

[Federal Register: September 27, 2005 (Volume 70, Number 186)]
[Notices]               
[Page 56514-56520]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27se05-112]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-28032]

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

September 19, 2005.
    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 under the Act. 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 amendment(s) is/are available for public 
inspection through the Commission's Branch 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 October 14, 2005, to the Secretary, Securities and Exchange 
Commission, 100 F Street, NE., Washington, DC 20549-9303, 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 the 
case of an attorney at law, by certificate) should be filed with the 
request. Any request for hearing should identify specifically the 
issues of facts 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 October 14, 2005, 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. (70-10324)

    Entergy Corporation (``Entergy''), a Delaware corporation and 
registered holding company, and its wholly-owned subsidiaries Entergy 
Louisiana, Inc., (``Company''), a Louisiana corporation, and Entergy 
Services, Inc. (``ESI''), a Delaware corporation all located at 639 
Loyola Avenue, New Orleans, LA 70113, (together, ``Applicants''), have 
filed an application-declaration (``Application'') with the Commission 
under sections 6(a), 7, 9(a), 10, 12(b), 12(c) and 13(b) of the Act and 
rules 42, 43, 45, 46, 54, 87, 90 and 91 under the Act.

Introduction and Background Information

Description of the Company

    The Company, which is a direct subsidiary of Entergy, owns and 
operates a retail electric utility business in certain parishes in the 
state of Louisiana. The Company, together with Entergy's other domestic 
retail electric utility subsidiaries (i.e., Entergy Arkansas, Inc. 
(``EAI''), Entergy Gulf States, Inc. (``EGSI''), Entergy Mississippi, 
Inc. (``EMI'') and Entergy New Orleans Inc. (``ENOI'')), collectively 
provide electric service to approximately 2,662,000 customers in 
portions of Arkansas, Louisiana (including the City of New Orleans), 
Mississippi and Texas. As of December 31, 2004, the Company has 
approximately 662,000 electric utility customers and owns or leases 
approximately 5363 MWs of gas/oil and nuclear generating capacity in 
Louisiana. In addition, in June 2005, the Company acquired a 718 MW 
power plant from Perryville Energy Partners, LLC, located near Monroe, 
Louisiana. Among its other assets, the Company also holds (i) a 33% 
equity ownership interest in SFI (``SFI Ownership Interest''), a fuel 
procurement company formed in 1972 as a jointly-owned nonutility 
subsidiary of Entergy's four original domestic retail operating 
companies (i.e., EAI, EMI, ENOI and the Company), as well as (ii) 
$14,223,000 in notes receivable from SFI (``SFI Notes Receivable'') 
relating to loans provided by the Company and the other original 
operating companies for the purpose of financing SFI's operations.

Reason for Proposed Transactions

    Under the Louisiana Revised Statutes Section 47.601A, the Company 
is obligated to pay corporation franchise taxes in the state of 
Louisiana. These taxes impose a substantial financial obligation on the 
Company and its ratepayers. For example, the Company's 2005 Louisiana 
franchise tax liability was $10.3 million. Louisiana law requires every 
Louisiana corporation (and every non-Louisiana corporation that 
qualifies to do business in Louisiana or is doing business in 
Louisiana) to pay this tax. However, Louisiana law does not subject 
limited liability companies to this tax. For this reason, in Docket No. 
U-20925 (RRF 2004) of the Louisiana Public Service Commission 
(``LPSC''), the LPSC staff recommended that the Company review the 
feasibility of restructuring its business form into a limited liability 
company in order to eliminate the Company's obligation to pay franchise 
taxes and the Company agreed to this recommendation. Applicants state 
that the proposed restructuring would implement the LPSC staff 
recommendation in Docket No. U-20925. Upon the approval of the proposed 
restructuring, the resulting decrease in the Company's jurisdictional 
revenue requirement (which consists of the anticipated franchise tax 
savings less the costs associated with the restructuring, amortized 
over an appropriate period of time) would be fully reflected in the 
Company's rates.
    Specifically, the Company proposes to restructure itself, through a 
two step process, into a new company, Holdings, and (i) a newly formed 
direct subsidiary of Holdings, referred to herein as ELL, which at the 
time of the Merger will become a public utility company, succeed to all 
of the Company's utility operations and be allocated substantially all 
of Holding's assets and

[[Page 56515]]

other properties (including all of the utility assets), as well as 
assume substantially all of the obligations of Holdings in effect prior 
to the Merger (including all of its debt securities and leases) and 
(ii) another newly formed subsidiary of Holdings, ELP, which at the 
time of the Merger, will be allocated certain undeveloped real property 
of the Company, known as the St. Rosalie and Wilton Plant Sites 
(``Plant Sites''), as well as the SFI Ownership Interest and SFI Notes 
Receivable, and assume any obligations/liabilities relating to these 
assets. Applicants propose that Holdings become an intermediate holding 
company and, following the Merger, register as a holding company under 
the Act.
    Applicants propose that Holdings serve as the parent of ELL, since 
Entergy would itself be exposed to Louisiana franchise tax liability in 
the event that ELL was to become a direct Entergy subsidiary. 
Applicants also propose that ELP be formed to hold the Plant Sites, the 
SFI Ownership Interest and the SFI Notes Receivable since (i) Holdings 
cannot retain any real property or other physical assets without also 
becoming subject to Louisiana franchise tax liability and (ii) Holdings 
would become subject to the jurisdiction of the LPSC if it retains the 
SFI Ownership Interest and SFI Notes Receivable, which currently are 
assets of the Company in rate base.

