Portions of the Proxy Statement of Entergy Corporation to

UNITED STATESSECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2003 OR

TRANSITION REPORT PURSUANT TO SECTION 13OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number

Registrant, State of Incorporation,Address of Principal Executive Offices and Telephone Number

IRS EmployerIdentification No.

1-11299 ENTERGY CORPORATION(a Delaware corporation)639 Loyola AvenueNew Orleans, Louisiana 70113Telephone (504) 576-4000

72-1229752

1-10764 ENTERGY ARKANSAS, INC.

(an Arkansas corporation)425 West Capitol Avenue Little Rock, Arkansas 72201Telephone (501) 377-4000

71-0005900

1-27031 ENTERGY GULF STATES, INC.

(a Texas corporation)350 Pine StreetBeaumont, Texas 77701Telephone (409) 838-6631

74-0662730

1-8474 ENTERGY LOUISIANA, INC.

(a Louisiana corporation)4809 Jefferson HighwayJefferson, Louisiana 70121Telephone (504) 840-2734

72-0245590

1-31508 ENTERGY MISSISSIPPI, INC.

(a Mississippi corporation)308 East Pearl StreetJackson, Mississippi 39201Telephone (601) 368-5000

64-0205830

0-5807 ENTERGY NEW ORLEANS, INC.

(a Louisiana corporation)1600 Perdido Street, Building 505New Orleans, Louisiana 70112Telephone (504) 670-3674

72-0273040

1-9067 SYSTEM ENERGY RESOURCES, INC.

(an Arkansas corporation)Echelon One1340 Echelon ParkwayJackson, Mississippi 39213Telephone (601) 368-5000

72-0752777

Securities registered pursuant to Section 12(b) of the Act:

Registrant Title of ClassName of Each Exchangeon Which Registered

Entergy Corporation Common Stock, $0.01 Par Value - 231,032,604

shares outstanding at February 27, 2004New York Stock Exchange, Inc.Chicago Stock Exchange Inc.Pacific Exchange Inc.

Entergy Arkansas, Inc.

Mortgage Bonds, 6.7% Series due April 2032Mortgage Bonds, 6.0% Series due November2032

New York Stock Exchange, Inc.New York Stock Exchange, Inc.

Entergy Arkansas Capital I 8-1/2% Cumulative Quarterly Income Preferred

Securities, Series A(guaranteed by Entergy Arkansas, Inc.)

New York Stock Exchange, Inc.

Entergy Gulf States, Inc. Preferred Stock, Cumulative, $100 Par Value:

$4.40 Dividend Series$4.52 Dividend Series$5.08 Dividend SeriesAdjustable Rate Series B (Depository Receipts)

New York Stock Exchange, Inc.New York Stock Exchange, Inc.New York Stock Exchange, Inc.New York Stock Exchange, Inc.

Entergy Gulf States Capital I 8.75% Cumulative Quarterly Income Preferred

Securities, Series A(guaranteed by Entergy Gulf States, Inc.)


Entergy Louisiana, Inc. Mortgage Bonds, 7.6% Series due April 2032 New York Stock Exchange, Inc. Entergy Louisiana Capital I 9% Cumulative Quarterly Income Preferred

Securities, Series A(guaranteed by Entergy Louisiana, Inc.)


Entergy Mississippi, Inc. Mortgage Bonds, 6.0% Series due November

2032Mortgage Bonds, 7.25% Series due December2032

New York Stock Exchange, Inc.New York Stock Exchange, Inc.

Securities registered pursuant to Section 12(g) of the Act:

Registrant Title of Class Entergy Arkansas, Inc. Preferred Stock, Cumulative, $100 Par Value

Preferred Stock, Cumulative, $0.01 Par Value Entergy Gulf States, Inc. Preferred Stock, Cumulative, $100 Par Value Entergy Louisiana, Inc. Preferred Stock, Cumulative, $100 Par Value

Preferred Stock, Cumulative, $25 Par Value Entergy Mississippi, Inc. Preferred Stock, Cumulative, $100 Par Value Entergy New Orleans, Inc. Preferred Stock, Cumulative, $100 Par Value

Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filingrequirements for the past 90 days. Yes Ö No ____

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to thebest of the registrants' knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment tothis Form 10-K. [ ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).

Yes No

Entergy CorporationEntergy Arkansas, Inc.Entergy Gulf States, Inc.Entergy Louisiana, Inc.Entergy Mississippi, Inc.Entergy New Orleans, Inc.System Energy Resources, Inc.

ÖÖ Ö Ö Ö Ö Ö

The aggregate market value of Entergy Corporation Common Stock, $0.01 Par Value, held by non-affiliates as of the end of the second quarter of 2003, was$12.0 billion based on the reported last sale price of $52.78 per share for such stock on the New York Stock Exchange on June 30, 2003. EntergyCorporation is the sole holder of the common stock of Entergy Arkansas, Inc., Entergy Gulf States, Inc., Entergy Louisiana, Inc., Entergy Mississippi, Inc.,Entergy New Orleans, Inc., and System Energy Resources, Inc.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement of Entergy Corporation to be filed in connection with its Annual Meeting of Stockholders, to be held May 14, 2004, areincorporated by reference into Parts I and III hereof.

TABLE OF CONTENTS

SEC Form 10-KReferenceNumber

PageNumber

Definitions iEntergy's Business Part I. Item 1. 1 Financial Information for U.S. Utility, Non-Utility Nuclear, and Energy Commodity Services

2

Strategy 3Report of Management 4Entergy Corporation and Subsidiaries Management's Financial Discussion and Analysis Part II. Item 7. Results of Operations 5 Liquidity and Capital Resources 12 Significant Factors and Known Trends 21 Critical Accounting Estimates 33 Selected Financial Data - Five-Year Comparison Part II. Item 6. 41 Independent Auditors' Report 42 Consolidated Statements of Income For the Years Ended December 31, 2003, 2002, and 2001

Part II. Item 8. 43

Consolidated Statements of Cash Flows For the Years Ended December 31, 2003, 2002, and 2001

Part II. Item 8. 44

Consolidated Balance Sheets, December 31, 2003 and 2002 Part II. Item 8. 46 Consolidated Statements of Retained Earnings, ComprehensiveIncome, and Paid in Capital for the Years Ended December 31, 2003, 2002, and2001

Part II. Item 8. 48

Notes to Consolidated Financial Statements Part II. Item 8. 49 U.S. Utility Part I. Item 1. 104 Customers 104 Electric Energy Sales 104 Retail Rate Regulation 106 Property and Other Generation Resources 112 Fuel Supply 115 Wholesale Rate Matters 118 Service Companies 126 Earnings Ratios 126 Non-Utility Nuclear Part I. Item 1. 127 Property 127 Energy and Capacity Sales 128 Fuel Supply 129 Other Business Activities 129 Other Matters 130 Energy Commodity Services Part I. Item 1. 130 Entergy-Koch, L.P. 130 Non-Nuclear Wholesale Assets Business 132 Regulation of Entergy's Business Part I. Item 1. 133 PUHCA 133 Federal Power Act 133 State Regulation 133 Regulation of the Nuclear Power Industry 134 Environmental Regulation 137 Other Environmental Matters 140 Litigation 141 Research Spending 146 Employees 146Entergy Arkansas, Inc. Management's Financial Discussion and Analysis Part II. Item 7. Results of Operations 147 Liquidity and Capital Resources 151 Significant Factors and Known Trends 154 Critical Accounting Estimates 157

Independent Auditors' Report 162 Income Statements For the Years Ended December 31, 2003, 2002, and 2001

Part II. Item 8. 163

Statements of Cash Flows For the Years Ended December 31, 2003,2002, and 2001


Balance Sheets, December 31, 2003 and 2002 Part II. Item 8. 166 Statements of Retained Earnings for the Years Ended December 31,2003, 2002, and 2001


Selected Financial Data - Five-Year Comparison Part II. Item 6. 169Entergy Gulf States, Inc. Management's Financial Discussion and Analysis Part II. Item 7. Results of Operations 170 Liquidity and Capital Resources 173 Significant Factors and Known Trends 176 Critical Accounting Estimates 184 Independent Auditors' Report 189 Income Statements For the Years Ended December 31, 2003, 2002, and 2001




Balance Sheets, December 31, 2003 and 2002 Part II. Item 8. 192 Statements of Retained Earnings and Comprehensive Income for theYears Ended December 31, 2003, 2002, and 2001


Selected Financial Data - Five-Year Comparison Part II. Item 6. 195Entergy Louisiana, Inc. Management's Financial Discussion and Analysis Part II. Item 7. Results of Operations 196 Liquidity and Capital Resources 199 Significant Factors and Known Trends 202 Critical Accounting Estimates 206 Independent Auditors' Report 210 Income Statements For the Years Ended December 31, 2003, 2002, and 2001






Selected Financial Data - Five-Year Comparison Part II. Item 6. 217Entergy Mississippi, Inc. Management's Financial Discussion and Analysis Part II. Item 7. Results of Operations 218 Liquidity and Capital Resources 220 Significant Factors and Known Trends 223 Critical Accounting Estimates 225 Independent Auditors' Report 229 Income Statements For the Years Ended December 31, 2003, 2002, and 2001






Selected Financial Data - Five-Year Comparison Part II. Item 6. 235Entergy New Orleans, Inc. Management's Financial Discussion and Analysis Part II. Item 7. Results of Operations 236 Liquidity and Capital Resources 238 Significant Factors and Known Trends 241 Critical Accounting Estimates 244 Independent Auditors' Report 247


Statements of Operations For the Years Ended December 31, 2003,2002, and 2001 Statements of Cash Flows For the Years Ended December 31, 2003,2002, and 2001




Selected Financial Data - Five-Year Comparison Part II. Item 6. 253System Energy Resources, Inc. Management's Financial Discussion and Analysis Part II. Item 7. Results of Operations 254 Liquidity and Capital Resources 255 Significant Factors and Known Trends 257 Critical Accounting Estimates 258 Independent Auditors' Report 262 Income Statements For the Years Ended December 31, 2003, 2002, and 2001






Selected Financial Data - Five-Year Comparison Part II. Item 6. 269Notes to Respective Financial Statements for the Domestic UtilityCompanies and System Energy


Properties Part I. Item 2. 332Legal Proceedings Part I. Item 3. 332Submission of Matters to a Vote of Security Holders Part I. Item 4. 332Directors and Executive Officers of Entergy Corporation Part III. Item 10. 332Market for Registrants' Common Equity and Related Stockholder Matters Part II. Item 5. 334Selected Financial Data Part II. Item 6. 335Management's Discussion and Analysis of Financial Condition andResults of Operations


Quantitative and Qualitative Disclosures About Market Risk Part II. Item 7A. 335Financial Statements and Supplementary Data Part II. Item 8. 336Changes in and Disagreements with Accountants on Accounting andFinancial Disclosure


Controls and Procedures Part II. Item 9A. 336Directors and Executive Officers of the Registrants Part III. Item 10. 337Executive Compensation Part III. Item 11. 342Security Ownership of Certain Beneficial Owners and Management Part III. Item 12. 352Certain Relationships and Related Transactions Part III. Item 13. 355Principal Accountant Fees and Services Part IV. Item 14 356Exhibits, Financial Statement Schedules, and Reports on Form 8-K Part IV. Item 15. 359Signatures 360Independent Auditors' Consents 367Independent Auditors' Report on Financial Statement Schedules 368Index to Financial Statement Schedules S-1Exhibit Index E-1

This combined Form 10-K is separately filed by Entergy Corporation, Entergy Arkansas, Inc., Entergy Gulf States, Inc., Entergy Louisiana, Inc.,Entergy Mississippi, Inc., Entergy New Orleans, Inc., and System Energy Resources, Inc. Information contained herein relating to any individualcompany is filed by such company on its own behalf. Each company makes representations only as to itself and makes no other representationswhatsoever as to any other company.

The report should be read in its entirety as it pertains to each respective registrant. No one section of the report deals with all aspects of the subjectmatter. Separate Item 6, 7, and 8 sections are provided for each registrant, except for the Notes to the financial statements. The EntergyCorporation Notes to the financial statements are separately presented, but the Notes to the financial statements for the other registrants arecombined. These two sets of Notes are marked by headers. All other Items are combined for the registrants.

FORWARD-LOOKING INFORMATION

From time to time, Entergy makes statements concerning its expectations, beliefs, plans, objectives, goals, strategies, and future events or performance. Suchstatements are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Although Entergy believes thatthese forward-looking statements and the underlying assumptions are reasonable, it cannot provide assurance that they will prove correct. Except to theextent required by the federal securities laws, Entergy undertakes no obligation to publicly update or revise any forward-looking statements, whether as aresult of new information, future events or otherwise.

Forward-looking statements involve a number of risks and uncertainties, and there are factors that could cause actual results to differ materially from thoseexpressed or implied in the statements. Some of those factors (in addition to others described elsewhere in this report and in subsequent securities filings)include:

resolution of pending and future rate cases and negotiations, including various performance-based rate discussions, and other regulatorydecisions, including those related to Entergy's System Agreement and utility supply planEntergy's ability to reduce its operation and maintenance costs, particularly at its Non-Utility Nuclear generating facilities, including theuncertainty of negotiations with unions to agree to such reductionsthe performance of Entergy's generating plants, and particularly the capacity factors at its nuclear generating facilitiesprices for power generated by Entergy's unregulated generating facilities, the ability to extend or replace the existing purchased poweragreements for those facilities, including the Non-Utility Nuclear plants, and the prices and availability of power Entergy must purchase for itsutility customersEntergy's ability to develop and execute on a point of view regarding prices of electricity, natural gas, and other energy-related commoditiesEntergy-Koch's profitability in trading physical and financial natural gas and power as well as other energy and weather-related contractschanges in the number of participants in the energy trading market, and in their creditworthiness and risk profilechanges in the financial markets, particularly those affecting the availability of capital and Entergy's ability to refinance existing debt and tofund investments and acquisitionsactions of rating agencies, including changes in the ratings of debt and preferred stockchanges in inflation and interest ratesEntergy's ability to purchase and sell assets at attractive prices and on other attractive termschanges in ownership of joint venturesvolatility and changes in markets for electricity, natural gas, uranium, and other energy-related commoditieschanges in utility regulation, including the beginning or end of retail and wholesale competition, the ability to recover net utility assets and otherpotential stranded costs, and the establishment of a regional transmission organization that includes Entergy's utility service territorychanges in regulation of nuclear generating facilities and nuclear materials and fuel, including possible shutdown of Indian Point or othernuclear generating facilitiesresolution of pending or future applications for license extensions of nuclear generating facilitieschanges in law resulting from proposed energy legislationchanges in environmental, tax, and other laws, including requirements for reduced emissions of sulfur, nitrogen, carbon, mercury, and othersubstancesthe economic climate, and particularly growth in Entergy's service territoryvariations in weather, hurricanes, and other disastersadvances in technologythe potential impacts of threatened or actual terrorism and warthe success of Entergy's strategies to reduce current tax paymentsthe effects of litigationchanges in accounting standards, corporate governance, and securities law requirementsEntergy's ability to attract and retain talented management and directors.

DEFINITIONS

Certain abbreviations or acronyms used in the text and notes are defined below:

Abbreviation or Acronym Term AFUDC Allowance for Funds Used During ConstructionALJ Administrative Law JudgeANO 1 and 2 Units 1 and 2 of Arkansas Nuclear One Steam Electric Generating Station

(nuclear), owned by Entergy ArkansasAPSC Arkansas Public Service CommissionBCF One billion cubic feet of natural gasBCF/D One billion cubic feet of natural gas per dayBoard Board of Directors of Entergy CorporationBPS British pounds sterlingCajun Cajun Electric Power Cooperative, Inc.capacity factor Actual plant output divided by maximum potential plant output for the

periodCity Council or Council Council of the City of New Orleans, LouisianaCPI-U Consumer Price Index - UrbanDamhead Creek 800 MW (gas) combined cycle electric generating facility located in the

United Kingdom that entered commercial operations in the first quarter of2001 and was sold by Entergy in 2002

DOE United States Department of Energydomestic utility companies Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy

Mississippi, and Entergy New Orleans, collectivelyEITF FASB's Emerging Issues Task Forceelectricity marketed

Total physical volume marketed by Entergy-Koch in the U.S. and Europeduring the period

electricity volatility Measure of price fluctuation over time using standard deviation of dailyprice differences for into-Entergy and into-Cinergy power prices for theupcoming month

Energy Commodity Services Entergy's business segment that is focused almost exclusively on providingenergy commodity trading and gas transportation and storage servicesthrough Entergy-Koch, LP and also includes Entergy's non-nuclearwholesale assets business

Entergy Entergy Corporation and its direct and indirect subsidiariesEntergy Corporation Entergy Corporation, a Delaware corporationEntergy-Koch Entergy-Koch, LP, a joint venture equally owned by subsidiaries of Entergy

and Koch Industries, Inc.EPA United States Environmental Protection AgencyEPDC Entergy Power Development Corporation, a wholly-owned subsidiary of

Entergy CorporationFASB Financial Accounting Standards BoardFEMA Federal Emergency Management AgencyFERC Federal Energy Regulatory CommissionFitzPatrick James A. FitzPatrick nuclear power plant, 825 MW facility located near

Oswego, New York, purchased in November 2000 from New York PowerAuthority (NYPA) by Entergy's Non-Utility Nuclear business

DEFINITIONS (Continued)

Abbreviation or Acronym Term gain/loss days Ratio of the number of days when Entergy-Koch recognized a net gain from

commodity trading activities to the number of days when Entergy-Kochrecognized a net loss from commodity trading activities

gas marketed Total physical volume marketed by Entergy-Koch in the U.S. and Europeduring the period

gas volatility Measure of price fluctuation over time using standard deviation of dailyprice differences for Henry Hub natural gas prices for the upcoming month

Grand Gulf 1 Unit No. 1 of Grand Gulf Steam Electric Generating Station (nuclear), 90%owned or leased by System Energy

GWh Gigawatt-hour(s), which equals one million kilowatt-hoursIndependence Independence Steam Electric Station (coal), owned 16% by Entergy

Arkansas, 25% by Entergy Mississippi, and 7% by Entergy PowerIndian Point 1 Indian Point Energy Center Unit 1 nuclear power plant that has been shut-

down and in safe storage since the 1970s, located in Westchester County,New York, purchased in September 2001 together with Indian Point 2 fromConsolidated Edison by Entergy's Non-Utility Nuclear business

Indian Point 2 Indian Point Energy Center Unit 2 nuclear power plant, 984 MW facilitylocated in Westchester County, New York, purchased in September 2001from Consolidated Edison by Entergy's Non-Utility Nuclear business

Indian Point 3 Indian Point Energy Center Unit 3 nuclear power plant, 994 MW facilitylocated in Westchester County, New York, purchased in November 2000from NYPA by Entergy's Non-Utility Nuclear business

IRS Internal Revenue ServicekV KilovoltkW KilowattkWh Kilowatt-hour(s)LDEQ Louisiana Department of Environmental QualityLPSC Louisiana Public Service CommissionMcf 1,000 cubic feet of gasmiles of pipeline Total miles of transmission and gathering pipelineMMBtu One million British Thermal UnitsMPSC Mississippi Public Service CommissionMW Megawatt(s), which equals one thousand kilowatt(s)MWh Megawatt-hour(s)Nelson Unit 6 Unit No. 6 (coal) of the Nelson Steam Electric Generating Station, owned

70% by Entergy Gulf StatesNet debt ratio Gross debt less cash and cash equivalents divided by total capitalization less

cash and cash equivalentsNet MW in operation Installed capacity owned or operatedNet revenue Operating revenue net of fuel, fuel-related, and purchased power expenses;

other regulatory credits; and amortization of rate deferrals

DEFINITIONS (Concluded)

Abbreviation or Acronym Term

Non-Utility Nuclear Entergy's business segment that owns and operates five nuclear power

plants and sells electric power produced by those plants to wholesalecustomers

NRC Nuclear Regulatory CommissionPilgrim Pilgrim Nuclear Station, 688 MW facility located in Plymouth,

Massachusetts, purchased in July 1999 from Boston Edison by Entergy'sNon-Utility Nuclear business

PPA Purchased power agreementproduction cost Cost in $/MMBtu associated with delivering gas, excluding the cost of the

gasPRP Potentially responsible party (a person or entity that may be responsible for

remediation of environmental contamination)PUCT Public Utility Commission of TexasPUHCA Public Utility Holding Company Act of 1935, as amendedPURPA Public Utility Regulatory Policies Act of 1978Ritchie Unit 2 Unit 2 of the R.E. Ritchie Steam Electric Generating Station (gas/oil)River Bend River Bend Steam Electric Generating Station (nuclear), owned by Entergy

Gulf StatesSEC Securities and Exchange CommissionSFAS Statement of Financial Accounting Standards as promulgated by the FASBSMEPA South Mississippi Electric Power Agency, which owns a 10% interest in

Grand Gulf 1spark spread Dollar difference between electricity prices per unit and natural gas prices

after assuming a conversion ratio for the number of natural gas unitsnecessary to generate one unit of electricity

storage capacity Working gas storage capacitySystem Energy System Energy Resources, Inc.throughput Gas in BCF/D transported through a pipeline during the periodUK The United Kingdom of Great Britain and Northern IrelandU.S. Utility Entergy's business segment that generates, transmits, distributes, and sells

electric power, with a small amount of natural gas distributionVermont Yankee Vermont Yankee nuclear power plant, 510 MW facility located in Vernon,

Vermont, purchased in July 2002 from Vermont Yankee Nuclear PowerCorporation (VYNPC) by Entergy's Non-Utility Nuclear business

Waterford 3 Unit No. 3 (nuclear) of the Waterford Steam Electric Generating Station,100% owned or leased by Entergy Louisiana

weather-adjusted usage Electric usage excluding the effects of deviations from normal weatherWhite Bluff White Bluff Steam Electric Generating Station, 57% owned by Entergy

Arkansas

ENTERGY'S BUSINESS

Entergy Corporation is an integrated energy company engaged primarily in electric power production, retail electric distribution operations, energymarketing and trading, and gas transportation. Entergy owns and operates power plants with approximately 30,000 MW of electric generating capacity, andit is the second-largest nuclear power generator in the United States. Entergy delivers electricity to 2.6 million utility customers in Arkansas, Louisiana,Mississippi, and Texas. Through Entergy-Koch, Entergy is a leading provider of wholesale energy marketing and trading services, as well as an operator ofnatural gas pipeline and storage facilities. Entergy generated annual revenues of over $9 billion in 2003 and had approximately 14,800 employees as ofDecember 31, 2003.

Entergy Corporation is an integrated energy company engaged primarily in electric power production, retail electric distribution operations, energymarketing and trading, and gas transportation. Entergy owns and operates power plants with approximately 30,000 MW of electric generating capacity, andit is the second-largest nuclear power generator in the United States. Entergy delivers electricity to 2.6 million utility customers in Arkansas, Louisiana,Mississippi, and Texas. Through Entergy-Koch, Entergy is a leading provider of wholesale energy marketing and trading services, as well as an operator ofnatural gas pipeline and storage facilities. Entergy generated annual revenues of over $9 billion in 2003 and had approximately 14,800 employees as ofDecember 31, 2003.

Entergy operates primarily through three business segments: U.S. Utility, Non-Utility Nuclear, and Energy Commodity Services.

U.S. Utility generates, transmits, distributes, and sells electric power, with a small amount of natural gas distribution.

Non-Utility Nuclear owns and operates five nuclear power plants and sells the electric power produced by those plants to wholesale customers.This business also provides services to other nuclear power plant owners.

Energy Commodity Services provides energy commodity trading and gas transportation and storage services through Entergy-Koch, LP.Energy Commodity Services also includes Entergy's non-nuclear wholesale assets business, which sells electric power produced by those assetsto wholesale customers while it focuses on selling the majority of those assets.

Entergy's business operates primarily through its regulated utility subsidiaries in a four-state service territory that includes portions of Arkansas, Mississippi,Texas, and Louisiana, including the City of New Orleans. Entergy has reshaped its non-utility business through the sale in 1998 of its international electricdistribution businesses located in the UK and Australia; the growth of its Non-Utility Nuclear business in the northeastern United States beginning in 1999;and the termination of new greenfield power development activity in 2002. With the start of the Entergy-Koch joint venture in early 2001, Entergy expandedits business opportunities into new areas. The trading activities of Entergy-Koch extend to various parts of the United States, as well as the United Kingdom,Western Europe, and Canada. Entergy-Koch's Gulf South Pipeline system covers the Gulf Coast region of the United States. Entergy's financial interest in

the Entergy-Koch venture allows it to appoint fou r of the eight members of the general partner's board of directors. Operating decisions for Entergy-Kochare made by Entergy-Koch management.

OPERATING INFORMATIONFor the Years Ended December 31, 2003, 2002, and 2001

U.S. Utility Non-UtilityNuclear

Energy CommodityServices

EntergyConsolidated (a)

(In Thousands)2003

Operating revenues $7,584,857 $1,274,983 $184,888 $9,194,920Operating expenses 6,274,830 1,039,614 224,567 7,710,365Other income (35,965) 33,997 337,334 325,238Interest and other charges 419,111 34,460 15,193 506,326Income taxes 341,044 88,619 105,903 490,074Cumulative effect of accounting change (21,333) 154,512 3,895 137,074Net income 492,574 300,799 180,454 950,467

2002Operating revenues $6,773,509 $1,200,238 $294,670 $8,305,035Operating expenses 5,434,694 868,288 769,834 7,163,314Other income 47,603 48,572 249,678 347,753Interest and other charges 465,703 47,291 61,632 572,464Income taxes 313,752 132,726 (141,288) 293,938Net income (loss) 606,963 200,505 (145,830) 623,072

2001Operating revenues $7,432,920 $789,244 $1,370,485 $9,620,899Operating expenses 6,050,534 576,510 1,361,153 8,072,954Other income 69,157 50,916 222,571 349,353Interest and other charges 576,705 55,717 74,953 714,580Income taxes 300,284 80,053 74,493 455,693Cumulative effect of accounting change - - 23,482 23,482Net income 574,554 127,880 105,939 750,507

CASH FLOW INFORMATIONFor the Years Ended December 31, 2003, 2002, and 2001




(In Thousands)2003

Net cash flow provided by (used in) operating activities $1,675,069 $182,524 ($111,291) $2,005,820Net cash flow used in investing activities (1,441,992) (184,913) (78,120) (1,783,130)Net cash flow provided by (used in) financing activities (919,983) (6,672) 166,165 (869,130)

2002Net cash flow provided by (used in) operating activities $2,341,161 $281,589 ($3,714) $2,181,703Net cash flow used in investing activities (1,020,087) (438,664) (760) (1,388,463)Net cash flow provided by (used in) financing activities (688,201) 176,162 (66,151) (212,610)

2001Net cash flow provided by (used in) operating activities $1,647,969 $263,476 ($127,938) $2,215,548Net cash flow provided by (used in) investing activities (1,243,715) (1,061,820) 138,351 (2,224,720)Net cash flow provided by (used in) financing activities (303,520) 292,872 (148,501) (622,004)

FINANCIAL POSITION INFORMATIONDecember 31, 2003 and 2002




(In Thousands)2003

Current assets $2,117,260 $542,837 $466,132 $2,919,244Other property and investments 1,151,538 1,326,347 1,137,069 3,746,926Property, plant and equipment - net 16,242,775 1,557,025 463,403 18,298,797Deferred debits and other assets 2,917,563 745,568 10,317 3,589,243Current liabilities 1,671,607 330,684 478,693 2,282,223Non-current liabilities 15,309,482 1,891,805 41,450 17,568,329Sh h ld ' it 5 448 047 1 949 288 1 614 620 8 703 658

Shareholders equity 5,448,047 1,949,288 1,614,620 8,703,658

2002Current assets $2,517,001 $706,056 $504,836 $3,205,583Other property and investments 1,089,871 1,437,896 1,175,842 3,468,240Property, plant and equipment - net 15,594,128 1,613,369 429,677 17,665,003Deferred debits and other assets 2,429,523 724,987 57,117 3,165,540Current liabilities 2,479,783 947,731 348,200 3,172,189Non-current liabilities 13,755,569 2,175,467 182,750 16,493,940Shareholders' equity 5,395,171 1,359,110 1,636,522 7,838,237

(a) In addition to the 3 operating segments presented here, Entergy Consolidated also includes Entergy Corporation (parent company), other business activity, and intercompany eliminations.

The following shows the principal subsidiaries and affiliates within Entergy's business segments. Companies that file reports and other information with theSEC under the Securities Exchange Act of 1934 are identified in bold-faced type.

Entergy Corporation

U. S. Utility Non-Utility Nuclear Energy Commodity Services

Entergy Arkansas, Inc. Entergy Nuclear Operations, Inc. Entergy-Koch, LP Non-Nuclear Wholesale Assets

Entergy Gulf States, Inc. Entergy Nuclear Finance, Inc. (50% ownership) Entergy Louisiana, Inc. Entergy Nuclear Generation Co. (Pilgrim) Entergy Mississippi, Inc. Entergy Nuclear FitzPatrick LLC Gulf South Pipeline Entergy Power Development Corp.

Entergy New Orleans, Inc. Entergy Nuclear Indian Point 2, LLC Entergy-Koch Trading Entergy Asset Management, Inc.

System Energy Resources, Inc. Entergy Nuclear Indian Point 3, LLC Entergy Operations, Inc. Entergy Nuclear Vermont Yankee, LLC Entergy Services, Inc. Entergy Nuclear, Inc. System Fuels, Inc. Entergy Nuclear Fuels Company Entergy Nuclear Nebraska LLC

In addition to its three primary operating segments, Entergy's Competitive Retail Services business markets and sells electricity, thermal energy and relatedservices in competitive markets, primarily the ERCOT region in Texas, where it has over 60,000 customers. This business is also preparing to operate asEntergy's affiliated competitive retailer when retail open access commences in Entergy Gulf States' service territory in Texas. Competitive Retail Servicesdoes not currently have material levels of revenue, net income, or total assets; and Entergy reports this business as part of All Other in its segmentdisclosures.

Strategy

Entergy's strategy is to create value by focusing on asset management and strong operational execution, with a particular emphasis on service reliability andexcellence in nuclear operations. Entergy continually evaluates its business position, with a view toward enhancing the company's scale, scope, and skilladvantages. It applies a well-developed point of view of the marketplace and strong risk management to manage its asset portfolio and customerrelationships. Entergy benchmarks its operational performance against industry and competitor standards on measures such as safety, reliability, customerservice, and cost efficiency.

___________________________________________________________________________________________

Availability of SEC filings and other information on Entergy's website

Entergy's internet address is www.entergy.com. Entergy's annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, andamendments to any of these reports, are available free of charge through Entergy's website as soon as reasonably practicable after filing with the SEC.Financial presentations and news releases are also available through Entergy's website. Additionally, Entergy's Corporate Governance Guidelines, BoardCommittee Charters for the Corporate Governance, Audit, and Personnel Committees, and Entergy's Codes of Conduct are posted on Entergy's website. Thisinformation is also available in print to any investor that requests it.

Part I, Item 1 is continued on page 104.

ENTERGY CORPORATION AND SUBSIDIARIES

REPORT OF MANAGEMENT

Management of Entergy Corporation and its subsidiaries has prepared and is responsible for the financial statements and related financial informationincluded herein. The financial statements are based on accounting principles generally accepted in the United States of America. Financial informationincluded elsewhere in this report is consistent with the financial statements.

To meet their responsibilities with respect to financial information, management maintains and enforces a system of internal accounting controls designed toprovide reasonable assurance, on a cost-effective basis, as to the integrity, objectivity, and reliability of the financial records, and as to the protection ofassets. This system includes communication through written policies and procedures, an employee Code of Entegrity, and an organizational structure thatprovides for appropriate division of responsibility and the training of personnel. This system is also tested by a comprehensive internal audit program.

The Audit Committee of the Board of Directors, composed solely of independent Directors, meets with the independent auditors, internal auditors,management, and internal accountants periodically to discuss internal accounting controls and auditing and financial reporting matters. The Audit

Committee appoints the independent auditors annually and reviews with the independent auditors the scope and results of the audit effort. The AuditCommittee also meets periodically with the independent auditors and the chief internal auditor without management, providing free access to theCommittee.

Independent public accountants regularly evaluate the system of internal accounting controls and perform such tests and other procedures as they deemnecessary to reach and express an opinion on the fairness of the financial statements. They also provide the Audit Committee their judgments about thequality of accounting policies and disclosures.

Management believes that these policies and procedures provide reasonable assurance that its operations are carried out with a high standard of businessconduct.

J. WAYNE LEONARDChief Executive Officer of Entergy Corporation

LEO P. DENAULTExecutive Vice President and Chief Financial Officer ofEntergy Corporation

HUGH T. MCDONALDChairman, President, and Chief Executive Officer of EntergyArkansas, Inc.

JOSEPH F. DOMINOChairman of Entergy Gulf States, Inc., President and ChiefExecutive Officer - Texas of Entergy Gulf States, Inc.

E. RENAE CONLEYChairman, President, and Chief Executive Officer of EntergyLouisiana, Inc.; President and Chief Executive Officer-Louisiana of Entergy Gulf States, Inc.

