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U.S. Securities and Exchange Commission

SECURITIES AND EXCHANGE COMMISSION

(Release No. 35-27787; 70-10157)

Entergy Mississippi, Inc.

Order Authorizing Financing Transactions; Reservation of Jurisdiction

December 29, 2003

Entergy Mississippi, Inc. ("EMI"), Jackson, Mississippi, a wholly-owned electric utility subsidiary of the Entergy Corporation, a registered holding company under the Public Utility Holding Act of 1935, as amended ("Act"), has filed with the Securities and Exchange Commission ("Commission") an application-declaration, as amended ("Application") under sections 6(a), 7, 9(a), 10, 12(b), and 12(c) of the Act and rules 44, 45, 46, 53 and 54 under the Act. The Commission issued a notice of the filing of the Application on November 21, 2003 (HCAR No. 27767).

Introduction

EMI requests the authorization of the Commission to (i) engage in ongoing financing activities and (ii) create specified types of new subsidiaries as part of those activities. By order dated December 26, 2000 (HCAR No. 27317), the Commission authorized EMI to engage in a program of external financing and related transactions through December 31, 2003 ("Current Order"). In particular, the Commission authorized EMI to (i) issue and sell up to a combined aggregate principal amount of $540 million of first mortgage bonds and debentures, with maturities not greater than fifty years, (ii) issue and sell up to a combined aggregate principal amount of $50 million of preferred stock and, through one or more special purpose subsidiaries, preferred securities, (iii) enter into arrangements for the issuance and sale of tax-exempt bonds in an aggregate principal amount of up to $46 million for the financing of pollution control facilities and sewage and solid waste disposal facilities, including the issuance and pledge of first mortgage bonds issued as collateral security for those tax-exempt bonds, in an aggregate principal amount of up to $52 million (that $52 million is not included in the $540 million limit in (i) above) and the purchase of letters of credit and insurance as collateral security for those tax-exempt bonds, and (iv) enter into arrangements for the issuance of municipal securities in an aggregate principal amount of up to $100,000,000, including the issuance and pledge of first mortgage bonds as collateral security for those municipal securities in an aggregate principal amount of up to $115 million (that $115 million was not included in the $540 million referenced in (i) above). That order authorized fees, commissions and expenses of the underwriters to be incurred in connection with the first mortgage bonds, debentures, preferred stock and tax exempt bonds up to 2% of the principal amount to be sold and, in the case of preferred securities and debentures issued under a subordinated debenture indenture, 3.25% of the principal amount to be sold.

Previous Authorization

By order dated October 1, 2002 (HCAR No. 27572), EMI was authorized, in connection with the issuance and sale of bonds, debentures, debentures issued under a subordinated debenture indenture, preferred stock, preferred securities, tax-exempt bonds and municipal securities, to incur fees, commissions and expenses of the underwriters not to exceed the lesser of 3.25% of the principal amount, respectively, to be sold or those generally paid at the time of pricing for sales of first mortgage bonds, debentures, debentures issued under a subordinated debenture indenture, subsidiary interests, preferred securities, tax-exempt bonds or municipal securities, respectively, having the same maturity, issued by companies of comparable credit quality and having similar terms, conditions and features.

Summary of Requested Approvals

EMI now requests authorization for a program of external financing and other related proposals for the period through March 31, 2007 ("Authorization Period"), as follows:

  1. EMI requests authority to issue and sell from time to time first mortgage bonds ("First Mortgage Bonds"), preferred stock ("Preferred Stock"), unsecured long-term indebtedness ("Long-Term Debt") and, directly or indirectly through one or more financing subsidiaries (as described in (v) below), other forms of preferred or equity-linked securities ("Equity Interests"), in a combined aggregate amount of up to $900 million;
     
  2. In connection with the issuance of Equity Interests, EMI requests authority to issue Notes (as defined below) to the extent of the related issuance of Equity Interests and Equity Contribution (as defined below);
     
  3. EMI intends 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 $50 million, for the financing or refinancing of certain pollution control facilities and sewage or solid waste disposal facilities. In connection with the issuance and sale of those Tax-Exempt Bonds, EMI requests authority to issue and pledge, of collateral bonds (First Mortgage Bonds issued as collateral security for those Tax-Exempt Bonds) ("Collateral Bonds") in an aggregate principal amount of up to $55 million (which $55 million is not included in the $900 million limit in (i) above);
     