Proposed Restructuring

Conversion of the Company to Holdings, a Texas Corporation
    The first step in the proposed restructuring is to change the place 
of incorporation of the Company from Louisiana to Texas. Since the 
Texas merger statute is only available for use by Texas corporations, 
this step allows the use of the flexible merger provisions of Article 
5.01 of the Texas Business Corporation Act (``TBCA'') in the formation 
of ELL and ELP. Section 164 of the Louisiana Business Corporation Law 
and Article 5.17 of the TBCA permit a Louisiana corporation to convert 
to a Texas corporation. Under these statutes, the Company will adopt a 
Plan of Conversion under which the Company will continue its existence 
under the name of Entergy Louisiana, Inc., a Texas corporation 
(``Holdings''). Under the Plan of Conversion, all of the Common Stock 
and Preferred Stock of the Company will remain outstanding as the 
Common Stock and Preferred Stock of Holdings and the holders of these 
securities will have the same rights and interests in Holdings as they 
had in the Company immediately prior to the effective date of the 
Merger.\1\ All of the ownership rights and interests in the real estate 
and other assets of the Company will continue to be owned by Holdings, 
subject to existing liens and encumbrances. Similarly, all liabilities 
and obligations of the Company will continue to be liabilities and 
obligations of Holdings, without impairment or diminution. It is 
intended that the Conversion of the Company to a Texas corporation 
under the Plan will qualify as a tax-free reorganization under Internal 
Revenue Code (``IRC'') Section 368(a)(1)(F), and not result in the 
imposition of any federal income tax.
---------------------------------------------------------------------------

    \1\ The Company has outstanding 146,970,607 shares of Common 
Stock, without par value, all of which are held by Entergy. The 
Company's outstanding Preferred Stock consists of 635,000 shares of 
Preferred Stock, with a par value of $100 per share, issued in eight 
series and 1,480,000 shares of Preferred Stock, with a par value of 
$25 per share.
---------------------------------------------------------------------------

The Merger
    Applicants state that the second and final step in the proposed 
restructuring is to form ELL, the new Texas limited liability company 
that will own and operate the Company's retail electric business, and 
ELP, the new Texas limited liability company, will own the Plant Sites, 
the SFI Ownership Interest and the SFI Notes Receivable. Under Article 
5.01 of the TBCA, Holdings will enter into a Plan of Merger 
(``Merger''), under which Holdings will continue to exist and ELL and 
ELP will be formed. Following the Merger, all of the Common Stock and 
Preferred Stock of Holdings will continue to be outstanding and will 
continue to be owned by the persons who owned these securities 
immediately prior to the Merger.\2\ Also (i) 146,970,607 units of 
Common Membership Interests of ELL (``ELL Common Units''), representing 
all of the issued and outstanding Common Membership Units of ELL and 
(ii) 100 units of Common Membership Interests of ELP (``ELP Common 
Units''), representing all of the issued and outstanding Common 
Membership Units of ELP, will be issued and allocated to Holdings. 
Substantially all of the real estate and other property owned, leased 
and claimed by Holdings immediately prior to the Merger will be 
allocated to and vested in ELL.\3\ However, Holdings will transfer to 
ELP the Plant Sites, the SFI Ownership Interest, the SFI Notes 
Receivable and working capital in an amount sufficient to fund the day-
to-day business operations of ELP (``ELP Assets''). The allocation of 
property to ELL under the merger provisions of the TBCA is intended to 
be tax free under I.R.C. Section 351. The allocation to ELP also will 
be tax free, because ELP will be a disregarded entity for federal 
income tax purposes.
---------------------------------------------------------------------------

    \3\ Applicants state that Entergy, as the holder of all of the 
Common Stock of Holdings, will consent to the Merger. While the 
Articles of Incorporation of the Company (and of Holdings) provide/
will provide that the holders of at least two-thirds of the 
outstanding shares of Preferred Stock must also be obtained in order 
to merge with another corporation or to sell or otherwise dispose of 
all or substantially all of the assets of the Company, such approval 
is not required in the event that the transaction is approved by the 
Commission under the Act. Therefore, Applicants state that, assuming 
approval is granted by the Commission, the consent of the holders of 
the Company's Preferred Stock is not required to consummate the 
Merger.
    \3\ The assets that will be allocated to ELL include 
approximately:
    (i) 6,081 MWs of electric generating capacity;
    (ii) 2,700 miles of transmission lines and associated 
transmission facilities and
    (iii) 20,362 pole miles of distribution lines and related 
facilities serving approximately 662,000 customers in Louisiana.
---------------------------------------------------------------------------

    Applicants state that all liabilities and obligations of Holdings 
immediately prior to the Merger will be allocated to ELL, except 
liabilities and obligations relating to the ELP Assets, which will be 
allocated to ELP.\4\ Holdings will have