CAROLYN C. SHANKS Chairman, President, and Chief Executive Officer of EntergyMississippi, Inc.

DANIEL F. PACKERChairman, President, and Chief Executive Officer of EntergyNew Orleans, Inc.

GARY J. TAYLORChairman, President, and Chief Executive Officer of SystemEnergy Resources, Inc.

THEODORE H. BUNTING, JR. Vice President and Chief Financial Officer of System EnergyResources, Inc.

JAY A. LEWIS Vice President and Chief Financial Officer of EntergyArkansas, Inc., Entergy Gulf States, Inc., Entergy Louisiana,Inc., Entergy Mississippi, Inc., and Entergy New Orleans, Inc.


MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS

Entergy Corporation is an investor-owned public utility holding company that operates primarily through three business segments.

U.S. Utility generates, transmits, distributes, and sells electric power, with a small amount of natural gas distribution.

Non-Utility Nuclear owns and operates five nuclear power plants and sells the electric power produced by those plants to wholesale customers.This business also provides services to other nuclear power plant owners.

Energy Commodity Services provides energy commodity trading and gas transportation and storage services through Entergy-Koch, LP.Energy Commodity Services also includes Entergy's non-nuclear wholesale assets business, which sells electric power produced by those assetsto wholesale customers while it focuses on selling the majority of those assets.

Following are the percentages of Entergy's consolidated revenues and net income generated by these segments and the percentage of total assets held bythem:

% of Revenue % of Net Income % of Total AssetsSegment 2003 2002 2001 2003 2002 2001 2003 2002 2001

U.S. Utility 82 82 77 52 97 77 79 79 78Non-Utility Nuclear 14 14 8 32 32 17 15 16 13Energy CommodityServices

2 4 14 19 (23) 14 7 8 9

Parent & Other 2 - 1 (3) (6) (8) (1) (3) -

Results of Operations

Earnings applicable to common stock for the years ended December 31, 2003, 2002, and 2001 by operating segment are as follows:

Operating Segment 2003 2002 2001(In Thousands)

U.S. Utility $469,050 $583,251 $550,243 Non-Utility Nuclear 300,799 200,505 127,880 Energy Commodity Services 180,454 (145,830) 105,939 Parent & Other (23,360) (38,566) (57,866) Total $926,943 $599,360 $726,196

Entergy's income before taxes is discussed according to the business segments listed above. Earnings for 2003 include the $137.1 million net-of-taxcumulative effect of changes in accounting principle that increased earnings in the first quarter of 2003, almost entirely resulting from the implementation ofSFAS 143. Earnings were negatively affected in the fourth quarter of 2003 by voluntary severance program expenses of $122.8 million net-of-tax. As part ofan initiative to achieve productivity improvements with a goal of reducing costs, primarily in the Non-Utility Nuclear and U.S. Utility businesses, in thesecond half of 2003 Entergy offered a voluntary severance program to employees in various departments. Approximately 1,100 employees, including 650employees in nuclear operations from the Non-Utility Nuclear and U.S. Utility businesses, accepted the offers.

Earnings for 2002 were negatively affected by net charges ($238.3 million after-tax) reflecting the effect of Entergy's decision to discontinue additionalgreenfield power plant development and asset impairments resulting from the deteriorating economics of wholesale power markets principally in the UnitedStates and the United Kingdom. The net charges are discussed more fully below in the Energy Commodity Services discussion. See Note 12 to theconsolidated financial statements for further discussion of Entergy's business segments and their financial results in 2003, 2002, and 2001.

Refer to "SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON OF ENTERGY CORPORATION AND SUBSIDIARIES" whichaccompanies Entergy Corporation's consolidated financial statements in this report for further information with respect to operating statistics.

U.S. Utility

The decrease in earnings for the U.S. Utility for 2003 from $583 million to $469 million was primarily due to a $107.7 million ($65.6 million net-of-tax)accrual of the loss that would be associated with a final, non-appealable decision disallowing abeyed River Bend plant costs; $99.8 million ($70.1 millionnet-of-tax) of charges recorded in connection with the voluntary severance program; and the $21.3 million net-of-tax cumulative effect of a change inaccounting principle that reduced earnings at Entergy Gulf States in the first quarter of 2003 upon implementation of SFAS 143. See "Critical AccountingEstimates - SFAS 143" below for discussion of the implementation of SFAS 143. Partially offsetting the decrease in earnings were decreased interestcharges and increased net revenue.

The increase in earnings for the U.S. Utility for 2002 from $550 million to $583 million was primarily due to an increase in net revenue and a decrease ininterest charges, partially offset by increases in depreciation and amortization expenses and other operation and maintenance expenses.

Net Revenue

2003 Compared to 2002

Net revenue, which is Entergy's measure of gross margin, consists of operating revenues net of: 1) fuel, fuel-related, and purchased power expenses and 2)other regulatory credits. Following is an analysis of the change in net revenue comparing 2003 to 2002.

(In Millions) 2002 net revenue $4,209.6

Base rate increases 66.2

Base rate decreases (23.3)Fuel price 56.2

Asset retirement obligation 42.9

Net wholesale revenue 23.2

March 2002 Ark. settlementagreement

(154.0)

Other (6.3)

2003 net revenue $4,214.5

Base rates increased net revenue due to base rate increases at Entergy Mississippi and Entergy New Orleans that became effective in January 2003 and June2003, respectively. Entergy Gulf States implemented base rate decreases in its Louisiana jurisdiction effective June 2002 and January 2003. The January2003 base rate decrease of $22.1 million has a minimal impact on net income due to a corresponding reduction in nuclear depreciation and decommissioningexpenses associated with the change in accounting estimate to reflect an assumed extension of River Bend's useful life.

The fuel price variance is due to a revised estimate made in December 2002 of the fuel cost component of the price applied to unbilled sales and furtherrevision of that estimate in the first quarter of 2003.

The asset retirement obligation variance is due to the implementation of SFAS 143, "Accounting for Asset Retirement Obligations," adopted in January2003. See "Critical Accounting Estimates" for more details on SFAS 143. The increase is offset by increased depreciation and decommissioning expensesand has no effect on net income.

The increase in net wholesale revenue is primarily due an increase in sales volume to municipal and cooperative customers.

The March 2002 settlement agreement variance reflects the absence in 2003 of the effect of recording the ice storm settlement approved by the APSC in2002. This settlement resulted in previously deferred revenues at Entergy Arkansas per the transition cost account mechanism being recorded in net revenuein the second quarter of 2002. The decrease is offset by a corresponding decrease in other operation and maintenance expenses and has a minimal effect onnet income.

Gross operating revenues and regulatory credits

Gross operating revenues include an increase in fuel cost recovery revenues of $682 million and $53 million in electric and gas sales, respectively, primarilydue to higher fuel rates in 2003 resulting from increases in the market prices of purchased power and natural gas. As such, this revenue increase is offset byincreased fuel and purchased power expenses.

Other regulatory credits decreased primarily due to the March 2002 settlement agreement mentioned above, which increased other regulatory credits in 2002to offset other operation and maintenance expenses of $159.9 million related to the December 2000 ice storms. The decrease was partially offset by the assetretirement obligation mentioned above, which increased other regulatory credits in 2003 to offset the increases in depreciation and decommissioningexpenses.


Following is an analysis of the change in net revenue comparing 2002 to 2001.

(In Millions) 2001 net revenue $3,873.1 March 2002 Ark. settlement agreement 180.7

Volume/weather 155.7

Fuel price 94.3 System Energy refund in 2001 (128.9)Other 34.7 2002 net revenue $4,209.6

The March 2002 settlement agreement is discussed above and is offset by an increase in other operation and maintenance expenses. The effect on net incomein 2002 is a decrease of $2.2 million.

The volume/weather variance is due to increased electricity usage in the service territories. Billed usage increased a total of 2,149 GWh in the residential andcommercial sectors.

The fuel price variance is due to an increase in the price applied to unbilled sales partially offset by a revised estimate made in December 2002 to the fuelcost component of that price.

The effect of the System Energy refund resulted from System Energy's application to FERC in May 1995 for a rate increase, which it implemented inDecember 1995, subject to refund. The request sought changes to System Energy's rate schedule, including increases in the revenue requirement associatedwith decommissioning costs, the depreciation rate, and the rate of return on common equity. In July 2000, FERC approved a lower rate of return than therate sought by System Energy. Upon receipt of a final FERC order in July 2001, Entergy Arkansas and Entergy Louisiana recorded entries to spread theimpacts of FERC's order to the various revenue, expense, asset, and liability accounts affected, as if the order had been in place since commencement of thecase in 1995. The accounting entries necessary to record the effects of the order reduced purchased power expenses in 2001, which resulted in acorresponding increase in net revenue in 2001. The System Energy refund proceeding is discusse d in Note 2 to the consolidated financial statements.

Gross operating revenues

Gross operating revenues include a decrease in fuel cost recovery revenue of $897.4 million and $60.5 million related to electric sales and gas sales,respectively, primarily due to lower fuel recovery factors resulting from decreases in the market prices of natural gas and purchased power in 2002. As such,this revenue decrease is offset by decreased fuel and purchased power expenses.

Other Income Statement Variances


Other operation and maintenance expenses decreased primarily due to decreased expenses at Entergy Arkansas. The March 2002 settlement agreement thatbecame final in the second quarter of 2002, allowing Entergy Arkansas to recover a large majority of 2000 and 2001 ice storm repair expenses through thepreviously-collected transition cost account amounts, increased Entergy Arkansas' expenses by $159.9 million in 2002. This increase in expenses in 2002was offset by a regulatory credit resulting in no effect on net income. The decrease was partially offset by an increase of $99.8 million in benefit costs as aresult of voluntary severance program accruals in 2003.

Decommissioning expense increased primarily due to the implementation of SFAS 143, "Accounting for Asset Retirement Obligations." The increase indecommissioning expense is offset by increases in other regulatory credits and interest and dividend income and has an insignificant effect on net income.

Depreciation and amortization expenses increased primarily due to an increase in plant in service. The increase was also due to the implementation of SFAS143. The increase in depreciation and amortization expense due to SFAS 143 implementation is offset by increases in other regulatory credits and interestand dividend income and has an insignificant effect on net income.

Other income decreased primarily due to a decrease in "miscellaneous - - net" as a result of a $107.7 million accrual in the second quarter 2003 for the lossthat would be associated with a final, non-appealable decision disallowing abeyed River Bend plant costs. See Note 2 to the consolidated financialstatements for more details regarding the River Bend abeyed plant costs. The decrease was partially offset by an increase in interest and dividend income asa result of the implementation of SFAS 143.

Interest charges decreased primarily due to a decrease of $28.5 million in interest on long-term debt due to the redemption and refinancing of long-termdebt. Refer to Note 5 to the consolidated financial statements for detail of long-term debt outstanding as of December 31, 2003 and 2002.


In addition to the effect of the March 2002 settlement agreement at Entergy Arkansas, the increase in other operation and maintenance expenses wasprimarily due to:

an increase of $51.2 million in benefit costs;

increased expenses of $24.5 million at Entergy Arkansas due to the reversal in 2001 of ice storm costs previously charged to expense inDecember 2000;

an increase of $14.6 million in fossil plant expenses due to maintenance outages and turbine inspection costs at various plants;

an increase of $10.9 million to reflect the current estimate of the liability for the future disposal of low-level radioactive waste materials; and

lower nuclear insurance refunds of $6.7 million.

Depreciation and amortization expenses increased primarily due to the effects in 2001 of the final FERC order addressing System Energy's 1995 rate filing.

Other income decreased primarily due to:

interest recognized in 2001 on Grand Gulf 1's decommissioning trust funds resulting from the final order addressing System Energy's rateproceeding;

interest recognized in 2001 at Entergy Mississippi and Entergy New Orleans on the deferred System Energy costs related to its 1995 rate filingthat were not being recovered through rates; and

lower interest earned on declining deferred fuel balances.

The decrease was partially offset by an increase in "miscellaneous - - net" of $26.7 million due to the cessation of amortization of goodwill in January 2002upon implementation of SFAS 142 and settlement of liability insurance coverage at Entergy Gulf States.

Interest and other charges decreased primarily due to:

a decrease of $31.9 million in interest on long-term debt primarily due to the retirement of long-term debt in late 2001 and early 2002; and

a decrease of $76.0 million in other interest expense primarily due to interest recorded on System Energy's provision for rate refund in 2001resulting from the effects of the final FERC order addressing System Energy's 1995 rate filing. The refund was made in December 2001.

Non-Utility Nuclear

Following are key performance measures for Non-Utility Nuclear:

2003 2002 2001 Net MW in operation at December 31 4,001 3,955 3,445Average realized price per MWh $38.54 $40.49 $34.90Generation in GWh for the year 32,379 29,953 22,614Capacity factor for the year 92.4% 92.8% 92.7%


The increase in earnings for Non-Utility Nuclear from $200.5 million to $300.8 million was primarily due to the $154.5 million net-of-tax cumulative effectof a change in accounting principle recognized in the first quarter of 2003 upon implementation of SFAS 143. See "Critical Accounting Estimates - -SFAS 143" below for discussion of the implementation of SFAS 143. Income before the cumulative effect of accounting change decreased by $54.2 million.The decrease was primarily due to $83.0 million ($50.6 million net-of-tax) of charges recorded in connection with the voluntary severance program. Exceptfor the effect of the voluntary severance program, operation and maintenance expenses in 2003 per MWh of generation were in line with 2002 operation andmaintenance expenses.


The increase in earnings for Non-Utility Nuclear from $127.9 million to $200.5 million was primarily due to the acquisitions of Indian Point 2, which waspurchased in September 2001, and Vermont Yankee, which was purchased in July 2002. Also contributing to the increase in earnings was higher pricingunder certain purchase power contracts.

Energy Commodity Services

Earnings for Energy Commodity Services in 2003 were primarily driven by Entergy's investment in Entergy-Koch. Following are key performance measuresfor Entergy-Koch's operations for 2003, 2002, and 2001:

2003 2002 2001Entergy-Koch Trading Gas volatility 62% 61% 72% Electricity volatility 59% 48% 78% Gas marketed (BCF/D) (1) 6.5 5.8 4.5 Electricity marketed (GWh) 445,979 408,038 180,893 Gain/loss days 1.5 1.8 2.8Gulf South Pipeline Throughput (BCF/D) 1.99 2.40 2.45 Production cost ($/MMBtu) $0.146 $0.094 $0.093

(1) Previously reported volumes, which included only U.S. trading, have beenadjusted to reflect both U.S. and Europe volumes traded.


The increase in earnings for Energy Commodity Services in 2003 from a $145.8 million loss to $180.5 million in earnings was primarily due to $428.5million ($238.3 million net-of-tax) of charges recorded in 2002, as discussed in the 2002 to 2001 comparison below. Higher earnings from Entergy'sinvestment in Entergy-Koch also contributed to the increase in earnings. The income from Entergy's investment in Entergy-Koch was $73 million higher in2003 primarily as a result of higher earnings at Entergy-Koch Trading (EKT). Volatility was slightly up and trading earnings reflected solid point-of-viewtrading results. In addition, EKT's physical optimization business continued to contribute earnings, and its European business earnings increased as tradingactivities continued to expand beyond the United Kingdom. Earnings at Gulf South Pipeline were lower due to lower throughput and higher productioncosts. The decreased throughput was due to shifting gas flow patterns in a sustained high gas price environment that led to higher fuel costs. Productioncosts were higher as the result of incremental legal and consultant expenses incurred primarily in connection with Gulf South's defense of a lawsuit which itbelieves has no merit.

Entergy accounts for its 50% share in Entergy-Koch under the equity method of accounting. Earnings from Entergy-Koch are reported as equity in earningsof unconsolidated equity affiliates in the financial statements. Certain terms of the partnership arrangement allocated income from various sources, and thetaxes on that income, on a significantly disproportionate basis through 2003. Losses and distributions from operations are allocated to the partners equally.Substantially all of Entergy-Koch's profits were allocated to Entergy in 2003, 2002, and 2001. Effective January 1, 2004, a revaluation of Entergy-Koch'sassets for legal capital account purposes occurred, and future profit allocations changed after the revaluation. The profit allocations other than for weathertrading and international trading became equal. Profit allocations for weather trading and international trading remain disproportionate to the ownershipinterests. The weather trading and international trading alloca tions are unequal only within a specified range, such that the overall earnings allocation shouldnot materially differ from 50/50. Earnings allocated under the terms of the partnership agreement constitute equity, not subject to reallocation, for thepartners.


The decrease in earnings for Energy Commodity Services in 2002 from $105.9 million to a $145.8 million loss was primarily due to the charges to reflectthe effect of Entergy's decision to discontinue additional greenfield power plant development and to reflect asset impairments resulting from thedeteriorating economics of wholesale power markets principally in the United States and the United Kingdom. Entergy recorded net charges of $428.5million ($238.3 million net-of-tax) to operating expenses. The net charges consist of the following:

The power development business obtained contracts in October 1999 to acquire 36 turbines from General Electric. Entergy's rights andobligations under the contracts for 22 of the turbines were sold to an independent special-purpose entity in May 2001. $178.0 million of thecharges, including an offsetting net-of-tax benefit of $18.5 million related to the subsequent sale of four turbines to a third party, is a provisionfor the net costs resulting from cancellation or sale of the turbines subject to purchase commitments with the special-purpose entity;

$204.4 million of the charges results from the write-off of Entergy Power Development Corporation's equity investment in the Damhead Creekproject and the impairment of the values of its Warren Power power plant and its Crete and RS Cogen projects. This portion of the chargesreflects Entergy's estimate of the effects of reduced spark spreads in the United States and the United Kingdom. Damhead Creek was sold inDecember 2002, resulting in net income of $31.4 million;

$39.1 million of the charges relates to the restructuring of the non-nuclear wholesale assets business, which is comprised of $22.5 million ofimpairments of administrative fixed assets, $10.7 million of estimated sublease losses, and $5.9 million of employee-related costs;

$32.7 million of the charges results from the write-off of capitalized project development costs for projects that will not be completed; and

a gain of $25.7 million ($15.9 million net-of-tax) realized on the sale in August 2002 of an interest in projects under development in Spain.

Also, in the first quarter of 2002, Energy Commodity Services sold its interests in projects in Argentina, Chile, and Peru for net proceeds of $135.5 million.After impairment provisions recorded for these Latin American interests in 2001, the net loss realized on the sale in 2002 was insignificant.

Revenues and fuel and purchased power expenses decreased for Energy Commodity Services by $1,075.8 million and $876.9 million, respectively, in 2002primarily due to:

a decrease of $542.9 million in revenues and $539.6 million in fuel and purchased power expenses resulting from the sale of Highland Energyin the fourth quarter of 2001;

a decrease of $161.7 million in revenues resulting from the sale of the Saltend plant in August 2001; and

a decrease of $139.1 million in revenues and $133.5 million in purchased power expenses due to the contribution of substantially all ofEntergy's power marketing and trading business to Entergy-Koch in February 2001. Earnings from Entergy-Koch are reported as equity inearnings of unconsolidated equity affiliates in the financial statements. The net income effect of the lower revenues was more than offset by theincome from Entergy's investment in Entergy-Koch. The income from Entergy's investment in Entergy-Koch was $31.9 million higher in 2002primarily as a result of earnings at Entergy-Koch Trading (EKT) and higher earnings at Gulf South Pipeline due to more favorabletransportation contract pricing. Although the gain/loss days ratio reported above declined in 2002, EKT made relatively more money on the gaindays than the loss days, and thus had an increase in earnings for the year.

Parent & Other

The loss from Parent & Other decreased in 2003 from $38.6 million to $23.4 million primarily due to lower income tax expense.

The loss from Parent & Other decreased in 2002 from $57.9 million to $38.6 million primarily due to:

a decrease in income tax expense of $12.1 million resulting from the allocation of intercompany tax benefits; and

a decrease in interest charges of $6.0 million.

Income Taxes

The effective income tax rates for 2003, 2002, and 2001 were 37.9%, 32.1%, and 38.3%, respectively. See Note 3 to the consolidated financial statementsfor a reconciliation of the federal statutory rate of 35.0% to the effective income tax rates.

Liquidity and Capital Resources

This section discusses Entergy's capital structure, capital spending plans and other uses of capital, sources of capital, and the cash flow activity presented inthe cash flow statement.

Capital Structure

Entergy's capitalization is balanced between equity and debt, as shown in the following table. The reduction in the percentage for 2003 is the result ofreduced debt outstanding in the U.S. Utility and Non-Utility Nuclear businesses, and an increase in shareholders' equity, primarily due to increased retainedearnings. The reduction in the percentage for 2002 is primarily the result of the sale of Damhead Creek in December 2002. Debt outstanding on theDamhead Creek facility was $458 million as of December 31, 2001.

2003 2002 2001

Net debt to net capital at the end of the year 45.3% 47.7% 51.1%Effect of subtracting cash from gross debt 2.2% 4.1% 2.2%

Debt to capital at the end of the year 47.5% 51.8% 53.3%

Net debt consists of gross debt less cash and cash equivalents. Gross debt consists of notes payable, capital lease obligations, preferred stock with sinkingfund, and long-term debt, including the currently maturing portion. Net capital consists of net debt, common shareholders' equity, and preferred stockwithout sinking fund. The preferred stock with sinking fund is included in gross debt pursuant to SFAS 150, which Entergy implemented in the third quarterof 2003. The 2002 and 2001 ratios do not reflect that type of security as debt, but do include it in net capital, which is how Entergy presented those securitiesprior to implementation of SFAS 150. Entergy uses the net debt to net capital ratio in analyzing its financial condition and believes it provides usefulinformation to its investors and creditors in evaluating Entergy's financial condition.

Long-term debt, including the currently maturing portion, makes up over 90% of Entergy's total debt outstanding. Following are Entergy's long-term debtprincipal maturities as of December 31, 2003 and 2002 by operating segment. A significant factor in the change from 2002 to 2003 is over $2 billion of debtrefinancing or retirement activity in the U.S. Utility business in 2003. The figures below include principal payments on the Entergy Louisiana and SystemEnergy sale-leaseback transactions, which are included in long-term debt on the balance sheet.

Long-term debt maturities 2003 2004 2005 2006 2007-2008 after 2008 (In Millions) As of December 31, 2002 U.S. Utility $1,111 $855 $470 $68 $654 $3,718Non-Utility Nuclear $87 $91 $95 $98 $119 $193Energy Commodity Services $79 - - - - -Parent and Other - $595 - - - $267 As of December 31, 2003 U.S. Utility - $450 $355 $28 $1,254 $4,345Non-Utility Nuclear - $74 $72 $76 $100 $193Energy Commodity Services - - - - - -Parent and Other - - $60 - $272 $568

Note 5 to the consolidated financial statements provides more detail concerning long-term debt.

Capital lease obligations, including nuclear fuel leases, are a minimal part of Entergy's overall capital structure, and are discussed further in Note 10 to theconsolidated financial statements. Following are Entergy's payment obligations under those leases:

2004 2005 2006 2007-2008 after 2008 (In Millions)Capital lease payments, including nuclear fuelleases

$165 $142 $6 $5 $3

Notes payable, which include borrowings outstanding on credit facilities with original maturities of less than one year, were less than $1 million as ofDecember 31, 2003. Entergy Corporation, Entergy Arkansas, Entergy Louisiana, and Entergy Mississippi each have 364-day credit facilities available asfollows:

Company

Expiration Date Amount of

Facility Amount Drawn as

of Dec. 31, 2003 Entergy Corporation May 2004 $1.450 billion -Entergy Arkansas April 2004 $63 million -Entergy Louisiana May 2004 $15 million -Entergy Mississippi May 2004 $25 million -

Although the Entergy Corporation credit line expires in May 2004, Entergy has the discretionary option to extend the period to repay the amount thenoutstanding for an additional 364-day term. Because of this option, which Entergy intends to exercise if it does not renew the credit line or obtain analternative source of financing, any debt outstanding on the credit line is reflected in long-term debt on the balance sheet. Entergy Corporation's facilityrequires it to maintain a consolidated debt ratio of 65% or less of its total capitalization, and maintain an interest coverage ratio of 2 to 1. If Entergy fails tomeet these limits, or if Entergy or the domestic utility companies default on other indebtedness or are in bankruptcy or insolvency proceedings, anacceleration of the facility's maturity date may occur.

Operating Lease Obligations and Guarantees of Unconsolidated Obligations

In addition to the obligations listed above that are reflected on the balance sheet, Entergy has a minimal amount of operating leases and guarantees insupport of unconsolidated obligations that are not reflected as liabilities on the balance sheet. These items are not on the balance sheet in accordance withgenerally accepted accounting principles.

Following are Entergy's payment obligations as of December 31, 2003 on non-cancelable operating leases with a term over one year:

2004 2005 2006 2007-2008

after 2008

(In Millions) Operating lease payments $99 $89 $70 $93 $245

The operating leases are discussed more thoroughly in Note 10 to the consolidated financial statements.

Entergy's guarantees of unconsolidated obligations outstanding as of December 31, 2003 total a maximum amount of $249 million, detailed as follows:

In August 2001, EntergyShaw entered into a turnkey construction agreement with an Entergy subsidiary, Entergy Power Ventures, L.P. (EPV),and with Northeast Texas Electric Cooperative, Inc. (NTEC), providing for the construction by EntergyShaw of a 550 MW electric generatingstation to be located in Harrison County, Texas. Entergy has guaranteed the obligations of EntergyShaw to construct the plant, which is 70%owned by EPV. Entergy's maximum liability on the guarantee is $232.5 million, and the guarantee is expected to remain outstanding throughJune 2004.

RS Cogen has an interest rate swap agreement that hedges the interest rate on a portion of its debt. Entergy guaranteed RS Cogen's obligationsunder the interest rate swap agreement. The guarantee is for $16.5 million and terminates in October 2017.

Summary of Contractual Obligations of Consolidated Entities

Contractual Obligations 2004 2005-2006 2007-2008 after 2008 Total (In Millions) Long-term debt (1) $524 $591 $1,626 $5,106 $7,847Capital lease obligations (2) $165 $148 $5 $3 $321Operating leases (2) $99 $159 $93 $245 $596Purchase obligations (3) $925 $1,007 $907 $1,446 $4,285

(1) Long-term debt is discussed in Note 5 to the consolidated financial statements.

(2) Capital lease obligations include nuclear fuel leases. Lease obligations are discussed in Note 10 tothe consolidated financial statements.

(3) As defined by SEC rule. For Entergy, it includes unconditional fuel and purchased powerobligations and other purchase obligations. Approximately 97% of the total pertains to fuel andpurchased power obligations that are recovered in the normal course of business through variousfuel cost recovery mechanisms in the U.S. Utility business.

Capital Funds Agreement

Pursuant to an agreement with certain creditors, Entergy Corporation has agreed to supply System Energy with sufficient capital to:

maintain System Energy's equity capital at a minimum of 35% of its total capitalization (excluding short-term debt);

permit the continued commercial operation of Grand Gulf 1;

pay in full all System Energy indebtedness for borrowed money when due; and

enable System Energy to make payments on specific System Energy debt, under supplements to the agreement assigning System Energy's rightsin the agreement as security for the specific debt.

Capital Expenditure Plans and Other Uses of Capital

Following are the amounts of Entergy's planned construction and other capital investments by operating segment for 2004 through 2006:

Planned construction and capital investments 2004 2005 2006 (In Millions)

Maintenance Capital:U.S. Utility $767 $767 $759Non-Utility Nuclear 73 68 76Energy Commodity Services 7 2 2Parent and Other 7 10 14

854 847 851Capital Commitments:

U.S. Utility 569 295 112Non-Utility Nuclear 123 - -Energy Commodity Services 73 - -Parent and Other 32 - -

797 295 112Total $1,651 $1,142 $963

Maintenance Capital refers to amounts Entergy plans to spend on routine capital projects that are necessary to support reliability of its service, equipment orsystems and to support normal customer growth.

Capital Commitments refers to non-routine capital investments that Entergy is either contractually obligated or otherwise required to make pursuant to aregulatory agreement or existing rule or law. Amounts reflected in this category include the following:

Replacement of the ANO 1 steam generators and reactor vessel closure head. Entergy estimates the cost of the ANO 1 project to beapproximately $235 million, of which approximately $135 million will be incurred through 2004. Entergy expects the replacement to occurduring a planned refueling outage in 2005. Entergy Arkansas filed in January 2003 a request for a declaratory order by the APSC that theinvestment in the replacement is in the public interest analogous to the order received in 1998 prior to the replacement of the ANO 2 steamgenerators. The APSC found that the replacement is in the public interest in a declaratory order issued in May 2003.

Purchase of the Perryville power plant in Louisiana. In January 2004, Entergy Louisiana signed an agreement to acquire the 718 MW Perryvillepower plant for $170 million. The plant is owned by a subsidiary of Cleco Corporation, which subsidiary submitted a bid in response toEntergy's Fall 2002 request for proposals for supply-side resources. The signing of the agreement followed a voluntary Chapter 11 bankruptcyfiling by the plant's owner. Entergy expects that Entergy Louisiana will own 100 percent of the Perryville plant, and that Entergy Louisiana willsell 75 percent of the output to Entergy Gulf States under a long-term cost-of-service purchased power agreement. The purchase of the plant,expected to be completed by December 2004, is contingent upon obtaining necessary approvals from the bankruptcy court and from state andfederal regulators, including approval of full cost recovery, giving consideration to the need for the power and the prudence of EntergyLouisiana and Ente rgy Gulf States for engaging in the transaction. In addition, Entergy Louisiana and Entergy Gulf States executed a purchasedpower agreement with the plant's owner through the date of the acquisition's closing (as long as that occurs by September 2005) for 100 percentof the output of the Perryville plant.

Nuclear power plant uprates.

Entergy's obligation in the Energy Commodity Services business to make a $72.7 million cash contribution to Entergy-Koch in January 2004.Entergy made the contribution on January 2, 2004.

From time to time, Entergy considers other capital investments as potentially being necessary or desirable in the future, including additional nuclear plantpower uprates, generation supply assets, various transmission upgrades, environmental compliance expenditures or investments in new businesses or assets.Because no contractual obligation or commitment exists to pursue these investments, they are not included in Entergy's planned construction and capitalinvestments. These potential investments are also subject to evaluation and approval in accordance with Entergy's policies before amounts may be spent. Inaddition, Entergy's capital spending plans do not include spending for transmission upgrades requested by merchant generators, other than projects currentlyunderway, because Entergy's contracts with the generators require the generators to fund the upgrades, which Entergy then repays through credits againstbillings to the generators.

Estimated capital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of business restructuring,regulatory constraints, environmental regulations, business opportunities, market volatility, economic trends, and the ability to access capital.

Dividends and Stock Repurchases

Declarations of dividends on Entergy's common stock are made at the discretion of the Board. Among other things, the Board evaluates the level ofEntergy's common stock dividends based upon Entergy's earnings, financial strength, and future investment opportunities. At its July 2003 meeting, theBoard increased Entergy's quarterly dividend per share by 29%, to $0.45. Entergy expects the next review of a potential dividend increase will occur inOctober 2004. Given the current number of Entergy common shares outstanding, Entergy expects the July 2003 dividend increase to result in an incrementalannual increase in cash used of approximately $90 million. In 2003, Entergy paid $363 million in cash dividends on its common stock.

In accordance with Entergy's stock option plans, Entergy periodically grants stock options to its employees, which may be exercised to obtain shares ofEntergy's common stock. According to the plans, these shares can be newly issued shares, treasury stock, or shares purchased on the open market. Entergy'smanagement has been authorized to repurchase on the open market shares up to an amount sufficient to fund the exercise of grants under the plans. In 2003,Entergy repurchased 155,000 shares of common stock for a total purchase price of $8.1 million.

PUHCA Restrictions on Uses of Capital

Entergy's ability to invest in electric wholesale generators and foreign utility companies is subject to the SEC's regulations under PUHCA. As authorized bythe SEC, Entergy is allowed to invest earnings in electric wholesale generators and foreign utility companies in an amount equal to 100% of its averageconsolidated retained earnings. As of December 31, 2003, Entergy's investments subject to this rule totaled $2.59 billion constituting 58.3% of Entergy'saverage consolidated retained earnings.

Entergy's ability to guarantee obligations of Entergy's non-utility subsidiaries is also limited by SEC regulations under PUHCA. In August 2000, the SECissued an order, effective through December 31, 2005, that allows Entergy to issue up to $2 billion of guarantees for the benefit of its non-utility companies.Entergy currently has sufficient capacity under this order for its foreseeable needs.

Under PUHCA, the SEC imposes a limit equal to 15% of consolidated capitalization on the amount that may be invested in "energy-related" businesseswithout specific SEC approval. Entergy has made investments in energy-related businesses, including power marketing and trading. Entergy's availablecapacity to make additional investments at December 31, 2003 was approximately $1.6 billion.

Sources of Capital

Entergy's sources to meet its capital requirements and to fund potential investments include:

internally generated funds;

cash on hand ($692 million as of December 31, 2003);

securities issuances;

bank financing under new or existing facilities; and

sales of assets.

