[Federal Register Volume 69, Number 208 (Thursday, October 28, 2004)]
[Notices]
[Pages 62921-62924]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-2901]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27903]


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

October 22, 2004.
    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 November 15, 2004, to the Secretary, Securities and Exchange 
Commission, Washington, DC 20549-0609, 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 November 15, 2004, 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. (70-10240)

    Entergy Corporation (``Entergy''), a registered holding company, 
639 Loyola Avenue, New Orleans, LA 70113; Entergy's public utility 
subsidiaries: Entergy Arkansas, Inc., (``Arkansas''), 424 West Capitol 
Avenue, Little Rock, Arkansas 72201, Entergy Gulf States, Inc., (``Gulf 
States''), 350 Pine Street,

[[Page 62922]]

Beaumont, TX 77701, Entergy Louisiana, Inc., (``Louisiana''), 4809 
Jefferson Highway, New Orleans, LA 70121, Entergy Mississippi, Inc. 
(``Mississippi''), 308 East Pearl Street, Jackson, MS 39201, and 
Entergy New Orleans, Inc., (``New Orleans''), 1600 Perdido Building, 
New Orleans, LA 70112 (collectively the ``Operating Companies,'' and 
individually, an ``Operating Company''); System Energy Resources, Inc., 
(``System Energy''), 1340 Echelon Parkway, Jackson, MS 39213, a 
generating company subsidiary of Entergy; Entergy Operations, Inc., 
(``EOI''), 1340 Echelon Parkway, Jackson, MS 39213, a nuclear power 
plant operations subsidiary of Entergy; Entergy Energy Services, Inc. 
(``ESI''), 639 Loyola Avenue, New Orleans LA 77701, a service company 
subsidiary of Entergy; and System Fuels, Inc., (``SFI''), 350 Pine 
Street, Beaumont, TX 77701, a fuel supply company of four of the 
Operating Companies, (collectively, ``Applicants'') have filed an 
application-declaration (``Application'') under sections 6(a), 7, 9(a), 
10, and 12(b) of the Act and rules 43, 45, and 54 under the Act.

I. Background

    By order dated November 29, 2001 (HCAR No. 27470) (``Prior 
Order''), the Commission authorized through November 30, 2004: (1) The 
Operating Companies, System Energy, EOI, ESI and SFI to make unsecured 
short-term borrowings through the Entergy System Money Pool (``Money 
Pool''); (2) the Operating Companies and System Energy to issue and 
sell short-term debt; (3) Entergy to make loans to EOI, ESI and SFI, 
and for EOI, ESI and SFI to issue notes evidencing the loans made by 
Entergy and under external banks lines of credit; \1\ and (4) Entergy 
to guarantee the obligations of EOI, ESI and SFI under the external 
bank lines of credit.
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    \1\ EOI, ESI and SFI do not currently have any external bank 
lines of credit pursuant to this authorization.
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II. Proposed Transactions

    The Operating Companies, System Energy, EOI, ESI and SFI propose to 
continue, through November 30, 2007 (the ``Authorization Period''), to 
finance their interim capital needs through Money Pool borrowings as 
provided below. The Operating Companies and System Energy also request 
authority to issue notes to banks evidencing short-term borrowings and 
to issue and sell commercial paper in the amounts and under the terms 
and conditions set forth below.
    The Operating Companies and System Energy propose to effect short-
term borrowings through the Money Pool and through the issuance of 
notes evidencing borrowing from banks and through the issuance and sale 
of commercial paper in the following maximum amounts for each company: 
Arkansas, $235 million; Gulf States, $340 million; Louisiana, $225 
million; Mississippi, $160 million; New Orleans, $100 million; and 
System Energy, $140 million.
    In addition EOI, ESI, SFI and Entergy request authorization to 
extend (i) the maturities of the loan agreements authorized in the 
Prior Order between Entergy and each of EOI, ESI and SFI the notes 
issued to Energy pursuant to the loan agreements, and (ii) the existing 
authorization with respect to EOI, ESI and SFI issuing notes evidencing 
borrowings under loan agreements entered with one or more banks (and 
with respect to Entergy guaranteeing the obligations of EOI, ESI and 
SFI thereunder) through the Authorization Period in the following 
aggregate amounts: $20 million in the case of EOI and $200 million 
each, in the case of ESI and SFI, all as further set forth below.