[[Page 56516]]

continuing liability for those liabilities and obligations allocated to 
ELL and ELP at the time of the Merger as provided by law, but not for 
any obligation or liability incurred by ELL or ELP after the Merger.\5\ 
Holdings also will retain an amount of working capital sufficient to 
meet its business needs. ELL will succeed to and assume all of the 
Company's jurisdictional tariffs, rate schedules and service 
agreements, as well as all of the Company's franchises, and will 
provide electric service to the Company's customers without 
interruption. ELL will also be the successor to the Company with 
respect to the commitments and authorizations set forth in the various 
Commission orders and underlying applications, including those relating 
to such matters as the conduct of the Company's utility business or the 
sale of utility assets, the Company's transactions with associate 
companies and its financing transactions (except to the extent 
otherwise provided in this Application).
---------------------------------------------------------------------------

    \4\ Applicants state that the significant liabilities and 
obligations to be allocated to ELL include (as of December 31, 
2004):
    (i) $490 million of outstanding first mortgage bonds issued 
under the Company's Mortgage and Deed of Trust, dated April 1, 1944, 
as amended;
    (ii) $415 million of pollution control revenue bonds, $232 
million of which are secured by collateral first mortgage bonds;
    (iii) approximately $248 million present value of future net 
minimum lease payments under the lease of a portion of Waterford 3;
    (iv) lease payments relating to approximately $32 million of 
nuclear fuel and
    (v) obligations under various power purchase and sale 
agreements, including the Unit Power Sales Agreement with System 
Energy Resources, Inc. (``System Energy''), various transmission 
service and interconnection agreements, and various fuel purchase 
and related agreements with SFI or non-affiliates, such as the 
Liquid Fuels Purchase Contract, between SFI, as Seller, and EAI, 
EMI, ENOI and the Company, as Buyers; the Nuclear Fuel and Fuel 
Services Agreement between SFI and certain of the System operating 
companies (including the Company) and System Energy; and the Fuel 
Lease with River Fuel Company 2, Inc., providing for the 
lease of nuclear fuel for Waterford 3.
    The agreements governing these obligations do not prohibit the 
allocation of these obligations to ELL. The Company will obtain all 
required consents of parties to these agreements.
    Applicants state that while the Plan of Merger also provides 
that the liabilities and obligations associated with the Plant 
Sites, the SFI Ownership Interest and the SFI Notes Receivable will 
be allocated to ELP, there are not expected to be any obligations 
associated with the Plant Sites, other than the payment of related 
taxes and any maintenance expenses, and there are no outstanding 
obligations/liabilities associated with the ownership of the SFI 
related assets. Following the Merger, SFI will continue to provide 
fuel procurement services to ELL on the same basis as such services 
are currently provided to the Company and the other original Entergy 
operating companies, EAI, EMI and ENOI. As indicated above, the 
obligations associated with these services will be allocated to and 
assumed solely by ELL in its capacity as a customer of SFI.
    \5\ Under the Plan of Merger, ELL or ELP, as applicable, will 
reimburse Holdings for any liabilities or defense related expenses 
that Holdings incurs with respect to the liabilities and 
obligations, which are allocated to the entity.
---------------------------------------------------------------------------

Management of ELL and ELP
    Under the proposed Articles of Organization and Regulations of 
Entergy Louisiana, LLC and the proposed Articles of Organization and 
Regulations of Entergy Louisiana Properties, LLC, ELL and ELP will each 
be managed under the authority of managers, each of which will be 
called a Director. Directors will act by majority vote either at a 
meeting or without a meeting. Holders of ELL Common Units or ELP Common 
Units, as applicable (as well as holders of ``Preferred Units'' of ELL 
(as defined below), to the extent provided below) will have the right 
to vote in the election of Directors and on other matters requiring 
approval of the members of these entities. The Directors, by majority 
vote, will elect a president, who will also serve as the chief 
executive officer, as well as a treasurer, a secretary, one or more 
vice presidents and other officers.

Proposed Financing Transactions

Financing Transactions of Holdings
    As a result of the Merger, Holdings will become a holding company 
and will register under section 5 of the Act. Section 11(b)(2) of the 
Act requires that the Commission take action to ensure that ``the 
corporate structure or continued existence of any company in the 
holding company system does not unduly complicate the structure or 
inequitably distribute voting power among security holders.'' 
Consistent with this requirement, Applicants propose that, subsequent 
to the Merger, no outside party have an interest in Holdings and that 
Holdings have no outside security holders, lenders or customers (except 
as provided above with respect to Holdings' continuing liability as to 
securities issued or other obligations incurred and outstanding prior 
to the Merger). To effect this intent, within one year of the Merger 
effective date, Holdings proposes to redeem or repurchase and retire 
the preferred stock (``Preferred Stock'') previously issued by the 
Company, which will remain outstanding after the effective date of the 
Plans of Conversion and Merger. After the Preferred Stock has been 
redeemed, Holdings will amend its Articles of Incorporation to 
eliminate authority to issue Preferred Stock. Additionally, since the 
Plan of Merger provides that all outstanding short or long-term debt of 
the Company will be allocated to ELL and ELL will succeed to all of the 
Company's utility operations, Holdings will have no external debt 
holders or customers (except with respect to Holdings' continuing 
liability as to debt securities or customer obligations, which are 
outstanding prior to the Merger). Also, Entergy will continue to hold 
all of the outstanding Common Stock of Holdings. Applicants further 
propose that upon the effective date of the Merger, the Company's 
existing December 29, 2003 financing order (``Finance Order'') be 
terminated and that Holdings be authorized to participate in the Money 
Pool as a lender only, to the extent that it may, from time to time, 
have surplus funds. Inasmuch as Holdings is to be capitalized 
exclusively with equity and/or debt provided by Entergy, Holdings 
proposes to issue and sell equity or debt securities to Entergy from 
time to time through December 31, 2008 (``Authorization Period''),\6\ 
up to an aggregate amount of $500 million. Any debt securities issued 
to Entergy under this authorization will be designed to parallel 
Entergy's effective cost of capital and will have maturities not 
exceeding 50 years. Entergy also may elect to make capital 
contributions or non-interest bearing open account advances to 
Holdings, as authorized under rule 45. Applicants state that in no 
event will Holdings borrow from Entergy for the purpose of making loans 
to associate companies under the Money Pool.
---------------------------------------------------------------------------