The majority of Entergy's internally generated funds come from the domestic utility companies and System Energy. Circumstances such as weather patterns,price fluctuations, and unanticipated expenses, including unscheduled plant outages, could affect the level of internally generated funds in the future. In thefollowing section Entergy's cash flow activity for the previous three years is discussed.

Provisions within the Articles of Incorporation or pertinent indentures and various other agreements relating to the long-term debt and preferred stock ofcertain of Entergy Corporation's subsidiaries restrict the payment of cash dividends or other distributions on their common and preferred stock. As ofDecember 31, 2003, Entergy Arkansas and Entergy Mississippi had restricted retained earnings unavailable for distribution to Entergy Corporation of $309.4million and $41.9 million, respectively. Additionally, PUHCA prohibits Entergy Corporation's subsidiaries from making loans or advances to EntergyCorporation. All debt and common and preferred stock issuances by the domestic utility companies and System Energy require prior regulatory approval andtheir preferred stock and debt issuances are also subject to issuance tests set forth in corporate charters, bond indentures, other agreements. The domesticutility companies and System Energy have sufficient capacity under these tests to meet foreseeable capital needs.

Short-term borrowings by the domestic utility companies and System Energy, including borrowings under the intra-company money pool, are limited toamounts authorized by the SEC. Under the SEC order authorizing the short-term borrowing limits, the domestic utility companies and System Energycannot incur new short-term indebtedness if the issuer's common equity would comprise less than 30% of its capital. See Note 4 to the consolidated financialstatements for further discussion of Entergy's short-term borrowing limits.

Cash Flow Activity

As shown in Entergy's Statements of Cash Flows, cash flows for the years ended December 31, 2003, 2002, and 2001 were as follows:

2003 2002 2001(In Millions)

Cash and cash equivalents at beginning of period $1,335 $752 $1,382

Cash flow provided by (used in): Operating activities 2,006 2,181 2,216 Investing activities (1,783) (1,388) (2,224) Financing activities (869) (213) (622)Effect of exchange rates on cash and cashequivalents

3 3 -

Net increase (decrease) in cash and cash equivalents (643) 583 (630)

Cash and cash equivalents at end of period $692 $1,335 $752

Operating Cash Flow Activity


Entergy's cash flow provided by operating activities decreased in 2003 primarily due to the following:

The U.S. Utility provided $1,675 million in operating cash flow in 2003 compared to providing $2,341 million in 2002. The decrease primarilyresulted from the tax accounting election made by Entergy Louisiana, as discussed below. Also contributing to the decrease were higherpayments for fuel during the period, which also significantly increased the amount of deferred fuel costs. Management expects that the deferredfuel costs will be recovered through regulatory recovery mechanisms currently in place.

The non-nuclear wholesale assets business used $70 million in operating cash flow in 2003 compared to providing $43 million in 2002primarily due to a decrease of $64 million in the income tax refund received in 2003 compared to 2002. Also contributing to the increase in cashused was a one-time $33 million payment related to a generation contract in the non-nuclear wholesale assets business.

The Non-Utility Nuclear segment provided $183 million in operating cash flow in 2003 compared to providing $282 million in 2002 primarilydue to higher tax payments and unplanned outages.

Operating cash flow used by the investment in Entergy-Koch, LP decreased by $6 million in 2003. This decrease in cash flow used was due tothe receipt of $100 million in dividends from Entergy-Koch in 2003. Almost entirely offsetting the dividends received was an increase in taxpayments related to Entergy's investment in Entergy-Koch due to increased income from the investment.

Partially offsetting the decrease was an increase due to the parent company providing $209 million in operating cash flow in 2003 compared to using $439million in 2002 primarily due to the payment that Entergy Corporation made to Entergy Louisiana in 2002 pursuant to the tax accounting election made byEntergy Louisiana that is discussed below.


Entergy's cash flow provided by operating activities decreased in 2002 primarily due to:

The U.S. Utility provided $2,341 million in operating cash flow, an increase of $693 million compared to 2001. The increase primarily resultedfrom the tax accounting election made by Entergy Louisiana that is discussed below.

The parent company used $439 million in operating cash flow compared to providing $407 million in 2001. The decrease primarily resultedfrom the payment that Entergy Corporation made to Entergy Louisiana pursuant to the tax accounting election made by Entergy Louisiana thatis discussed below.

The Non-Utility Nuclear business provided $282 million in operating cash flow, an increase of $18 million compared to 2001.

Entergy's investment in Entergy-Koch used $47 million in operating cash flow in 2002, a decrease of $8 million compared to 2001. The use ofcash primarily relates to tax payments on Entergy's share of the partnership income. Entergy did not receive a dividend from Entergy-Koch in2002 or in 2001 because the joint venture was retaining capital for business opportunities.

The non-nuclear wholesale assets business provided $43 million in operating cash flow in 2002, compared to using $73 million in 2001.

Tax Election

In 2001, Entergy Louisiana changed its method of accounting for tax purposes related to the contract to purchase power from the Vidalia project (thecontract is discussed in Note 9 to the consolidated financial statements). The new tax accounting method has provided a cumulative cash flow benefit ofapproximately $805 million through 2003, which is expected to reverse in the years 2005 through 2031. The election did not reduce book income taxexpense. The timing of the reversal of this benefit depends on several variables, including the price of power. Approximately half of the consolidated cashflow benefit of the election occurred in 2001 and the remainder occurred in 2002. In accordance with Entergy's intercompany tax allocation agreement, thecash flow benefit for Entergy Louisiana occurred in the fourth quarter of 2002.

In a September 2002 settlement of an LPSC proceeding that concerned the Vidalia contract, the LPSC approved Entergy Louisiana's proposed treatment ofthe regulatory impact of the tax accounting election. In general, the settlement permits Entergy Louisiana to keep a portion of the tax benefit in exchange forbearing the risk associated with sustaining the tax treatment. The LPSC settlement divided the term of the Vidalia contract into two segments: 2002-2012and 2013-2031. During the first eight years of the 2002-2012 segment, Entergy Louisiana agreed to credit rates by flowing through its fuel adjustmentcalculation $11 million each year, beginning monthly in October 2002. Entergy Louisiana must credit rates in this way and by this amount even if EntergyLouisiana is unable to sustain the tax deduction. Entergy Louisiana also must credit rates by $11 million each year for an additional two years unless eitherthe tax accounting method elected is retroactively repealed or the Inter nal Revenue Service denies the entire deduction related to the tax accounting method.Entergy Louisiana agreed to credit ratepayers additional amounts unless the tax accounting election is not sustained if it is challenged. During 2013-2031,Entergy Louisiana and its ratepayers would share the remaining benefits of this tax accounting election.

Investing Activities


Net cash used in investing activities increased in 2003 primarily due to the following:

The non-nuclear wholesale assets business realized $215 million in net proceeds from sales of businesses in 2002.

Temporary investments of $150 million matured in 2002, which provided cash flow in 2002.

Temporary investments of $50 million were made in 2003, which used cash flow in 2003.

Entergy Gulf States has $77 million and Entergy Mississippi has $73 million of other regulatory investments in 2003 as a result of fuel costunder-recoveries. See Note 1 to the consolidated financial statements for discussion of the accounting treatment of these fuel cost under-recoveries. See Note 2 to the consolidated financial statements for discussion of the change in Entergy Mississippi's energy cost recovery rider.

Partially offsetting these uses of cash, approximately $172 million of the cash collateral for a letter of credit that secures the installment obligations owed toNYPA for the acquisition of the FitzPatrick and Indian Point 3 nuclear power plants was released to Entergy during 2003. There is approximately $60million of cash collateral remaining that Entergy expects to be released in March 2004 as a result of the regularly scheduled payment on the note payable toNYPA.


Net cash used in investing activities decreased in 2002 primarily due to the following:

Entergy used $420 million less cash in its 2002 nuclear power plant purchase than it used in its 2001 purchase. In July 2002, Entergy's Non-Utility Nuclear business purchased the Vermont Yankee nuclear power plant for $180 million in cash. In September 2001, Entergy's Non-UtilityNuclear business purchased the Indian Point 2 nuclear power plant for $600 million in cash. The liabilities to decommission both plants, as wellas related decommissioning trust funds, were also transferred to Entergy. These decommissioning trust transfers are reflected in the non-cashactivity section of the cash flow statements.

Entergy made cash contributions of approximately $414 million in 2001 in connection with the formation of Entergy-Koch.

Entergy made a $272 million cash investment in 2001 to provide the collateral, discussed above, for the letter of credit that secures theinstallment obligations owed to NYPA. Approximately $40 million of this collateral was released to Entergy in 2002.

Entergy used $150 million to invest in temporary investments with a maturity of greater than 90 days in 2001 and those investments matured in2002. This resulted in a net decrease of $300 million in cash used in 2002.

Partially offsetting the decrease in net cash used in investing activities were the following:

Entergy received less cash from sales of businesses in 2002 than it received in 2001. The sale of the Saltend plant in August 2001 providedapproximately $810 million in cash, while the sale of various projects in 2002 provided approximately $215 million in cash.

Entergy spent approximately $150 million more on construction in 2002 than in 2001, primarily for construction of the Harrison County project.

Financing Activities


Net cash used in financing activities increased in 2003 primarily due to the following:

Net long-term debt retirements by the U.S. Utility segment were approximately $470 million in 2003 compared to net issuances ofapproximately $76 million in 2002. See Note 5 to the consolidated financial statements for the details of Entergy's long-term debt outstanding.

The net borrowings under Entergy Corporation's credit facilities decreased $500 million in 2003 compared to an increase of $244 million in2002.

The items causing cash used to increase in 2003 were partially offset by the following:

Entergy Corporation issued $538 million of long-term notes in 2003 compared to $267 million in 2002.

The non-nuclear wholesale assets business retired $268 million of long-term debt in 2002 related to the repurchase of the rights to acquireturbines discussed in Results of Operations above. Partially offsetting this was the retirement of the $79 million Top of Iowa wind project debtat its maturity in January 2003.

Entergy repurchased $8 million of its common stock in 2003 compared to $118 million in 2002.


Net cash used in financing activities decreased in 2002 primarily due to:

Entergy increased the net borrowings under Entergy Corporation's credit facilities by $295 million in 2002.

Entergy Corporation issued $267 million of long-term notes in 2002.

The non-nuclear wholesale assets business used $196 million less cash in 2002 to retire debt than it did in 2001. This primarily resulted fromtwo transactions. The non-nuclear wholesale assets business retired $268 million of long-term debt in April 2002 related to the acquisition of therights to purchase turbines from a special-purpose financing entity. In 2001 the non-nuclear wholesale assets business retired the $555 millionoutstanding on the Saltend credit facility when the plant was sold.

Issuances of long-term debt net of retirements by the U.S. Utility segment provided $113 million less cash in 2002 than in 2001. Net issuanceswere $76 million in 2002 compared to $189 million in 2001.

Entergy repurchased $81.6 million more of its common stock in 2002 than in 2001.

In a non-cash transaction in 2002, long-term debt was reduced by $488 million in the sale of the Damhead Creek plant when the purchaser assumed theDamhead Creek debt along with the acquisition of the plant.

Significant Factors and Known Trends

Rate Regulation and Fuel-Cost Recovery

The rates that the domestic utility companies and System Energy charge for their services are an important item influencing Entergy's financial position,results of operations, and liquidity. These companies are closely regulated and the rates charged to their customers are determined in regulatory proceedings,except for a portion of Entergy Gulf States' operations. Governmental agencies, including the APSC, the City Council, the LPSC, the MPSC, the PUCT, andFERC, are primarily responsible for approval of the rates charged to customers. The status of material retail rate proceedings are summarized below anddescribed in more detail in Note 2 to the consolidated financial statements.

Company AuthorizedROE

Pending Proceedings/Events

Entergy Arkansas 11.0% No cases are pending. Transition cost account mechanism expiredon December 31, 2001. It is likely that a rate filing will be madein mid-2005 in connection with the steam generator replacementat ANO.

Entergy GulfStates-Texas

10.95% Base rates have been frozen since settlement order issued in June1999. Freeze will likely extend to the start of retail open access,given management's current expectations as to the start date ofretail open access.

Entergy GulfStates-Louisiana

11.1% The LPSC approved a settlement resolving the 4th - 8th post-merger earning reviews resulting in a $22.1 million prospectiverate reduction effective January 2003 and a refund of $16.3million. In December 2003, the LPSC staff recommended a $30.6million rate refund and a prospective rate reduction ofapproximately $50 million as a result of the 9th earnings analysis(2002). Hearings are set for April 2004. With the LPSC staff,Entergy Gulf States continues to pursue the development of aperformance-based rate structure.

Entergy Louisiana 9.7%-11.3%(1)

In January 2004, Entergy Louisiana filed with the LPSC for a$167 million base rate increase and an ROE of 11.4%. Thecurrent ROE midpoint is 10.5%. Hearings are currently set forSeptember 2004. With the LPSC staff, Entergy Louisianacontinues to pursue the development of a performance-based ratestructure.

EntergyMississippi

10.64%-12.86%(2)

An annual formula rate plan is in place. The MPSC approved a$48.2 million rate increase effective January 2003 and an ROEmidpoint of 11.75%. Entergy Mississippi will make a formularate plan filing in March 2004.

Entergy NewOrleans

10.25%-12.25%(3)

The City Council approved an agreement in May 2003 allowingfor a $30.2 million increase in base rates effective June 1, 2003and approved the implementation of formula rate plans for theelectric and gas service that will be evaluated annually until 2005.An appeal of the approval by intervenors is pending, but the ratesremain in effect. The midpoint ROE of both plans is 11.25%,with a target equity component of 42%. Entergy New Orleanswill make a formula rate plan filing in May 2004.

System Energy 10.94% ROE approved by July 2001 FERC order. No cases pendingbefore FERC.

(1) Entergy Louisiana's formula rate plan expired with the 2001 test year. Under the expired formula,if Entergy Louisiana earned outside of the bandwidth range, rates would be adjusted on aprospective basis. If earnings were above the bandwidth range, rates would be reduced by 60percent of the overage, and if below, increased by 60 percent of the shortfall.

(2) Under Mississippi law and Entergy Mississippi's formula rate plan, if Entergy Mississippi's earnedROE is above the top of the range-of-no-change at the top of the bandwidth, then EntergyMississippi's rates are reduced by 50 percent of the difference between the earned ROE and the topof the bandwidth. In such circumstance, Entergy Mississippi's 'Allowed ROE' for the next twelve-month period is the point halfway between such earned ROE and the top of the bandwidth --Entergy Mississippi's retail rates are set at that halfway-point ROE level. (Before the comparison ismade of the earned ROE to the bandwidth, the bandwidth can be adjusted for performancemeasures by as much as 1%. Rates are adjusted pursuant to Entergy Mississippi's formula rate planon a prospective basis only.) In the situation where Entergy Mississippi's earned ROE is not abovethe top of the range-of-no-change at the top of the bandwidth, then Entergy Mississippi 's 'AllowedROE' for the next twelve-month period is the top of the range-of-no-change at the top of thebandwidth. If earnings are below the bandwidth range, rates are increased by 50 percent of thedifference between the earned ROE and the bottom of the bandwidth. Under the provisions ofEntergy Mississippi's formula rate plan, each annual formula rate plan filing incorporates a revisedcalculation of the benchmark ROE. The benchmark ROE set out in the March 15, 2004, formularate plan filing likely will differ from the last approved ROE. Entergy Mississippi anticipates theMarch 15, 2004, filing will show an allowed regulatory earnings range of 9.3% to 12.2%. EntergyMississippi does not anticipate a reduction in revenues going forward.

(3) If Entergy New Orleans earns outside of the bandwidth range, rates will be adjusted on aprospective basis. Under the gas formula rate plan, if earnings are above the bandwidth range,rates are reduced by 100 percent of the overage, and if below, increased by 100 percent of theshortfall. In addition, if the ROE falls between 11.5% and 12.25%, rates are reduced by 60 percentof the difference, and if the ROE falls between 10.25% and 11%, rates are increased by 40 percentof the differential. Under the electric formula rate plan, rates are adjusted accordingly by 100percent of the amount of any overage or shortfall. Entergy New Orleans may earn up to 13.25%under the electric formula rate plan provided that the increase is caused by its share of energy costsavings under the generation performance-based recovery plan discussed below.

In addition to the regulatory scrutiny connected with base rate proceedings, the domestic utility companies' fuel and purchased power costs recovered fromcustomers are subject to regulatory scrutiny. The domestic utility companies' significant fuel and purchased power cost proceedings are described in Note 2to the consolidated financial statements.

System Agreement Litigation

The domestic utility companies historically have engaged in the coordinated planning, construction, and operation of generating and transmission facilitiesunder the terms of an agreement called the System Agreement that has been approved by the FERC. Litigation involving the System Agreement is beingpursued by the LPSC at both the FERC and before itself. These proceedings include challenges to the allocation of costs as defined by the SystemAgreement, raise questions of imprudence by the domestic utility companies in their execution of the System Agreement, and seek support for localregulatory authority over System Agreement issues. Regarding the proceeding at the LPSC, Entergy believes that state and local regulators are pre-emptedby federal law from reviewing and deciding System Agreement issues for themselves. An unrelated case between the LPSC and Entergy Louisiana raisedthe question of whether a state regulator is pre-empted by federal law from reviewing and interpreting FERC rate schedules that are part of the SystemAgreement, and from subsequently enforcing that interpretation. The LPSC interpreted a System Agreement rate schedule in the unrelated case, and thensought to enforce its interpretation. The Louisiana Supreme Court affirmed. In 2003, the U.S. Supreme Court ruled in Entergy Louisiana's favor andreversed the decisions of the LPSC and the Louisiana Supreme Court.

In the proceeding at FERC, the LPSC alleges that the domestic utility companies' annual production costs over the period 2002 to 2007 will be over or(under) the average for the domestic utility companies by the following amounts:

Entergy Arkansas ($130) to ($278) millionEntergy Gulf States -Louisiana

$11 to $87 million

Entergy Louisiana $139 to $132 millionEntergy Mississippi ($27) to $13 millionEntergy New Orleans $7 to $46 million

This range of results is a function of assumptions regarding such things as future natural gas prices, the future market price of electricity, and other factors. IfFERC grants the relief requested by the LPSC, the relief may result in a material increase in production costs allocated to companies whose costs currentlyare projected to be less than the average and a material decrease in production costs allocated to companies whose costs currently are projected to exceed theaverage. Management believes that any changes in the allocation of production costs resulting from a FERC decision should result in similar rate changesfor retail customers. Therefore, management does not believe that this proceeding will have a material effect on the financial condition of any of thedomestic utility companies, although the outcome of the proceeding at FERC cannot be predicted at this time.

In February 2004 a FERC ALJ issued an Initial Decision in the proceeding. The Initial Decision decided some issues in favor of the relief sought by theLPSC, and decided some issues against the relief sought by the LPSC. Entergy continues to assess the potential effects of the ALJ's Initial Decision, andhow it will respond to the decision. It appears that the shift in total production costs under the terms of the ALJ's Initial Decision would not be as great asthat sought in the LPSC's complaint, but would still be substantial. As an Initial Decision, it is not a FERC order, and Entergy and the other parties in theproceeding will have additional opportunities to explain their positions in the proceeding prior to the issuance of a FERC decision. FERC does not have adeadline by which it has to decide the proceeding and management does not expect a FERC decision before the fourth quarter 2004.

On February 10, 2004, the APSC issued an "Order of Investigation," in which it discusses the negative effect that implementation of the FERC ALJ's InitialDecision would have on Entergy Arkansas' customers. The APSC order includes a preliminary estimate that the FERC ALJ's Initial Decision would shiftapproximately $125 million of costs for the year 2003 to Entergy Arkansas' retail customers, and would shift an average of approximately $113 million peryear for the years 2004-2011 to Entergy Arkansas' retail customers. The APSC order establishes an investigation into whether Entergy Arkansas' continuedparticipation in the System Agreement is in the best interest of its customers, and whether there are steps that Entergy Arkansas or the APSC can take "toprotect [Entergy Arkansas' customers] from future attempts by Louisiana, or any other Entergy retail regulator, to shift its high costs to Arkansas." EntergyArkansas' initial testimony in the proceeding is due in Ap ril 2004.

In addition to the APSC's Order of Investigation, Entergy's retail regulators have and may continue to question the prudence and other aspects of EntergySystem or domestic utility company contracts or assets that may not be subject to their respective jurisdictions. For instance, in its Order of Investigation, theAPSC discusses aspects of Entergy Louisiana's power purchases from the Vidalia project, and the APSC has publicly announced its intention to initiate aninquiry into the Vidalia purchase power contract. Entergy believes that any such inquiry would have to occur at the FERC.

Market and Credit Risks

Market risk is the risk of changes in the value of commodity and financial instruments, or in future operating results or cash flows, in response to changingmarket conditions. Entergy is exposed to the following significant market risks:

The commodity price risk associated with Entergy's Non-Utility Nuclear and Energy Commodity Services segments.

The foreign currency exchange rate risk associated with certain of Entergy's contractual obligations.

The interest rate and equity price risk associated with Entergy's investments in decommissioning trust funds.

Entergy is also exposed to credit risk. Credit risk is the risk of loss from nonperformance by suppliers, customers, or financial counterparties to a contract oragreement. Where it is a significant consideration, counterparty credit risk is addressed in the discussions that follow.

Commodity Price Risk

Power Generation

The sale of electricity from the power generation plants owned by Entergy's Non-Utility Nuclear business and Energy Commodity Services, unlessotherwise contracted, is subject to the fluctuation of market power prices. Entergy's Non-Utility Nuclear business has entered into power purchaseagreements (PPAs) and other contracts to sell the power produced by its power plants at prices established in the PPAs. Entergy continues to pursueopportunities to extend the existing PPAs and to enter into new PPAs with other parties. Following is a summary of the amount of the Non-Utility Nuclearbusiness' output that is currently sold forward under physical or financial contracts at fixed prices:

2004 2005 2006 2007 2008Non-Utility Nuclear: % of planned generation soldforward

100% 52% 32% 16% 4%

Planned generation (GWh) 32,787 34,164 34,853 34,517 34,513Average price per MWh $38 $37 $35 $34 $38

The Vermont Yankee acquisition included a 10-year PPA, which is through the expiration of the current operating license for the plant, under which theformer owners will buy the power produced by the plant. The PPA includes an adjustment clause under which the prices specified in the PPA will beadjusted downward annually, beginning in November 2005, if power market prices drop below PPA prices. Accordingly, because the price is not fixed, thetable above does not report power from that plant as sold forward after October 2005. Approximately 2% of Non-Utility Nuclear's planned generation in2005, 13% in 2006, 12% in 2007, and 13% in 2008 is under contract from Vermont Yankee after October 2005.

Under the PPAs with NYPA for the output of power from Indian Point 3 and FitzPatrick, the Non-Utility Nuclear business is obligated to produce at anaverage capacity factor of 85% with a financial true-up payment to NYPA should NYPA's cost to purchase power due to an output shortfall be higher thanthe PPAs' price. The calculation of any true-up payments is based on two two-year periods. For the first period, which ran through November 20, 2002,Indian Point 3 and FitzPatrick operated at 95% and 97%, respectively, under the true-up formula. Credits of up to 5% reflecting period one generation above85% can be used to offset any output shortfalls in the second period, which runs through the end of the PPAs on December 31, 2004.

Included in the planned generation sold forward percentages are contracts entered into in 2003 that are not unit contingent but are firm contracts containingliquidated damages provisions. These firm contracts are for 1% of Non-Utility Nuclear's planned generation in 2005, 4% in 2006, 2% in 2007, and 0% in2008.

In addition to selling the power produced by its plants, the Non-Utility Nuclear business sells installed capacity to load-serving distribution companies inorder for those companies to meet requirements placed on them by the Independent System Operators in their area. Following is a summary of the amount ofthe Non-Utility Nuclear business' installed capacity that is currently sold forward, and the blended amount of the Non-Utility Nuclear business' plannedgeneration output and installed capacity that is currently sold forward:

2004 2005 2006 2007 2008Non-Utility Nuclear:

Percent of capacity sold forward: Bundled capacity and energy contracts 55% 15% 12% 13% 13% Capacity contracts 28% 15% 6% 3% 0% Total 83% 30% 18% 16% 13%Planned MW in operation 4,111 4,203 4,203 4,203 4,203Average capacity contract price per kW per month $2.4 $1.3 $0.6 $0.7 N/ABlended Capacity and Energy (based on revenues) % of planned generation and capacity sold forward 99% 49% 28% 13% 4%Average contract revenue per MWh $39 $37 $35 $34 $38

As of December 31, 2003, approximately 99% of Entergy's counterparties to Non-Utility Nuclear's energy and capacity contracts have investment gradecredit ratings.

Following is a summary of the amount of Energy Commodity Services' output and installed capacity that is currently sold forward under physical orfinancial contracts at fixed prices:

2004 2005 2006 2007 2008Energy Commodity Services: Capacity Planned MW in operation 1,911 1,911 1,911 1,911 1,911% of capacity sold forward 43% 43% 34% 31% 26%Energy Planned generation (GWh) 3,321 3,348 3,337 3,545 4,015% of planned generation sold forward 64% 67% 52% 42% 39%Blended Capacity and Energy (based on revenues) % of planned energy and capacity sold forward 62% 66% 50% 41% 35%Average contract revenue per MWh $26 $25 $27 $31 $28

The increase in the planned generation sold forward percentages from the percentages reported in the 2002 Form 10-K is attributable to Entergy Louisianaand Entergy New Orleans contracts involving RS Cogen and Independence 2 entered into in 2003. These contracts are still subject to a FERC reviewproceeding scheduled for hearing later in 2004.

Entergy continually monitors industry trends in order to determine whether asset impairments or other losses could result from a decline in value, orcancellation, of merchant power projects, and records provisions for impairments and losses accordingly.

Marketing and Trading

The earnings of Entergy's Energy Commodity Services segment are exposed to commodity price market risks primarily through Entergy's 50%-owned,unconsolidated investment in Entergy-Koch. Entergy-Koch Trading (EKT) uses value-at-risk models as one measure of the market risk of a loss in fair valuefor EKT's natural gas and power trading portfolio. Actual future gains and losses in portfolios will differ from those estimated based upon actual fluctuationsin market rates, operating exposures, and the timing thereof, and changes in the portfolio of derivative financial instruments during the year.

To manage its portfolio, EKT enters into various derivative and contractual transactions in accordance with the policy approved by the trading committee ofthe governing board of Entergy-Koch. The trading portfolio consists of physical and financial natural gas and power as well as other energy and weather-related contracts. These contracts take many forms, including futures, forwards, swaps, and options.

Characteristics of EKT's value-at-risk method and the use of that method are as follows:

Value-at-risk is used in conjunction with stress testing, position reporting, and profit and loss reporting in order to measure and control the riskinherent in the trading and mark-to-market portfolios.

EKT estimates its value-at-risk using a model based on J.P. Morgan's Risk Metrics methodology combined with a Monte Carlo simulationapproach.

EKT estimates its daily value-at-risk for natural gas and power using a 97.5% confidence level. EKT's daily value-at-risk is a measure thatindicates that, if prices moved against the positions, the loss in neutralizing the portfolio would not be expected to exceed the calculated value-at-risk.

EKT seeks to limit the daily value-at-risk on any given day to a certain dollar amount approved by the trading committee.

EKT's value-at-risk measures, which it calls Daily Earnings at Risk (DE@R), for its trading portfolio were as follows:

2003 2002 2001 (in

millions)

DE@R at end of the year $9.6 $15.2 $5.5Average DE@R for the year 13.6 10.8 6.4Low DE@R for the year 5.9 6.6 3.6High DE@R for the year 35.2 16.9 8.0

EKT's DE@R at the end of the year was lower in 2003 compared to 2002 as a result of reduced strength of point-of-view during the second half of 2003.EKT's average DE@R increased in 2003 compared to 2002 as a result of an increase in the size of the position held, particularly during the first quarter of

2003. EKT's average DE@R increased in 2002 compared to 2001 as a result of an increase in the size of the position held and an increase in the volatility ofnatural gas prices in the latter part of the year.

For all derivative and contractual transactions, EKT is exposed to losses in the event of nonperformance by counterparties to these transactions. Relevantconsiderations when assessing EKT's credit risk exposure include:

EKT's operations are primarily concentrated in the energy industry.

EKT's trade receivables and other financial instruments are predominantly with energy, utility, and financial services related companies, as wellas other trading companies in the U.S., UK, and Western Europe.

EKT maintains credit policies, which its management believes minimize overall credit risk.

Prospective and existing customers are reviewed for creditworthiness based upon pre-established standards, with customers not meetingminimum standards providing various secured payment terms, including the posting of cash collateral.

EKT also has master netting agreements in place. These agreements allow EKT to offset cash and non-cash gains and losses arising fromderivative instruments with the same counterparty. EKT's policy is to have such master netting agreements in place with significantcounterparties.

Based on EKT's policies, risk exposures, and valuation adjustments related to credit, EKT does not anticipate a material adverse effect on its financialposition as a result of counterparty nonperformance. As of December 31, 2003 approximately 91% of EKT's counterparty credit exposure is associated withcompanies that have at least investment grade credit ratings.

Following are EKT's mark-to-market assets (liabilities) and the period within which the assets (liabilities) would be realized (paid) in cash if they are held tomaturity and market prices are unchanged:

Maturities and Sources for FairValue of Trading Contracts atDecember 31, 2003 0-12 months 13-24 months 25+ months Total (In Millions)

Prices actively quoted $126.3 ($87.1) ($14.6) $24.6 Prices provided by other sources 4.8 (10.1) 5.6 0.3 Prices based on models (28.0) 14.2 4.9 (8.9)Total $103.1 ($83.0) ($4.1) $16.0

Following is a roll-forward of the change in the fair value of EKT's mark-to-market contracts during 2003:

2003 (In Millions)

Fair value of contracts outstanding at December 31, 2002 after implementation of EITF 02-03 $90.9 (Gain)/loss from contracts realized/settled during the year (580.0)Net option premiums received during the year 275.7 Change in fair value of contracts attributable to market movements during the year 229.4 Net change in contracts outstanding during the year (74.9)Fair value of contracts outstanding at December 31, 2003 $16.0

Foreign Currency Exchange Rate Risk

Entergy Gulf States, System Fuels, and Entergy's Non-Utility Nuclear business enter into foreign currency forward contracts to hedge the Euro-denominatedpayments due under certain purchase contracts. The notional amounts of the foreign currency forward contracts are 142.8 million Euro and the forwardcurrency rates range from .8641 to 1.085. The maturities of these forward contracts depend on the purchase contract payment dates and range in time fromJanuary 2004 to January 2007. The mark-to-market valuation of the forward contracts at December 31, 2003 was a net asset of $50 million. Thecounterparty banks obligated on these agreements are rated by Standard & Poor's Rating Services at AA on their senior debt obligations as of December 31,2003.

Interest Rate and Equity Price Risk - Decommissioning Trust Funds

Entergy's nuclear decommissioning trust funds are exposed to fluctuations in equity prices and interest rates. The NRC requires Entergy to maintain trusts tofund the costs of decommissioning ANO 1, ANO 2, River Bend, Waterford 3, Grand Gulf 1, Pilgrim, Indian Point 1 and 2, and Vermont Yankee (NYPAcurrently retains the decommissioning trusts and liabilities for Indian Point 3 and FitzPatrick). The funds are invested primarily in equity securities; fixed-rate, fixed-income securities; and cash and cash equivalents. Management believes that exposure of the various funds to market fluctuations will not affectEntergy's financial results of operations as it relates to the ANO 1 and 2, River Bend, Grand Gulf 1, and Waterford 3 trust funds because of the application ofregulatory accounting principles. The Pilgrim, Indian Point 1 and 2, and Vermont Yankee trust funds collectively hold approximately $895 million of fixed-rate, fixed-income securities as of De cember 31, 2003. These securities have an average coupon rate of approximately 5.6%, an average duration ofapproximately 5.2 years, and an average maturity of approximately 7.9 years. The Pilgrim, Indian Point 1 and 2, and Vermont Yankee trust funds alsocollectively hold equity securities worth approximately $450 million as of December 31, 2003. These securities are generally held in funds that are designedto approximate or somewhat exceed the return of the Standard & Poor's 500 Index, and a relatively small percentage of the securities are held in a fundintended to replicate the return of the Wilshire 4500 Index. The decommissioning trust funds are discussed more thoroughly in Notes 1 and 9 to theconsolidated financial statements.

Utility Restructuring

In Entergy's U.S. Utility service territory, movement to retail competition either has not occurred or has been abandoned, with the exception of Texas, whereit has been significantly delayed. At FERC, the pace of restructuring at the wholesale level has begun but has also been delayed. It is too early to predict theultimate effects of changes in U.S. energy markets. Restructuring issues are complex and are continually affected by events at the national, regional, state,and local levels. These changes may result, in the long-term, in fundamental changes in the way traditional integrated utilities and holding company systems,like the Entergy system, conduct their business. Some of these changes may be positive for Entergy, while others may not be.