A. Money Pool

    The Operating Companies, System Energy, Entergy, EOI, ESI and SFI 
(collectively, the ``Participants,'' and individually, a 
``Participant'') propose to participate in the Money Pool, which will 
be administered on behalf of the Participants by ESI under the 
direction of its Treasurer. The Money Pool will consist solely of 
available funds from the treasuries of the Participants, which will be 
loaned on a short-term basis (potentially as short as intra-day) to any 
one or more of the Participants in the Money Pool, other than Entergy. 
Entergy will be a participant in the Money Pool only to the extent that 
it has funds available to invest through the Money Pool, but in no 
event will Entergy be permitted to borrow funds held in the Money Pool.
    The determination of whether a Participant at any time has funds 
that may be available to the Money Pool will be made by, or under the 
direction of, its respective Treasurer or other designee. Participants 
will not make external borrowings for the purpose of making loans to 
other Participants in the Money Pool.
    The operation of the Money Pool will be designed and managed to 
match, on a daily basis, the available cash and borrowing requirements 
of the Participants, thereby reducing the need for borrowings to be 
made by the Participants from external sources. Although it is 
generally expected that the short-term borrowing requirements of the 
Operating Companies and System Energy will be met first with the 
proceeds of borrowing through the Money Pool, and then, only to the 
extent necessary with the proceeds of external borrowings, there may be 
circumstances where it may be desirable for one or more of the 
Participants to make short-term bank borrowings, notwithstanding the 
existence of available funds in the Money Pool.
    The Operating Companies and System Energy will have priority as 
borrowers from the Money Pool. EOI, ESI and SFI will be permitted to 
borrow through the Money Pool, only if, on a given day, there are funds 
available in the Money Pool after the needs of the Operating Companies 
and System Energy have been satisfied.
    Some of System Energy's existing credit arrangements require 
(absent waivers) that System Energy's Money Pool borrowings be deemed 
subordinated indebtedness to the extent that in the event of a default 
by System Energy or the insolvency, liquidation, reorganization or 
similar proceedings (a ``Default Condition'') affecting System Energy, 
no payments by System Energy of principal or interest on its Money Pool 
obligations may be made until all obligations of System Energy under 
these credit arrangements have been paid or otherwise provided for. 
Except where a Default Condition exists, System Energy would be 
permitted to make payments of principal and interest on account of its 
Money Pool borrowings.
    With respect to funds remaining in the Money Pool after 
satisfaction of the borrowing needs of the Participants, ESI, the 
administrator of the Pool, will invest the remaining funds and allocate 
the earnings on these funds among the Participants on a pro rata basis 
in accordance with their respective interest in the funds. ESI proposes 
to invest the excess funds in investments as are permitted by the 
provisions of Section 9(c) and Rule 40 of the Act.
    Subject to each Participant's borrowing limits specified above, the 
Participants making borrowing through the Money Pool (other than EOI, 
ESI, and SFI) will be entitled to borrow, on any given day, an amount 
of the total funds then available for lending to the Participants 
determined on the basis of an equal allocation of the funds among all 
borrowing Participants, except that in circumstances where one or more 
borrowing Participants would be provided with funds in excess of the 
Participant's respective borrowing