    \6\ Although Applicants request that the Authorization Period be 
through December 31, 2008, because of the passage of the Energy 
Policy Act of 2005, which repeals the Act, the Authorization Period 
will be through February 8, 2006.
---------------------------------------------------------------------------

ELP Participation in Money Pool
    As a result of the Merger, ELP will be formed to own the Plant 
Sites, the SFI Ownership Interest and the SFI Notes Receivable. Since 
ELP will not be engaging in any other business operations and is not 
expected to have any on-going obligations/liabilities other than the 
payment of taxes, any expenses relating to its ownership of the Plant 
Sites and routine expenses associated with record-keeping and corporate 
maintenance requirements, it is anticipated that ELP will have minimal 
financing needs. To satisfy these financing needs, Applicants request 
authorization for ELP to participate in the Money Pool as a borrower 
(as well as a lender), through the Authorization Period, on the same 
basis as the other participating companies. The aggregate principal 
amount of ELP's borrowings at any one time outstanding through the 
Money Pool will not exceed $50 million. Any loans by ELP to other 
participants through the Money Pool will be made from ELP's available 
funds. ELP will not borrow funds for the purpose of making loans to 
associate companies through the Money Pool. Applicants further request 
that Holdings be authorized to participate in the Money Pool as a 
lender only.
ELL Financing Transactions
    Since ELL will be the successor to the Company's electric utility 
business, it will require authorization to issue debt and equity 
securities to provide financing to satisfy its working capital needs 
and for other general corporate purposes. Applicants state that the 
financing authorizations requested for ELL herein are substantially 
similar to the authorizations granted to the Company under the Finance 
Order. Upon the effective date of the Merger, Applicants request that 
the Finance Order be terminated and the financing authorizations 
requested for ELL herein will replace and supercede the authorizations 
granted under the Finance Order. In addition, as the successor to the 
Company, ELL proposes to succeed to the Company's existing 
authorization to issue short-term debt under the Money Pool Order. 
Specifically, under the Money Pool Order, ELL proposes to be 
authorized, through Authorization Period, to issue short-term debt, 
consisting of borrowings under the Money Pool or

[[Page 56517]]

one or more credit agreements, the issuance of commercial paper, or 
other forms of short-term financing, up to an aggregate amount of $225 
million. ELL proposes to be authorized to participate as a lender in 
the Money Pool to the extent of its available funds. Applicants also 
request authorization for ELL, from time to time through the 
Authorization Period, to enter into the following financing 
transactions:
    (i) To issue and sell units of preferred membership interests 
(``Preferred Units'') and, directly or indirectly, through one or more 
financing subsidiaries (as described below), other forms of preferred 
or equity-linked securities (``Equity Interests''), up to a combined 
aggregate amount of $200 million;
    (ii) To issue and sell from time to time first mortgage bonds 
(``First Mortgage Bonds'') and unsecured long-term indebtedness 
(``Long-term Debt''), in all cases having maturities of up to 50 years 
in a combined aggregate amount of up to $700 million;
    (iii) In connection with the issuance of Equity Interests, to issue 
Notes (as defined below) to the extent of the related issuance of 
Equity Interests and Equity Contribution (as defined below);
    (iv) To enter into arrangements for the issuance and sale from time 
to time of tax exempt bonds (``Tax-exempt Bonds''), in an aggregate 
principal amount of up to $420 million, for the financing or 
refinancing of certain pollution control facilities and/or solid waste 
disposal facilities and, in connection with the issuance and sale of 
these Tax-exempt Bonds, to issue and pledge collateral bonds (first 
mortgage bonds issued as collateral security for the tax-exempt bonds) 
(``Collateral Bonds'') in an aggregate principal amount of up to $470 
million (this $470 million is not included in the $700 million 
referenced in (ii) above) and
    (v) To acquire the equity securities of one or more Financing 
Subsidiaries (as defined below) and/or Special Purposes Subsidiaries 
(as defined below) and/or Partner Subs (as defined below), organized 
solely to facilitate financing, as discussed below; to guarantee the 
securities issued by the Financing Subsidiaries and/or Special Purpose 
Subsidiaries and to have the Financing Subsidiaries and/or Special 
Purposes Subsidiaries pay ELL, either directly or indirectly, dividends 
out of capital.
    Entergy contemplates that the Preferred Units, Equity Interests, 
First Mortgage Bonds, Long-term Debt, and Tax-exempt Bonds (including 
Collateral Bonds, if any) would be issued and sold directly to one or 
more purchasers in negotiated transactions, or to one or more 
investment banking or underwriting firms or other entities who would 
resell these securities without registration under the Securities Act 
of 1933 (``Securities Act'') in reliance upon one or more applicable 
exemptions from registration thereunder, or to the public in 
transactions registered under the Securities Act either through 
underwriters selected by negotiation or competitive bidding or through 
selling agents, acting either as agent or as principal, for resale to 
the public either directly or through dealers.
Preferred Membership Interests and Equity Interests
    Applicants propose that ELL issue and sell Preferred Units, as 
authorized by its proposed regulations.\7\ It is anticipated that 
holders of the Preferred Units will be eligible to vote, together with 
the holders of the ELL Common Units, for the election of Directors and 
on other matters requiring approval of the members of ELL. As the sole 
holder of the ELL Common Units, Holdings will have no less than 75% of 
the combined voting power of the ELL Common Units and, if applicable, 
the Preferred Units, and so will have sufficient voting power to elect 
all Directors of ELL.\8\ In addition, as is customary with preferred 
stock, the holders of the Preferred Units will be entitled to vote as a 
class on matters that may adversely affect their interests, such as 
changes in the terms of their Preferred Units, certain mergers and 
similar matters. In addition to Preferred Units, it is proposed that 
ELL have the flexibility to issue Equity Interests, directly or 
indirectly through one or more special purpose finance subsidiaries 
(including, specifically trust preferred securities), as described 
below.
---------------------------------------------------------------------------

