

[Federal Register: October 12, 2005 (Volume 70, Number 196)]
[Notices]               
[Page 59379-59380]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12oc05-111]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-28043]

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

October 5, 2005.
    Notice is hereby given that the following filing(s) has/have been 
made with the Commission under 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 27, 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 27, 2005, the 
application(s) and/or declaration(s), as filed or as amended, may be 
granted and/or permitted to become effective.

Entergy Corporation (70-9049; 70-9123; 70-10202)

    Entergy Corporation (``Entergy''), 639 Loyola Avenue, New Orleans, 
LA 70113, a registered holding company, has filed post-effective 
amendments to its original declaration/applications (``Amended 
Declarations'') under sections 6(a), 7, 9(a), 10, 12(b), 12(c),13(b), 
32 and 33 of the Act and rules 42, 43, 45, 46, 53, 54, 83, 90 and 91 
under the Act.

I. Existing Orders

    By order dated June 22, 1999 (Holding Company Act Release No. 
27039; File No. 70-9123) (``Original Order'') Entergy was authorized, 
among other things, to finance its exempt wholesale generator (``EWG'') 
and foreign utility company (``FUCO'') (collectively, ``Exempt 
Projects'') investments by providing guarantees and other forms of 
credit support regarding the securities and other obligations of these 
entities in an aggregate amount not to exceed $750 million.
    By order dated June 13, 2000 (Holding Company Act Release No. 
27184; File No. 70-9049) (``2000 Order'') the Original Order was 
modified to authorize Entergy, among other things, to issue securities 
for the purpose of investing in Exempt Projects and to provide credit 
support for the securities and obligations of the Exempt Projects to 
the extent that its ``aggregate investment'' (as defined in rule 53 of 
the Act) in the Exempt Projects did not exceed 100% of its consolidated 
retained earnings.
    By order dated June 30, 2004 (Holding Company Act Release No. 
27864; File No. 70-10202) (``2004 Order'') Entergy was authorized, 
among other things, to issue securities and use the proceeds from the 
issuances to fund investments in Exempt Projects, as long as the 
``aggregate investment'' (as defined in rule 53 of the Act) did not 
exceed 100% of Entergy's consolidated retained earnings as set forth in 
the 2000 Order.

II. Rule 54

    The transactions approved in the Original Order, 2000 Order and 
2004 Order were each subject to the provisions of rule 54 under the 
Act. Rule 54 provides that, in determining whether to approve the issue 
or sale of any securities for purposes other than the acquisition of 
any Exempt Projects or other transactions unrelated to Exempt Projects, 
the Commission shall not consider the effect of the capitalization or 
earnings of subsidiaries of a registered holding company that are EWGs 
or FUCOs if the requirements of rule 53(a), (b) and (c) are 
satisfied.\1\
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    \1\ Under rule 53(a), the Commission shall not make certain 
specified findings under sections 7 and 12 in connection with a 
proposal by a holding company to issue securities for the purpose of 
acquiring the securities of, or other interest in, an EWG, or to 
guarantee the securities of an EWG, if each of the conditions in 
paragraphs (a)(1) through (a)(4) are met, provided that none of the 
conditions specified in paragraphs (b)(1) through (b)(3) of rule 53 
exists.
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    In the Amended Declarations, Entergy states that it is ineligible 
for the safe harbor provisions of rule 54 that were relied upon by the 
Commission in issuing the Original Order, 2000 Order and 2004 Order 
because it no longer satisfies the condition contained in rule 
53(b)(1), as discussed below.\2\ Accordingly, Entergy requests 
authority to issue and sell securities to continue to finance the 
acquisition of EWGs or to guarantee the security of an EWG when the 
event described in rule 53(b)(1) of the Act has occurred. Entergy must, 
in

[[Page 59380]]

accordance with rule 53(c), affirmatively demonstrate that the issue 
and sale of a security to finance the acquisition of an EWG or the 
guarantee of a security of an EWG will not have a substantial adverse 
impact upon the financial integrity of the registered holding company 
system and will not have an adverse impact on any utility subsidiary, 
its customers or on the ability of State commissions to protect the 
subsidiary or customers.
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    \2\ Entergy states that all of the other criteria of rule 53(a) 
and (b) are satisfied, except with respect to rule 53(a)(1). 
However, Entergy states that while its ``aggregate investment'' in 
Exempt Projects exceeds the 50% of consolidated retained earnings 
limitation of rule 53(a)(1), Entergy is in compliance with the 2000 
Order which allows Entergy to invest up to 100% of its consolidated 
retained earnings in Exempt Projects. As of June 30, 2005, Entergy's 
aggregate investment in Exempt Projects was approximately $2.9 
billion and was equal to approximately 57% of Entergy's consolidated 
retained earnings of approximately $5 billion.
    Entergy states that it has complied with, and will continue to 
comply with, the record keeping requirements of rule 53(a)(2), the 
limitation in rule 53(a)(3) on the use of Entergy system domestic 
public utility subsidiary companies' personnel in rendering services 
to affiliated Exempt Projects, and the requirements of rule 53(a)(4) 
concerning the submission of certain filings and reports under the 
Act to retail regulatory commissions.
    Finally, none of the other conditions set forth in rule 53(b) 
currently exists. Specifically, as required by rule 53(b)(2), 
Entergy's average consolidated retained earnings for the four most 
recent quarterly periods have not decreased by 10% from the average 
for the previous four quarterly periods, and, as required by rule 53 
(b)(3), Entergy did not report operating losses in its previous 
fiscal year attributable to its investments in Exempt Projects in 
excess of 5% of Entergy's consolidated retained earnings.
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III. Rules 53(b)(1) and 53(c)