[[Page 62923]]

requirements, the excess will be available for loans equally allocated 
among the remaining borrowing Participants.
    All loans will be payable on demand (subject to the subordination 
provision described above in the case of System Energy), may be prepaid 
at any time without premium or penalty, and will bear interest payable 
monthly at a rate calculated on a daily basis, equal to the Daily 
Weighted Average Investment Rate of the Money Pool portfolio; provided 
however, that in the event, on and as of any particular day, there are 
no excess Money Pool funds invested in the Money Pool portfolio, the 
Daily Federal Funds Effective Rate as quoted by the Federal Reserve 
Bank of New York will be the rate of interest applicable to Money Pool 
loans and borrowings for that day. ``Daily Weighted Average Investment 
Rate'' as applied to any day, shall be calculated by multiplying (A) 
the aggregate of the total daily interest payable on all investments in 
the Money Pool portfolio (consisting of excess Money Pool funds not 
loaned to the Participants) outstanding as of that day by (B) 360, and 
dividing the product by the total amount invested in the Money Pool 
portfolio as of that day. For purpose of calculating the daily interest 
payable on each investment in the Money Pool portfolio in (A) above, 
the original cost of each investment is multiplied by its respective 
yield and the product is divided by 360.
    In the event that, on any given day, the available funds in the 
Money Pool are insufficient to satisfy the short-term borrowing 
requirements of one or more of the Operating Companies or System 
Energy, the Operating Company or System Energy, as the case may be, 
will effect short-term borrowing through bank loans and/or sales of 
commercial paper as provided below.

B. Lines of Credit

    Each of the Operating Companies and System Energy may establish 
lines of credit with various commercial banks. These lines of credit 
may be arranged on an individual basis, or on a consolidated basis with 
each other and with EOI, ESI and SFI.
    Borrowings from banks will be in the form customarily used by the 
lending bank, will be secured or unsecured, will be payable not later 
than one year from the date of issuance, and will bear interest at 
rates which will not exceed the greater of (a) 500 basis points over 
the comparable-term London Interbank Offered Rate (``LIBOR'') or (b) a 
gross spread over LIBOR that is consistent with bank borrowings by 
companies of the same or reasonably comparable credit quality and 
having the same or reasonably similar maturities and similar terms, 
conditions and features.
    The Participants may agree to pay to each lending bank (a) a 
commitment, facility or similar fee that will be (i) a fixed dollar 
amount; and/or (ii) a percentage of the total commitment or unused 
commitment, as well as (b) one time closing fees, consisting of up-
front fees, arrangement fees, administrative agency fee or similar 
closing fees. The fees will be negotiated at the time of the 
arrangement and will be comparable to fees in the applicable market for 
borrowing arrangements with similar features and terms and conditions 
to borrowers of comparable credit quality, provided that in no event 
shall these fees exceed five percent (5%) of the aggregate principal 
amount of the applicable bank borrowings.

C. Commercial Paper Arrangements

    Each of the Operating Companies and System Energy proposes to 
issue, reissue and sell the commercial paper directly to a dealer in 
commercial paper (``Dealer'') at a discount not in excess of the 
maximum discount rate per annum prevailing at the date of issuance for 
commercial paper of comparable quality and maturity sold by public 
utility issuers to Dealers.
    The proposed commercial paper will be in the form of unsecured 
promissory notes with varying maturities not to exceed 270 days, the 
actual maturity to be determined by market conditions and the 
particular borrower's anticipated cash requirement at the time of 
issuance. No commission or fee will be payable by the Operating 
Companies or System Energy in connection with the issuance and sale of 
the commercial paper. Each Dealer will reoffer and sell the commercial 
paper to customers on a non-public list for each Operating Company and 
System Energy, consisting of financial and non-financial institutions 
that normally invest funds in commercial paper, at the customary 
discount rate for commercial paper. Applicants state that they expect 
the commercial paper to be held by the buyers to maturity. However, 
each Dealer may, if desired by a buyer, repurchase the commercial paper 
for resale to other customers on the list.