  4. EMI intends to enter into arrangements for the issuance of municipal securities ("Municipal Securities") in an aggregate principal amount of up to $300 million. In connection with the issuance of those Municipal Securities, EMI requests authority to issue and pledge municipal collateral bonds (First Mortgage Bonds issued as collateral security for Municipal Securities) ("Municipal Collateral Bonds") in an aggregate principal amount of up to $350 million (that $350 million is not included in the $900 million referenced in (i) above); and
     
  5. EMI requests authority (a) to acquire the equity securities of one or more Financing Subsidiaries (as defined below), Special Purpose Subsidiaries (as defined below) and Partner Subs (as defined below), which would be organized solely to facilitate financing as discussed below; (b) to guarantee the securities issued by Financing Subsidiaries and Special Purpose Subsidiaries, to the extent not exempt under rule 45(b) and rule 52, and (c) to have the Financing Subsidiaries and/or Special Purpose Subsidiaries pay EMI, either directly or indirectly, dividends out of capital.
     

Proposed Financing Program

EMI requests authority to issue and sell from time to time during the Authorization Period First Mortgage Bonds, Long-Term Debt, Preferred Stock and Equity Interests in an aggregate amount up to $900 million. EMI also intends to enter into arrangements for the issuance and sale on its behalf of up to an aggregate principal amount of (i) $50 million of Tax-Exempt Bonds (and, in connection with that issuance and sale EMI requests authority to issue and pledge up to an aggregate principal amount of $55 million of Collateral Bonds, which $55 million is not included in the $900 million limit above) and (ii) $300 million of Municipal Securities (and, in connection with those securities, EMI requests authority to issue and pledge of up to an aggregate principal amount of $350 million of Municipal Collateral Bonds, which $350 million is not included in the $900 million above).

EMI contemplates that the First Mortgage Bonds, Long-Term Debt, Tax-Exempt Bonds (including Collateral Bonds, if any), Municipal Securities (including Municipal Collateral Bonds, if any), Preferred Stock, and Equity Interests 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 securities without registration under the Securities Act of 1933 ("Securities Act") in reliance upon one or more applicable exemptions from registration under the Securities Actor to the public in transactions registered under that Act either (i) through underwriters selected by negotiation or competitive bidding or (ii) through selling agents, acting either as agent or as principal, for resale to the public either directly or through dealers.

First Mortgage Bonds

EMI proposes to issue First Mortgage Bonds under its Mortgage and Deed of Trust, dated of February 1, 1988, to The Bank of New York (formerly Bank of Montreal Trust Company) and Stephen J. Giurlando (successor to Z. George Klodnicki), as Trustees, as amended and supplemented by twenty-one supplemental indentures ("Supplemental Indentures") and as proposed to be further amended and supplemented by additional Supplemental Indentures, each relating to one or more new series of First Mortgage Bonds ("Mortgage"). The First Mortgage Bonds would be issued on the basis of unfunded net property additions and/or previously retired bonds, as permitted and authorized by the Mortgage. First Mortgage Bonds (i) may be subject to optional or mandatory redemption, in whole or in part, at par or at premiums above their principal amount, (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 under 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) would have a maturity ranging from one year to fifty years.

The maturity dates, interest rates, redemption and sinking fund provisions and conversion features, if any, of the First Mortgage Bonds of a particular series, as well as any associated placement, underwriting or selling agent fees, commissions and discounts, would be established by negotiation or competitive bidding. The interest rate on First Mortgage Bonds would not exceed at the time of issuance the greater of (i) if issued at a fixed rate, 500 basis points over U.S. Treasury securities having a remaining term comparable to the term of series, or, if issued at a floating rate, 500 basis points over the London Interbank Offered Rate ("LIBOR") for the relevant interest rate period, and (ii) a spread over U.S. Treasury securities or LIBOR, as the case may be, that is consistent with similar securities of comparable credit quality and maturities issued by other companies.

In each Supplemental Indenture relating to a series of First Mortgage Bonds, EMI may create a dividend covenant relating to its payment of common stock dividends.