A. Rule 53(b)(1)

    Rule 53(b)(1) states that the safe harbor provided by the rule 
generally is not available if: (1) The registered holding company or 
any subsidiary company having assets with book value exceeding 10% or 
more of consolidated retained earnings has been the subject of a 
bankruptcy proceeding; (2) the average consolidated retained earnings 
for the four most recent quarterly periods have decreased by 10% from 
the average for the previous four quarterly periods and the aggregate 
investment in EWGs and FUCOs exceeds two percent of total capital 
invested in utility operations; or (3) in the previous fiscal year, the 
registered holding company reported operating losses attributable to 
its direct or indirect investments in EWGs and FUCOs, and the losses 
exceed an amount equal to 5% of consolidated retained earnings.
    On September 23, 2005, Entergy New Orleans, Inc. (``ENO''), a 
public utility subsidiary of Entergy, filed a voluntary petition for 
relief under Chapter 11 of the U.S. Bankruptcy Code (``Bankruptcy 
Code'') in the United States Bankruptcy Court for the Eastern District 
of Louisiana. The book value of ENO's assets exceeded 10% of Entergy's 
``consolidated retained earnings'' as of June 30, 2005. Consequently, 
the circumstances described in rule 53(b)(1) have occurred.
    The bankruptcy petition was precipitated by the unanticipated and 
devastating impact of Hurricane Katrina, which destroyed substantial 
portions of ENO's facilities, disrupted its revenues, and, with the 
evacuation of the City of New Orleans (``City''), eliminated at least 
in the short term, the quality of ENO's customer base, which is 
directly linked to the fortunes of the City. ENO is continuing in 
possession of its properties and has continued to operate its business 
as a debtor-in-possession pursuant to sections 1107(a) and 1108 of the 
Bankruptcy Code.\3\
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    \3\ On September 26, 2005, the Commission issued an emergency 
order (Holding Company Act Release No. 28036) authorizing Entergy 
and ENO to enter into a secured $200 million credit facility and 
allowing ENO to borrow up to $150 million under the credit facility. 
In addition the order modified two outstanding orders so as to 
eliminate the requirements that ENO maintain common equity of at 
least 30% of its consolidated capitalization and investment grade 
credit ratings.
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    ENO's most pressing concern, and the immediate cause of its 
bankruptcy filing, is the liquidity crisis resulting from the 
hurricane's severe disruption to operations. ENO estimates that over 
one hundred thousand of its customers are presently unable to accept 
electric and gas service, and will remain unable to accept such service 
for a period of time that cannot yet be determined. Other customers in 
the New Orleans area who have had their utility services restored have 
been displaced by Hurricane Katrina. The ordinary cycle of customer 
payment of utility bills has been shattered. As a result, ENO's cash 
receipts have been significantly below normal levels since the 
hurricane.

B. Rule 53(c)

    In accordance with rule 53(c), Entergy believes that the 
transactions authorized in the Original Order, 2000 Order and 2004 
Order (to the extent they involve the issuance of securities by Entergy 
to finance the acquisition of EWGs), (i) will not have a substantial 
adverse impact upon Entergy's financial integrity and (ii) will not 
have an adverse impact on Entergy's utility subsidiaries (including 
ENO), their customers or on the ability of Entergy's state and local 
regulators to protect the subsidiaries or customers. In support of its 
position, Entergy states that:
    1. As of June 30, 2005, Entergy's aggregate investment in Exempt 
Projects was equal to 17% of Entergy's total consolidated 
capitalization, 15% of consolidated net utility plant and 18% of the 
market value of Entergy's common stock. As of March 31, 2000 (the most 
recent calendar quarter preceding the 2000 Order), Entergy's aggregate 
investment in Exempt Projects was equal to 7% of Entergy's total 
capitalization, 7% of Entergy's consolidated net utility plant and 24% 
of the market value of Entergy's outstanding common stock.
    2. Entergy's consolidated retained earnings have grown by an 
average of 12% annually during the period since the Commission issued 
the 2000 Order (i.e., from June 30, 2000 through June 30, 2005).
    3. Income from Entergy's investments in Exempt Projects has 
contributed positively to its overall earnings during the period since 
the Commission issued the 2000 Order.
    4. As of March 31, 2000 (the most recent calendar quarter preceding 
the 2000 Order), Entergy's consolidated capitalization ratio was 
approximately 50.0% debt and approximately 50.0% equity, consisting of 
approximately 5.0% preferred stock and approximately 45.0% common 
stock. As of June 30, 2005, Entergy's consolidated capitalization ratio 
was approximately 50.6% debt and approximately 49.4% equity, consisting 
of approximately 2.3% preferred stock and approximately 47.1% common 
stock. These ratios are within industry ranges set by the independent 
debt rating agencies for BBB-rated electric utility companies.
    5. As of the date of the Amended Declarations, each of the 
considerations set forth in the 2000 Order, in support of Entergy's 
assertion that its existing and proposed level of investment in Exempt 
Projects would not have an adverse impact on any Entergy operating 
utility subsidiaries or their ratepayers, or on the ability of 
interested state commissions to protect the utilities and their 
customers, continues to apply.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Jill M. Peterson,
Assistant Secretary.
 [FR Doc. E5-5580 Filed 10-11-05; 8:45 am]

BILLING CODE 8010-01-P