D. EOI, ESI and SFI Loan Agreements With Entergy

    EOI, ESI and SFI were each previously authorized by the Commission 
through November 30, 2004 to enter into a separate loan agreement with 
Entergy of up to an aggregate principal amount of $20 million in the 
case of EOI, $200 million in the case of ESI and $200 million in the 
case of SFI. EOI, ESI, SFI and Entergy now propose to enter into an 
amendment to each of their respective loan agreements, which will 
extend the expiration date of the borrowing period through the 
Authorization Period and provide for the issuance of new notes stated 
to mature on November 30, 2007. The aggregate amount that EOI, ESI and 
SFI may borrow from Entergy through the Authorization Period will be 
$20 million, $200 million and $200 million, respectively.
    Each loan agreement mentioned above will provide that the amount of 
Entergy's respective commitments will be correspondingly reduced by the 
commitments of any bank or banks to lend money to EOI, ESI, or SFI, as 
applicable. The new notes will continue to be payable to the order of 
Entergy and may be prepaid at any time without premium or penalty and 
will bear interest, payable quarterly, on the unpaid principal amount 
at the rate that is determined from time to time to be equal to 
Entergy's effective cost of short-term debt.

E. External Borrowing Arrangements

    EOI, ESI and SFI further propose to extend the period during which 
they may enter into external borrowing arrangements with one or more 
banks through the Authorization Period. EOI, ESI and SFI may arrange 
these lines of credit on an individual basis, or on a consolidated 
basis with each other, and/or with the Operating Companies and System 
Energy. The proposed bank borrowing will be in an aggregate principal 
amount of up to $20 million in the case of EOI, up to $200 million in 
the case of ESI and up to $200 million in the case of SFI. 
Additionally, these borrowings (and any related promissory notes) will 
be in the form customarily used by lending banks, will be payable not 
later than November 30, 2007 and will bear interest at rates which will 
not exceed the greater of (a) 500 basis points over LIBOR or (b) a 
gross spread over LIBOR that is consistent with bank borrowings by 
companies of the same or reasonably comparable credit quality and 
having the same or reasonably similar maturities and similar terms, 
conditions and features.
    Each borrower may agree to pay to each bank (a) a commitment, 
facility or similar fee that will be (i) a fixed dollar amount; and/or 
(ii) a percentage of the total commitment or unused commitment, as well 
as (b) one-time closing fees. These fees will be negotiated at the time 
of the arrangement and will be comparable to

[[Page 62924]]

the fees generally prevailing in the market for borrowing arrangements 
having similar terms to borrowers of comparable credit quality, 
provided that in no event will these fees exceed five percent (5%) of 
the aggregate principal amount of the applicable bank borrowings.
    As an inducement to banks to make loans to EOI, ESI, and SFI, it is 
contemplated that Entergy may be required to guarantee the obligations 
of EOI, ESI and SFI in an aggregate principal amount not to exceed $20 
million in the case of EOI, $200 million in the case of ESI and $200 
million in the case of SFI. Entergy agrees that the fee, if any, 
charged to EOI, ESI and SFI for any guarantee provided will not exceed 
the cost, if any, of obtaining the liquidity necessary to perform the 
guarantee for the period of time the guarantee remains outstanding. 
Accordingly, Applicants request authority for Entergy to issue these 
guarantees through the Authorization Period.

F. Use of Proceeds

    The proceeds to be received by the Operating Companies and System 
Energy from borrowings through the Money Pool and through borrowings 
from banks and the issuance and sale of commercial paper, together with 
other funds available from time to time to the Operating Companies and 
System Energy from operations will be used to provide interim financing 
for construction expenditures, to meet long-term debt maturities and 
satisfy sinking fund requirements, as well as for the possible 
refunding, redemption, purchase or other acquisition of all or a 
portion of certain series of debt and preferred stock and for general 
corporate purposes.
    The proceeds of borrowings by EOI through the Money Pool, as well 
as the proceeds of borrowings by EOI pursuant to its loan agreement 
with Entergy and other external borrowing arrangements will be used to 
finance EOI's interim capital needs.
    The proceeds of borrowings by ESI through the Money Pool, as well 
as the proceeds of borrowing by ESI pursuant to ESI's loan agreement 
with Entergy and other external borrowings will be used by ESI for the 
repayment of other borrowings from time to time and for any lawful 
purpose in connection with its performance as a subsidiary service 
company under the Act.
    The proceeds of borrowings by SFI through the Money Pool, as well 
as the proceeds of borrowings by SFI pursuant to its loan agreement 
with Entergy and other external borrowing arrangements of SFI will be 
used by SFI for the repayment of other borrowings and for any lawful 
purpose in connection with its fuel supply program.
    None of the proceeds to be received by the Operating Companies, 
System Energy, EOI, ESI or SFI from borrowings through the Money Pool 
or through the issuance and sale of promissory notes and commercial 
paper will be used to invest directly or indirectly in an exempt 
wholesale generator or foreign utility company as defined in Section 32 
or 33, respectively, of the Act.