In the long-term, these changes may result in increased costs associated with utility unbundling of services or functions and transitioning in neworganizational structures and ways of conducting business. It is possible that the new organizational structures that may be required will result in losteconomies of scale, less beneficial cost sharing arrangements within utility holding company systems, and, in some cases, greater difficulty and cost inaccessing capital. Furthermore, these changes could result in early refinancing of debt, the reorganization of debt, or other obligations between newly formedcompanies and Entergy. As a result of federal and state "codes of conduct" and affiliate transaction rules, adopted as part of restructuring, new non-utilityaffiliates in Entergy's system may be precluded from, or limited in, doing business with affiliated electric market participants, or have prices set at the lowerof cost or market. In addition, regulators may impose limits on (pr ice caps), rather than have the market set, wholesale energy prices. There are a number ofother changes that may result from electric business competition and unbundling, including, but not limited to, changes to labor relations, management andstaffing, structure of operations, environmental compliance responsibility, and other aspects of the utility business.

Transmission

In 2000, FERC issued an order encouraging utilities to voluntarily place their transmission facilities under the control of independent RTOs (regionaltransmission organizations) by December 15, 2001. Delays in implementing the FERC order have occurred due to a variety of reasons, including the factthat utility companies, other stakeholders, and federal and state regulators continue to work to resolve various issues related to the establishment of suchRTOs. Entergy's domestic utility companies were participating with other transmission owners within the southeastern United States to establish an RTO, theproposed SeTrans RTO, but the sponsors determined that the regulatory approvals necessary for the development of the SeTrans RTO were unlikely to beobtained at the present time and in December 2003 suspended further development activity. Although SeTrans development is suspended, Entergy continuesto focus its efforts on reforms that can further the core objectives of FERC's 2000 ord er: achieving greater independence in the provision of transmissionservice and a more efficient method of pricing that service. Entergy intends to work with FERC and Entergy's retail regulators on certain voluntary steps tofurther those objectives.

As currently contemplated, and assuming applicable regulatory support and approvals can be obtained, Entergy plans to contract with an independenttransmission entity to oversee the granting of transmission service on the Entergy system as well as the implementation of the weekly procurement processthat Entergy has proposed. Entergy will submit to the FERC for its approval the proposed contract setting forth the independent entity's duties andobligations as well as other documents necessary to implement this proposed structure. The proposed structure does not transfer control of Entergy'stransmission system to the independent entity, but rather will vest with the independent entity broad oversight authority over transmission planning andoperations.

Entergy also intends that the independent transmission entity will administer a transition to participant funding that should increase the efficiency oftransmission pricing on the Entergy system. Entergy intends for the independent transmission entity to determine whether transmission upgrades associatedwith new requests for service should be funded directly by the party requesting such service or by a broader group of transmission customers. Thisdetermination would be made in accordance with protocols approved by the FERC and any party contesting such determination, including Entergy, would berequired to seek review at the FERC.

On February 13, 2004 a group of ten market participants filed with the FERC a response to the announcement that the SeTrans sponsors had suspendedfurther development efforts. In their response, the participants allege that absent the SeTrans RTO the dominant utilities in the southeastern United States(Entergy and Southern Company) will continue to maintain control over the transmission system and will continue to have the ability to exercise marketpower in the wholesale market. The market participants urge the FERC to: (1) order Entergy and Southern to immediately turn over control of their OASISsystem to an independent entity; (2) initiate a formal investigation into competitive conditions in the southeastern United States; (3) issue a show cause orderregarding revocation of Entergy's and Southern's market-based rate authority; and (4) either order Entergy and Southern into an RTO or initiate proceedingsto appoint a market monitor and conduct various audits of Entergy's and South ern's practices and procedures related to the granting of transmission serviceand the planning of the transmission system. Entergy believes that the allegations contained in the response are without merit and plans to vigorously defenditself. See additional discussion related to this issue in the FERC's Supply Margin Assessment section below.

In September 2001, the LPSC ordered Entergy Gulf States and Entergy Louisiana to show cause as to why these companies should not be enjoined fromtransferring their transmission assets, or control of those transmission assets, to an ITC (independent transmission company), RTO, or any similarorganization, asserting that FERC does not have jurisdiction to mandate an ITC or RTO. This proceeding is pending.

FERC's Supply Margin Assessment

In November 2001, FERC issued an order that established a new generation market power screen (called Supply Margin Assessment) for purposes ofevaluating a utility's request for market-based rate authority, applied that new screen to the Entergy System (among others), determined that Entergy and theothers failed the screen within their respective control areas, and ordered these utilities to implement certain mitigation measures as a condition to theircontinued ability to buy and sell at market-based rates. Among other things, the mitigation measures would require that Entergy transact at cost-based rateswhen it is buying or selling in the hourly wholesale market within its control area. Entergy requested rehearing of the order, and FERC has delayed theimplementation of certain mitigation measures until such time as it has had the opportunity to consider the rehearing request. In June 2003, the FERCproposed and ultimately ado pted new market behavior rules and tariff provisions that would be applied to any market-based sale. Entergy modified itsmarket-based rate tariffs to reflect the new provisions but has requested rehearing of FERC's order. Additionally, during December 2003 the FERCannounced it was holding additional technical conferences on proposed modifications to its Supply Margin Assessment screen. Two technical conferenceswere held during January 2004. Entergy has filed comments in this proceeding urging the FERC to rely on an "uncommitted capacity" version of any marketscreen in order to reflect a utility's native load obligations. It is Entergy's belief that cost-based regulation effectively mitigates both the ability and theincentive to exercise market power to the extent of the native load obligations. A FERC rule on Supply Margin Assessment could be issued by the end ofMarch 2004.

Separately, Entergy-Koch Trading filed its triennial market power update on January 26, 2004. Three market participants intervened and urged the FERC toreject Entergy-Koch Trading's triennial update and terminate Entergy-Koch Trading's, the domestic utility companies', and their affiliates' market-based rateauthority for sales within the Entergy control area unless and until adequate mitigation measures have been implemented. If the FERC were to revokeEntergy-Koch Trading's, the domestic utility companies', and their affiliates' market- based rate authority for wholesale sales within the Entergy control area,these entities would be limited to making wholesale sales pursuant to cost-based rate schedules approved by the FERC. Entergy's wholesale sales within itscontrol area could be cost-justified and the wholesale electricity sales of Entergy-Koch Trading within Entergy's control area are of a limited amount;therefore management does not believe that the revocation of market-based rate authority would have a material effect on the financial results of Entergy. Inspite of this, Entergy intends to vigorously defend its market-based rate authority.

In a separate, but related proceeding, in December 2003, the FERC determined that the acquisition by Oklahoma Gas & Electric (OG&E) of a generatingfacility within its control area from a non-affiliated entity would undermine competition and was, accordingly, not consistent with the public interest. Based

on this conclusion, the FERC then set the matter for hearing to determine what mitigation remedies would be necessary to address the market power issues.The FERC's determination that the acquisition would raise market power concerns was premised on an analysis that relied on OG&E's total capacity, not itsuncommitted capacity. This proceeding, and the FERC's ultimate ruling, could significantly affect a utility's ability to acquire needed non-affiliatedgeneration resources in its service territory, such as the pending purchase of the Perryville power plant by Entergy Louisiana.

Interconnection Orders

In January 2003, the FERC issued two orders in proceedings involving Interconnection Agreements between each of the domestic utility companies (exceptEntergy New Orleans) and certain generators interconnecting to the domestic utility companies' transmission system. In the orders, the FERC authorized thegenerators to abrogate certain provisions of the interconnection agreements in order to avail themselves of new FERC policies developed after thegenerators' execution of the agreements. Under the FERC's orders, capital costs that the generators had agreed to bear will now be shifted to Entergy's nativeload and other transmission customers. Other generators that previously had executed interconnection agreements agreeing to bear similar costs have alsofiled complaints to obtain the same or similar relief against the domestic utility companies. In the event that the generators that have interconnected to theEntergy transmission system are successful in obtaining such relief, it i s estimated that approximately $280 million of costs will be shifted from theinterconnecting generators to the domestic utility companies' other transmission customers, including the domestic utility companies' bundled-rate retailcustomers. Entergy intends to pursue all regulatory and legal avenues available to it in order to have these orders reversed, and the affected interconnectionagreements reinstated as agreed to by the generators. The domestic utility companies had appealed previously to the Court of Appeals for the D.C. Circuitthe FERC orders initially establishing the new FERC policy that was applied retroactively in the January orders. In the orders currently pending before theD.C. Circuit, the FERC had applied the new policy on a prospective basis. In an opinion issued in February 2003, the D.C. Circuit denied Entergy's petitionfor review in one proceeding, concluding that the FERC had not acted in an arbitrary and capricious manner when it changed its policy from that of directlyassign ing certain interconnection costs to the generator to a policy in which those costs are borne by all customers on the domestic utility companies'transmission system. A related proceeding concerning a similar change in policy for another segment of interconnection costs is still pending before the D.C.Circuit.

In July 2003, the FERC issued its final rule on the standardization of generation interconnection agreements and procedures (Order 2003). Among otherthings, Order 2003 incorporates pricing policies that require the transmission provider's other customers to bear the vast majority of costs required when anew generator interconnects to its transmission system or requests transmission upgrades necessary for the generator to be considered a network resource forload serving entities within the transmission provider's control area. Order 2003 also requires that generators that fund upgrades receive their money back,with interest, in no more than five years. Order 2003, which the FERC has indicated is to be applied only to prospective interconnection agreements, becameeffective on January 20, 2004. Consistent with their past practices, the generators that had previously executed interconnection agreements with Entergy andthat have transmission credits outstanding have filed complaints at the FERC seeking to avail themselves of the more beneficial crediting aspects of theFERC's final rule. Entergy has opposed such relief and the proceedings are pending. On March 5, 2004, the FERC issued an order on rehearing respondingto certain issues raised with respect to Order 2003. While management is still analyzing the order on rehearing, it appears that the FERC has modified Order2003 to, among other things, eliminate the requirement that the generators receive their money back in no more than five years and include a requirementthat the generators receive credits only when transmission service is taken from the specific generating facility served by the interconnection or upgrade.Because the order on rehearing was just issued, however, management's analysis of the effects of the order is ongoing.

Retail

Only in the Texas portion of Entergy Gulf States' service territory has there been significant movement toward retail open access, but implementation hasbeen delayed in that territory. Entergy does not expect that retail open access is likely to begin for Entergy Gulf States before the first quarter of 2005.Entergy Gulf States' Texas-jurisdictional base rates remain unchanged as a result of a base rate freeze implemented in connection with the delay inimplementation of retail open access in its Texas service territory. While the PUCT has approved, on an interim basis, a business separation plan for EntergyGulf States in Texas, and has approved market protocols to implement an interim solution (retail open access without a FERC-approved RTO), several otherproceedings necessary to implement retail open access are still pending in Texas. In addition, the LPSC has not approved certain matters needed for retailopen access to begin in Texas. Delay in the start of retail open access may delay or jeopardize the regulatory approvals required for retail open access. Retailopen access legislation has not been enacted in the other jurisdictions in Entergy's service territory, except for in Arkansas, where it was repealed in February2003. The status of electric industry restructuring in Entergy's U.S. Utility service territory is more thoroughly discussed in Note 2 to the consolidatedfinancial statements.

Federal Legislation

Federal legislation intended to facilitate wholesale competition in the electric power industry has been seriously considered by the United States Congress, inboth the House of Representatives and the Senate. In 2003, both the House and Senate passed separate versions of comprehensive energy legislation. Thebills contain electricity provisions that would, among other things, repeal PUHCA, repeal or modify PURPA, enact a mechanism for establishingenforceable reliability standards, provide FERC with new authority over utility mergers and acquisitions, and codify FERC's authority over market-basedrates. Late in 2003, a conference committee approved a bill reconciling the differences between the two bills, but that bill has not been brought up for a votein the Senate.

Nuclear Matters

The domestic utility companies, System Energy, and Non-Utility Nuclear subsidiaries own and operate ten nuclear power generating units and the shutdownIndian Point 1 nuclear reactor. Entergy is, therefore, subject to the risks related to owning and operating nuclear plants. These include risks from the use,storage, handling, and disposal of high-level and low-level radioactive materials, limitations on the amounts and types of insurance commercially availablefor losses in connection with nuclear operations, and technological and financial uncertainties related to decommissioning nuclear plants at the end of theirlicensed lives, including the sufficiency of funds in decommissioning trusts. In the event of an unanticipated early shutdown of any of Entergy's nuclearplants, Entergy may be required to provide additional funds or credit support to satisfy regulatory requirements for decommissioning.

Concerns are being expressed in public forums about the safety of nuclear generating units and nuclear fuel, in particular in the area where Entergy's IndianPoint units are located, which are discussed in more detail below. These concerns have led to various proposals to federal regulators as well as governingbodies in some localities where Entergy owns nuclear plants for legislative and regulatory changes that could lead to the shut-down of nuclear units, denialof license extension applications, municipalization of nuclear units, restrictions on nuclear units as a result of unavailability of sites for nuclear fuel disposal,or other adverse effects on owning and operating nuclear power plants. Entergy believes that its generating units are in compliance with NRC requirementsand intends to vigorously respond to these concerns and proposals.

Groups of concerned citizens and local public officials have raised concerns about safety issues associated with Entergy's Indian Point power plants locatedin New York. They argue that Indian Point's security measures and emergency plans do not provide reasonable assurance to protect the public health andsafety. The NRC has original jurisdiction over these matters. In a decision that became final on December 13, 2002, the NRC denied a petition filed byRiverkeeper, Inc. asking the NRC to order Entergy to suspend operations, revoke the operating license, or adopt other measures, including a temporaryshutdown of Indian Point 2 and Indian Point 3. The NRC noted that after September 11, 2001, it ordered enhanced security measures at all nuclear facilitiesand found that as a result of the collective measures taken since September 11, 2001, the security at Indian Point provides adequate protection of publichealth and saf ety. The NRC further found that the existing emergency response plans are flexible enough to respond to a wide variety of adverse conditions,

including a terrorist attack, and that the current spent fuel storage system adequately protects the public health and safety. Riverkeeper petitioned the UnitedStates Court of Appeals for the Second Circuit for review of this final action of the NRC, and in February 2004 the Second Circuit affirmed the NRC anddismissed the petition for review.

In addition, certain concerns are being raised regarding the adequacy of the emergency evacuation plans for Indian Point. These matters initially must bereviewed by the Federal Emergency Management Agency (FEMA). Jurisdiction as to the overall adequacy of emergency planning and preparedness forIndian Point lies with the NRC. Entergy believes that the emergency evacuation plans for Indian Point are adequate to ensure the public health and safety incompliance with NRC requirements. Entergy is working with New York state and county officials, FEMA, the NRC, and other federal agencies to makeadditional improvements to the plans that may be warranted and to assure them as to the adequacy of the plans.

In July 2003, FEMA issued its notice of certification of the Indian Point Emergency Plan. The NRC followed soon thereafter with its endorsement. InAugust 2003, Westchester County filed an administrative appeal of the FEMA ruling that the emergency plans are adequate to protect the public health andsafety. FEMA regulations on emergency plans provide for appeals in only two situations: (1) FEMA's approval or disapproval of a radiological emergencyresponse plan (RERP) for a nuclear power facility; and (2) FEMA's determination to withdraw approval for a state or local RERP. In both cases, the appealprocess is the same.

Litigation

Entergy and its subsidiaries are involved in the ordinary course of business in a substantial amount of employment, asbestos, hazardous material, and otherenvironmental and rate-related proceedings and litigation. Entergy uses legal and appropriate means to contest vigorously litigation threatened or filedagainst it, but litigation poses a significant business risk to Entergy.

Critical Accounting Estimates

The preparation of Entergy's financial statements in conformity with generally accepted accounting principles requires management to make estimates andjudgments that can have a significant effect on reported financial position, results of operations, and cash flows. Management has identified the followingestimates as critical accounting estimates because they are based on assumptions and measurements that involve an unusual degree of uncertainty, and thereis the potential that different assumptions and measurements could produce estimates that are significantly different than those recorded in Entergy'sfinancial statements.

Nuclear Decommissioning Costs

Entergy owns a significant number of nuclear generation facilities in both its U.S. Utility and Non-Utility Nuclear business units. Regulations require thatthese facilities be decommissioned after the facility is taken out of service, and funds are collected and deposited in trust funds during the facilities' operatinglives in order to provide for this obligation. Entergy conducts periodic decommissioning cost studies (typically updated every three to five years) to estimatethe costs that will be incurred to decommission the facilities. Note 9 to the consolidated financial statements contains details regarding Entergy's most recentstudies and the obligations recorded by Entergy related to decommissioning. The following key assumptions have a significant effect on these estimates:

Cost Escalation Factors - Entergy's decommissioning revenue requirement studies include an assumption that decommissioning costs willescalate over present cost levels by annual factors ranging from approximately CPI-U to 5.5%. A 50 basis point change in this assumption couldchange the ultimate cost of decommissioning a facility by as much as 11.0%.

Timing - In projecting decommissioning costs, two assumptions must be made to estimate the timing of plant decommissioning. First, the dateof the plant's retirement must be estimated. The expiration of the plant's operating license is typically used for this purpose, or an assumptioncould be made that the plant will be relicensed and operate for some time beyond the original license term. Second, an assumption must bemade whether decommissioning will begin immediately upon plant retirement, or whether the plant will be held in "safestore" status for laterdecommissioning, as permitted by applicable regulations. While the impact of these assumptions cannot be determined with precision, assumingeither license extension or use of a "safestore" status can significantly decrease the present value of these obligations.

Spent Fuel Disposal - Federal regulations require the Department of Energy to provide a permanent repository for the storage of spent nuclearfuel, and recent legislation has been passed by Congress to develop this repository at Yucca Mountain, Nevada. However, until this site isavailable, nuclear plant operators must provide for interim spent fuel storage on the nuclear plant site, which can require the construction andmaintenance of dry cask storage sites or other facilities.

The costs of developing and maintaining these facilities can have a significant impact (as much as 16% of estimateddecommissioning costs). Entergy's decommissioning studies include cost estimates for spent fuel storage. However, these estimatescould change in the future based on the timing of the opening of the Yucca Mountain facility, the schedule for shipments to thatfacility when it is opened, or other factors.

Technology and Regulation - To date, there is limited practical experience in the U.S. with actual decommissioning of large nuclear facilities.As experience is gained and technology changes, cost estimates could also change. If regulations regarding nuclear decommissioning were tochange, this could have a potentially significant impact on cost estimates. The impact of these potential changes is not presently determinable.Entergy's decommissioning cost studies assume current technologies and regulations.

The implications of these estimates vary significantly between Entergy's U.S. Utility and Non-Utility Nuclear businesses. Separate discussions of theseimplications by business segment follow.

U.S. Utility

Entergy collects substantially all of the projected costs of decommissioning the nuclear facilities in its U.S. Utility business segment through rates charged tocustomers, except for portions of River Bend, which is discussed in more detail below. The amounts collected through rates, which are based upondecommissioning cost studies, are deposited in decommissioning trust funds. These collections plus earnings on the trust fund investments are generallyestimated to be sufficient to fund the future decommissioning costs. For the U.S. Utility segment, if decommissioning cost study estimates were changed andapproved by regulators, collections from customers would also change.

Approximately half of River Bend is not currently subject to cost-based ratemaking. When Entergy Gulf States obtained the 30% share of River Bendformerly owned by Cajun, Entergy Gulf States obtained decommissioning trust funds of $132 million, which have since grown to almost $150 million.Entergy Gulf States believes that these funds will be sufficient to cover the costs of decommissioning this portion of River Bend, and no further collectionsor deposits are being made for these costs. Additionally, under the Deregulated Asset Plan in the Louisiana jurisdiction of Entergy Gulf States, a portion ofRiver Bend (approximately 16% of its total capacity) is excluded from rate base, and no amounts have been or are being collected for decommissioning forthis portion of the plant.

Non-Utility Nuclear

In conjunction with the purchase of Entergy's Non-Utility Nuclear facilities, Entergy assumed the decommissioning obligations and received the relateddecommissioning trust funds (except for the NYPA acquisition, in which NYPA retained the decommissioning obligations for the Indian Point 3 andFitzPatrick units). Based on decommissioning cost studies and expected plant operation lives, Entergy believes that the amounts in the trust funds will besufficient to fund future decommissioning costs without additional deposits from Entergy.

As Entergy has assumed these decommissioning obligations without any further external source of funding, changes in estimates of decommissioning costsfor these units will have a direct impact on Entergy's financial position and results of operations.

SFAS 143

Entergy implemented SFAS 143, "Accounting for Asset Retirement Obligations," effective January 1, 2003. Nuclear decommissioning costs comprisesubstantially all of Entergy's asset retirement obligations, and the measurement and recording of Entergy's decommissioning obligations changedsignificantly with the implementation of SFAS 143. The most significant differences in the measurement of these obligations are outlined below:

Recording of full obligation - SFAS 143 requires that the fair value of an asset retirement obligation be recorded when it is incurred. Thiscaused the recorded decommissioning obligation in Entergy's U.S. Utility business to increase significantly, as Entergy had previously onlyrecorded this obligation as the related costs were collected from customers, and as earnings were recorded on the related trust funds.

Fair value approach - SFAS 143 requires that these obligations be measured using a fair value approach. Among other things, this entails theassumption that the costs will be incurred by a third party and will therefore include appropriate profit margins and risk premiums. Entergy'sdecommissioning studies to date have been based on Entergy performing the work, and have not included any such margins or premiums.Inclusion of these items increased cost estimates.

Discount rate - SFAS 143 requires that these obligations be discounted using a credit-adjusted, risk-free rate. This resulted in significantdecreases in Entergy's decommissioning obligations in the Non-Utility Nuclear business, as this discount rate is higher than the implicit ratesutilized by Entergy in accounting for these obligations through December 31, 2002.

The net effect on Entergy's financial statements of implementing SFAS 143 for the U.S. Utility and Non-Utility Nuclear businesses follows:

For the U.S. Utility business, the implementation of SFAS 143 for the rate-regulated business of the domestic utility companies and SystemEnergy was recorded as a regulatory asset, with no resulting impact on Entergy's net income. Entergy recorded these regulatory assets becauseexisting rate mechanisms in each jurisdiction are based on the original or historical cost standard that allows Entergy to recover all ultimatecosts of decommissioning existing assets from current and future customers. As a result of this treatment, SFAS 143 is expected to be earningsneutral to the rate-regulated business of the domestic utility companies and System Energy. Assets and liabilities increased by approximately$1.1 billion in 2003 for the domestic utility companies and System Energy as a result of recording the asset retirement obligations at their fairvalues of $1.1 billion as determined under SFAS 143, increasing utility plant by $288 million, reducing accumulated depreciation by $361 million and recording the related regulatory assets of $422 million. The implementation of SFAS 143 for the portion of River Bend not subject tocost-based ratemaking decreased earnings by approximately $21 million net-of-tax ($0.09 per share) as a result of a one-time cumulative effectof accounting change. In accordance with ratemaking treatment and as required by SFAS 71, the depreciation provisions for Entergy's utilitysubsidiaries include a component for removal costs that are not asset retirement obligations under SFAS 143. Approximately 6% of the U.S.Utility's current depreciation rates, on a weighted-average basis, represents a component for the net of salvage value and removal costs.

For the Non-Utility Nuclear business, the implementation of SFAS 143 resulted in a decrease in liabilities in 2003 of approximately $595million due to reductions in decommissioning liabilities, a decrease in assets of approximately $340 million, including a decrease in electricplant in service of $315 million, and an increase in earnings of approximately $155 million net-of-tax ($0.67 per share) as a result of the one-time cumulative effect of accounting change.

Also Entergy's 2003 earnings for the Non-Utility Nuclear business increased by approximately $18 million after-tax over 2002 because of the change inaccretion of the liability and depreciation of the adjusted plant costs. This effect will gradually decrease over future years as the accretion of the liabilityincreases. Management expects that applying SFAS 143 post-implementation will have a minimal effect on ongoing earnings for the U.S. Utility business.

Impairment of Long-lived Assets

Entergy has significant investments in long-lived assets in all of its segments, and Entergy evaluates these assets against the market economics and under theaccounting rules for impairment whenever there are indications that impairments may exist. This evaluation involves a significant degree of estimation anduncertainty, and these estimates are particularly important in Entergy's U.S. Utility and Energy Commodity Services segments. In the U.S. Utility segment,portions of River Bend and Grand Gulf are not included in rate base, which could reduce the revenue that would otherwise be recovered for the applicableportions of those units' generation. In the Energy Commodity Services segment, Entergy's investments in merchant generation assets are subject toimpairment if adverse market conditions arise.

In order to determine if Entergy should recognize an impairment of a long-lived asset that is to be held and used, accounting standards require that the sumof the expected undiscounted future cash flows from the asset be compared to the asset's carrying value. If the expected undiscounted future cash flowsexceed the carrying value, no impairment is recorded; if such cash flows are less than the carrying value, Entergy is required to record an impairment chargeto write the asset down to its fair value. If an asset is held for sale, an impairment is required to be recognized if the fair value (less costs to sell) of the assetis less than its carrying value.

These estimates are based on a number of key assumptions, including:

Future power and fuel prices - Electricity and gas prices have been very volatile in recent years, and this volatility is expected to continue forsome time. This volatility necessarily increases the imprecision inherent in the long-term forecasts of commodity prices that are a keydeterminant of estimated future cash flows. There is currently an oversupply of electricity throughout the U.S., and it is necessary to projecteconomic growth and other macroeconomic factors in order to project when this oversupply will cease and prices will rise. Similarly, gas priceshave been volatile as a result of recent fluctuations in both supply and demand, and projecting future trends in these prices is difficult.

Market value of generation assets - Valuing assets held for sale requires estimating the current market value of generation assets. While markettransactions provide evidence for this valuation, the market for such assets is volatile and the value of individual assets is impacted by factorsunique to those assets.

Future operating costs - Entergy assumes relatively minor annual increases in operating costs. Technological or regulatory changes that have asignificant impact on operations could cause a significant change in these assumptions.

Due to the oversupply of power that existed throughout the U.S. and the UK in 2002, and the resulting decreases in spark spreads, consistent with Entergy'spoint of view, Entergy's impairment tests indicated that a number of impairments were required to be recognized in 2002 in the Energy Commodity Servicessegment. These impairments, which were also accompanied by other charges related to the restructuring of Entergy's independent power business, arefurther detailed in Note 12 to the consolidated financial statements.

Mark-to-market Accounting

The EITF reached a consensus to rescind Issue No. 98-10 effective January 1, 2003. Rescinding Issue No. 98-10 resulted in some energy-related contractsbeing accounted for on an accrual basis that were previously accounted for on a mark-to-market basis. Contracts that meet the provisions of SFAS 133 toqualify as derivatives are marked-to-market in accordance with the guidance in SFAS 133. Contracts such as capacity, transportation, storage, tolling, andfull requirements contracts that are based on physical assets and do not meet the provisions of SFAS 133 to qualify as derivatives are accounted for usingaccrual accounting. Energy commodity inventories held by trading companies such as physical natural gas are accounted for at the lower of cost or market.The adoption of the consensus had minimal cumulative and ongoing earnings effects for Entergy's Energy Commodity Services business.

As required by generally accepted accounting principles, Entergy and Entergy-Koch mark-to-market commodity instruments held by them for trading andrisk management purposes that are considered derivatives under SFAS 133. Because of the significant estimates and uncertainties inherent in mark-to-market accounting, this method is considered a critical accounting estimate for the Energy Commodity Services segment. Examples of commodityinstruments that are marked to market include:

commodity futures, options, swaps, and forwards that are expected to be net settled; and

power sales agreements that do not involve delivery of power from Entergy's power plants.

Conversely, commodity contracts that are not considered derivatives, generally because they involve physical delivery of a commodity to the purchaser, arenot marked to market. Examples of commodity contracts that are not marked to market include:

the PPAs for Entergy's Non-Utility Nuclear plants;

capacity purchases and sales by the U.S. Utility companies; and

forward contracts that will result in physical delivery.

Fair value estimates of the commodity instruments that are marked to market are made at discrete points in time based on relevant market information.Market quotes are used in determining fair value whenever they are available. When market quotes are not available (e.g., long-dated commodity contract),other information is used, including transactional data and internally developed models. Fair value estimates based on these other methodologies arenecessarily subjective in nature and involve uncertainties and matters of significant judgment. These uncertainties include projections of macroeconomictrends and future commodity prices, including supply and demand levels and future price volatility. The impact of these uncertainties, however, is lessenedby the relatively short-term nature of the mark-to-market positions held by Entergy and EKT.

Pension and Other Postretirement Benefits

Entergy sponsors defined benefit pension plans which cover substantially all employees. Additionally, Entergy provides postretirement health care and lifeinsurance benefits for substantially all employees who reach retirement age while still working for Entergy. Entergy's reported costs of providing thesebenefits, as described in Note 11 to the consolidated financial statements, are impacted by numerous factors including the provisions of the plans, changingemployee demographics and various actuarial calculations, assumptions, and accounting mechanisms. Because of the complexity of these calculations, thelong-term nature of these obligations, and the importance of the assumptions utilized, Entergy's estimate of these costs is a critical accounting estimate forthe U.S. Utility and Non-Utility Nuclear segments.

Assumptions

Key actuarial assumptions utilized in determining these costs include:

Discount rates used in determining the future benefit obligations;

Projected health care cost trend rates;

Expected long-term rate of return on plan assets; and

Rate of increase in future compensation levels.

Entergy reviews these assumptions on an annual basis and adjusts them as necessary. The falling interest rate environment and poor performance of thefinancial equity markets over the past several years have impacted Entergy's funding and reported costs for these benefits. In addition, these trends havecaused Entergy to make a number of adjustments to its assumptions.

In selecting an assumed discount rate, Entergy reviews market yields on high-quality corporate debt. Based on recent market trends, Entergy reduced itsdiscount rate from 7.5% in 2001 and 6.75% in 2002 to 6.25% in 2003. Entergy reviews actual recent cost trends and projected future trends in establishinghealth care cost trend rates. Based on this review, Entergy increased its health care cost trend rate assumption used in calculating the 2003 accumulatedpostretirement benefit obligation. The assumed health care cost trend rate is a 10% increase in health care costs in 2004 gradually decreasing each successiveyear until it reaches a 4.5% annual increase in health care costs in 2010 and beyond.

In determining its expected long-term rate of return on plan assets, Entergy reviews past long-term performance, asset allocations, and long-term inflationassumptions. Entergy targets an asset allocation for its pension plan assets of roughly 66% equity securities, 30% fixed income securities, and 4% otherinvestments. The target allocation for Entergy's other postretirement benefit assets is 45% equity securities and 55% fixed income securities. Based on recentmarket trends, Entergy decreased its expected long-term rate of return on plan assets from 9% in 2001 to 8.75% for 2002 and 2003. The trend of reducedinflation caused Entergy to reduce its assumed rate of increase in future compensation levels from 4.6% in 2001 to 3.25% in 2002 and 2003.

Cost Sensitivity

The following chart reflects the sensitivity of pension cost to changes in certain actuarial assumptions (in thousands):

Actuarial Assumption Change in

Assumption Impact on 2003

Pension Cost Impact on

Projected Benefit Obligation

Increase/(Decrease)

Discount rate (0.25%) $4,882 $83,651Rate of return on plan assets (0.25%) $4,346 -Rate of increase incompensation

0.25% $4,039 $28,101

The following chart reflects the sensitivity of postretirement benefit cost to changes in certain actuarial assumptions (in thousands):

Actuarial Assumption

Change in

Assumption

Impact on 2003 Postretirement Benefit

Cost

Impact on Accumulated Postretirement Benefit

Obligation Increase/(Decrease)

Health care cost trend 0.25% $5,206 $25,979Discount rate (0.25%) $3,278 $29,500

Each fluctuation above assumes that the other components of the calculation are held constant.

Accounting Mechanisms

In accordance with SFAS No. 87, "Employers' Accounting for Pensions," Entergy utilizes a number of accounting mechanisms that reduce the volatility ofreported pension costs. Differences between actuarial assumptions and actual plan results are deferred and are amortized into cost only when theaccumulated differences exceed 10% of the greater of the projected benefit obligation or the market-related value of plan assets. If necessary, the excess isamortized over the average remaining service period of active employees.

Additionally, Entergy smoothes the impact of asset performance on pension expense over a twenty-quarter phase-in period through a "market-related" valueof assets calculation. Since the market-related value of assets recognizes investment gains or losses over a twenty-quarter period, the future value of assetswill be impacted as previously deferred gains or losses are recognized. As a result, the losses that the pension plan assets experienced in 2002 may have anadverse impact on pension cost in future years depending on whether the actuarial losses at each measurement date exceed the 10% corridor in accordancewith SFAS 87.

Costs and Funding

In 2003, Entergy's total pension cost was $108 million, including a $47 million charge related to the voluntary severance program. Entergy anticipates 2004pension cost to increase to $87 million due to a decrease in the discount rate from 6.75% to 6.25% and the phased-in effect of poor asset performance.Pension funding was $35 million for 2003 and in 2004 is projected to be $110 million due to the poor performance of the financial equity markets.