    \7\ The Company, on behalf of ELL, may agree that ELL will sell 
Preferred Units and other securities prior to its formation, but the 
consummation of any sale shall be conditioned on the effectiveness 
of the Merger and of the Commission's authorization requested in 
this Application.
    \8\ The grant to the holders of the Preferred Units of the right 
to vote for Directors may require ELL to deconsolidate from Entergy 
for federal tax purposes. If ELL deconsolidates, then it will not be 
a party to the Entergy Corporation and Subsidiary Companies 
Intercompany Income Tax Consolidation Agreement, dated April 28, 
1988, as amended, and Holdings will retain the benefits and 
obligations of the Agreement.
---------------------------------------------------------------------------

    Applicants propose that Preferred Units or Equity Interests may be 
issued in one or more series with rights, preferences and priorities, 
including those relating to redemption, as may be designed in the 
instrument creating the series, as determined by ELL's directors or an 
officer authorized thereby. Preferred Units or Equity Interests may be 
redeemable or may be perpetual in duration. Distributions on Preferred 
Units or Equity Interests, each of which may be issued at fixed or 
floating dividend or distribution rates, will be made periodically and 
to the extent that funds are legally available for this purpose, but 
may be made subject to terms which allow the user to defer dividend or 
distribution payments for specified periods.
First Mortgage Bonds
    As previously discussed, under the Plan of Merger, substantially 
all of the Company's property, rights and obligations prior to the 
Merger will be allocated to and vested in ELL. This will include the 
Company's rights and obligations under the Company's Mortgage and Deed 
of Trust, dated as of April 1, 1944, to The Bank of New York (successor 
to Bank of Montreal Trust Company and the Chase National Bank of the 
City of New York) and Stephen J. Giurlando (successor to Mark F. 
McLaughlin, Z. George Klodnicki and Carl E. Buckley), as Trustees, as 
amended and supplemented by sixty supplemental indentures 
(``Supplemental Indentures''), each relating to one or more new series 
of First Mortgage Bonds (``Mortgage''). ELL may issue First Mortgage 
Bonds on the basis of unfunded net property additions and/or previously 
retired bonds as permitted or authorized by the Mortgage, as further 
supplemented by additional Supplemental Indenture(s).
    First Mortgage Bonds: (i) May be subject to optional and/or 
mandatory redemption, in whole or in part, at par or at premiums above 
the principal amount thereof; (ii) may be entitled to mandatory or 
optional sinking fund provisions; (iii) may be issued at fixed or 
floating rates of interest; (iv) may provide for reset of the coupon 
pursuant to a remarketing arrangement; (v) may be called from existing 
investors by a third party; (vi) may be backed by a bond insurance 
policy and (vii) will have a maturity ranging from one year to 50 
years. The maturity dates, interest rates, redemption and sinking fund 
provisions and conversion features, if any, with respect to First 
Mortgage Bonds of a particular series, as well as any associated 
placement, underwriting or selling agent fees, commissions and 
discounts, if any, will be established by negotiation or competitive 
bidding (subject, however, in the case of interest rates, to the limits 
set forth below). In each Supplemental Indenture relating to a series 
of First Mortgage Bonds, ELL may covenant that, so long as any First 
Mortgage Bonds of the series remain outstanding, ELL will not pay any 
cash

