Securities not currently exempt under rule 
52(b) or otherwise authorized by the Commission (``Other Securities''). 
Entergy undertakes that it will file a post-effective amendment in this 
proceeding describing the general terms of the proposed Other 
Securities and obtain a supplemental order of the Commission 
authorizing the issuances of Other Securities.
    In connection with the issuance of debt Securities by Nonutility 
Companies, Entergy requests authorization for Nonutility Companies to 
enter into interest rate swaps, options and similar products to 
mitigate interest rate risk associated with debt Securities.
    Net proceeds from the issuance and sale of Securities will be used 
for general corporate purposes, including (1) loans to and/or equity 
investments in Nonutility Companies; (2) for the repayment, refinancing 
or redemption of outstanding securities of Entergy or Nonutility 
Companies originally issued for purposes of acquiring interests in 
Nonutility Companies or providing funds for the authorized business 
activities of these companies; and (3) for working capital or other 
cash requirements of Nonutility Companies. Entergy states that net 
proceeds will only be applied to finance activities that are exempt 
under the Act or otherwise authorized by the Commission.
    Entergy undertakes that no System Operating Company will incur any 
indebtedness, extend any credit, or sell or pledge its assets, directly 
or indirectly, to or for the benefit of any Nonutility Company. Entergy 
further undertakes that any Securities issued by a Nonutility Company 
will be nonrecourse to any System Operating Company.

Services by Nonutility Companies

    To the extent not exempt or otherwise authorized by the Commission, 
Entergy requests authorization for Nonutility Companies to provide 
other Nonutility Companies with administrative services 
(``Administrative Services''),\18\ to provide consulting services 
(``Consulting Services'')\19\ to other Nonutility Companies and to 
nonassociate companies, and to engage in development activities 
(``Development Activities''),\20\ all on a world-wide basis.
---------------------------------------------------------------------------

    \18\ Administrative Services would include, without limitation, 
corporate and project development and planning, management, 
administrative, employment, tax, legal, accounting, engineering, 
consulting, marketing, utility performance and electric data 
processing services, and intellectual property development, 
marketing and other support services.
    \19\ Consulting Services would include, without limitation, 
providing technical capabilities and expertise primarily in the 
areas of electric power generation, transmission and distribution 
and ancillary operations.
    \20\ Development Activities would include, without limitation, 
investigating sites, research, engineering and licensing activities, 
acquiring options and rights, contract drafting and negotiation, 
legal, accounting and financial analysis, preparing and submitting 
bids and proposals, and other activities necessary to identify and 
analyze investment opportunities on behalf of companies in the 
Entergy system, excluding Excepted Companies.
---------------------------------------------------------------------------

    The Applicants state that Administrative Services, Consulting 
Services and Development Activities

[[Page 8508]]

would generally be performed at cost. The Applicants further state that 
to the extent that any Nonutility Company uses the expertise or 
resources of an Excepted Company in connection with the performance of 
Administrative Services, Consulting Services or Development Activities, 
such expertise or resources shall be provided in a manner consistent 
with the terms and conditions contained in the June 1995 Order.
    To the extent not exempt or otherwise authorized by the Commission, 
Entergy requests an exemption from the ``at cost'' requirements of 
rules 90 and 91 for the performance of Administrative Services, 
Consulting Services and Development Activities by Nonutility Companies 
for associate Nonutility Companies, provided that no Excepted Company 
shall be engaged or otherwise involved, directly or indirectly, in the 
performance of Administrative Services, Consulting Services or 
Development Activities that are provided to Nonutility Companies at a 
price other than at cost. Nonutility Companies would continue to 
provide Consulting Services to nonassociate companies at market rates.

Payment of Dividends

    To the extent not exempt from the Act or otherwise authorized by 
the Commission, Entergy requests authorization for Nonutility Companies 
to declare and pay dividends out of capital or unearned surplus to 
their immediate parent companies through December 31, 2002, subject to 
applicable corporate law and any applicable financing agreement which 
restricts distributions to shareholders.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-4204 Filed 2-18-98; 8:45 am]
BILLING CODE 8010-01-M