Due to negative pension plan asset returns from 2000 to 2002, Entergy's accumulated benefit obligation at December 31, 2003 and 2002 exceeded planassets. As a result, Entergy was required to recognize an additional minimum liability as prescribed by SFAS 87. At December 31, 2003 Entergy reduced itsadditional minimum liability to $180.2 million ($149.4 million net of related pension assets) from $208.1 million ($175 million net of related pension assets)at December 31, 2002. This reduced the charge to other comprehensive income to $9.3 million at December 31, 2003 from $11 million at December 31,2002, after reductions for the unrecognized prior service cost, amounts recoverable in rates, and taxes. Net income for 2003 and 2002 were not affected.

Total postretirement health care and life insurance benefit costs for Entergy in 2003 were $165 million, including a $64 million charge related to thevoluntary severance program. In December 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 became law. The Actintroduces a prescription drug benefit under Medicare (Part D) as well as a federal subsidy to employers who provide a retiree prescription drug benefit thatis at least actuarially equivalent to Medicare Part D. Currently, specific authoritative guidance on the accounting for the federal subsidy is pending. Entergyexpects 2004 postretirement health care and life insurance benefit costs to approximate $102 million.

Other Contingencies

Entergy, as a company with multi-state domestic utility operations, and which also had investments in international projects, is subject to a number offederal, state, and international laws and regulations and other factors and conditions in the areas in which it operates, which potentially subject it toenvironmental, litigation, and other risks. Entergy periodically evaluates its exposure for such risks and records a reserve for those matters which areconsidered probable and estimable in accordance with generally accepted accounting principles.

Environmental

Entergy must comply with environmental laws and regulations applicable to the handling and disposal of hazardous waste. Under these various laws andregulations, Entergy could incur substantial costs to restore properties consistent with the various standards. Entergy conducts studies to determine the extentof any required remediation and has recorded reserves based upon its evaluation of the likelihood of loss and expected dollar amount for each issue.Additional sites could be identified which require environmental remediation for which Entergy could be liable. The amounts of environmental reservesrecorded can be significantly affected by the following external events or conditions:

Changes to existing state or federal regulation by governmental authorities having jurisdiction over air quality, water quality, control of toxicsubstances and hazardous and solid wastes, and other environmental matters.

The identification of additional sites or the filing of other complaints in which Entergy may be asserted to be a potentially responsible party.

The resolution or progression of existing matters through the court system or resolution by the EPA.

Litigation

Entergy has been named as defendant in a number of lawsuits involving employment, ratepayer, and injuries and damages issues, among other matters.Entergy periodically reviews the cases in which it has been named as defendant and assesses the likelihood of loss in each case as probable, reasonablyestimable, or remote and records reserves for cases which have a probable likelihood of loss and can be estimated. Notes 2 and 9 to the consolidatedfinancial statements include more detail on ratepayer and other lawsuits and management's assessment of the adequacy of reserves recorded for these

matters. Given the environment in which Entergy operates, and the unpredictable nature of many of the cases in which Entergy is named as a defendant,however, the ultimate outcome of the litigation Entergy is exposed to has the potential to materially affect the results of operations of Entergy, or itsoperating company subsidiaries.

Sales Warranty and Tax Reserves

Entergy's operations, including acquisitions and divestitures, require Entergy to evaluate risks such as the potential tax effects of a transaction, or warrantiesmade in connection with such a transaction. Entergy believes that it has adequately assessed and provided for these types of risks, where applicable. Anyreserves recorded for these types of issues, however, could be significantly affected by events such as claims made by third parties under warranties,additional transactions contemplated by Entergy, or completion of reviews of the tax treatment of certain transactions or issues by taxing authorities. Entergydoes not expect a material adverse effect from these matters.


SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON

2003 2002 2001 2000 1999 (In Thousands, Except Percentages and Per Share Amounts) Operating revenues $9,194,920 $8,305,035 $9,620,899 $10,022,129 $8,765,635Income before cumulativeeffect of accounting change $813,393

$623,072

$727,025

$710,915

$595,026

Earnings per share before cumulative effect of accountingchangeBasic Diluted

$3.48$3.42

$2.69$2.64

$3.18$3.13

$3.00$2.97

$2.25$2.25

Dividends declared per share $1.60 $1.34 $1.28 $1.22 $1.20Return on average common equity 11.21% 7.85% 10.04% 9.62% 7.77%Book value per share, year-end $38.02 $35.24 $33.78 $31.89 $29.78Total assets $28,554,210 $27,504,366 $25,910,311 $25,451,896 $22,969,940Long-term obligations (1) $7,497,690 $7,488,919 $7,743,298 $8,214,724 $7,252,697

(1) Includes long-term debt (excluding currently maturing debt), preferred stock with sinking fund,preferred securities of subsidiary trusts and partnership, and noncurrent capital lease obligations.

2003 2002 2001 2000 1999(Dollars In Thousands)

Domestic Electric Operating Revenues: Residential $2,682,802 $2,439,590 $2,612,889 $2,524,529 $2,231,091 Commercial 1,882,060 1,672,964 1,860,040 1,699,699 1,502,267 Industrial 2,081,781 1,850,476 2,298,825 2,177,236 1,878,363 Governmental 194,998 179,508 205,054 185,286 163,403 Total retail 6,841,641 6,142,538 6,976,808 6,586,750 5,775,124 Sales for resale 371,646 330,010 395,353 423,519 397,844 Other (1) 183,888 173,866 (127,334) 209,417 98,446 Total $7,397,175 $6,646,414 $7,244,827 $7,219,686 $6,271,414

Billed Electric EnergySales (GWh): Residential 32,817 32,581 31,080 31,998 30,631 Commercial 25,863 25,354 24,706 24,657 23,775 Industrial 38,637 41,018 41,577 43,956 43,549 Governmental 2,651 2,678 2,593 2,605 2,564 Total retail 99,968 101,631 99,956 103,216 100,519 Sales for resale 9,248 9,828 8,896 9,794 9,714 Total 109,216 111,459 108,852 113,010 110,233

(1) 2001 includes the effect of a reserve for rate refund at System Energy.

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders ofEntergy Corporation:

We have audited the accompanying consolidated balance sheets of Entergy Corporation and subsidiaries as of December 31, 2003 and 2002, and the relatedconsolidated statements of income; of retained earnings, comprehensive income, and paid-in capital; and of cash flows for each of the three years in theperiod ended December 31, 2003. These financial statements are the responsibility of the Corporation's management. Our responsibility is to express anopinion on these financial statements based on our audits. We did not audit the financial statements of Entergy-Koch, LP for the year ended December 31,2003, the Corporation's investment in which is accounted for by the use of the equity method. The Corporation's equity in earnings of unconsolidated equityaffiliates for the year ended December 31, 2003 includes $180,110,000 for Entergy Koch, LP, which earnings were audited by other auditors whose reporthas been furnished to us, and our opinion, insofar as it relates to the amount audited by other auditors included for such company, is based solely on thereport of such other auditors.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan andperform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on atest basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report ofother auditors provide a reasonable basis for our opinion.

In our opinion, based on our audits and the report of other auditors, such consolidated financial statements present fairly, in all material respects, thefinancial position of Entergy Corporation and subsidiaries as of December 31, 2003 and 2002, and the results of their operations and their cash flows foreach of the three years in the period ended December 31, 2003 in conformity with accounting principles generally accepted in the United States of America.

As discussed in Notes 1 and 9 to the consolidated financial statements, Entergy Corporation adopted the provisions of Statement of Financial AccountingStandards (SFAS) No. 143, Accounting for Asset Retirement Obligations, and Financial Accounting Standards Board Interpretation No. 46, Consolidation ofVariable Interest Entities, in 2003, SFAS No. 142, Goodwill and Other Intangible Assets, in 2002 and SFAS No. 133, Accounting for Derivative Instrumentsand Hedging Activities, in 2001.

DELOITTE & TOUCHE LLP

New Orleans, LouisianaMarch 9, 2004

ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME For the Years Ended December 31, 2003 2002 2001 (In Thousands, Except Share Data) OPERATING REVENUES Domestic electric $7,397,175 $6,646,414 $7,244,827 Natural gas 186,176 125,353 185,902 Competitive businesses 1,611,569 1,533,268 2,190,170 ---------- ---------- ---------- TOTAL 9,194,920 8,305,035 9,620,899 ---------- ---------- ---------- OPERATING EXPENSES Operating and Maintenance: Fuel, fuel-related expenses, and gas purchased for resale 1,987,217 2,154,596 3,681,677 Purchased power 1,697,959 832,334 1,021,432 Nuclear refueling outage expenses 159,995 105,592 89,145 Provision for turbine commitments, asset impairments and restructuring charges (7,743) 428,456 - Other operation and maintenance 2,484,436 2,488,112 2,151,742 Decommissioning 146,100 76,417 28,586 Taxes other than income taxes 405,659 380,462 399,849 Depreciation and amortization 850,503 839,181 721,033 Other regulatory credits - net (13,761) (141,836) (20,510) ---------- ---------- ---------- TOTAL 7,710,365 7,163,314 8,072,954 ---------- ---------- ---------- OPERATING INCOME 1,484,555 1,141,721 1,547,945 ---------- ---------- ---------- OTHER INCOME Allowance for equity funds used during construction 42,710 31,658 26,209 Interest and dividend income 87,386 118,325 159,805 Equity in earnings of unconsolidated equity affiliates 271,647 183,878 162,882 Miscellaneous - net (76,505) 13,892 457 ---------- ---------- ---------- TOTAL 325,238 347,753 349,353 ---------- ---------- ---------- INTEREST AND OTHER CHARGES Interest on long-term debt 485,964 526,442 563,758 Other interest - net 53,553 70,560 172,241 Allowance for borrowed funds used during construction (33,191) (24,538) (21,419) ---------- ---------- ---------- TOTAL 506,326 572,464 714,580 ---------- ---------- ---------- INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGES 1,303,467 917,010 1,182,718 Income taxes 490,074 293,938 455,693 ---------- ---------- ----------

INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES 813,393 623,072 727,025 CUMULATIVE EFFECT OF ACCOUNTING CHANGES (net of income taxes of $89,925 in 2003 and $10,064 in 2001) 137,074 - 23,482 ---------- ---------- ---------- CONSOLIDATED NET INCOME 950,467 623,072 750,507 Preferred dividend requirements and other 23,524 23,712 24,311 ---------- ---------- ---------- EARNINGS APPLICABLE TO COMMON STOCK $926,943 $599,360 $726,196 ========== ========== ========== Earnings per average common share before cumulative effect of accounting changes: Basic $3.48 $2.69 $3.18 Diluted $3.42 $2.64 $3.13 Earnings per average common share: Basic $4.09 $2.69 $3.29 Diluted $4.01 $2.64 $3.23 Dividends declared per common share $1.60 $1.34 $1.28 Average number of common shares outstanding: Basic 226,804,370 223,047,431 220,944,270 Diluted 231,146,040 227,303,103 224,733,662 See Notes to Consolidated Financial Statements. ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended December 31, 2003 2002 2001 (In Thousands) OPERATING ACTIVITIES Consolidated net income $950,467 $623,072 $750,507 Noncash items included in net income: Reserve for regulatory adjustments 13,090 18,848 (359,199) Other regulatory credits - net (13,761) (141,836) (20,510) Depreciation, amortization, and decommissioning 996,603 915,597 749,619 Deferred income taxes and investment tax credits 1,189,531 (256,664) 87,752 Allowance for equity funds used during construction (42,710) (31,658) (26,209) Cumulative effect of accounting changes (137,074) - (23,482) Equity in undistributed earnings of unconsolidated equity affiliates (176,036) (181,878) (150,799) Provision for turbine commitments, asset impairments, and restructuring charges (7,743) 428,456 - Changes in working capital: Receivables (140,612) (43,957) 302,230 Fuel inventory (14,015) 1,030 (3,419) Accounts payable (60,164) 286,230 (415,160) Taxes accrued (828,539) 462,956 486,676 Interest accrued (35,837) 7,209 17,287 Deferred fuel (33,874) 156,181 495,007 Other working capital accounts 16,809 (286,232) (39,978) Provision for estimated losses and reserves 196,619 10,533 19,093 Changes in other regulatory assets 22,671 71,132 119,215 Other 110,395 142,684 226,918 ---------- ---------- ---------- Net cash flow provided by operating activities 2,005,820 2,181,703 2,215,548 ---------- ---------- ---------- INVESTING ACTIVITIES Construction/capital expenditures (1,568,943) (1,530,301) (1,380,417) Allowance for equity funds used during construction 42,710 31,658 26,209 Nuclear fuel purchases (224,308) (250,309) (130,670) Proceeds from sale/leaseback of nuclear fuel 150,135 183,664 71,964 Proceeds from sale of assets and businesses 25,987 215,088 784,282 Investment in nonutilty properties (71,438) (216,956) (647,015) Decrease (increase) in other investments 172,187 38,964 (631,975) Changes in other temporary investments (50,000) 150,000 (150,000) Decommissioning trust contributions and realized change in trust assets (91,518) (84,914) (95,571) Other regulatory investments (156,446) (39,390) (3,460) Other (11,496) 114,033 (68,067) ---------- ---------- ---------- Net cash flow used in investing activities (1,783,130) (1,388,463) (2,224,720) ---------- ---------- ---------- See Notes to Consolidated Financial Statements.

ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended December 31, 2003 2002 2001 (In Thousands) FINANCING ACTIVITIES Proceeds from the issuance of: Long-term debt 2,221,164 1,197,330 682,402 Common stock and treasury stock 217,521 130,061 64,345 Retirement of long-term debt (2,409,917) (1,341,274) (962,112) Repurchase of common stock (8,135) (118,499) (36,895) Redemption of preferred stock (3,450) (1,858) (39,574) Changes in short-term borrowings - net (499,975) 244,333 (37,004) Dividends paid: Common stock (362,814) (298,991) (269,122) Preferred stock (23,524) (23,712) (24,044) ---------- ---------- ---------- Net cash flow used in financing activities (869,130) (212,610) (622,004) ---------- ---------- ---------- Effect of exchange rates on cash and cash equivalents 3,345 3,125 325 ---------- ---------- ---------- Net increase (decrease) in cash and cash equivalents (643,095) 583,755 (630,851) Cash and cash equivalents at beginning of period 1,335,328 751,573 1,382,424 ---------- ---------- ---------- Cash and cash equivalents at end of period $692,233 $1,335,328 $751,573 ========== ========== ========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid (received) during the period for: Interest - net of amount capitalized $552,017 $633,931 $708,748 Income taxes $188,709 $57,856 ($113,466) Noncash investing and financing activities: Debt assumed by the Damhead Creek purchaser - $488,432 - Decommissioning trust funds acquired in nuclear power plant acquisitions - $310,000 $430,000 Long-term debt refunded with proceeds from long-term debt issued in prior period - ($47,000) - Proceeds from long-term debt issued for the purpose of refunding prior long-term debt - - $47,000 See Notes to Consolidated Financial Statements. ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS December 31, 2003 2002 (In Thousands) CURRENT ASSETS Cash and cash equivalents: Cash $115,112 $169,788 Temporary cash investments - at cost, which approximates market 576,813 1,165,260 Special deposits 308 280 ----------- ----------- Total cash and cash equivalents 692,233 1,335,328 ----------- ----------- Other temporary investments 50,000 - Notes receivable 1,730 2,078 Accounts receivable: Customer 398,091 323,215 Allowance for doubtful accounts (25,976) (27,285) Other 246,824 244,621 Accrued unbilled revenues 384,860 319,133 ----------- ----------- Total receivables 1,003,799 859,684 ----------- ----------- Deferred fuel costs 245,973 55,653 Fuel inventory - at average cost 110,482 96,467 Materials and supplies - at average cost 548,921 525,900 Deferred nuclear refueling outage costs 138,836 163,646 Prepayments and other 127,270 166,827 ----------- ----------- TOTAL 2,919,244 3,205,583 ----------- ----------- OTHER PROPERTY AND INVESTMENTS Investment in affiliates - at equity 1,053,328 824,209 Decommissioning trust funds 2,278,533 2,069,198 Non-utility property - at cost (less accumulated depreciation) 262,384 297,294 Other 152,681 277,539 ----------- -----------

TOTAL 3,746,926 3,468,240 ----------- ----------- PROPERTY, PLANT AND EQUIPMENT Electric 28,035,899 26,789,538 Property under capital lease 751,815 746,624 Natural gas 236,622 209,969 Construction work in progress 1,380,982 1,232,891 Nuclear fuel under capital lease 278,683 259,433 Nuclear fuel 234,421 263,609 ----------- ----------- TOTAL PROPERTY, PLANT AND EQUIPMENT 30,918,422 29,502,064 Less - accumulated depreciation and amortization 12,619,625 11,837,061 ----------- ----------- PROPERTY, PLANT AND EQUIPMENT - NET 18,298,797 17,665,003 ----------- ----------- DEFERRED DEBITS AND OTHER ASSETS Regulatory assets: SFAS 109 regulatory asset - net 830,539 844,105 Other regulatory assets 1,425,145 973,185 Long-term receivables 20,886 24,703 Goodwill 377,172 377,172 Other 935,501 946,375 ----------- ----------- TOTAL 3,589,243 3,165,540 ----------- ----------- TOTAL ASSETS $28,554,210 $27,504,366 =========== =========== See Notes to Consolidated Financial Statements. ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' EQUITY December 31, 2003 2002 (In Thousands) CURRENT LIABILITIES Currently maturing long-term debt $524,372 $1,191,320 Notes payable 351 351 Accounts payable 796,572 855,446 Customer deposits 199,620 198,442 Taxes accrued 224,926 385,315 Accumulated deferred income taxes 22,963 26,468 Nuclear refueling outage costs 8,238 14,244 Interest accrued 139,603 175,440 Obligations under capital leases 159,978 153,822 Other 205,600 171,341 ----------- ----------- TOTAL 2,282,223 3,172,189 ----------- ----------- NON-CURRENT LIABILITIES Accumulated deferred income taxes and taxes accrued 4,779,513 4,250,800 Accumulated deferred investment tax credits 420,248 447,925 Obligations under capital leases 153,898 155,943 Other regulatory liabilities 291,239 185,579 Decommissioning and retirement cost liabilities 2,242,312 2,115,744 Transition to competition 79,098 79,098 Regulatory reserves 69,528 56,438 Accumulated provisions 506,960 389,868 Long-term debt 7,322,940 7,308,649 Preferred stock with sinking fund 20,852 - Other 1,347,404 1,145,232 ----------- ----------- TOTAL 17,233,992 16,135,276 ----------- ----------- Preferred stock with sinking fund - 24,327 Preferred stock without sinking fund 334,337 334,337 SHAREHOLDERS' EQUITY Common stock, $.01 par value, authorized 500,000,000 shares; issued 248,174,087 shares in 2003 and in 2002 2,482 2,482 Paid-in capital 4,767,615 4,666,753 Retained earnings 4,502,508 3,938,693 Accumulated other comprehensive loss (7,795) (22,360) Less - treasury stock, at cost (19,276,445 shares in 2003 and 25,752,410 shares in 2002) 561,152 747,331 ----------- ----------- TOTAL 8,703,658 7,838,237 ----------- ----------- Commitments and Contingencies TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $28,554,210 $27,504,366 =========== =========== See Notes to Consolidated Financial Statements. ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF RETAINED EARNINGS, COMPREHENSIVE INCOME, AND PAID-IN CAPITAL

For the Years Ended December 31, 2003 2002 2001 (In Thousands) RETAINED EARNINGS Retained Earnings - Beginning of period $3,938,693 $3,638,448 $3,190,639 Add: Earnings applicable to common stock 926,943 $926,943 599,360 $599,360 726,196 $726,196 Deduct: Dividends declared on common stock 362,941 299,031 278,342 Capital stock and other expenses 187 84 45 ---------- ---------- ---------- Total 363,128 299,115 278,387 ---------- ---------- ---------- Retained Earnings - End of period $4,502,508 $3,938,693 $3,638,448 ========== ========== ========== ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Net of taxes): Balance at beginning of period: Accumulated derivative instrument fair value changes $17,313 $(17,973) $- Other accumulated comprehensive (loss) items (39,673) (70,821) (75,033) ---------- ---------- ---------- Total (22,360) (88,794) (75,033) ---------- ---------- ---------- Cumulative effect to January 1, 2001 of accounting change regarding fair value of derivative instruments - - (18,021) Net derivative instrument fair value changes arising during the period (43,124) (43,124) 35,286 35,286 48 48 Foreign currency translation adjustments 4,169 4,169 65,948 (15,487) 4,615 4,615 Minimum pension liability adjustment 1,153 1,153 (10,489) (10,489) - - Net unrealized investment gains (losses) 52,367 52,367 (24,311) (24,311) (403) (403) ------- -------- -------- -------- -------- -------- Balance at end of period: Accumulated derivative instrument fair value changes (25,811) 17,313 (17,973) Other accumulated comprehensive income (loss) items 18,016 (39,673) (70,821) ------- -------- -------- Total ($7,795) -------- ($22,360) -------- ($88,794) -------- Comprehensive Income ======= $941,508 ======== $584,359 ======== $730,456 ======== ======== ======== PAID-IN CAPITAL Paid-in Capital - Beginning of period $4,666,753 $4,662,704 $4,660,483 Add: Common stock issuances related to stock plans 100,862 4,049 2,221 ---------- ---------- ---------- Paid-in Capital - End of period $4,767,615 $4,666,753 $4,662,704 ========== ========== ========== See Notes to Consolidated Financial Statements.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying consolidated financial statements include the accounts of Entergy Corporation and its direct and indirect subsidiaries. As required bygenerally accepted accounting principles, all significant intercompany transactions have been eliminated in the consolidated financial statements. Thedomestic utility companies and System Energy maintain accounts in accordance with FERC and other regulatory guidelines. Certain previously reportedamounts have been reclassified to conform to current classifications, with no effect on net income or shareholders' equity.

Use of Estimates in the Preparation of Financial Statements

The preparation of Entergy Corporation's consolidated financial statements, in conformity with generally accepted accounting principles, requiresmanagement to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilitiesand the reported amounts of revenues and expenses. Adjustments to the reported amounts of assets and liabilities may be necessary in the future to the extentthat future estimates or actual results are different from the estimates used.

Revenues and Fuel Costs

The domestic utility companies generate, transmit, and distribute electric power primarily to retail customers in Arkansas, Louisiana, including the City ofNew Orleans, Mississippi, and Texas. Entergy Gulf States distributes gas to retail customers in and around Baton Rouge, Louisiana and Entergy NewOrleans distributes gas to retail customers in the City of New Orleans. Entergy's Non-Utility Nuclear and Energy Commodity Services segments derivealmost all of their revenue from sales of electric power generated by plants owned by them.

Entergy recognizes revenue from electric power and gas sales when it delivers power or gas to its customers. To the extent that deliveries have occurred buta bill has not been issued, the domestic utility companies accrue an estimate of the revenues for energy delivered since the latest billings. Entergy calculatesthe estimate based upon several factors including billings through the last billing cycle in a month, actual generation in the month, historical line loss factors,and prices in effect in the domestic utility companies' various jurisdictions. Each month the estimated unbilled revenue amounts are recorded as revenue anda receivable, and the prior month's estimate is reversed. Therefore, changes in price and volume differences resulting from factors such as weather affect thecalculation of unbilled revenues from one period to the next, and may result in variability in reported revenues from one period to the next as prior estimatesare so recorded and reversed.

The domestic utility companies' rate schedules include either fuel adjustment clauses or fixed fuel factors, both of which allow either current recovery inbillings to customers or deferral of fuel costs until the costs are billed to customers. Because the fuel adjustment clause mechanism allows monthlyadjustments to recover fuel costs, Entergy Louisiana, Entergy New Orleans, and the Louisiana portion of Entergy Gulf States include a component of fuelcost recovery in their unbilled revenue calculations. Where the fuel component of revenues is billed based on a pre-determined fuel cost (fixed fuel factor),the fuel factor remains in effect until changed as part of a general rate case, fuel reconciliation, or fixed fuel factor filing. Entergy Mississippi's fuel factorincludes an energy cost rider that is adjusted quarterly. Entergy Mississippi has deferred until 2004 the collection of fuel under-recoveries for the first andsecond quarters of 2003 that would have been collected in the third and fourth quarters of 2003, respectively. The deferred amount plus carrying charges willbe collected over twelve months beginning January 2004. In the case of Entergy Arkansas and the Texas portion of Entergy Gulf States, their fuel under-recoveries are treated as regulatory investments in the cash flow statements because those companies are allowed by their regulatory jurisdictions to recoverthe fuel cost regulatory asset over longer than a twelve-month period, and the companies earn a carrying charge on the under-recovered balances.

System Energy's operating revenues are intended to recover from Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleansoperating expenses and capital costs attributable to Grand Gulf 1. The capital costs are computed by allowing a return on System Energy's common equityfunds allocable to its net investment in Grand Gulf 1, plus System Energy's effective interest cost for its debt allocable to its investment in Grand Gulf 1.

Property, Plant, and Equipment

Property, plant, and equipment is stated at original cost. For the domestic utility companies and System Energy, the original cost of plant retired or removed,less salvage, is charged to accumulated depreciation. Normal maintenance, repairs, and minor replacement costs are charged to operating expenses.Substantially all of the domestic utility companies' and System Energy's plant is subject to mortgage liens.

Electric plant includes the portions of Grand Gulf 1 and Waterford 3 that have been sold and leased back. For financial reporting purposes, these sale andleaseback arrangements are reflected as financing transactions.

Net property, plant, and equipment by business segment and functional category, as of December 31, 2003 and 2002, is shown below:

EnergyU.S. Non-Utility Commodity Parent and

2003 Entergy Utility Nuclear Services Other(In Millions)

Production Nuclear $7,056 $6,112 $944 $- $- Other 1,816 1,359 - 457 -Transmission 2,067 2,067 - - -Distribution 4,231 4,231 - - -Other 1,079 1,069 - - 10Construction work in progress 1,381 954 398 - 29Nuclear fuel (leased and owned) 513 298 215 - -Asset retirement obligation (1) 156 155 - 1 -Property, plant, and equipment -net

$18,299 $16,245 $1,557 $458 $39

EnergyU.S. Non-Utility Commodity Parent and

2002 Entergy Utility Nuclear Services Other(In Millions)

Production Nuclear $7,472 $6,314 $1,158 $- $- Other 1,616 1,382 - 234 -Transmission 1,851 1,851 - - -Distribution 4,037 4,037 - - -Other 933 929 - - 4Construction work in progress 1,233 797 216 192 28Nuclear fuel

Nuclear fuel

(leased and owned) 523 284 239 - -Property, plant, and equipment -net

$17,665 $15,594 $1,613 $426 $32

(1) This is reflected in electric property, plant, and equipment and accumulated depreciation andamortization on the balance sheet.

Depreciation is computed on the straight-line basis at rates based on the estimated service lives of the various classes of property. Depreciation rates onaverage depreciable property approximated 2.8% in 2003 and 2.9% in 2002 and 2001. Included in these rates are the depreciation rates on averagedepreciable utility property of 2.8% in 2003, 2002 and 2001 and the depreciation rates on average depreciable non-utility property of 3.3% in 2003, 4.0% in2002, and 4.8% in 2001.

Jointly-Owned Generating Stations

Certain Entergy subsidiaries jointly own electric generating facilities with third parties. The investments and expenses associated with these generatingstations are recorded by the Entergy subsidiaries to the extent of their respective undivided ownership interests. As of December 31, 2003, the subsidiaries'investment and accumulated depreciation in each of these generating stations were as follows:

Generating Stations

Fuel-Type

TotalMegawatt

Capability (1)

Ownership

Investment

AccumulatedDepreciation

(In Millions)

Grand Gulf Unit 1 Nuclear 1,207 90.00% (2) $3,672 $1,673

Independence Units 1 and 2 Coal 1,630 47.90% 459 240

White Bluff Units 1 and 2 Coal 1,635 57.00% 423 256

Roy S. Nelson Unit 6 Coal 550 70.00% 404 234

Big Cajun 2 Unit 3 Coal 575 42.00% 233 123

Harrison County Gas 550 70.00% 230 3

(1) "Total Megawatt Capability" is the dependable load carrying capability as demonstrated underactual operating conditions based on the primary fuel (assuming no curtailments) that each stationwas designed to utilize.

(2) Includes an 11.5% leasehold interest held by System Energy. System Energy's Grand Gulf 1 leaseobligations are discussed in Note 10 to the consolidated financial statements.

Goodwill

Entergy implemented SFAS 142, "Goodwill and Other Intangible Assets," effective January 1, 2002. The adoption of SFAS 142 required an initialimpairment assessment involving a comparison of the fair value of goodwill and other intangible assets to the current carrying value. Goodwill and otherintangible assets determined to have indefinite useful lives are not amortized, whereas goodwill and other intangible assets determined to have definiteuseful lives are amortized over their useful lives. Goodwill and other intangible assets are subject to annual impairment testing.

The implementation of SFAS 142 resulted in the cessation of Entergy's amortization of the remaining plant acquisition adjustment recorded in conjunctionwith its acquisition of Entergy Gulf States. The following table is a reconciliation of reported earnings applicable to common stock to earnings applicable tocommon stock without goodwill amortization for the years ended December 31, 2003, 2002, and 2001:

For the Years Ended December31,

2003 2002 2001(In Thousands, Except Share Data)

Reported earnings applicable to common stock $926,943 $599,360 $726,196Add back: Goodwill amortization - - 16,265Adjusted earnings applicable to common stock without goodwill amortization $926,943 $599,360 $742,461

Basic earnings per average common share:Reported earnings applicable to common stock $4.09 $2.69 $3.29Goodwill amortization - - 0.07Adjusted earnings applicable to common stock without goodwill amortization $4.09 $2.69 $3.36

Diluted earnings per average common share:Reported earnings applicable to common stock $4.01 $2.64 $3.23Goodwill amortization - - 0.07Adjusted earnings applicable to common stock without

Adjusted earnings applicable to common stock without

goodwill amortization $4.01 $2.64 $3.30

During 2001, Entergy acquired certain intangible assets in connection with the formation of Entergy-Koch, LP, an unconsolidated 50/50 limited partnershipbetween subsidiaries of Entergy and Koch Industries, Inc. Because the intangible assets were assigned definite useful lives, which correspond to the usefullives of Entergy-Koch's fixed assets, Entergy is amortizing them on a straight-line basis over a period of 30 years. Entergy's consolidated balance sheet atDecember 31, 2003 includes $53 million of unamortized intangible assets acquired in forming Entergy-Koch.

Nuclear Refueling Outage Costs

Entergy records nuclear refueling outage costs in accordance with regulatory treatment and the matching principle. These refueling outage expenses areincurred to prepare the units to operate for the next operating cycle without having to be taken off line. Except for the River Bend plant, the costs aredeferred during the outage and amortized over the period to the next outage. In accordance with the regulatory treatment of the River Bend plant, RiverBend's costs are accrued in advance and included in the cost of service used to establish retail rates. Entergy Gulf States relieves the accrued liability when itincurs costs during the next River Bend outage.

Allowance for Funds Used During Construction

AFUDC represents the approximate net composite interest cost of borrowed funds and a reasonable return on the equity funds used for construction in theU.S. Utility segment. Although AFUDC increases both the plant balance and earnings, it is realized in cash through depreciation provisions included inrates.

Income Taxes

Entergy Corporation and its subsidiaries file a U.S. consolidated federal income tax return. Income taxes are allocated to the subsidiaries in proportion totheir contribution to consolidated taxable income. SEC regulations require that no Entergy subsidiary pay more taxes than it would have paid if a separateincome tax return had been filed. In accordance with SFAS 109, "Accounting for Income Taxes," deferred income taxes are recorded for all temporarydifferences between the book and tax basis of assets and liabilities, and for certain credits available for carryforward.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of the deferred taxassets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates in the period in which the tax or ratewas enacted.

Investment tax credits are deferred and amortized based upon the average useful life of the related property, in accordance with ratemaking treatment.

Earnings per Share

The following table presents Entergy's basic and diluted earnings per share (EPS) calculation included on the consolidated income statement:

For the years ended December 31,2003 2002 2001

(In Millions, Except Per Share Data)$/share $/share $/share

Income before cumulative effect of accounting change $ 789.9 $599.4 $ 702.7Average number of common shares outstanding - basic 226.8 $ 3.48 223.0 $ 2.69 220.9 $ 3.18 Average dilutive effect of:Stock Options (1) 4.1 (0.062) 3.9 (0.046) 3.6 (0.052)Equity Awards 0.2 (0.004) 0.4 (0.005) 0.2 (0.002)Average number of common shares outstanding - diluted 231.1 $ 3.42 227.3 $ 2.64 224.7 $ 3.13

Earnings applicable to common stock $ 926.9 $599.4 $ 726.2Average number of common shares outstanding - basic 226.8 $ 4.09 223.0 $ 2.69 220.9 $ 3.29 Average dilutive effect of:Stock Options (1) 4.1 (0.073) 3.9 (0.046) 3.6 (0.054)Equity Awards 0.2 (0.004) 0.4 (0.005) 0.2 (0.002)Average number of common shares outstanding - diluted 231.1 $ 4.01 227.3 $ 2.64 224.7 $ 3.23

(1) Options to purchase approximately 15,231 shares in 2003, 109,897 shares in 2002, and 148,500shares in 2001 of common stock at various prices were outstanding at the end of those years thatwere not included in the computation of diluted earnings per share because the exercise priceswere greater than the average market price of the common shares at the end of each of the yearspresented.