[[Page 56518]]

distributions on ELL Common Units, except from credits to retained 
earnings, plus a specified amount, plus any additional amounts approved 
by the Commission. However, ELL may determine not to include any 
provisions restricting its ability to pay distributions on ELL Common 
Units.
Long-Term Debt
    ELL, directly or through a Financing Subsidiary, may also issue and 
sell from time to time long-term indebtedness. Long-term Debt of a 
particular series: (i) Will be unsecured; (ii) may be convertible into 
any other securities of ELL (except ELL Common Units); (iii) will have 
a maturity ranging from one year to 50 years; (iv) may be subject to 
optional and/or mandatory redemption, in whole or in part, at par or at 
premiums above the principal amount thereof; (v) may be entitled to 
mandatory or optional sinking fund provisions; (vi) may provide for 
reset of the coupon pursuant to a remarketing arrangement; (vii) may be 
issued at fixed or floating rates of interest and (viii) may be called 
from existing investors by a third party.
    The maturity dates, interest rates, redemption and sinking fund 
provisions and conversion features, if any, with respect to Long-term 
Debt of a particular series, as well as any associated placement, 
underwriting or selling agent fees, commissions and discounts, if any, 
will be established by negotiation or competitive bidding (subject, 
however, in the case of interest rates, to the limits set forth below).
Tax-Exempt Bonds
    Applicants request authorization for ELL to enter into arrangements 
for the issuance by one or more governmental authorities (each, an 
``Issuer'') on behalf of ELL of up to $420 million in aggregate 
principal amount of Tax-exempt Bonds (and, in connection therewith, 
authorization is also requested for ELL to issue up to $470 million in 
aggregate principal amount of ELL Collateral Bonds, which $470 million 
is not included in the $700 million authorization requested herein for 
First Mortgage Bonds and Long-term Debt), and it is further proposed 
that ELL may enter into one or more leases, subleases, installment sale 
agreements or other agreements and/or supplements and/or amendments 
thereto (collectively, the ``Facilities Agreement''), or to enter into 
one or more refunding agreements and possible supplements and/or 
amendments thereto (collectively, the ``Refunding Agreement'') with the 
respective Issuer(s) that will contemplate the issuance and sale by the 
Issuer(s) of one or more series of Tax-exempt Bonds in an aggregate 
principal amount of up to $420 million under one or more trust 
indentures and/or supplements thereto (individually and collectively, 
the ``Indenture'') between the Issuer(s) and one or more trustees. 
Under the terms of each Facilities Agreement and/or each Refunding 
Agreement, ELL will be obligated to make payments sufficient to provide 
for payment by the Issuer(s) of the principal or redemption price of, 
premium (if any) and interest on, and other amounts owing with respect 
to the Tax-exempt Bonds, together with related expenses.
    The proceeds of the sale of Tax-exempt Bonds will be applied to 
financing, or refinancing tax-exempt bonds issued for the purpose of 
financing, certain ELL pollution control facilities and/or sewage or 
solid waste disposal facilities. Under the terms of each Facilities 
Agreement, ELL will agree to purchase, acquire, construct and install 
the facilities unless the facilities are already in operation. In 
addition, under the terms of the Facilities Agreement, the respective 
Issuer(s) may acquire by purchase from ELL the subject pollution 
control and/or sewage or solid waste disposal facilities that ELL will 
then repurchase from the Issuer(s).
    The Tax-exempt Bonds of a particular series: (i) Will have a 
maturity ranging from one year to 40 years; (ii) may be subject to 
optional and/or mandatory redemption, in whole or in part, at par or at 
premiums above the principal amount thereof; (iii) may be entitled to 
mandatory or optional sinking fund provisions; (iv) may provide for 
reset of the coupon pursuant to a remarketing arrangement; (v) may be 
issued at fixed or floating rates of interest; (vi) may be called from 
existing investors by a third party; (vii) may be backed by a municipal 
bond insurance policy; (viii) may be supported by credit support such 
as a bank letter of credit and reimbursement agreement; (ix) may be 
supported by a lien subordinate to the Mortgage on the facilities 
related to the Tax-exempt Bonds and (x) may be supported by the 
issuance and pledge of Collateral Bonds.
    The maturity dates, interest rates, redemption and sinking fund 
provisions and conversion features, if any, with respect to Tax-exempt 
Bonds of a particular series, as well as any associated placement, 
underwriting or selling agent fees, commissions and discounts, if any, 
will be established by negotiation or competitive bidding (subject, 
however, in the case of interest rates, to the limits set forth below).
Dividend/Distribution and Interest Rate Parameters
    Dividends/distributions and interest rates on the equity or debt 
securities proposed to be issued by ELL will be subject to certain 
limits. The dividend or distribution rate on any series of Preferred 
Units and Equity Interests or the interest rate on First Mortgage 
Bonds, Long-term Debt, Tax-exempt Bonds (including Collateral Bonds, if 
any) will not exceed, at the time of issuance, a rate that is 
consistent with similar securities of comparable credit quality and 
maturities issued by other companies, but in no event will: (i) The 
dividend/distribution rate (in the case of any equity securities issued 
at a fixed rate) exceed 500 basis points over the yield to maturity of 
a U.S. Treasury Security having a remaining term comparable to the term 
of the series; (ii) the interest rate (in the case of any debt 
securities issued at a fixed rate) exceed 500 basis points (or 400 
basis points with respect to Tax-exempt Bonds and any related 
Collateral Bonds) over U.S. Treasury Securities having a remaining term 
comparable to the term of the securities or (iii) the dividend/
distribution or interest rate exceed 500 basis points over the London 
Interbank Offering Rate (``LIBOR'') (or 400 basis points over LIBOR 
with respect to Tax-exempt Bonds or any related Collateral Bonds) for 
the relevant dividend/distribution or interest rate period in the case 
of any equity or debt securities issued at a floating rate.
    In connection with the issuance of Equity Interests, Applicants 
request authorization for ELL to acquire, directly or indirectly, the 
equity securities of one or more Financing Subsidiaries and/or Special 
Purpose Subsidiaries and/or Partner Subs. These entities would be 
organized specifically for the purpose of facilitating the issuance of 
the Equity Interests, which would be reported by ELL on its financial 
statements or the footnotes relating thereto. Entergy represents that 
sufficient internal controls will be put in place of ELL to enable it 
to monitor the creation and use of any of these entities. Applicants 
further represent that no Financing Subsidiary or Special Purpose 
Subsidiary shall acquire or dispose of, directly or indirectly, any 
interest in any ``utility asset,'' as that term is defined under the 
Act.
    Applicants propose that ELL acquire all of the outstanding shares 
of common stock or other equity interests of one or more Financing 
Subsidiaries (``Financing Subsidiaries''). In connection with the 
issuance of Equity Interests, ELL may enter into one or