Long-Term Debt

EMI also proposes to issue and sell from time to time, directly or through a Financing Subsidiary, long-term indebtedness. Long-Term Debt of a particular series (i) would be unsecured, (ii) may be convertible into any other securities of EMI (except common stock), (iii) would have a maturity ranging from one year to fifty years, (iv) may be subject to optional and/or mandatory redemption, in whole or in part, at par or at premiums above their principal amount, (v) may be entitled to mandatory or optional sinking fund provisions, (vi) may be issued at fixed or floating rates of interest, (vii) may provide for reset of the coupon under a remarketing arrangement, 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, of Long-Term Debt of a particular series, as well as any associated placement, underwriting or selling agent fees, commissions and discounts, would be established by negotiation or competitive bidding. The interest rate on Debt would not exceed at the time of issuance the greater of (i) if issued at a fixed rate, 500 basis points over U.S. Treasury securities having a remaining term comparable to the term of series, or, if issued at a floating rate, 500 basis points over LIBOR for the relevant interest rate period and (ii) a spread over U.S. Treasury securities or LIBOR, as the case may be, that is consistent with similar securities of comparable credit quality and maturities issued by other companies.

Preferred Stock and Equity Interests

EMI proposes to issue and sell shares of its Preferred Stock, Cumulative, $100 Par Value ("$100 Preferred"), as currently authorized by its Restated Articles of Incorporation, as amended ("Articles"). In accordance with the Articles, EMI had authorized and unissued at June 30, 2003, 1,675,001 shares of $100 Preferred. In addition to this denomination, if Preferred Stock shares with different denominations are likely to have a materially better market reception than shares of $100 Preferred, EMI may issue and sell series of Preferred Stock to underwriters for deposit with a bank or trust company ("Depositary"). The underwriters would then receive from the Depositary and deliver to purchasers, in a subsequent public offering, shares of depositary preferred stock, each share of which would represent a stated fraction of a share of the new series of $100 Preferred. EMI also seeks the flexibility to issue Equity Interests directly or indirectly through one or more special-purpose Finance Subsidiaries (see below) (including specifically, trust preferred securities).

Preferred Stock or Equity Interests may be issued in one or more series with those rights, preferences and priorities, including those related to redemption, designated in the instrument creating each series, as determined by EMI's board of directors or an authorized officer. Preferred Stock or Equity Interests may be redeemable or may be perpetual. The dividend rate on any series of Preferred Stock or Equity Interests would not exceed at the time of issuance the greater of (a) if issued at a fixed rate, 500 basis points over the yield to maturity of a U.S. Treasury security having a remaining term comparable to the term of series, or, if issued at a floating rate, 500 basis points over LIBOR for the relevant interest rate period and (b) a rate that is consistent with similar securities of comparable credit quality and maturities issued by other companies. Dividends or distributions on Preferred Stock or Equity Interests, each of which may be issued at fixed or floating dividend or distribution rates, would be made periodically and to the extent funds are legally available for that purpose, but may be made subject to terms that allow the issuer to defer dividend payments for specified periods.

Tax-Exempt Bonds (including Collateral Bonds, if any)

EMI requests authority to enter into arrangements for the issuance by one or more governmental authorities ("Issuers") on behalf of EMI of up to $50 million in aggregate principal amount of Tax-Exempt Bonds (including the possible issuance and pledge by EMI of up to $55 million in aggregate principal amount of Collateral Bonds, which $55 million is not included in the $900 million limit referenced above), and EMI proposes to enter into one or more leases, subleases, installment sale agreements, refunding agreements or other agreements and/or supplements and/or amendments to those agreements ("Facilities Agreements") with the respective Issuers that would contemplate the issuance and sale by the Issuers of one or more series of Tax-Exempt Bonds in an aggregate principal amount of up to $50 million under one or more trust indentures and any supplements to those indentures ("Indentures") between the Issuer(s) and one or more trustees. Under the terms of each Facilities Agreement, EMI would be obligated to make payments sufficient to provide for payment by the Issuer 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, net of any underwriters' discounts and other expenses payable from proceeds, would be applied to finance, or refinance tax-exempt bonds issued for the purpose of financing, certain EMI pollution control facilities and sewage or solid waste disposal facilities ("Facilities"). Under the terms of each Facilities Agreement, EMI would agree to purchase, acquire, construct and install Facilities unless the Facilities are already in operation. In addition, under the terms of the Facilities Agreements, the respective Issuers may purchase from EMI the subject Facilities that EMI would then repurchase from Issuer.