Stock-based Compensation Plans

Entergy has two plans that grant stock options, which are described more fully in Note 8 to the consolidated financial statements. Prior to 2003, Entergyapplied the recognition and measurement principles of APB Opinion 25, "Accounting for Stock Issued to Employees," and related Interpretations inaccounting for those plans. No stock-based employee compensation expense is reflected in 2002 and 2001 net income as all options granted under thoseplans have an exercise price equal to the market value of the underlying common stock on the date of grant. Effective January 1, 2003, Entergyprospectively adopted the fair value based method of accounting for stock options prescribed by SFAS 123, "Accounting for Stock-Based Compensation."Awards under Entergy's plans vest over three years. Therefore, the cost related to stock-based employee compensation included in the determination of netincome for 2003 is less than that which would have been recognized if the fair value based me thod had been applied to all awards since the original

effective date of SFAS 123. The following table illustrates the effect on net income and earnings per share if Entergy would have historically applied the fairvalue based method of accounting to stock-based employee compensation.

Application of SFAS 71

The domestic utility companies and System Energy currently account for the effects of regulation pursuant to SFAS 71, "Accounting for the Effects ofCertain Types of Regulation." This statement applies to the financial statements of a rate-regulated enterprise that meets three criteria. The enterprise musthave rates that (i) are approved by a body empowered to set rates that bind customers (its regulator); (ii) are cost-based; and (iii) can be charged to andcollected from customers. These criteria may also be applied to separable portions of a utility's business, such as the generation or transmission functions, orto specific classes of customers. If an enterprise meets these criteria, it capitalizes costs that would otherwise be charged to expense if the rate actions of itsregulator make it probable that those costs will be recovered in future revenue. Such capitalized costs are reflected as regulatory assets in the accompanyingfinancial statements. A significant majority o f Entergy's regulatory assets, net of related regulatory and deferred tax liabilities, earn a return on investmentduring their recovery periods. SFAS 71 requires that rate-regulated enterprises assess the probability of recovering their regulatory assets at each balancesheet date. When an enterprise concludes that recovery of a regulatory asset is no longer probable, the regulatory asset must be removed from the entity'sbalance sheet.

SFAS 101, "Accounting for the Discontinuation of Application of FASB Statement No. 71," specifies how an enterprise that ceases to meet the criteria forapplication of SFAS 71 for all or part of its operations should report that event in its financial statements. In general, SFAS 101 requires that the enterprisereport the discontinuation of the application of SFAS 71 by eliminating from its balance sheet all regulatory assets and liabilities related to the applicablesegment. Additionally, if it is determined that a regulated enterprise is no longer recovering all of its costs and therefore no longer qualifies for SFAS 71accounting, it is possible that an impairment may exist that could require further write-offs of plant assets.

EITF 97-4: "Deregulation of the Pricing of Electricity - Issues Related to the Application of FASB Statements No. 71 and 101" specifies that SFAS 71should be discontinued at a date no later than when the effects of a transition to competition plan for all or a portion of the entity subject to such plan arereasonably determinable. Additionally, EITF 97-4 promulgates that regulatory assets to be recovered through cash flows derived from another portion of theentity that continues to apply SFAS 71 should not be written off; rather, they should be considered regulatory assets of the segment that will continue toapply SFAS 71.

See Note 2 to the consolidated financial statements for discussion of transition to competition activity in the retail regulatory jurisdictions served by thedomestic utility companies. Only Texas has a currently enacted retail open access law, but Entergy believes that significant issues remain to be addressed byregulators, and the enacted law does not provide sufficient detail to reasonably determine the impact on Entergy Gulf States' regulated operations.

Cash and Cash Equivalents

Entergy considers all unrestricted highly liquid debt instruments with an original or remaining maturity of three months or less at date of purchase to be cashequivalents. Investments with original maturities of more than three months are classified as other temporary investments on the balance sheet.

Investments

Entergy applies the provisions of SFAS 115, "Accounting for Investments for Certain Debt and Equity Securities," in accounting for investments indecommissioning trust funds. As a result, Entergy records the decommissioning trust funds at their fair value on the consolidated balance sheet. As ofDecember 31, 2003 and 2002, the fair value of the securities held in such funds differs from the amounts deposited plus the earnings on the deposits by $94million and ($24) million, respectively. Because of the ability of the domestic utility companies and System Energy to recover decommissioning costs inrates and in accordance with the regulatory treatment for decommissioning trust funds, the domestic utility companies and System Energy have recorded anoffsetting amount of unrealized gains/(losses) on investment securities in other regulatory liabilities/assets. Prior to the implementation of SFAS 143, theoffsetting amount of unrealized gains/(losses) on investment securities was recor ded in accumulated depreciation for Entergy Arkansas, Entergy Gulf States(for the regulated portion of River Bend), and for Entergy Louisiana. For the nonregulated portion of River Bend, Entergy Gulf States has recorded anoffsetting amount of unrealized gains/(losses) in other deferred credits. Decommissioning trust funds for Pilgrim, Indian Point 2, and Vermont Yankee do notreceive regulatory treatment. Accordingly, unrealized gains and losses recorded on the assets in these trust funds are recognized in the accumulated otherincome component of shareholders' equity because these assets are classified as available for sale.

Equity Method Investees

Entergy owns investments that are accounted for under the equity method of accounting because Entergy's ownership level results in significant influence,but not control, over the investee and its operations. Entergy records its share of earnings or losses of the investee based on the change during the period inthe estimated liquidation value of the investment, assuming that the investee's assets were to be liquidated at book value. The equity earnings for Entergy-Koch, LP recorded by Entergy are dictated by the terms of the partnership agreement in accordance with the hypothetical liquidation at book value (HLBV)method. In accordance with the HLBV method, earnings are allocated to members based on what each partner would receive from their capital account if,hypothetically, liquidation were to occur at the balance sheet date and amounts distributed were based on recorded book values. Entergy discontinues the

recognition of losses on equit y investments when its share of losses equals or exceeds its carrying amount of investee plus any advances made orcommitments to provide additional financial support. See Note 13 to the consolidated financial statements for additional information regarding Entergy'sequity method investments.

Derivative Financial Instruments and Commodity Derivatives

Entergy implemented SFAS 133, "Accounting for Derivative Instruments and Hedging Activities" on January 1, 2001. The statement requires that allderivatives be recognized in the balance sheet, either as assets or liabilities, at fair value, unless they meet the normal purchase, normal sales criteria. Thechanges in the fair value of recognized derivatives are recorded each period in current earnings or other comprehensive income, depending on whether aderivative is designated as part of a hedge transaction and the type of hedge transaction.

Contracts for commodities that will be delivered in quantities expected to be used or sold in the ordinary course of business, including certain purchases andsales of power and fuel, are not classified as derivatives. These contracts are exempted under the normal purchase, normal sales criteria. Revenues andexpenses from these contracts are reported on a gross basis in the appropriate revenue and expense categories as the commodities are received or delivered.

Other contracts for commodities in which Entergy is hedging the variability of cash flows related to a variable-rate asset, liability, or forecasted transactionqualify as cash flow hedges. The changes in the fair value of such derivative instruments are reported in other comprehensive income. To qualify for hedgeaccounting, the relationship between the hedging instrument and the hedged item must be documented to include the risk management objective andstrategy, and at inception and on a ongoing basis the effectiveness of the hedge in offsetting the changes in the cash flows of the item being hedged. Gains orlosses accumulated in other comprehensive income are reclassified as earnings in the periods in which earnings are affected by the variability of the cashflows of the hedged item. The ineffective portions of all hedges are recognized in current-period earnings.

Effective January 1, 2001, Entergy recorded a net-of-tax cumulative-effect-type adjustment of approximately $18.0 million reducing accumulated othercomprehensive income to recognize, at fair value, all derivative instruments that are designated as cash-flow hedging instruments, primarily interest rateswaps and foreign currency forward contracts related to Entergy's competitive businesses. Effective October 1, 2001, Entergy recorded an additional net-of-tax cumulative-effect-type adjustment that increased net income by approximately $23.5 million. This adjustment resulted from the implementation of aninterpretation of SFAS 133 that requires fuel supply agreements with volumetric optionality to be classified as derivative instruments. The agreement thatresulted in the adjustment is in the Energy Commodity Services segment and was disposed of in the Damhead Creek sale in December 2002.

Impairment of Long-Lived Assets

Entergy periodically reviews long-lived assets held in all of its business segments whenever events or changes in circumstances indicate that recoverabilityof these assets is uncertain. Generally, the determination of recoverability is based on the undiscounted net cash flows expected to result from suchoperations and assets. Projected net cash flows depend on the future operating costs associated with the assets, the efficiency and availability of the assetsand generating units, and the future market and price for energy over the remaining life of the assets. See Note 12 to the consolidated financial statements fordiscussion of asset impairments recognized in 2002 in the Energy Commodity Services segment.

River Bend AFUDC

The River Bend AFUDC gross-up is a regulatory asset that represents the incremental difference imputed by the LPSC between the AFUDC actuallyrecorded by Entergy Gulf States on a net-of-tax basis during the construction of River Bend and what the AFUDC would have been on a pre-tax basis. Theimputed amount was only calculated on that portion of River Bend that the LPSC allowed in rate base and is being amortized over the estimated remainingeconomic life of River Bend.

Transition to Competition Liabilities

In conjunction with electric utility industry restructuring activity in Texas, regulatory mechanisms were established to mitigate potential stranded costs.Texas restructuring legislation allowed depreciation on transmission and distribution assets to be directed toward generation assets. The liability recorded asa result of this mechanism is classified as "transition to competition" deferred credits.

Reacquired Debt

The premiums and costs associated with reacquired debt of the domestic utility companies and System Energy (except that portion allocable to thederegulated operations of Entergy Gulf States) are being amortized over the life of the related new issuances, in accordance with ratemaking treatment.

Foreign Currency Translation

All assets and liabilities of Entergy's foreign subsidiaries are translated into U.S. dollars at the exchange rate in effect at the end of the period. Revenues andexpenses are translated at average exchange rates prevailing during the period. The resulting translation adjustments are reflected in a separate component ofshareholders' equity. Current exchange rates are used for U.S. dollar disclosures of future obligations denominated in foreign currencies.

New Accounting Pronouncements

During 2003, Entergy adopted the provisions of the following accounting standards: SFAS 143, "Accounting for Asset Retirement Obligations," which isdiscussed further in Note 9; FIN 46, Consolidation of Variable Interest Entities," which is discussed further in Note 6; and SFAS 150, "Accounting forCertain Financial Instruments with Characteristics of both Liabilities and Equity." SFAS 150, which became effective July 1, 2003, requires mandatorilyredeemable financial instruments to be classified and treated as liabilities in the presentation of financial position and results of operations. The only effectof implementing SFAS 150 for Entergy is the inclusion of long-term debt and preferred stock with sinking fund under the liabilities caption in Entergy'sbalance sheet. Entergy's results of operations and cash flows were not affected by this standard.

During 2003, Entergy also adopted the provisions of the following accounting standards: EITF 02-3, "Issues Involved in Accounting for DerivativeContracts Held for Trading Purposes and Contracts Involved in Energy Trading and Risk Management Activities; SFAS 149, "Amendment of Statement 133on Derivative Instruments and Hedging Activities" and related interpretations by the Derivatives Implementation Group, and FIN 45, "Guarantor'sAccounting and Disclosure Requirements for Guarantees Including Indirect Guarantees of Indebtedness of Others". The adoption of these standards did nothave a material effect on Entergy's financial statements.

NOTE 2. RATE AND REGULATORY MATTERS

Electric Industry Restructuring and the Continued Application of SFAS 71

Although Arkansas and Texas enacted retail open access laws, the retail open access law in Arkansas has now been repealed. Retail open access in EntergyGulf States' service territory in Texas has been delayed. Entergy believes that significant issues remain to be addressed by regulators, and the enacted law inTexas does not provide sufficient detail to allow Entergy Gulf States to reasonably determine the impact on Entergy Gulf States' regulated operations.

Entergy therefore continues to apply regulatory accounting principles to the retail operations of all of the domestic utility companies. Following is asummary of the status of retail open access in the domestic utility companies' retail service territories.

Jurisdiction

Status of Retail Open Access

% of Entergy's 2003 Revenues Derived

from Retail ElectricUtility Operations in the Jurisdiction

Arkansas Retail open access was repealed in February 2003. 15.4%

Texas Implementation delayed in Entergy Gulf States' service area in a settlement

approved by PUCT. In light of regulatory proceedings and approvals required,retail open access not likely before the first quarter of 2005.

14.4%

Louisiana The LPSC has deferred pursuing retail open access, pending developments at

the federal level and in other states. 43.9%

Mississippi The MPSC has recommended not pursuing open access at this time. 13.0%

New Orleans The Council has taken no action on Entergy New Orleans' proposal filed in

1997. 5.9%

Retail open access commenced in portions of Texas on January 1, 2002. The staff of the PUCT filed a petition to delay retail open access in Entergy GulfStates' service area, and Entergy Gulf States reached a settlement agreement approved by the PUCT to delay retail open access until at least September 15,2002. In September 2002, the PUCT ordered Entergy Gulf States to file on January 24, 2003 a proposal for an interim solution (retail open access without aFERC-approved RTO) if it appeared by January 15, 2003 that a FERC-approved RTO would not be functional by January 1, 2004. On January 24, 2003,Entergy Gulf States filed its proposal, which among other elements, included:

the recommendation that retail open access in Entergy Gulf States' Texas service territory, including corporate unbundling, occur by January 1, 2004,or else be delayed until at least January 1, 2007. If retail open access is delayed past January 1, 2004, Entergy Gulf States seeks authorization toseparate into two bundled utilities, one subject to the retail jurisdiction of the PUCT and one subject to the retail jurisdiction of the LPSC.the recommendation that Entergy's transmission organization, possibly with the oversight of another entity, will continue to serve as the transmissionauthority for purposes of retail open access in Entergy Gulf States' service territory.the recommendation that the decision points be identified that would require prior to January 1, 2004, the PUCT's determination, based upon objectivecriteria, whether to proceed with further efforts toward retail open access in Entergy Gulf States' Texas service territory.

The PUCT considered the proposal at a March 2003 hearing, and issued an order in April 2003. The order set forth a sequence of proceedings and activitiesdesigned to initiate an interim solution. These proceedings and activities include ruling on market protocols; initiating a proceeding to certify an independentorganization to administer the market protocols and ensure nondiscriminatory access to transmission and distribution systems; resuming business separationproceedings; re-invigorating the pilot project; and initiating a market-readiness proceeding. The PUCT issued an order on rehearing in late-July 2003 inwhich it identified December 2004 as the target date for the beginning of the interim solution. Consistent with the order, and after negotiations with otherparties and following a series of contested hearings and the PUCT approval of a settlement agreement on the market protocols, Entergy Services made afiling at the FERC and has received approval on an expedited basis of the market protocols subject to FERC jurisdiction. This ruling, when final andappealable, will allow for the reinvigorated pilot to begin upon the PUCT approval of Entergy Gulf States' independent organization request. The PUCT iscurrently scheduled to conduct a hearing on this request in June 2004.

In September 2003, the PUCT issued a written order that approved the Price to Beat (PTB) fuel factor for Entergy Gulf States, which is to be implementedupon the commencement of retail open access in its Texas service territory. This PTB fuel factor is subject to revision based on PUCT rules. The PUCTdeclined consideration of a request for rehearing sought by certain cities in Texas served by Entergy Gulf States and the Office of Public Utility Counsel.The Office of Public Utility Counsel has appealed this decision to the Texas courts. Management cannot predict the ultimate outcome of the proceeding atthis time.

In November 2003, Entergy Gulf States initiated a proceeding to certify the Entergy Transmission Organization as the independent organization. The PUCTis scheduled to conduct a hearing on the certification application in June 2004.

Regulatory Assets

Other Regulatory Assets

The domestic utility companies and System Energy are subject to the provisions of SFAS 71, "Accounting for the Effects of Certain Types of Regulation."Regulatory assets represent probable future revenues associated with certain costs that are expected to be recovered from customers through the ratemakingprocess. In addition to the regulatory assets that are specifically disclosed on the face of the balance sheets, the table below provides detail of "Otherregulatory assets" that are included on the balance sheets as of December 31, 2003 and 2002.

2003 2002(In Millions)

DOE Decommissioning and Decontamination Fees - recovered through fuel rates until December 2006 (Note 9)

$32.9 $40.3

Asset Retirement Obligation - recovery dependent upon timing of decommissioning (Note 9)

464.9 -

Removal costs - recovered through depreciation rates 72.4 79.6Provisions for storm damages - recovered through cost of service 123.3 93.9Postretirement benefits - recovered through 2013 (Note 11) 21.5 23.9Pension costs (Note 11) 134.0 157.8Depreciation re-direct - recovery begins at start of retail open access (Note 1) 79.1 79.1

River Bend AFUDC - recovered through August 2025 (Note 1) 39.4 41.3Spindletop gas storage lease - recovered through December 2032 38.0 35.0Low-level radwaste - recovery timing dependent upon pending lawsuit 19.4 19.41994 FERC Settlement - recovered through June 2004 (Note 2) 4.0 12.1Sale-leaseback deferral - recovered through June 2014 (Note 10) 131.7 123.9Deferred fuel - non-current - recovered through rate riders redetermined annually 28.2 17.3Unamortized loss on reaquired debt - recovered over term of debt 164.4 155.2Other - various 71.9 94.4Total $1,425.1 $973.2

Deferred fuel costs

The domestic utility companies are allowed to recover certain fuel and purchased power costs through fuel mechanisms included in electric rates that arerecorded as fuel cost recovery revenues. The difference between revenues collected and the current fuel and purchased power costs is recorded as "Deferredfuel costs" on the domestic utility companies' financial statements. The table below shows the amount of deferred fuel costs as of December 31, 2003 and2002 that has been or will be recovered or (refunded) through the fuel mechanisms of the domestic utility companies.

2003 2002 (In Millions) Entergy Arkansas $10.6 $(42.6)Entergy Gulf States $118.4 $100.6 Entergy Louisiana $30.6 $(25.6)Entergy Mississippi $89.1 $38.2 Entergy NewOrleans

$(2.7) $(14.9)

Entergy Arkansas

Entergy Arkansas' rate schedules include an energy cost recovery rider to recover fuel and purchased energy costs in monthly bills. The rider utilizes priorcalendar year energy costs and projected energy sales for the twelve-month period commencing on April 1 of each year to develop an annual energy costrate. The energy cost rate includes a true-up adjustment reflecting the over-recovery or under-recovery, including carrying charges, of the energy cost for theprior calendar year.

In March 2003, Entergy Arkansas filed with the APSC its energy cost recovery rider for the period April 2003 through March 2004. The energy cost ratefiled was approximately the same as the interim energy cost rate that was in effect since October 2002. The current energy cost rate is designed to eliminatethe over-recovery during the annual rider period.

Entergy Gulf States

In the Texas jurisdiction, Entergy Gulf States' rate schedules include a fixed fuel factor to recover fuel and purchased power costs, including carryingcharges, not recovered in base rates. Under current methodology, semi-annual revisions of the fixed fuel factor may be made in March and September basedon the market price of natural gas. Entergy Gulf States will likely continue to use this methodology until the start of retail open access. The amountscollected under Entergy Gulf States' fixed fuel factor and any interim surcharge implemented until the date retail open access commences are subject to fuelreconciliation proceedings before the PUCT. In the Texas jurisdiction, Entergy Gulf States' deferred electric fuel costs are $116.6 million as of December 31,2003, which includes the following:

Interim surcharge $87.0 millionItems to be addressed as part of unbundling $29.0 millionImputed capacity charges $9.3 millionOther (includes over-recovery for the period 9/03 - 12/03) $(8.7) million

The PUCT has ordered that the imputed capacity charges be excluded from fuel rates and therefore recovered through base rates. It is uncertain, however, asto when and if Entergy Gulf States will initiate a base rate proceeding before the PUCT. The current PUCT-approved settlement agreement delaying retailopen access in Texas requires a rate freeze during the delay period. If Entergy Gulf States implements retail open access without a Texas base rateproceeding, it is possible that Entergy Gulf States will not be allowed to recover imputed capacity charges in Texas retail rates in the future.

In January 2001, Entergy Gulf States filed a fuel reconciliation case covering the period from March 1999 through August 2000. Entergy Gulf States wasreconciling approximately $583 million of fuel and purchased power costs. As part of this filing, Entergy Gulf States requested authority to collect $28million, plus interest, of under-recovered fuel and purchased power costs. The PUCT decided in August 2002 to reduce Entergy Gulf States' request toapproximately $6.3 million, including interest through July 31, 2002. Approximately $4.7 million of the total reduction to the requested surcharge relates tonuclear fuel costs that the PUCT deferred ruling on at this time. In October 2002, Entergy Gulf States appealed the PUCT's final order in Texas DistrictCourt. In its appeal, Entergy Gulf States is challenging the PUCT's disallowance of approximately $4.2 million related to imputed capacity costs and itsdisallowance related to costs for energy delivered from the 30% non-regulated sha re of River Bend. The case was argued before the Travis County TexasDistrict Court in August 2003 and the Travis County District Court judge affirmed the PUCT's order. In October 2003, Entergy Gulf States appealed thisdecision to the Court of Appeals.

In September 2003, Entergy Gulf States filed an application with the PUCT to implement an $87.3 million interim fuel surcharge, including interest, tocollect under-recovered fuel and purchased power expenses incurred from September 2002 through August 2003. Hearings were held in October 2003 andthe PUCT issued an order in December 2003 allowing for the recovery of $87 million. The surcharge will be collected over a twelve-month period thatbegan in January 2004.

In March 2004, Entergy Gulf States filed with the PUCT a fuel reconciliation case covering the period September 2000 through August 2003. Entergy GulfStates is reconciling $1.43 billion of fuel and purchased power costs on a Texas retail basis. The reconciliation includes $8.6 million of under-recoveredcosts that Entergy Gulf States is asking to roll into its fuel over/under-recovery balance to be addressed in the next appropriate fuel proceeding. Hearings areexpected to occur in the third quarter 2004 with a final PUCT decision expected in early 2005.

Entergy Gulf States (Louisiana) and Entergy Louisiana

The Louisiana jurisdiction of Entergy Gulf States and Entergy Louisiana recover electric fuel and purchased power costs for the upcoming month basedupon the level of such costs from the prior month. Entergy Gulf States' gas rate schedules include estimates for the billing month adjusted by a surcharge orcredit for deferred fuel expense arising from monthly reconciliations.

In August 2000, the LPSC authorized its staff to initiate a proceeding to audit the fuel adjustment clause filings of Entergy Louisiana pursuant to aNovember 1997 LPSC general order. The time period that is the subject of the audit is January 1, 2000 through December 31, 2001. In September 2003, theLPSC staff issued its audit report and recommended a disallowance with regard to one item. The issue relates to the alleged failure to uprate Waterford 3 in atimely manner. The LPSC staff has quantified the possible disallowance as between $7.6 and $14 million. Entergy Louisiana is currently evaluating theLPSC staff report and expects to contest the recommendation. A procedural schedule has been adopted and hearings, which also will address issues relatingto the reasonableness of transmission planning and purchases of power from affiliates, the potential value of which issues cannot yet be quantified, arescheduled to begin in September 2004, but the LPSC staff has requested a delay until April 2005.

In January 2003, the LPSC authorized its staff to initiate a proceeding to audit the fuel adjustment clause filings of Entergy Gulf States and its affiliatespursuant to a November 1997 LPSC general order. The audit will include a review of the reasonableness of charges collected by Entergy Gulf States throughits fuel adjustment clause in Louisiana for the period January 1, 1995 through December 1, 2002. The discovery process is underway, but a detailedprocedural schedule extending beyond the discovery stage has not yet been established and the LPSC staff has not yet issued its audit report.

Entergy Mississippi

Entergy Mississippi's rate schedules include an energy cost recovery rider which is adjusted quarterly to reflect accumulated over- or under-recoveries fromthe second prior quarter. In May 2003, Entergy Mississippi filed and the MPSC approved a change in Entergy Mississippi's energy cost recovery rider.Under the MPSC's order, Entergy Mississippi has deferred until 2004 the collection of fuel under-recoveries for the first and second quarters of 2003 thatwould have been collected in the third and fourth quarters of 2003, respectively. The deferred amount of $77.6 million plus carrying charges will becollected through the energy cost recovery rider over a twelve-month period beginning January 2004.

Entergy New Orleans

Effective June 2003, Entergy New Orleans electric rate schedules include a fuel adjustment tariff designed to reflect no more than targeted fuel andpurchased power costs adjusted by a surcharge or credit for deferred fuel expense arising from monthly reconciliations, including carrying charges. EntergyNew Orleans' gas rate schedules include estimates for the billing month adjusted by a surcharge or credit for deferred fuel expense arising from monthlyreconciliations, including carrying charges.

Retail Rate Proceedings

Filings with the APSC (Entergy Arkansas)

Retail Rates

No significant retail rate proceedings are pending in Arkansas at this time.

Filings with the PUCT and Texas Cities (Entergy Gulf States)

Retail Rates

Entergy Gulf States is operating in Texas under the terms of a June 1999 PUCT-approved settlement agreement. The settlement provided for a base ratefreeze that has remained in effect during the delay in implementation of retail open access in Entergy Gulf States' Texas service territory.

Recovery of River Bend Costs

In March 1998, the PUCT disallowed recovery of $1.4 billion of company-wide abeyed River Bend plant costs, which have been held in abeyance since1988. Entergy Gulf States appealed the PUCT's decision on this matter to the Travis County District Court in Texas. A 1999 settlement agreement limitspotential recovery of the remaining plant asset to $115 million as of January 1, 2002, less depreciation after that date. Entergy Gulf States accordinglyreduced the value of the plant asset in 1999. Entergy Gulf States has also agreed that it will not seek recovery of the abeyed plant costs through anyadditional charge to Texas ratepayers. In an interim order approving this agreement, however, the PUCT recognized that any additional River Bendinvestment found prudent, subject to the $115 million cap, could be used as an offset against stranded benefits, should legislation be passed requiringEntergy Gulf States to return stranded benefits to retail customers.

In April 2002, the Travis County District Court issued an order affirming the PUCT's order on remand disallowing recovery of the abeyed plant costs.Entergy Gulf States appealed this ruling to the Third District Court of Appeals. In July 2003, the Third District Court of Appeals unanimously affirmed thejudgment of the Travis County District Court. After considering the progress of the proceeding in light of the decision of the Court of Appeals, managementhas concluded that it is prudent to accrue for the loss that would be associated with a final, non-appealable decision disallowing the abeyed plant costs. Thenet carrying value of the abeyed plant costs was $107.7 million as of June 30, 2003, and after this accrual Entergy Gulf States provided for all potential lossrelated to current or past contested costs of construction of the River Bend plant. Accrual of the loss was recorded in the second quarter 2003 and reducednet income by $65. 6 million. In January 2004, the Texas Supreme Court asked for full briefing on the merits of the case in response to Entergy Gulf States'petition for review.

Filings with the LPSC

Annual Earnings Reviews (Entergy Gulf States)

In December 2002, the LPSC approved a settlement between Entergy Gulf States and the LPSC staff pursuant to which Entergy Gulf States agreed to makea base rate refund of $16.3 million, including interest, and to implement a $22.1 million prospective base rate reduction effective January 2003. Thesettlement discharged any potential liability for claims that relate to Entergy Gulf States' fourth, fifth, sixth, seventh, and eighth post-merger earningsreviews. Entergy Gulf States made the refund in February 2003. In addition to resolving and discharging all liability associated with the fourth througheighth earnings reviews, the settlement provides that Entergy Gulf States shall be authorized to continue to reflect in rates a ROE of 11.1% until a differentROE is authorized by a final resolution disposing of all issues in the proceeding that was commenced with Entergy Gulf States' May 2002 filing.

In May 2002, Entergy Gulf States filed its ninth and last required post-merger analysis with the LPSC. The filing included an earnings review filing for the2001 test year that resulted in a rate decrease of $11.5 million, which was implemented effective June 2002. In April 2003, the LPSC staff filed testimony inwhich it recommended that the LPSC require a rate refund of $30.3 million and a prospective rate reduction of $75.9 million, before taking into account the$11.5 million rate reduction that Entergy Gulf States implemented effective June 2002. In July 2003, Entergy Gulf States filed testimony rebutting the LPSCstaff's testimony and supporting the filing. During discovery, the LPSC staff requested that Entergy Gulf States provide updated cost of service data to reflectchanges in costs, revenues, and rate base through December 31, 2002. In September 2003, Entergy Gulf States supplied the updated data. In December 2003,the LPSC staff recommended a rate refund of $30.6 mil lion and a prospective rate reduction of approximately $50 million. Hearings are scheduled to beginin April 2004. Entergy Gulf States cannot predict the ultimate outcome of this proceeding.

Retail Rates (Entergy Louisiana)

In January 2004, Entergy Louisiana made a rate filing with the LPSC requesting a base rate increase of approximately $167 million. In that filing, EntergyLouisiana noted that approximately $73 million of the base rate increase was attributable to certain power purchase agreements, the implementation ofwhich would, based on current natural gas prices, produce fuel savings for customers that substantially mitigate the impact of the requested base rateincrease. The filing also requested an allowed ROE of 11.4%. Entergy Louisiana's previously authorized ROE midpoint currently in effect is 10.5%.Hearings are currently set for September 2004.

Filings with the MPSC (Entergy Mississippi)

Formula Rate Plan Filings

In December 2002, the MPSC issued a final order approving a joint stipulation entered into by Entergy Mississippi and the Mississippi Public Utilities Staffin October 2002. The final order results in a $48.2 million rate increase, or about a 5.3% increase in overall retail revenues, which is based on an ROE of11.75%. The rate increase began in January 2003. The order endorsed a new power management rider schedule designed to more efficiently collect capacityportions of purchased power costs. Also, the order provides for improvements in the return on equity formula and more robust performance measures forEntergy Mississippi's formula rate plan. Under the provisions of Entergy Mississippi's formula rate plan, a bandwidth is placed around the benchmark ROE,and if Entergy Mississippi earns outside of the bandwidth (as well as outside of a range-of-no-change at each edge of the bandwidth), then EntergyMississippi's rates will be adjusted, though on a prospective basis only. Under the provisions of the order, Entergy Mississippi will make its next formularate plan filing during March 2004. The "benchmark ROE" set out in Entergy Mississippi's March 2004 annual formula rate plan filing likely will differfrom the last approved ROE. Under Mississippi law and Entergy Mississippi's formula rate plan, however, if Entergy Mississippi's earned ROE is above thetop of the range-of-no-change at the top of the formula rate plan bandwidth, then Entergy Mississippi's "Allowed ROE" for the next twelve-month period isthe point halfway between such earned ROE and the top of the bandwidth; and Entergy Mississippi's retail rates are set at that halfway-point ROE level. Inthe situation where Entergy Mississippi's earned ROE is not above the top of the range-of-no-change at the top of the bandwidth, then Entergy Mississippi's"Allowed ROE" for the next twelve-month period is the top of the range-of-no-change at the top of the bandwidth.

Grand Gulf Accelerated Recovery Tariff (GGART)

In September 1998, FERC approved the GGART for Entergy Mississippi's allocable portion of Grand Gulf, which was filed with FERC in August 1998. TheGGART provided for the acceleration of Entergy Mississippi's Grand Gulf purchased power over the period October 1, 1998 through June 30, 2004. In May2003, the MPSC authorized the cessation of the GGART effective July 1, 2003. Entergy Mississippi filed notice of the change with FERC and the FERCapproved the filing on July 30, 2003. Entergy Mississippi accelerated a total of $168.4 million of Grand Gulf purchased power obligation under the GGARTover the period October 1, 1998 through June 30, 2003.

Filings with the Council (Entergy New Orleans)

Rate Proceedings

In May 2002, Entergy New Orleans filed a cost of service study and revenue requirement filing with the City Council for the 2001 test year. The filingindicated that a revenue deficiency existed and that a $28.9 million electric rate increase and a $15.3 million gas rate increase were appropriate.Additionally, Entergy New Orleans proposed a $6 million public benefit fund. In March 2003, Entergy New Orleans and the Advisors to the City Councilpresented to the City Council an agreement in principle and the City Council approved that agreement in May 2003 allowing for a total increase of $30.2million in electric and gas base rates effective June 1, 2003. Certain intervenors have appealed the City Council's approval to Civil District Court for theParish of Orleans. Entergy New Orleans and the City Council will oppose the appeal, but the outcome cannot be predicted.