[[Page 56519]]

more guarantee or other credit support agreements in favor of a 
Financing Subsidiary. Any Financing Subsidiary or Special Purpose 
Subsidiary organized by ELL under the authority granted by the 
Commission in this proceeding will be organized only if, in 
management's opinion, the creation and utilization of the Financing 
Subsidiary or Special Purpose Subsidiary, will likely result in tax 
savings, increased financial flexibility, increased access to capital 
markets and/or lower cost of capital for ELL.
    Additionally, in connection with the issuance of certain types of 
Equity Interests, ELL and/or a Financing Subsidiary may organize one or 
more separate special purpose subsidiaries (``Special Purpose 
Subsidiaries'') as any one or any combination of: (i) A limited 
liability company under the Limited Liability Company Act (``LLC Act'') 
of the State of Delaware or other jurisdiction considered advantageous 
by ELL; (ii) a limited partnership under the Revised Uniform Limited 
Partnership Act of the State of Delaware or other jurisdiction 
considered advantageous by ELL; (iii) a business trust under the 
Business Trust Act of the State of Delaware or other jurisdiction 
considered advantageous by ELL or (iv) any other domestic entity or 
structure that is considered advantageous by ELL. In the event that any 
Special Purpose Subsidiary is organized as a limited liability company, 
ELL or a Financing Subsidiary may also organize a second special 
purpose wholly owned subsidiary under the General Corporation Law of 
the State of Delaware or other jurisdiction (``Partner Sub'') for the 
purpose of acquiring and holding Special Purpose Subsidiary membership 
interests in order to comply with any requirement under the applicable 
law that a limited liability company have at least two members. In the 
event that any Special Purpose Subsidiary is organized as a limited 
partnership, ELL or a Financing Subsidiary also may organize a Partner 
Sub for the purpose of acting as the general partner of the Special 
Purpose Subsidiary and may acquire, either directly or indirectly 
through the Partner Sub, a limited partnership interest in the Special 
Purpose Subsidiary to ensure that the Special Purpose Subsidiary will 
have a limited partner to the extent required by applicable law.
    ELL, a Financing Subsidiary and/or a Partner Sub will acquire all 
of the common stock or all of the general partnership or other common 
equity interests, as the case may be, of any Special Purpose Subsidiary 
for an amount not less than the minimum required by any applicable law 
(i.e., the aggregate of the equity accounts of the Special Purpose 
Subsidiary) (the aggregate of the investment by ELL, a Financing 
Subsidiary and/or a Partner Sub being referred to herein as the 
``Equity Contribution''). ELL and/or a Financing Subsidiary may issue 
and sell to any Special Purpose Subsidiary, at any time or from time to 
time in one or more series, unsecured subordinated debentures, 
unsecured promissory notes or other unsecured debt instruments 
(``Notes'') governed by an indenture or other document, and the Special 
Purpose Subsidiary will apply both the Equity Contribution made to it 
and the proceeds from the sale of Equity Interests by it from time to 
time to purchase Notes. Alternatively, ELL and/or a Financing 
Subsidiary may enter into a loan agreement or agreements with any 
Special Purpose Subsidiary under which the Special Purpose Subsidiary 
will loan to ELL and/or a Financing Subsidiary both the Equity 
Contribution to the Special Purpose Subsidiary and the proceeds from 
the sale of Equity Interests by the Special Purpose Subsidiary, from 
time to time, and ELL and/or the Financing Subsidiary will issue to the 
Special Purpose Subsidiary Notes evidencing the borrowings. The 
Financing Subsidiary or the Special Purpose Subsidiary will then 
transfer (directly or indirectly) the proceeds to ELL resulting in its 
payment of dividends out of capital to ELL. The terms (e.g., interest 
rate, maturity, amortization, prepayment terms, default provisions, 
etc.) of any Notes would generally be designed to parallel the terms of 
the Equity Interests to which the Notes relate (the maximum principal 
amount of such Notes will not exceed the aggregate of the related 
Equity Contribution and Equity Interests).
    ELL or any Financing Subsidiary also proposes to guarantee solely 
in connection with the issuance of Equity Interests by a Special 
Purpose Subsidiary: (i) Payment of dividends or distributions on such 
securities by the Special Purpose Subsidiary if and to the extent such 
Special Purpose Subsidiary has funds legally available therefore; (ii) 
payments to the holders of such securities due upon liquidation of such 
Special Purpose Subsidiary or redemption of the Equity Interests of 
such Special Purpose Subsidiary and (iii) certain additional amounts 
that may be payable in respect of such Equity Interests. Alternatively, 
ELL may provide credit support for any guarantee that is provided by a 
Financing Subsidiary.
    In the event of any voluntary or involuntary liquidation, 
dissolution or winding up of any Special Purpose Subsidiary, the 
holders of Equity Interests issued by a Special Purpose Subsidiary will 
be entitled to receive, out of the assets of the Special Purpose 
Subsidiary available for distribution to its shareholders, partners or 
other owners (as the case may be), an amount equal to the par or stated 
value or liquidation preference to the Equity Interests plus any 
accrued and unpaid dividends or distributions.
    The constituent instruments of each Special Purpose Subsidiary will 
provide, among other things, that the Special Purpose Subsidiary's 
activities will be limited to the issuance and sale of Equity Interests 
from time to time and the lending to a Financing Subsidiary or Partner 
Sub of the proceeds thereof and the Equity Contribution to the Special 
Purpose Subsidiary, and certain other related activities.
    The amount of any Equity Interests issued by any Finance Subsidiary 
shall be counted against the $200 limitation on the amount of Preferred 
Units and Equity Interests that ELL may issue directly, as set forth in 
this Application or in any other application-declaration that may be 
filed in the future, to the extent that ELL guarantees the securities.