The Tax-Exempt Bonds of a particular series (i) would have a maturity ranging from one year to fifty years, (ii) may be subject to optional or mandatory redemption, in whole or in part, at par or at premiums above their principal amount, (iii) may be entitled to mandatory or optional sinking fund provisions, (iv) may be issued at fixed or floating rates of interest, (v) may provide for reset of the coupon under a remarketing arrangement, (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 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 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, of Tax-Exempt Bonds of a particular series, as well as any associated placement, underwriting or selling agent fees, commissions and discounts, would be established by negotiation or competitive bidding. The interest rate on Tax-Exempt Bonds would not exceed at the time of issuance the greater of (a) if issued at a fixed rate, 400 basis points over U.S. Treasury securities having a remaining term comparable to the term of series, or, if issued at a floating rate, 400 basis points over LIBOR for the relevant interest rate period, and (b) a spread over U.S. Treasury securities or LIBOR, as the case may be, that is consistent with similar securities of comparable credit quality and maturities issued on behalf of other companies.

Municipal Securities (including Municipal Collateral Bonds, if any)

EMI intends to arrange for the issuance of up to $300 aggregate principal amount of Municipal Securities (and, in that connection, EMI requests authority to issue and pledge up to $350 million in aggregate principal amount of Municipal Collateral Bonds, which $350 million is not included in the $900 million limit referenced above), and EMI proposes to enter into one or more agreements, either directly or indirectly or through an affiliate of EMI, with governmental authority as may be authorized by state or local law ("Municipal Entities"), whereby the Municipal Entity would issue securities to the public on behalf of EMI or would loan money to EMI through a bank, an affiliate of EMI, or other person. EMI would enter into arrangements to benefit from certain tax exemptions offered by a state or local taxing authority. Certain purchasers of Municipal Securities may benefit from state or local income tax exemptions on interest they receive from the Municipal Securities. Under the terms of the related agreement with the Municipal Entity, EMI would be obligated to make payments sufficient to provide for the Municipal Entity 's payment of the principal or redemption price of, premium (if any) and interest on, and other amounts owing with respect to the Municipal Securities, together with related expenses.

The proceeds of the sale of Municipal Securities, net of any underwriters' discounts or other expenses payable from proceeds, would be applied to finance certain costs of EMI. The Municipal Entity would agree to pay to EMI an amount equal to the proceeds of the Municipal Securities.

The Municipal Securities of a particular series (i) would have a maturity ranging from one year to fifty years, (ii) may be subject to optional and/or mandatory redemption, in whole or in part, at par or at premiums above their principal amount, (iii) may be entitled to mandatory and/or optional sinking fund provisions, (iv) may be issued at fixed or floating rules of interest, (v) may provide for reset of the coupon under a remarketing arrangement, (vi) may be called from existing investors by a third party, (vii) may be backed by a municipal securities insurance policy, (viii) may be supported by credit support as a bank letter of credit and reimbursement agreement, (ix) may be supported by a lien subordinate to the Mortgage on certain of EMI's facilities and other assets, and (x) may be supported by the issuance and pledge of Municipal Collateral Bonds.

The maturity dates, interest rates, redemption and sinking fund provisions and conversion features, if any, of Municipal Securities of a particular series, as well as any associated placement, underwriting or selling agent fees, commissions and discounts, would be established by negotiation or competitive bidding. The interest rate on Municipal Securities would not exceed at the time of issuance the greater of (i) if issued at a fixed rate, 500 basis points over U.S. Treasury securities having a remaining term comparable to the term of series, or if issued at a floating rate, 500 basis points over LIBOR for the relevant interest rate period, and (ii) a spread over U.S. Treasury securities or LIBOR, as the case may be, that is consistent with similar securities of comparable credit quality and maturities issued on behalf of other companies.

Financing Subsidiaries and Special Purpose Subsidiaries

EMI requests authority to acquire, directly or indirectly, the equity securities of one or more Financing Subsidiaries, Special Purpose Subsidiaries and Partner Subs, which would be organized specifically for the purpose of facilitating the issuance of Equity Interests that would be reported by EMI on its financial statements or the financial statements' footnotes. EMI represents that it has in place sufficient internal controls to enable it to monitor the creation and use of any of these entities. No Financing Subsidiary or Special Purpose Subsidiary would acquire or dispose of, directly or indirectly, any interest in any "utility asset," as that term is defined under the Act.

EMI, as noted above, proposes to acquire all of the outstanding shares of common stock or other equity interests of one or more Financing Subsidiaries. In connection with its financing transactions, EMI may enter into one or more guarantee or other credit support agreements in favor of those Financing Subsidiaries.