G. Financing Parameters

1. Common Equity Ratio
    Entergy and each of the Operating Companies, System Energy and EOI 
represents that it will at all times during the Authorization Period 
maintain common equity (as reflected in the most recent Quarterly 
Report on Form 10-Q or Annual Report on Form 10-K filed with the 
Commission adjusted to reflect changes in capitalization since the 
balance sheet date therein) of at least 30% of its consolidated 
capitalization. The term ``consolidated capitalization'' means 
shareholders' equity, long-term debt, preferred stock with sinking fund 
and short-term debt.
2. Investment Grade Rating
    Entergy, the Operating Companies, System Energy and EOI each 
represent that, apart from promissory notes issued to evidence 
borrowings from the Money Pool, no guarantees or other securities may 
be issued by it in reliance upon the authorization granted by the 
Commission under this Application, unless (1) the security to be 
issued, if rated, is rated investment grade, (2) all outstanding 
securities of the issuer that are rated, are rated investment grade 
(except, in the case of Gulf States, the company's preferred stock and 
trust preferred securities (``QUIPS'') and, in the case of New Orleans, 
the company's preferred stock, and (3) all outstanding securities of 
Entergy that are rated, are rated investment grade (``Investment Grade 
Ratings Criteria''). For 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 
other nationally recognized statistical rating agency (``NRSRO''), 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. Applicants further 
request 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.

Rochester Gas and Electric Corporation (70-10241)

    Rochester Gas and Electric Corporation (``RG&E''), is a New York 
corporation and a wholly owned subsidiary of RGS Energy Group, Inc. 
(``RGS'') \2\,which, in turn, is a wholly owned subsidiary of Energy 
East Corporation, (``Energy East'') a New York corporation and a 
registered holding company under the Act. RG&E is located at 89 East 
Avenue, Rochester, New York. RG&E filed a Declaration seeking 
authorization, under section 12(c) of the Act and rules 42, 46 and 54 
under the Act.
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    \2\ RGS is a New York corporation and a public utility holding 
company that is exempt from registration by order under section 
3(a)(1) of the Act. According to RG&E, the Commission has authorized 
RGS to conduct similar transactions. Energy East Corp. et al., HCAR 
No. 27643 (Jan. 28, 2003).
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    RG&E is a public utility company engaged in the purchase, 
generation, transmission, distribution and sale of electricity and the 
purchase, distribution and sale of natural gas in New York.
    In connection with the restructuring of the electric industry in 
New York, RG&E sold the Robert E. Ginna Nuclear Power Plant for 
approximately $420,000,000. According to RG&E it is in the interests of 
RG&E's security holders and ratepayers for RG&E to transfer by dividend 
up to $175 million to an associate company and to use the amount for 
the reduction of debt held by Energy East. RG&E states, among other 
things, that RG&E's revenues from operations are sufficient to fund its 
expenses and capital improvements, that its current equity as a 
percentage of its total capitalization is in excess of 45%, and that 
the New York Public Service Commission will not allow RG&E to earn a 
return on equity that is in excess of 45%. RG&E asserts that the better 
use of the funds represented by the proposed dividend is reducing debt 
within the Energy East holding company system. Accordingly, RG&E 
requests authority from the Commission for RG&E to declare or pay 
dividends out of capital or unearned surplus and for RG&E to acquire, 
retire or redeem its securities from an associate company.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
J. Lynn Taylor,
Assistant Secretary.
 [FR Doc. E4-2901 Filed 10-27-04; 8:45 am]
BILLING CODE 8010-01-P