Fuel Adjustment Clause Litigation

In April 1999, a group of ratepayers filed a complaint against Entergy New Orleans, Entergy Corporation, Entergy Services, and Entergy Power in statecourt in Orleans Parish purportedly on behalf of all Entergy New Orleans ratepayers. The plaintiffs seek treble damages for alleged injuries arising from thedefendants' alleged violations of Louisiana's antitrust laws in connection with certain costs passed on to ratepayers in Entergy New Orleans' fuel adjustmentfilings with the City Council. In particular, plaintiffs allege that Entergy New Orleans improperly included certain costs in the calculation of fuel charges andthat Entergy New Orleans imprudently purchased high-cost fuel from other Entergy affiliates. Plaintiffs allege that Entergy New Orleans and the otherdefendant Entergy companies conspired to make these purchases to the detriment of Entergy New Orleans' ratepayers and to the benefit of Entergy'sshareholders, in violation of Louisiana's antitrust laws. Plaintiffs also seek to recover interest and attorneys' fees. Entergy filed exceptions to the plaintiffs'allegations, asserting, among other things, that jurisdiction over these issues rests with the City Council and FERC. If necessary, at the appropriate time,Entergy will also raise its defenses to the antitrust claims. The suit in state court has been stayed by stipulation of the parties pending a decision by the CityCouncil in the proceeding discussed in the next paragraph.

Plaintiffs also filed this complaint with the City Council in order to initiate a review by the City Council of the plaintiffs' allegations and to force restitutionto ratepayers of all costs they allege were improperly and imprudently included in the fuel adjustment filings. Testimony was filed on behalf of the plaintiffsin this proceeding asserting, among other things, that Entergy New Orleans and other defendants have engaged in fuel procurement and power purchasingpractices and included costs in Entergy New Orleans' fuel adjustment that could have resulted in New Orleans customers being overcharged by more than$100 million over a period of years. Hearings were held in February and March 2002. In February 2004, the City Council approved a resolution that resultsin a refund to customers of $11.3 million, including interest during the months of June through September 2004. Entergy New Orleans has accrued for thisliability as of December 31, 2003. The resolution concludes, among o ther things, that the record does not support an allegation that Entergy New Orleans'actions or inactions, either alone or in concert with Entergy or any of its affiliates, constituted a misrepresentation or a suppression of the truth made in orderto obtain an unjust advantage of Entergy New Orleans, or to cause loss, inconvenience, or harm to its ratepayers. The plaintiffs have appealed the CityCouncil resolution to the state court in Orleans Parish.

System Energy's 1995 Rate Proceeding

System Energy applied to FERC in May 1995 for a rate increase, and implemented the increase in December 1995. The request sought changes to SystemEnergy's rate schedule, including increases in the revenue requirement associated with decommissioning costs, the depreciation rate, and the rate of return oncommon equity. The request proposed a 13% return on common equity. In July 2000, FERC approved a rate of return of 10.58% for the period December1995 to the date of FERC's decision, and prospectively adjusted the rate of return to 10.94% from the date of FERC's decision. FERC's decision alsochanged other aspects of System Energy's proposed rate schedule, including the depreciation rate and decommissioning costs and their methodology. FERCaccepted System Energy's compliance tariff in November 2001. System Energy made refunds to the domestic utility companies in December 2001.

In accordance with regulatory accounting principles, during the pendency of the case, System Energy recorded reserves for potential refunds against itsrevenues. Upon the order becoming final, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy recordedentries to spread the impacts of FERC's order to the various revenue, expense, asset, and liability accounts affected, as if the order had been in place sincecommencement of the case in 1995. System Energy also recorded an additional reserve amount against its revenue, to adjust its estimate of the impact of theorder, and recorded additional interest expense on that reserve. System Energy also recorded reductions in its depreciation and its decommissioning expensesto reflect the lower levels in FERC's order, and reduced tax expense affected by the order.

FERC Settlement

In November 1994, FERC approved an agreement settling a long-standing dispute involving income tax allocation procedures of System Energy. Inaccordance with the agreement, System Energy has been refunding a total of approximately $62 million, plus interest, to Entergy Arkansas, EntergyLouisiana, Entergy Mississippi, and Entergy New Orleans through June 2004. System Energy also reclassified from utility plant to other deferred debitsapproximately $81 million of other Grand Gulf 1 costs. Although such costs are excluded from rate base, System Energy is amortizing and recovering thesecosts over a 10-year period. Interest on the $62 million refund and the loss of the return on the $81 million of other Grand Gulf 1 costs is reducing Entergy'sand System Energy's net income by approximately $10 million annually.

NOTE 3. INCOME TAXES

Income tax expenses for 2003, 2002, and 2001 consist of the following:

(a) The actual cash taxes paid/(received) were $188,709 in 2003, $57,856 in 2002, and ($113,466)in 2001. Entergy Louisiana's mark-to-market tax accounting election significantly reduced taxespaid in 2001 and 2002. In 2001, Entergy Louisiana changed its method of accounting for taxpurposes related to the contract to purchase power from the Vidalia project (the contract isdiscussed in Note 9 to the consolidated financial statements). The new tax accounting methodhas provided a cumulative cash flow benefit of approximately $805 million through 2003, whichis expected to reverse in the years 2005 through 2031. The election did not reduce book incometax expense. The timing of the reversal of this benefit depends on several variables, including theprice of power. Approximately half of the consolidated cash flow benefit of the election occurredin 2001 and the remainder occurred in 2002.

Total income taxes differ from the amounts computed by applying the statutory income tax rate to income before taxes. The reasons for the differences forthe years 2003, 2002, and 2001 are:

Significant components of net deferred and noncurrent accrued tax liabilities as of December 31, 2003 and 2002 are as follows:

At December 31, 2003, Entergy had $192 million in net realized federal capital loss carryforwards that will expire as follows: $12 million in 2006, $163million in 2007, and $17 million in 2008.

At December 31, 2003, Entergy had state net operating loss carryforwards of $1.9 billion, primarily resulting from Entergy Louisiana's mark-to-market taxelection. If the state net operating loss carryforwards are not utilized, they will expire in the years 2010 through 2016.

The 2003 and 2002 valuation allowances are provided against UK capital loss and UK net operating loss carryforwards, which can be utilized against futureUK taxable income. For UK tax purposes, these carryforwards do not expire.

At December 31, 2003, Entergy had $9.8 million of indefinitely reinvested undistributed earnings from subsidiary companies outside the U.S. Upondistribution of these earnings in the form of dividends or otherwise, Entergy could be subject to U.S. income taxes (subject to foreign tax credits) andwithholding taxes payable to various foreign countries.

NOTE 4. LINES OF CREDIT AND RELATED SHORT-TERM BORROWINGS

Entergy Corporation has in place a 364-day bank credit facility with a borrowing capacity of $1.45 billion, none of which was outstanding as of December31, 2003. The commitment fee for this facility is currently 0.20% of the line amount. Commitment fees and interest rates on loans under the credit facilitycan fluctuate depending on the senior debt ratings of the domestic utility companies.

Although the Entergy Corporation credit facility expires in May 2004, Entergy has the discretionary option to extend the period to repay the amount thenoutstanding for an additional 364-day term. Because of this option, which Entergy intends to exercise if it does not renew the credit line or obtain analternative source of financing, the credit line is reflected in long-term debt on the balance sheet. Entergy Corporation's facility requires it to maintain aconsolidated debt ratio of 65% or less of its total capitalization, and maintain an interest coverage ratio of 2 to 1. If Entergy fails to meet these limits, or ifEntergy or the domestic utility companies default on other indebtedness or are in bankruptcy or insolvency proceedings, an acceleration of the facility'smaturity date may occur.

The short-term borrowings of Entergy's subsidiaries are limited to amounts authorized by the SEC. The current limits authorized are effective throughNovember 30, 2004. Also, under the SEC order authorizing the short-term borrowing limits, the domestic utility companies and System Energy cannot incurnew short-term indebtedness if the issuer's common equity would comprise less than 30% of its capital. In addition to borrowing from commercial banks,Entergy's subsidiaries are authorized to borrow from the Entergy System Money Pool (money pool). The money pool is an inter-company borrowingarrangement designed to reduce Entergy's subsidiaries' dependence on external short-term borrowings. Borrowings from the money pool and externalborrowings combined may not exceed the SEC authorized limits. As of December 31, 2003, Entergy's subsidiaries' authorized limit was $1.6 billion and theoutstanding borrowing from the money pool was $147.1 million. There were no borrowings outstanding from external sources. There is further discussion ofcommitments for long-term financing arrangements in Note 5 to the consolidated financial statements.

Entergy Arkansas, Entergy Louisiana, and Entergy Mississippi each have 364-day credit facilities available as follows:

Company


Facility Amount Drawn as

of Dec. 31, 2003 Entergy Arkansas April 2004 $63 million -Entergy Louisiana May 2004 $15 million -E Mi i i i M 2004 $25 illi

Entergy Mississippi May 2004 $25 million -

The facilities have variable interest rates and the average commitment fee is 0.14%.

NOTE 5. LONG - TERM DEBT

Long-term debt as of December 31, 2003 and 2002 consisted of:

2003 2002(In Thousands)

Mortgage Bonds:6.25% Series due February 2003 - Entergy Mississippi $- $70,0007.75% Series due February 2003 - Entergy Mississippi - 120,0006.75% Series due March 2003 - Entergy Gulf States - 33,0007.72% Series due March 2003 - Entergy Arkansas - 100,0008.5% Series due June 2003 - Entergy Louisiana - 150,000Libor + 1.2% Series due June 2003 - Entergy Gulf States - 260,0006.0% Series due October 2003 - Entergy Arkansas - 155,0006.625% Series due November 2003 - Entergy Mississippi - 65,0006.65% Series due March 2004 - Entergy New Orleans - 30,0008.25% Series due April 2004 - Entergy Gulf States 292,000 292,0006.2% Series due May 2004 - Entergy Mississippi 75,000 75,000Libor + 0.65% Series due May 2004 - Entergy Mississippi - 50,0008.25% Series due July 2004 - Entergy Mississippi - 25,000Libor + 1.3% Series due September 2004 - Entergy GulfStates - 300,0006.125% Series due July 2005 - Entergy Arkansas 100,000 100,0008.125% Series due July 2005 - Entergy New Orleans 30,000 30,0006.65% Series due August 2005 - Entergy Arkansas - 115,0006.77% Series due August 2005 - Entergy Gulf States 98,000 98,0008.0% Series due March 2006 - Entergy New Orleans - 40,000Libor + 0.90% Series due June 2007 - Entergy Gulf States 275,000 -7.5% Series due August 2007 - Entergy Arkansas - 100,0004.875% Series due October 2007 - System Energy 70,000 70,0005.2% Series due December 2007 - Entergy Gulf States 200,000 200,0006.5% Series due March 2008 - Entergy Louisiana 115,000 115,0004.35% Series due April 2008 - Entergy Mississippi 100,000 -6.45% Series due April 2008 - Entergy Mississippi 80,000 80,0003.6% Series due June 2008 - Entergy Gulf States 325,000 -7.0% Series due July 2008 - Entergy New Orleans - 30,0003.875% Series due August 2008 - Entergy New Orleans 30,000 -6.0% Series due December 2012 - Entergy Gulf States 140,000 140,0005.15% Series due February 2013 - Entergy Mississippi 100,000 -5.25% Series due August 2013 - Entergy New Orleans 70,000 -5.25% Series due August 2015 - Entergy Gulf States 200,000 -6.75% Series due October 2017 - Entergy New Orleans 25,000 25,0005.4% Series due May 2018 - Entergy Arkansas 150,000 -4.95% Series due June 2018 - Entergy Mississippi 95,000 -


Mortgage Bonds (continued):5.0% Series due July 2018 - Entergy Arkansas $115,000 $-8.94% Series due January 2022 - Entergy Gulf States - 150,0008.0% Series due March 2023 - Entergy New Orleans 45,000 45,0007.7% Series due July 2023 - Entergy Mississippi 60,000 60,0007.55% Series due September 2023 - Entergy NewOrleans 30,000 30,0007 0% Series due October 2023 Entergy Arkansas 175 000 175 000

7.0% Series due October 2023 Entergy Arkansas 175,000 175,000

8.7% Series due April 2024 - Entergy Gulf States - 294,9506.7% Series due April 2032 - Entergy Arkansas 100,000 100,0007.6% Series due April 2032 - Entergy Louisiana 150,000 150,0006.0% Series due November 2032 - Entergy Arkansas 100,000 100,0006.0% Series due November 2032 - Entergy Mississippi 75,000 75,0007.25% Series due December 2032 - Entergy Mississippi 100,000 100,0005.9% Series due June 2033 - Entergy Arkansas 100,000 -6.20% Series due July 2033 - Entergy Gulf States 240,000 -

Total mortgage bonds 3,860,000 4,147,950

Governmental Bonds (a):5.45% Series due 2010, Calcasieu Parish - Louisiana $22,095 $22,1006.75% Series due 2012, Calcasieu Parish - Louisiana 48,285 48,2806.7% Series due 2013, Pointe Coupee Parish - Louisiana 17,450 17,4505.7% Series due 2014, Iberville Parish - Louisiana 21,600 21,6007.7% Series due 2014, West Feliciana Parish - Louisiana 94,000 94,0005.8% Series due 2015, West Feliciana Parish - Louisiana 28,400 28,4007.0% Series due 2015, West Feliciana Parish - Louisiana 39,000 39,0007.5% Series due 2015, West Feliciana Parish - Louisiana 41,600 41,6009.0% Series due 2015, West Feliciana Parish - Louisiana 45,000 45,0005.8% Series due 2016, West Feliciana Parish - Louisiana 20,000 20,0006.3% Series due 2016, Pope County - Arkansas 19,500 19,5005.6% Series due 2017, Jefferson County - Arkansas 45,500 45,5006.3% Series due 2018, Jefferson County - Arkansas 9,200 9,2006.3% Series due 2020, Pope County - Arkansas 120,000 120,0006.25% Series due 2021, Independence County - Arkansas 45,000 45,0007.5% Series due 2021, St. Charles Parish - Louisiana 50,000 50,0005.875% Series due 2022, Mississippi Business Finance Corp. 216,000 216,0005.9% Series due 2022, Mississippi Business Finance Corp. 102,975 102,9757.0% Series due 2022, Warren County - Mississippi 8,095 8,0957.0% Series due 2022, Washington County - Mississippi 7,935 7,9357.0% Series due 2022, St. Charles Parish - Louisiana 24,000 24,000


Governmental Bonds (continued):7.05% Series due 2022, St. Charles Parish - Louisiana $20,000 $20,000Auction Rate due 2022, Independence City - Mississippi 30,000 30,0005.95% Series due 2023, St. Charles Parish - Louisiana 25,000 25,0006.2% Series due 2023, St. Charles Parish - Louisiana 33,000 33,0006.875% Series due 2024, St. Charles Parish - Louisiana 20,400 20,4006.375% Series due 2025, St. Charles Parish - Louisiana 16,770 16,7707.3% Series due 2025, Claiborne County - Mississippi 7,625 7,6256.2% Series due 2026, Claiborne County - Mississippi 90,000 90,0005.05% Series due 2028, Pope County - Arkansas (b) 47,000 47,0005.65% Series due 2028, West Feliciana Parish - Louisiana (c) 62,000 62,0006.6% Series due 2028, West Feliciana Parish - Louisiana 40,000 40,0005.35% Series due 2029, St. Charles Parish - Louisiana (d) - 110,950Auction Rate due 2030, St. Charles Parish - Louisiana 60,000 60,0004.9% Series due 2030, St. Charles Parish - Louisiana (e) (f) 55,000 55,000

Total governmental bonds 1,532,430 1,643,380

Other Long-Term Debt:Note Payable to NYPA, non-interest bearing, 4.8% implicit rate $514,708 $683,640Bank Credit Facility (Entergy Corporation and Subsidiaries,Note 4) - 535,000Bank term loan, Entergy Corporation, avg rate 2.98%, due 2005 60,000 60,000Bank term loan, Entergy Corporation, avg rate 3.08%, due 2008 35,000 -6.17% Notes due March 2008, Entergy Corporation 72,000 -6.23% Notes due March 2008, Entergy Corporation 15,000 -6.13% Notes due September 2008, EntergyCorporation 150,000 -

7.75% Notes due December 2009, EntergyCorporation

267,000 267,000

6.58% Notes due May 2010, Entergy Corporation 75,000 -6.9% Notes due November 2010, EntergyCorporation 140,000 -7.06% Notes due March 2011, Entergy Corporation 86,000 -Long-term DOE Obligation (g) 154,409 152,804Waterford 3 Lease Obligation7.45% (Entergy Corporation and Subsidiaries, Note 10) 262,534 297,950Grand Gulf Lease Obligation7.02% (Entergy Corporation and Subsidiaries, Note 10) 403,468 414,843Unamortized Premium and Discount -Net (11,853) (13,741)Top of Iowa wind project debt, avg rate 3.15% due 2003 - 79,0298.5% Junior Subordinated Deferrable Interest DebenturesDue 2045 - Entergy Arkansas 61,856 61,8568.75% Junior Subordinated Deferrable Interest DebenturesDue 2046 - Entergy Gulf States 87,629 87,6299.0% Junior Subordinated Deferrable Interest DebenturesDue 2045 - Entergy Louisiana 72,165 72,165Other 9,966 10,464

Total Long-TermDebt 7,847,312 8,499,969Less Amount Due Within OneYear 524,372 1,191,320

Long-Term Debt Excluding Amount Due Within One Year $7,322,940 $7,308,649

Fair Value of Long-Term Debt (h) $7,113,740 $7,546,996

(a) Consists of pollution control revenue bonds and environmental revenue bonds, certain series ofwhich are secured by non-interest bearing first mortgage bonds.

(b) The bonds are subject to mandatory tender for purchase from the holders at 100% of the principalamount outstanding on September 1, 2005 and can then be remarketed.

(c) The bonds are subject to mandatory tender for purchase from the holders at 100% of the principalamount outstanding on September 1, 2004 and can then be remarketed.

(d) The bonds had a mandatory tender date of October 1, 2003. Entergy Louisiana purchased the bondsfrom the holders, pursuant to the mandatory tender provision, and has not remarketed the bonds atthis time. Entergy Louisiana used a combination of cash on hand and short-term borrowing to buy-in the bonds.

(e) On June 1, 2002, Entergy Louisiana remarketed $55 million St. Charles Parish Pollution ControlRevenue Refunding Bonds due 2030, resetting the interest rate to 4.9% through May 2005.

(f) The bonds are subject to mandatory tender for purchase from the holders at 100% of the principalamount outstanding on June 1, 2005 and can then be remarketed.

(g) Pursuant to the Nuclear Waste Policy Act of 1982, Entergy's nuclear owner/licensee subsidiarieshave contracts with the DOE for spent nuclear fuel disposal service. The contracts include a one-time fee for generation prior to April 7, 1983. Entergy Arkansas is the only Entergy company thatgenerated electric power with nuclear fuel prior to that date and includes the one-time fee, plusaccrued interest, in long-term debt.

(h) The fair value excludes lease obligations, long-term DOE obligations, and other long-term debt andincludes debt due within one year. It is determined using bid prices reported by dealer markets andby nationally recognized investment banking firms.

The annual long-term debt maturities (excluding lease obligations) for debt outstanding as of December 31, 2003, for the next five years are as follows:

(In Thousands) 2004 $503,2152005 $462,4202006 $75,8962007 $624,5392008 $941,625

In November 2000, Entergy's Non-Utility Nuclear business purchased the FitzPatrick and Indian Point 3 power plants in a seller-financed transaction.Entergy issued notes to NYPA with seven annual installments of approximately $108 million commencing one year from the date of the closing, and eightannual installments of $20 million commencing eight years from the date of the closing. These notes do not have a stated interest rate, but have an implicit

interest rate of 4.8%. In accordance with the purchase agreement with NYPA, the purchase of Indian Point 2 resulted in Entergy's Non-Utility Nuclearbusiness becoming liable to NYPA for an additional $10 million per year for 10 years, beginning in September 2003. This liability was recorded upon thepurchase of Indian Point 2 in September 2001, and is included in the note payable to NYPA balance above. In July 2003, a payment of $102 million wasmade prior to maturity on the note payable to NYPA. Under a provision in a letter of credit supporting these notes, if certain of the domestic utilitycompanies or System Energy were to default on other indebtedness, Entergy could be required to post collateral to support the letter of credit.

Covenants in the Entergy Corporation notes require it to maintain a consolidated debt ratio of 65% or less of its total capitalization. If Entergy's debt ratioexceeds this limit, or if Entergy or certain of the domestic utility companies default on other indebtedness or are in bankruptcy or insolvency proceedings, anacceleration of the notes' maturity dates may occur.


Pursuant to an agreement with certain creditors, Entergy Corporation has agreed to supply System Energy with sufficient capital to:

maintain System Energy's equity capital at a minimum of 35% of its total capitalization (excluding short-term debt);permit the continued commercial operation of Grand Gulf 1;

pay in full all System Energy indebtedness for borrowed money when due; andenable System Energy to make payments on specific System Energy debt, under supplements to the agreement assigning System Energy's rights

in the agreement as security for the specific debt.

NOTE 6. COMPANY-OBLIGATED REDEEMABLE PREFERRED SECURITIES

Entergy implemented FASB Interpretation No. 46, "Consolidation of Variable Interest Entities" effective December 31, 2003. FIN 46 requires existingunconsolidated variable interest entities to be consolidated by their primary beneficiaries if the entities do not effectively disperse risks among theirinvestors. Variable interest entities (VIEs), generally, are entities that do not have sufficient equity to permit the entity to finance its operations withoutadditional financial support from its equity interest holders and/or the group of equity interest holders are collectively not able to exercise control over theentity. The primary beneficiary is the party that absorbs a majority of the entity's expected losses, receives a majority of its expected residual returns, or bothas a result of holding the variable interest. A company may have an interest in a VIE through ownership or other contractual rights or obligations.

Entergy Louisiana Capital I, Entergy Arkansas Capital I, and Entergy Gulf States Capital I (Trusts) were established as financing subsidiaries of EntergyLouisiana, Entergy Arkansas, and Entergy Gulf States, respectively, (the parent company or companies, collectively) for the purposes of issuing commonand preferred securities. The Trusts issued Cumulative Quarterly Income Preferred Securities (Preferred Securities) to the public and issued commonsecurities to their parent companies. Proceeds from such issues were used to purchase junior subordinated deferrable interest debentures (Debentures) fromthe parent company. The Debentures held by each Trust are its only assets. Each Trust uses interest payments received on the Debentures owned by it tomake cash distributions on the Preferred Securities and common securities. The parent companies fully and unconditionally guaranteed payment ofdistributions on the Preferred Securities issued by the respective Trusts. Prior to the application of FIN 46, each parent company consolidated its interest inits Trust. Because each parent company's share of expected losses of its Trust is limited to its investment in its Trust, the parent companies are notconsidered the primary beneficiaries and therefore de-consolidated their interest in the Trusts upon application of FIN 46 with no significant impacts to thefinancial statements. The parent companies' investment in the Trusts and the Debentures issued by each parent company are included in Other Property andInvestments and Long-Term Debt, respectively. The financial statements as of December 31, 2002 have been reclassified to reflect the application of FIN 46as of that date.

NOTE 7. PREFERRED STOCK

The number of shares authorized and outstanding and dollar value of preferred stock for Entergy Corporation subsidiaries as of December 31, 2003 and2002 are presented below. Only the Entergy Gulf States series "with sinking fund" contain mandatory redemption requirements. All other series areredeemable at Entergy's option.

SharesAuthorized

and Outstanding2003 2002 2003 2002

(Dollars in Thousands)

Entergy CorporationU.S. Utility Preferred Stock:Without sinking fund:Entergy Arkansas, 4.32% - 7.88% Series 1,613,500 1,613,500 $116,350 $116,350Entergy Gulf States, 4.20% - 7.56% Series 473,268 473,268 47,327 47,327Entergy Louisiana, 4.16% - 8.00% Series 2,115,000 2,115,000 100,500 100,500Entergy Mississippi, 4.36% - 8.36% Series 503,807 503,807 50,381 50,381Entergy New Orleans, 4.36% - 5.56% Series 197,798 197,798 19,780 9,780

Total without sinking fund 4,903,373 4,903,373 $334,337 $334,337

With sinking fund: Entergy Gulf States, Adjustable Rate 7.0% (a) 208,519 243,269 $20,852 $24,327

Total with sinking fund 208,519 243,269 $20,852 $24,327

Fair Value of Preferred Stockwith sinking fund (b) $15,354 $20,792

(a) Represents weighted-average annualized rate for 2003.(b) Fair values were determined using bid prices reported by dealer markets and by nationally

recognized investment banking firms. There is additional disclosure of fair value of financialinstruments in Note 15 to the consolidated financial statements.

All outstanding preferred stock is cumulative.

Changes in the preferred stock of Entergy during the last three years were:

Number of Shares 2003 2002 2001Preferred stock retirements Entergy Gulf States $100 par value (34,500) (18,579) (49,237)Entergy Louisiana $100 par value - - (350,000)

Entergy Gulf States has annual sinking fund requirements of $3.45 million through 2008 for its preferred stock outstanding.

NOTE 8. COMMON EQUITY

Common Stock

Treasury Stock

Treasury stock activity for Entergy for 2003 and 2002:

2003 2002Treasury Shares Cost Treasury Shares Cost

(In Thousands) (In Thousands)

Beginning Balance, January 1 25,752,410 $747,331 27,441,384 $758,820 Repurchases 155,000 8,135 2,885,000 118,499 Issuances: Equity Ownership/Equity Awards Plans (6,622,095) (194,057) (4,567,054) (129,748) Directors' Plan (8,870) (257) (6,920) (240)Ending Balance, December 31 19,276,445 $561,152 25,752,410 $747,331

Entergy Corporation reissues treasury shares to meet the requirements of the Stock Plan for Outside Directors (Directors' Plan), the Equity Ownership Planof Entergy Corporation and Subsidiaries (Equity Ownership Plan), the Equity Awards Plan, and certain other stock benefit plans. The Directors' Plan awardsto non-employee directors a portion of their compensation in the form of a fixed number of shares of Entergy Corporation common stock.

Equity Compensation Plan Information

Entergy has two plans that grant stock options, equity awards, and incentive awards to key employees of the Entergy subsidiaries. The Equity OwnershipPlan is a shareholder-approved stock-based compensation plan. The Equity Awards Plan is a Board-approved stock-based compensation plan. Stock optionsare granted at exercise prices not less than market value on the date of grant. The majority of options granted in 2003, 2002, and 2001 will becomeexercisable in equal amounts on each of the first three anniversaries of the date of grant. Options expire ten years after the date of the grant if they are notexercised.

Beginning in 2001, Entergy began granting most of the equity awards and incentive awards earned under its stock benefit plans in the form of performanceunits, which are equal to the cash value of shares of Entergy Corporation common stock at the time of payment. In addition to the potential for equivalentshare appreciation or depreciation, performance units will earn the cash equivalent of the dividends paid during the performance period applicable to eachplan. The amount of performance units awarded will not reduce the amount of securities remaining under the current authorizations. The costs of equity andincentive awards, given either as company stock or performance units, are charged to income over the period of the grant or restricted period, as appropriate.In 2003, 2002, and 2001, $45 million, $28 million, and $14 million, respectively, was charged to compensation expense.

Entergy was assisted by external valuation firms to determine the fair value of the stock option grants made in 2003. The fair value applied to the 2003grants was an average of two firms' option valuations, which included adjustments for factors such as lack of marketability, stock retention requirements,and regulatory restrictions on exercisability. In 2002 and 2001, the fair value of each option grant was estimated on the date of grant using the Black-Scholesoption-pricing model, without any such adjustments. The stock option weighted-average assumptions used in determining the fair values were as follows:

2003 2002 2001 Stock price volatility 26.3% 27.2% 26.3%Expected term in years 6.2 5.0 5.0Risk-free interest rate 3.3% 4.2% 4.9%Dividend yield 3.3% 3.2% 3.4%Dividend payment $1.40 $1.32 $1.26

Stock option transactions are summarized as follows:

2003 2002 2001Average Average Average

Number Exercise Number Exercise Number Exerciseof Options Price of Options Price of Options Price

Beginning-of-year balance 19,943,114 $ 35.85 17,316,816 $ 31.06 11,468,316 $ 25.52

Options granted 2,936,236 44.98 8,168,025 41.72 8,602,300 36.96Options exercised (6,927,000) 33.12 (4,877,688) 28.62 (2,407,783) 25.85Options forfeited (522,967) 40.98 (664,039) 36.36 (346,017) 30.35

End-of-year balance 15,429,383 $ 38.64 19,943,114 $ 35.85 17,316,816 $ 31.06

Options exercisable at year-end

6,153,043 $ 34.82 4,837,511 $ 31.39 2,923,452 $ 27.35

Weighted-average fair valueofoptions at time of grant $ 6.86 $ 9.22 $ 8.14

The following table summarizes information about stock options outstanding as of December 31, 2003:

Retained Earnings and Dividend Restrictions

Provisions within the Articles of Incorporation or pertinent indentures and various other agreements relating to the long-term debt and preferred stock ofcertain of Entergy Corporation's subsidiaries restrict the payment of cash dividends or other distributions on their common and preferred stock. As ofDecember 31, 2003, Entergy Arkansas and Entergy Mississippi had restricted retained earnings unavailable for distribution to Entergy Corporation of $309.4million and $41.9 million, respectively. Additionally, PUHCA prohibits Entergy Corporation's subsidiaries from making loans or advances to EntergyCorporation. In 2003, Entergy Corporation received dividend payments totaling $425 million from subsidiaries.

Investments in affiliates that are not controlled by Entergy Corporation, but over which it has significant influence, are accounted for using the equitymethod. Entergy's retained earnings include undistributed earnings of equity method investees of $472.0 million in 2003 and $304.1 million in 2002. Equitymethod investments are discussed in Note 13 to the consolidated financial statements.

NOTE 9. COMMITMENTS AND CONTINGENCIES

Entergy is involved in a number of legal, tax, and regulatory proceedings before various courts, regulatory commissions, and governmental agencies in theordinary course of its business. While management is unable to predict the outcome of such proceedings, management does not believe that the ultimateresolution of these matters will have a material adverse effect on Entergy's results of operations, cash flows, or financial condition.

Sales Warranties and Indemnities

In the Saltend sales transaction discussed further in Note 14 to the consolidated financial statements, Entergy or its subsidiaries made certain warranties tothe purchasers relating primarily to the performance of certain remedial work on the facility and the assumption of responsibility for certain contingentliabilities. Entergy believes that it has provided adequately for the warranties as of December 31, 2003.

Vidalia Purchased Power Agreement

Entergy Louisiana has an agreement extending through the year 2031 to purchase energy generated by a hydroelectric facility known as the Vidalia project.Entergy Louisiana made payments under the contract of approximately $112.6 million in 2003, $104.2 million in 2002, and $86.0 million in 2001. If themaximum percentage (94%) of the energy is made available to Entergy Louisiana, current production projections would require estimated payments ofapproximately $116.5 million in 2004, and a total of $3.6 billion for the years 2005 through 2031. Entergy Louisiana currently recovers the costs of thepurchased energy through its fuel adjustment clause. In an LPSC-approved settlement related to tax benefits from the tax treatment of the Vidalia contract,Entergy Louisiana agreed to credit rates by $11 million each year for up to ten years, beginning in October 2002.

Nuclear Insurance

Third Party Liability Insurance

The Price-Anderson Act provides insurance for the public in the event of a nuclear power plant accident. The costs of this insurance are borne by the nuclearpower industry. Originally passed by Congress in 1957 and most recently amended in 1988, the Price-Anderson Act requires nuclear power plants to showevidence of financial protection in the event of a nuclear accident. This protection must consist of two levels:

1. The primary level is private insurance underwritten by American Nuclear Insurers and provides liability insurance coverage of $300 million. If thisamount is not sufficient to cover claims arising from the accident, the second level, Secondary Financial Protection, applies. An industry-wideaggregate limitation of $300 million exists for domestically-sponsored terrorist acts. There is no limitation for foreign-sponsored terrorist acts.

2. Within the Secondary Financial Protection level, each nuclear plant must pay a retrospective premium, equal to its proportionate share of the loss inexcess of the primary level, up to a maximum of $100.6 million per reactor per incident. This consists of a $95.8 million maximum retrospective

premium plus a five percent surcharge that may be applied, if needed, at a rate that is presently set at $10 million per year per nuclear power reactor.There are no domestically- or foreign-sponsored terrorism limitations.

Currently, 105 nuclear reactors are participating in the Secondary Financial Protection program - 103 operating reactors and two closed units that still storeused nuclear fuel on site. The product of the maximum retrospective premium assessment to the nuclear power industry and the number of nuclear powerreactors provides over $10 billion in insurance coverage to compensate the public in the event of a nuclear power reactor accident.

Entergy owns and operates ten of the nuclear power reactors, and owns the shutdown Indian Point 1 reactor (10% of Grand Gulf 1 is owned by a non-affiliated company which would share on a pro-rata basis in any retrospective premium assessment under the Price-Anderson Act).