Any Financing Subsidiary or Special Purpose Subsidiary organized by EMI under the authority granted by the Commission in this order would be organized only if in management's opinion the creation and utilization of that Financing Subsidiary or Special Purpose Subsidiary would likely result in tax savings, increased financial flexibility, increased access to capital markets or lower cost of capital for EMI.

In connection with the issuance of certain types of Equity Interests, EMI seeks authorization for itself and for its Financing Subsidiaries to organize one or more separate Special Purpose Subsidiaries as any one or any combination of (i) a limited liability company, (ii) a limited partnership, (iii) a business trust, or (iv) any other domestic entity or structure that is considered advantageous by EMI. In the event a Special Purpose Subsidiary is organized as a limited liability company, EMI 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 a Special Purpose Subsidiary is organized as a limited partnership, EMI 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 Partner Sub, a limited partnership interest in that Special Purpose Subsidiary to ensure that the Special Purpose Subsidiary would have a limited partner to the extent required by applicable law.

EMI, a Financing Subsidiary and/or a Partner Sub would acquire all of the common stock or all of the general partnership or other common equity interests, 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 Special Purpose Subsidiary) ("Equity Contribution"). EMI 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 would apply both the Equity Contribution made to it and the proceeds from the sale of Equity Interests to purchase Notes. Alternatively, EMI and/or a Financing Subsidiary may enter into a loan agreement or agreements with any Special Purpose Subsidiary under which the Special Purpose Subsidiary would loan to EMI 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 EMI and/or the Financing Subsidiary would issue to the Special Purpose Subsidiary Notes evidencing the borrowings. The Financing Subsidiary or the Special Purpose Subsidiary would then transfer the proceeds (directly or indirectly) to EMI, resulting in its payment of dividends out of capital to EMI. The terms (e.g., interest rate, maturity, amortization, prepayment terms, default provisions, etc.) of the Notes would generally be designed to parallel the terms of the Equity Interests to which the Notes relate. The maximum principal amount of Notes would not exceed the aggregate of the related Equity Contribution and Equity Interests.

EMI seeks authorization for itself and for its Financing Subsidiaries to guarantee, solely in connection with the issuance of Equity Interests by a Special Purpose Subsidiary, (i) payment of dividends or distributions on securities by the Special Purpose Subsidiary if and to the extent Special Purpose Subsidiary has funds legally available for that purpose, (ii) payments to the holders of securities due upon liquidation of a Special Purpose Subsidiary or redemption of the Equity Interests of a Special Purpose Subsidiary, and (iii) certain additional amounts that may be payable in respect of Equity Interests. Alternatively, EMI 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 that Special Purpose Subsidiary would be entitled to receive, out of the assets of that 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 of the Equity Interests plus any accrued and unpaid dividends or distributions.

The constituent instruments of each Special Purpose Subsidiary would provide, among other things, that the Special Purpose Subsidiary's activities would be limited to the issuance and sale of Equity Interests from time to time and lending to a Financing Subsidiary or Partner Sub the proceeds of the sale of those Equity Interests and the Equity Contribution to the Special Purpose Subsidiary, as well as certain other related activities.

The amount of any long-term debt or preferred securities issued by any Finance Subsidiary would be counted against any limitation on the amounts of similar types of securities that EMI may issue directly as set forth in this order or in any order issued in the future to the extent that EMI guarantees securities.

EMI's Representations

EMI represents that:

  1. at all times during the Authorization Period, EMI and Entergy will each maintain common equity of at least 30% of total capitalization (based upon the financial statements filed with the most recent quarterly report on Form 10-Q or annual report on Form 10-K); and
     
  2. no guarantees or other securities may be issued in reliance upon the authorization in this order unless (1) the security to be issued, if rated, is rated investment grade; (2) all outstanding securities of EMI that are rated are rated investment grade; and (3) all outstanding securities of Entergy that are rated are rated investment grade ("Investment Grade Ratings Criteria"). For the purposes of this provision, a security will be deemed to be rated "investment grade" if it is rated investment grade by Moody's Investors Service, Standard & Poor's, Fitch Ratings or any one other 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. EMI further requests that the Commission reserve jurisdiction over the issuance of any guarantee or other security at any time that one or more of the Investment Grade Ratings Criteria are not satisfied.
     