Use of Proceeds

    The proceeds to be received by Holdings, ELP and ELL from the 
financings authorized by the Commission, under this Application-
Declaration, will be used for general corporate purposes, including (i) 
the financing of working capital requirements, (ii) financing, in part, 
investments by Holdings in ELP and ELL and (iii) the repayment, 
redemption, refunding or purchase by ELL of its securities.

Additional Representations

    Entergy and the Company make the following additional 
representations:
    (i) At all times during the Authorization Period, Entergy, Holdings 
and ELL will each maintain common equity of at least 30% of its 
consolidated capitalization (based upon the financial statements filed 
with the most recent Quarterly Report on Form 10-Q or Annual Report on 
Form 10-K or, with respect to Holdings and ELL, prior to the 
availability of these financial statements, based on the pro forma 
balance sheets, attached hereto as Exhibit FS 9). The term 
``consolidated capitalization'' is defined to include,

[[Page 56520]]

where applicable, all common equity (comprised of common stock or 
Common Units, additional paid-in capital, retained earnings, treasury 
stock and/or minority interests), Preferred Stock or Preferred Units, 
preferred securities, equity linked securities, Long-term debt, short-
term debt and current maturities.\9\
---------------------------------------------------------------------------

    \9\ Applicants state that the consequence of Entergy, Holdings 
or ELL failing to satisfy the 30% common equity to consolidated 
capitalization condition is that the applicable company would not be 
authorized to issue securities in a transaction subject to 
Commission approval, except for securities which would result in an 
increase in the common equity percentage.
---------------------------------------------------------------------------

    (ii) With respect to the securities issuance authority proposed in 
this Application on behalf of ELL: (a) Within four business days after 
the occurrence of a Ratings Event,\10\ Applicants will notify the 
Commission of its occurrence (by means of a letter, via fax, e-mail or 
overnight mail to the Office of Public Utility Regulation) and (b) 
within 30 days after the occurrence of a Ratings Event, Applicants will 
submit a post-effective amendment to this Application explaining the 
material facts and circumstances relating to that Ratings Event 
(including the basis on which, taking into account the interests of 
investors, consumers and the public as well as other applicable 
criteria under the Act, it remains appropriate for ELL to issue the 
securities for which authorization has been requested in this 
Application, so long as ELL continues to comply with the other 
applicable terms and conditions specified in the Commission's order 
authorizing the transactions requested in this Application). 
Furthermore, no securities authorized as a result of this Application 
will be issued following the 60th day after a Ratings Event by ELL if 
the downgraded rating(s) has or have not been upgraded to investment 
grade. Applicants request that the Commission reserve jurisdiction 
through the remainder of the Authorization Period over the issuance of 
any securities that ELL is prohibited from issuing as a result of the 
occurrence of a Ratings Event if no revised rating reflecting an 
investment grade rating has been issued.
---------------------------------------------------------------------------

    \10\ A ``Ratings Event'' will occur, with respect to securities 
proposed to be issued by ELL if (i) the security to be issued by 
ELL, pursuant to the authority sought in this Application-
Declaration, upon original issuance, is rated below investment 
grade; (ii) any outstanding security of ELL that is rated is 
downgraded below investment grade or (iii) any outstanding security 
of Entergy that is rated is downgraded below investment grade. For 
purposes of this provision, a security will be deemed to be rated 
``investment grade'' if it is rated investment grade by at least one 
nationally recognized statistical rating organization, as that term 
is used in paragraphs (c)(2)(vi)(E), (F) and (H) of rule 15c3-1 
under the Securities Exchange Act of 1934.
---------------------------------------------------------------------------

Distributions Out of Capital

    As a result of the proposed restructuring, substantially all of the 
assets of the Company will be allocated to ELL and the retained 
earnings of ELP will effectively be set to zero. ELP, therefore, may 
need to pay distributions to Holdings, its immediate parent company, 
out of capital. Accordingly, the Applicants request authorization for 
ELP to pay distributions out of capital, to the extent not otherwise 
authorized under the Act.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Jill M. Peterson,
Assistant Secretary.
 [FR Doc. E5-5175 Filed 9-26-05; 8:45 am]

BILLING CODE 8010-01-P