Use of Proceeds

Except as otherwise provided above, the proceeds from the financings authorized in this order would be used for EMI's general corporate purposes, including (i) financing its capital expenditures, (ii) repaying, redeeming, refunding or purchasing any of its securities under rule 42 and those issued on EMI's behalf under section 9(c)(1), and (iii) financing its working capital requirements.

Reporting

EMI will to file statements in accordance with rule 24 within ten days after the consummation of any financing transaction involving Special Purpose Subsidiaries authorized in this order, which statements shall contain the following: (i) a representation that the financial statements of EMI account for all Special Purpose Subsidiaries in accordance with generally accepted accounting principles; (ii) a description of each Special Purpose Subsidiary, including the following information: (1) its name; (2) the value of EMI's direct or indirect, through a Financing Subsidiary, investment in it; (3) the balance sheet account where the investment and the cost of the investment are booked; (4) the amount invested in the subsidiary by EMI, either directly or through a Financing Subsidiary; (5) the form of organization (e.g., corporation, limited partnership, trust, etc.); (6) the percentage owned by EMI, either directly or through a Financing Subsidiary; (7) the identities of all other owners, if the Special Purpose Subsidiary is not 100% owned by EMI, either directly or through a Financing Subsidiary; (8) the purpose of the investment in the subsidiaries; and (9) the amounts and types of securities to be issued by the subsidiaries; (iii) the amount of consideration received; (iv) the amount of any guarantee and/or Notes issued in connection with the offering; and (v) to the extent any securities are issued by any entity as authorized in this order that are not set forth on the balance sheet of EMI, then the terms and conditions of those securities will be included.

Compliance with Rules 53 and 54

The proposed transactions are also subject to 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 wholesale generator" ("EWG") or "foreign utility company" ("FUCO") or other transactions unrelated to EWGs or FUCOs ("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. 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) of rule 53 are met, provided that none of the conditions specified in paragraphs (b)(1) through (b)(3) of rule 53 exists.

With respect to the condition set forth in clause (1) of rule 53(a), Entergy's "aggregate investment" in Exempt Projects (approximately $2.21 billion) is equal to approximately 56% of Entergy's "consolidated retained earnings" as of March 31, 2003 (approximately $3.9 billion), and thus currently exceeds the 50% limitation in rule 53(a)(1) as a result of increased investments in EWGs relating to the acquisition and/or construction of "eligible facilities" (as defined in section 32 under the Act). Although Entergy's current aggregate investment in EWGs and FUCOs exceeds the limit specified in rule 53(a)(1), the Commission in the June 2000 Order authorized Entergy to make investments in amounts up to 100% of its consolidated retained earnings in Exempt Projects. Entergy's aggregate investment in Exempt Projects is within the parameters authorized in the June 2000 Order.

EMI represents that all of the other criteria of rule 53(a) and (b) are satisfied. Specifically, the Entergy System 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 EWGs and FUCOs, 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 conditions set forth in rule 53(b) exists.

Jurisdiction

EMI states that no state commission, and no federal commission, other than the Commission, has jurisdiction over any of the transactions proposed in the Application.

Fees, Commissions and Expenses

EMI states that the fees, commissions and expenses, including underwriting fees, arrangement fees and up-front fees, incurred or expected to be incurred in connection with the proposed transactions would not exceed 5% of the proceeds of transactions in the case of First Mortgage Bonds, Long-Term Debt, Preferred Stock, Equity Interests, Tax-Exempt Bonds, and Municipal Securities.

Conclusion

Due notice of the filing of the Application has been given in the manner prescribed in rule 23 under the Act, and no hearing has been requested of or ordered by the Commission. On the basis of the facts in the record, it is found that the applicable standards of the Act and rules under the Act are satisfied, and no adverse findings are necessary.

IT IS ORDERED, under the applicable provisions of the Act and the rules under the Act, that, except as to matters as to which jurisdiction has been reserved, the Application, as amended, be, and hereby is, granted and permitted to become effective immediately, subject to the terms and conditions prescribed in rule 24 under the Act.

IT IS FURTHER ORDERED that jurisdiction is reserved over EMI's issuance of any guarantee or other security at any time that one or more of the Investment Grade Ratings Criteria are not satisfied.

For the Commission, by the Division of Investment Management, pursuant to delegated authority.


Jill M. Peterson
Assistant Secretary


http://www.sec.gov/divisions/investment/opur/filing/35-27787.htm

Modified: 06/28/2004