An additional but temporary contingent liability exists for all nuclear power reactor owners because of a previous Nuclear Worker Tort (long-term bodilyinjury caused by exposure to nuclear radiation while employed at a nuclear power plant) insurance program that was in place from 1988 to 1998. Themaximum premium assessment exposure to each reactor is $3 million and will only be applied if such claims exceed the program's accumulated reservefunds. This contingent premium assessment feature will expire with the Nuclear Worker Tort program's expiration, which is scheduled for 2008.

Property Insurance

Entergy's nuclear owner/licensee subsidiaries are members of certain mutual insurance companies that provide property damage coverage, includingdecontamination and premature decommissioning expense, to the members' nuclear generating plants. These programs are underwritten by Nuclear ElectricInsurance Limited (NEIL). As of December 31, 2003, Entergy was insured against such losses per the following structures:

U.S. Utility Plants (ANO 1 and 2, Grand Gulf 1, River Bend, and Waterford 3)

Primary Layer (per plant) - $500 million per occurrenceExcess Layer (per plant) - $100 million per occurrence

Blanket Layer (shared among all plants) - $1.0 billion per occurrenceTotal limit - $1.6 billion per occurrence

Deductibles:

$1.0 million per occurrence - Equipment breakdown/failure$2.5 million per occurrence - Other than equipment breakdown/failure

Note: ANO 1 and 2 share in the Primary Layer with one policy in common.

Non-Utility Nuclear Plants (Indian Point 2 and 3, FitzPatrick, Pilgrim, and Vermont Yankee)

Primary Layer (per plant) - $500 million per occurrenceBlanket Layer (shared among all plants) - $615 million per occurrence

Total limit - $1.115 billion per occurrenceDeductibles:

$1.0 million per occurrence - Equipment breakdown/failure$1.0 million per occurrence (all plants except Vermont Yankee which is $500,000) - Other than equipment breakdown/failure

Note: Indian Point 2 and 3 share in the Primary Layer with one policy in common.

In addition, the Non-Utility Nuclear plants are also covered under NEIL's Accidental Outage Coverage program. This coverage provides certain fixedindemnities in the event of an unplanned outage that results from a covered NEIL property damage loss, subject to a deductible. The following summarizesthis coverage as of December 31, 2003:

Indian Point 2 and 3, FitzPatrick, and Pilgrim (each plant has an individual policy with the noted parameters):

$4.5 million weekly indemnity$490 million maximum indemnity

Deductible: 12 week waiting period

Vermont Yankee



Entergy's U.S. Utility nuclear plants have significantly less or no accidental outage coverage. Under the property damage and accidental outage insuranceprograms, Entergy nuclear plants could be subject to assessments should losses exceed the accumulated funds available from NEIL. As of December 31,2003, the maximum amounts of such possible assessments per occurrence were $77 million for the Non-Utility Nuclear plants and $79.3 million for the U.S.Utility plants.

Entergy maintains property insurance for its nuclear units in excess of the NRC's minimum requirement of $1.06 billion per site for nuclear power plantlicensees. NRC regulations provide that the proceeds of this insurance must be used, first, to render the reactor safe and stable, and second, to completedecontamination operations. Only after proceeds are dedicated for such use and regulatory approval is secured would any remaining proceeds be madeavailable for the benefit of plant owners or their creditors.

In the event that one or more acts of domestically-sponsored terrorism causes property damage under one or more or all nuclear insurance policies issued byNEIL (including, but not limited to, those described above) within 12 months from the date the first property damage occurs, the maximum recovery underall such nuclear insurance policies shall be an aggregate of $3.24 billion plus the additional amounts recovered for such losses from reinsurance, indemnity,and any other sources applicable to such losses. There is no aggregate limit involving one or more acts of foreign-sponsored terrorism.

Nuclear Decommissioning and Other Retirement Costs

SFAS 143, "Accounting for Asset Retirement Obligations," which was implemented effective January 1, 2003, requires the recording of liabilities for alllegal obligations associated with the retirement of long-lived assets that result from the normal operation of those assets. For Entergy, these asset retirementobligations consist of its liability for decommissioning its nuclear power plants.

These liabilities are recorded at their fair values (which is the present values of the estimated future cash outflows) in the period in which they are incurred,with an accompanying addition to the recorded cost of the long-lived asset. The asset retirement obligation is accreted each year through a charge toexpense, to reflect the time value of money for this present value obligation. The amounts added to the carrying amounts of the long-lived assets will bedepreciated over the useful lives of the assets. The net effect of implementing this standard for the rate-regulated business of the domestic utility companiesand System Energy was recorded as a regulatory asset, with no resulting impact on Entergy's net income. Entergy recorded these regulatory assets becauseexisting rate mechanisms in each jurisdiction are based on the principle that Entergy will recover all ultimate costs of decommissioning from customers.

Assets and liabilities increased approximately $1.1 billion for the domestic utility companies and System Energy as a result of recording the asset retirementobligations at their fair values of $1.1 billion as determined under SFAS 143, increasing utility plant by $287 million, reducing accumulated depreciation by$361 million and recording the related regulatory assets of $422 million. The implementation of SFAS 143 for the portion of River Bend not subject to cost-based ratemaking decreased earnings by approximately $21 million net-of-tax ($0.09 per share) as a result of a one-time cumulative effect of accountingchange. In accordance with ratemaking treatment and as required by SFAS 71, the depreciation provisions for the domestic utility companies and SystemEnergy include a component for removal costs that are not asset retirement obligations under SFAS 143. In accordance with regulatory accountingprinciples, Entergy has recorded a regulatory asset for certain of its domestic utility companies and System Energy of approximately $72.4 million as ofDecember 31, 2003 and approximately $79.6 million as of December 31, 2002 to reflect an estimate of incurred but uncollected removal costs previouslyrecorded as a component of accumulated depreciation. The decommissioning and retirement cost liability for certain of the domestic utility companies andSystem Energy includes a regulatory liability of approximately $26.8 million as of December 31, 2003 and approximately $25.5 million as of December 31,2002 representing an estimate of collected but not yet incurred removal costs. For the Non-Utility Nuclear business, the implementation of SFAS 143resulted in a decrease in liabilities of approximately $595 million due to reductions in decommissioning liabilities, a decrease in assets of approximately$340 million, including a decrease in electric plant in service of $315 million, and an increase in earnings in the first quarter of 2003 of approximately $155million net-of-tax ($0.67 per share) as a result of a one-time cumulative effect of accounting change.

The cumulative decommissioning liabilities and expenses recorded in 2003 by Entergy were as follows:

Liabilities as of SFAS 143 Liabilities as ofDecember 31, 2002 Adoption Accretion Spending December 31, 2003

(In Millions)

ANO 1 & ANO 2 $310.7 $221.0 $35.8 $ - $567.5River Bend 237.0 41.2 20.6 - 298.8Waterford 3 125.3 179.4 20.6 - 325.3Grand Gulf 1 153.5 137.2 21.8 - 312.5Pilgrim 490.2 (292.6) 15.8 - 213.4Indian Point 1 & 2 456.9 (207.3) 19.9 11.8 257.7Vermont Yankee 316.7 (95.1) 17.7 - 239.3

$2,090.3 ($16.2) $152.2 $ 11.8 $2,214.5

In addition, an insignificant amount of removal costs associated with non-nuclear power plants are also included in the decommissioning line item on thebalance sheet. Entergy periodically reviews and updates estimated decommissioning costs. The actual decommissioning costs may vary from the estimatesbecause of regulatory requirements, changes in technology, and increased costs of labor, materials, and equipment.

If Entergy had applied SFAS 143 during prior periods, the following impacts would have resulted:

Year EndedDecember 31,

2002


2001 Asset retirement obligations actually recorded $2,090,269 $1,679,738 Pro forma effect of SFAS 143 $(46,041) $28,512 Asset retirement obligations - pro forma $2,044,228 $1,708,250 Earnings applicable to common stock - as reported $599,360 $726,196 Pro forma effect of SFAS 143 $14,119 $9,613 Earnings applicable to common stock - pro forma $613,479 $735,809 Basic earnings per average common share - as reported $2.69 $3.29 Pro forma effect of SFAS 143 $0.06 $0.04 Basic earnings per average common share - pro forma $2 75 $3 33

Basic earnings per average common share pro forma

$2.75

$3.33

Diluted earnings per average common share - as reported $2.64 $3.23 Pro forma effect of SFAS 143 $0.06 $0.04 Diluted earnings per average common share - pro forma $2.70 $3.27

For the Indian Point 3 and FitzPatrick plants purchased in 2000, NYPA retained the decommissioning trusts and the decommissioning liability. NYPA andEntergy executed decommissioning agreements, which specify their decommissioning obligations. NYPA has the right to require Entergy to assume thedecommissioning liability provided that it assigns the corresponding decommissioning trust, up to a specified level, to Entergy. If the decommissioningliability is retained by NYPA, Entergy will perform the decommissioning of the plants at a price equal to the lesser of a pre-specified level or the amount inthe decommissioning trusts. Entergy believes that the amounts available to it under either scenario are sufficient to cover the future decommissioning costswithout any additional contributions to the trusts.

Entergy maintains decommissioning trust funds that are committed to meeting the costs of decommissioning the nuclear power plants. The fair values of thedecommissioning trust funds and asset retirement obligation-related regulatory assets of Entergy as of December 31, 2003 are as follows:

DecommissioningTrust Regulatory

Fair Values Assets(In Millions)

ANO 1 & ANO 2 $360.5 $203.7River Bend 267.9 36.2Waterford 3 152.0 132.3Grand Gulf 1 172.9 92.7Pilgrim 491.9 -Indian Point 1 & 2 485.9 -Vermont Yankee 347.4 -

$2,278.5 $464.9

The Energy Policy Act of 1992 contains a provision that assesses domestic nuclear utilities with fees for the decontamination and decommissioning (D&D)of the DOE's past uranium enrichment operations. Annual assessments (in 2003 dollars), which will be adjusted annually for inflation, are for 15 years andwere $4.3 million for Entergy Arkansas, $1.1 million for Entergy Gulf States, $1.6 million for Entergy Louisiana, and $1.8 million for System Energy in2003. The Energy Policy Act calls for cessation of annual D&D assessments not later than October 24, 2007. At December 31, 2003, three years ofassessments were remaining. D&D fees are included in other current liabilities and other non-current liabilities and, as of December 31, 2003, recordedliabilities were $12.8 million for Entergy Arkansas, $3.0 million for Entergy Gulf States, $4.9 million for Entergy Louisiana, and $4.8 million for SystemEnergy. Regulatory assets in the financial statements offset these liabilitie s, with the exception of Entergy Gulf States' 30% non-regulated portion. Theseassessments are recovered through rates in the same manner as fuel costs.

Employment Litigation

Entergy Corporation and certain subsidiaries are defendants in numerous lawsuits filed by former employees asserting that they were wrongfully terminatedand/or discriminated against on the basis of age, race, and/or sex. Entergy Corporation and these subsidiaries are vigorously defending these suits and denyany liability to the plaintiffs. Nevertheless, no assurance can be given as to the outcome of these cases.

NOTE 10. LEASES

General

As of December 31, 2003, Entergy had non-cancelable operating leases for equipment, buildings, vehicles, and fuel storage facilities (excluding nuclear fuelleases and the Grand Gulf 1 and Waterford 3 sale and leaseback transactions) with minimum lease payments as follows:

Total rental expenses for all leases (excluding nuclear fuel leases and the Grand Gulf 1 and Waterford 3 sale and leaseback transactions) amounted to $58.9million in 2003, $60.1 million in 2002, and $65.1 million in 2001.

Nuclear Fuel Leases

As of December 31, 2003, arrangements to lease nuclear fuel existed in an aggregate amount up to $150 million for Entergy Arkansas, $80 million for eachof System Energy and Entergy Louisiana, and $105 million for Entergy Gulf States. As of December 31, 2003, the unrecovered cost base of nuclear fuelleases amounted to approximately $102.7 million for Entergy Arkansas, $63.7 million for Entergy Gulf States, $65.0 million for Entergy Louisiana, and$47.2 million for System Energy. The lessors finance the acquisition and ownership of nuclear fuel through loans made under revolving credit agreements,the issuance of commercial paper, and the issuance of intermediate-term notes. The credit agreements for Entergy Arkansas, Entergy Gulf States, EntergyLouisiana, and System Energy each have a termination date of October 30, 2006. The termination dates may be extended from time to time with the consentof the lenders. The intermediate-term notes issued pursuant to these fuel lease arrang ements have varying maturities through December 15, 2008. It isexpected that additional financing under the leases will be arranged as needed to acquire additional fuel, to pay interest, and to pay maturing debt. However,if such additional financing cannot be arranged, the lessee in each case must repurchase sufficient nuclear fuel to allow the lessor to meet its obligations inaccordance with the Fuel Lease.

Lease payments are based on nuclear fuel use. The total nuclear fuel lease payments (principal and interest) as well as the separate interest componentcharged to operations by the domestic utility companies and System Energy were $142.0 million (including interest of $11.8 million) in 2003, $137.8million (including interest of $11.3 million) in 2002, and $149.3 million (including interest of $17.2 million) in 2001.

Sale and Leaseback Transactions

Waterford 3 Lease Obligations

In 1989, Entergy Louisiana sold and leased back 9.3% of its interest in Waterford 3 for the aggregate sum of $353.6 million. The lease has an approximateterm of 28 years. The lessors financed the sale-leaseback through the issuance of Waterford 3 Secured Lease Obligation Bonds. The lease payments made byEntergy Louisiana are sufficient to service the debt.

In 1994, Entergy Louisiana did not exercise its option to repurchase the 9.3% interest in Waterford 3. As a result, Entergy Louisiana issued $208.2 million ofnon-interest bearing first mortgage bonds as collateral for the equity portion of certain amounts payable under the lease.

In 1997, the lessors refinanced the outstanding bonds used to finance the purchase of Waterford 3 at lower interest rates, which reduced the annual leasepayments.

Upon the occurrence of certain events, Entergy Louisiana may be obligated to assume the outstanding bonds used to finance the purchase of the unit and topay an amount sufficient to withdraw from the lease transaction. Such events include lease events of default, events of loss, deemed loss events, or certainadverse "Financial Events." "Financial Events" include, among other things, failure by Entergy Louisiana, following the expiration of any applicable graceor cure period, to maintain (i) total equity capital (including preferred stock) at least equal to 30% of adjusted capitalization, or (ii) a fixed charge coverageratio of at least 1.50 computed on a rolling 12 month basis.

As of December 31, 2003, Entergy Louisiana's total equity capital (including preferred stock) was 49.82% of adjusted capitalization and its fixed chargecoverage ratio for 2003 was 4.06.

As of December 31, 2003, Entergy Louisiana had future minimum lease payments (reflecting an overall implicit rate of 7.45%) in connection with theWaterford 3 sale and leaseback transactions, which are recorded as long-term debt, as follows:

Grand Gulf 1 Lease Obligations

In December 1988, System Energy sold 11.5% of its undivided ownership interest in Grand Gulf 1 for the aggregate sum of $500 million. Subsequently,System Energy leased back its interest in the unit for a term of 26-1/2 years. System Energy has the option of terminating the lease and repurchasing the11.5% interest in the unit at certain intervals during the lease. Furthermore, at the end of the lease term, System Energy has the option of renewing the leaseor repurchasing the 11.5% interest in Grand Gulf 1.

System Energy is required to report the sale-leaseback as a financing transaction in its financial statements. For financial reporting purposes, System Energyexpenses the interest portion of the lease obligation and the plant depreciation. However, operating revenues include the recovery of the lease paymentsbecause the transactions are accounted for as a sale and leaseback for ratemaking purposes. Consistent with a recommendation contained in a FERC auditreport, System Energy recorded as a net regulatory asset the difference between the recovery of the lease payments and the amounts expensed for interestand depreciation and is recording this difference as a regulatory asset or liability on an ongoing basis, resulting in a zero net balance at the end of the leaseterm. The amount of this net regulatory asset was $83.2 million and $79.5 million as of December 31, 2003 and 2002, respectively.

As of December 31, 2003, System Energy had future minimum lease payments (reflecting an implicit rate of 7.02%), which are recorded as long-term debtas follows:

NOTE 11. RETIREMENT, OTHER POSTRETIREMENT BENEFITS, AND DEFINED CONTRIBUTION PLANS

Pension Plans

Entergy has seven pension plans covering substantially all of its employees: "Entergy Corporation Retirement Plan for Non-Bargaining Employees,""Entergy Corporation Retirement Plan for Bargaining Employees," "Entergy Corporation Retirement Plan II for Non-Bargaining Employees, " "EntergyCorporation Retirement Plan II for Bargaining Employees, " "Entergy Corporation Retirement Plan III, " "Entergy Corporation Retirement Plan IV for Non-Bargaining Employees, " and "Entergy Corporation Retirement Plan IV for Bargaining Employees. " Except for the Entergy Corporation Retirement PlanIII, the pension plans are noncontributory and provide pension benefits that are based on employees' credited service and compensation during the finalyears before retirement. The Entergy Corporation Retirement Plan III includes a mandatory employee contribution of 3% of earnings during the first 10years of plan participation, and allows voluntary contributions from 1% to 10% of earn ings for a limited group of employees. Entergy Corporation and itssubsidiaries fund pension costs in accordance with contribution guidelines established by the Employee Retirement Income Security Act of 1974, asamended, and the Internal Revenue Code of 1986, as amended. The assets of the plans include common and preferred stocks, fixed-income securities,interest in a money market fund, and insurance contracts. As of December 31, 2003 and December 31, 2002, Entergy recognized an additional minimumpension liability for the excess of the accumulated benefit obligation over the fair market value of plan assets. In accordance with FASB 87, an offsettingintangible asset, up to the amount of any unrecognized prior service cost, was also recorded, with the remaining offset to the liability recorded as aregulatory asset reflective of the recovery mechanism for pension costs in Entergy's jurisdictions. Entergy's domestic utility companies' and System Energy'spension costs are recovered from customers as a component of cost of service in each of its jurisdictions. Entergy uses a December 31 measurement date forits pension plans.

Components of Net Pension Cost

Total 2003, 2002, and 2001, pension costs of Entergy Corporation and its subsidiaries, including amounts capitalized, included the following components:

Pension Obligations, Plan Assets, Funded Status, Amounts Not Yet Recognized and Recognized in the Balance Sheet as of December 31, 2003 and2002:

Other Postretirement Benefits

Entergy also provides health care and life insurance benefits for retired employees. Substantially all domestic employees may become eligible for thesebenefits if they reach retirement age while still working for Entergy. Entergy uses a December 31 measurement date for its postretirement benefit plans.

Effective January 1, 1993, Entergy adopted SFAS 106, which required a change from a cash method to an accrual method of accounting for postretirementbenefits other than pensions. At January 1, 1993, the actuarially determined accumulated postretirement benefit obligation (APBO) earned by retirees andactive employees was estimated to be approximately $241.4 million for Entergy (other than Entergy Gulf States) and $128 million for Entergy Gulf States.Such obligations are being amortized over a 20-year period that began in 1993. For the most part, the domestic utilities and System Energy recover SFAS106 costs from customers and are required to fund postretirement benefits collected in rates to an external trust.

Components of Net Postretirement Benefit Cost

Total 2003, 2002, and 2001 other postretirement benefit costs of Entergy Corporation and its subsidiaries, including amounts capitalized and deferred,included the following components (in thousands):

2003 2002 2001(In Thousands)

Service cost - benefits earned during theperiod

$37,799 $29,199 $24,225

Interest cost on APBO 52,746 44,819 38,811Expected return on assets (15,810) (14,066) (12,578)Amortization of transition obligation 15,193 17,874 17,874Amortization of prior service cost (925) 992 992Recognized net (gain)/loss 12,369 1,874 (1,506)Curtailment loss 57,958 - -Special termination benefits 5,444 - -Net other postretirement benefit cost $164,774 $80,692 $67,818

Other Postretirement Benefit Obligations, Plan Assets, Funded Status, and Amounts Not Yet Recognized and Recognized in the Balance Sheet as ofDecember 31, 2003 and 2002:

December 31,2003 2002

(In Thousands)

Change in APBOBalance at beginning of year $799,506 $590,731

Service cost 37,799 29,199

Interest cost 52,746 44,819

Actuarial loss 115,966 159,143

Benefits paid (48,379) (35,861)

Plan amendments (a) (84,722) - Plan participant contributions 7,074 - Curtailment 56,369 - Special termination benefits 5,444 - Acquisition of subsidiary - 11,475

Balance at end of year $941,803 $799,506

Change in Plan AssetsFair value of assets at begininning of year $182,692 $158,190

Actual return on plan assets 22,794 (11,559)

Employer contributions 63,265 59,542

Plan participant contributions 7,074 - Benefits paid (48,379) (35,861)

Acquisition of subsidiary - 12,380

Fair value of assets at end of year $227,446 $182,692

Funded status ($714,357) ($616,814)

Amounts not yet recognized in the balance sheet:Unrecognized transition obligation 44,815 114,724

Unrecognized prior service cost (20,746) 3,522

Unrecognized net loss 336,005 245,795

Accrued other postretirement benefit cost recognized in the balance sheet ($354,283) ($252,773)

(a) Reflects plan design changes, including a change in the participation assumptionfor non-bargaining employees effective August 1, 2003.

Pension and Other Postretirement Plans' Assets

Entergy's pension and postretirement plans weighted-average asset allocations by asset category at December 31, 2003 and 2002 are as follows:

Pension Postretirement 2003 2002 2003 2002 Domestic Equity Securities 56% 50% 37% 34%International Equity Securities 14% 10% 0% 1%Fixed Income Securities 28% 37% 60% 64%Other 2% 3% 3% 1%

Entergy's trust asset investment strategy is to invest the assets in a manner whereby long-term earnings on the assets (plus cash contributions) provideadequate funding for retiree benefit payments. Adequate funding is described as a 90% confidence that assets equal or exceed liabilities due five years in thefuture, and a corresponding 75% confidence level ten years out. The mix of assets is based on an optimization study that identifies asset allocation targets inorder to achieve the maximum return for an acceptable level of risk while minimizing the expected contributions and pension and postretirement expense.

To perform such an optimization study, Entergy first makes assumptions about certain market characteristics, such as expected asset class investmentreturns, volatility (risk) and correlation coefficients among the various asset classes. Entergy does so by examining (or hiring a consultant to provide suchanalysis) historical market characteristics of the various asset classes over all of the different economic conditions that have existed. Entergy then examinesand projects the economic conditions expected to prevail over the study period. Finally, the historical characteristics to reflect the expected future conditionsare adjusted to produce the market characteristics that will be assumed in the study.

The optimization analysis utilized in Entergy's latest study produced the following approved asset class target allocations.

Pension Postretirement Domestic Equity Securities 54% 37%International Equity Securities 12% 8%Fixed Income Securities 30% 55%

Other (Cash and GACs) 4% 0%

These allocation percentages combined with each asset class' expected investment return produced an aggregate return expectation of 9.59% for pensionassets, 5.45% for taxable postretirement assets, and 7.19% for non-taxable postretirement assets. These returns are consistent with Entergy's disclosedexpected return on assets of 8.75% (non-taxable assets) and 5.5% (taxable assets).

Since precise allocation targets are inefficient to manage security investments, the following ranges were established to produce an acceptable economicallyefficient plan to manage to targets:

Pension Postretirement Domestic Equity Securities 49 % to 59% 32 % to 42%International Equity Securities 7% to 17% 3% to 12%Fixed Income Securities 25% to 35% 50% to 60%Other 0% to 10% 0% to 5%

Accumulated Pension Benefit Obligation

The accumulated benefit obligation for Entergy's pension plans was $2.1 billion and $1.7 billion at December 31, 2003 and 2002, respectively.

Estimated Future Benefit Payments

Based upon the assumptions used to measure the company's pension and postretirement benefit obligation at December 31, 2003, and including pension andpostretirement benefits attributable to estimated future employee service, Entergy expects that pension benefits to be paid over the next ten years is asfollows:

Estimated Future BenefitsPayments

Pension Postretirement (In Thousands)Year(s) 2004 $96,764 $53,6662005 $98,378 $57,2712006 $100,411 $58,3892007 $103,225 $61,1712008 $107,120 $63,3932009 - 2013 $631,594 $358,648

Contributions

Entergy expects to contribute $110 million (which includes about $1 million in employee contributions) to its pension plans and $68.6 million to otherpostretirement plans in 2004.

Additional Information

The change in the minimum pension liability included in other comprehensive income and regulatory assets was as follows for 2003 and 2002:

2003 2002 (In Thousands)Increase/(decrease) in the minimum pension liability included in: Other comprehensive income ($1,639) $17,016 Regulatory assets ($23,768) $157,789

Actuarial Assumptions

The assumed health care cost trend rate used in measuring the APBO of Entergy was 10% for 2004, gradually decreasing each successive year until itreaches 4.5% in 2010 and beyond. The assumed health care cost trend rate used in measuring the Net Other Postretirement Benefit Cost of Entergy was 10%for 2004, gradually decreasing each successive year until it reaches 4.5% in 2009 and beyond. A one percentage point increase in the assumed health carecost trend rate for 2003 would have increased the APBO and the sum of the service cost and interest cost of Entergy as of December 31, 2003 as follows:

The significant actuarial assumptions used in determining the pension PBO and the SFAS 106 APBO for 2003, 2002, and 2001 were as follows:

2003 2002 2001Weighted-average discount rate:

i 6 2 % 6 % 0%

Pension 6.25% 6.75% 7.50%

Other postretirement 6.71% 6.75% 7.50%Weighted-average rate ofincrease

in future compensation levels 3.25% 3.25% 4.60%Expected long-term rate of return on plan assets: Taxable assets 5.5% 5.50% 5.50% Non-taxable assets 8.75% 8.75% 9.00%

The significant actuarial assumptions used in determining the net periodic pension and other postretirement benefit costs for 2003, 2002, and 2001 were asfollows:

2003 2002 2001 Weighted-average discount rate 6.75% 7.5% 7.5%Weighted-average rate ofincrease


Entergy's remaining pension transition assets are being amortized over the greater of the remaining service period of active participants or 15 years, and itsSFAS 106 transition obligations are being amortized over 20 years.

Voluntary Severance Program

During 2003, Entergy offered a voluntary severance program to certain groups of employees. As a result of this program, Entergy recorded additionalpension and postretirement costs (including amounts capitalized) of $110.3 million for special termination benefits and plan curtailment charges. Theseamounts are included in the net pension cost and net postretirement benefit cost for the year ended December 31, 2003.

Medicare Prescription Drug, Improvement and Modernization Act of 2003

In December 2003, the President signed the Medicare Prescription Drug, Improvement and Modernization Act of 2003 into law. The Act introduces aprescription drug benefit under Medicare (Part D) as well as federal subsidy to employers who provide a retiree prescription drug benefit that is at leastactuarially equivalent to Medicare Part D.

Currently, specific authoritative guidance on the accounting for the federal subsidy is pending. As allowed by Financial Accounting Standards Board StaffPosition No. FAS 106-1, Entergy has elected to record an estimate of the effects of the Act in accounting for its postretirement benefit plans under SFAS 106and in providing disclosures required by SFAS No. 132 (revised 2003), Employers' Disclosures about Pensions and Other Postretirement Benefits.

Based on actuarial analysis of prescription drug benefits, estimated future Medicare subsidies are expected to reduce the December 31, 2003 AccumulatedPostretirement Benefit Obligation by $56 million. For the year ended December 31, 2003 the impact of the Act on Net Postretirement Cost was immaterial,as it reflected only one month's impact of the Act. When specific guidance on accounting for federal subsidy is issued, these estimates could change.

Defined Contribution Plans

Entergy sponsors the Savings Plan of Entergy Corporation and Subsidiaries (Savings Plan). The Savings Plan is a defined contribution plan covering eligibleemployees of Entergy and its subsidiaries. Through January 31, 2004, the Savings Plan provided that the employing Entergy subsidiary:

make matching contributions to the Savings Plan in an amount equal to 75% of the participants' basic contributions, up to 6% of their eligibleearnings, in shares of Entergy Corporation common stock if the employees direct their company-matching contribution to the purchase of

Entergy Corporation's common stock; ormake matching contributions in the amount of 50% of the participants' basic contributions, up to 6% of their eligible earnings, if the employees

direct their company-matching contribution to other investment funds.

Effective February 1, 2004, the employing Entergy subsidiary will make matching contributions to the Savings Plan in an amount equal to 70% of theparticipants' basic contributions, up to 6% of their eligible earnings. The 70% match will be allocated to investments as directed by the employee.

Entergy also sponsors the Savings Plan of Entergy Corporation and Subsidiaries II (began in 2001), the Savings Plan of Entergy Corporation andSubsidiaries III (began in 2002), and the Savings Plan of Entergy Corporation and Subsidiaries V (began in 2002). The plans are defined contribution plansthat cover eligible employees, as defined by each plan, of Entergy and its subsidiaries. The employing Entergy subsidiary makes matching contributionsequal to 50% of the participants' participating contributions for each of these plans.

Entergy's subsidiaries' contributions to the plans collectively were $31.5 million in 2003, $29.6 million in 2002, and $25.4 million in 2001 to these definedcontribution plans. The majority of the contributions were to the Savings Plan.

NOTE 12. BUSINESS SEGMENT INFORMATION

Entergy's reportable segments as of December 31, 2003 are U.S. Utility, Non-Utility Nuclear, and Energy Commodity Services. U.S. Utility generates,transmits, distributes, and sells electric power in portions of Arkansas, Louisiana, Mississippi, and Texas, and provides natural gas utility service in portionsof Louisiana. Non-Utility Nuclear owns and operates five nuclear power plants and is primarily focused on selling electric power produced by those plants

to wholesale customers. Energy Commodity Services is focused primarily on providing energy commodity trading and gas transportation and storageservices through Entergy-Koch, LP. Energy Commodity Services also includes non-nuclear wholesale assets, a participant in the wholesale power generationbusiness in North America and Europe. Results from Entergy-Koch are reported as equity in earnings of unconsolidated equity affiliates in the financialstatements. Entergy's operating segments are strategic business units managed separa tely due to their different operating and regulatory environments.Entergy's chief operating decision maker is its Office of the Chief Executive, which consists of its highest-ranking officers.

"All Other" includes the parent company, Entergy Corporation, and other business activity, including earnings on the proceeds of sales of previously ownedbusinesses.

Entergy's segment financial information is as follows:

U.S. Utility

Non-UtilityNuclear*

EnergyCommodity

Services* All Other*

Eliminations

Consolidated (In Thousands)2003 Operating revenues $7,584,857 $1,274,983 $184,888 $188,228 ($38,036) $9,194,920Deprec., amort. & decomm. 890,092 87,825 13,681 5,005 - 996,603Interest income 43,035 36,874 18,128 27,575 (38,226) 87,386Equity in earnings (loss) of unconsolidated equity affiliates (3) - 271,650 - - 271,647Interest charges 419,111 34,460 15,193 75,787 (38,225) 506,326Income taxes (credits) 341,044 88,619 105,903 (45,492) - 490,074Cumulative effect of accountingchange

(21,333) 154,512 3,895 - - 137,074

Net income (loss) 492,574 300,799 180,454 (23,360) - 950,467Total assets 22,429,136 4,171,777 2,076,921 1,495,903 (1,619,527) 28,554,210Investment in affiliates - at equity 211 - 1,081,462 - (28,345) 1,053,328Cash paid for long-lived assetadditions

1,233,208 281,377 44,284 10,074 - 1,568,943

U.S. Utility

Non-UtilityNuclear*

EnergyCommodity

Services* All Other*

Eliminations

Consolidated (In Thousands)2002 Operating revenues $6,773,509 $1,200,238 $294,670 $40,729 ($4,111) $8,305,035Deprec., amort. & decomm. 800,257 88,733 21,465 5,143 - 915,598Interest income 23,231 71,262 26,140 35,433 (37,741) 118,325Equity in earnings of unconsolidated equity affiliates (2) - 183,880 - - 183,878Interest charges 465,703 47,291 61,632 35,579 (37,741) 572,464Income taxes (credits) 313,752 132,726 (141,288) (11,252) - 293,938Net income (loss) 606,963 200,505 (145,830) (38,566) - 623,072Total assets 21,630,523 4,482,308 2,167,472 1,327,354 (2,103,291) 27,504,366Investment in affiliates - at equity 214 - 823,995 - - 824,209Cash paid for long-lived assetadditions

1,131,734 169,756 210,297 18,514 - 1,530,301

U.S. Utility

Non-UtilityNuclear*

EnergyCommodity

Services* AllOther*

Eliminations

Consolidated

(In Thousands)2001 Operating revenues $7,432,920 $789,244 $1,370,485 $34,603 ($6,353) $9,620,899Deprec., amort. & decomm. 667,333 43,103 34,667 4,516 - 749,619Interest income 79,702 54,053 23,169 37,235 (34,354) 159,805Equity in earnings of unconsolidated equity affiliates - - 162,882 - - 162,882Interest charges 576,705 55,717 74,953 41,558 (34,353) 714,580Income taxes 300,284 80,053 74,493 863 - 455,693

Cumulative effect of accountingchange

- - 23,482 - - 23,482

Net income (loss) 574,554 127,880 105,939 (57,866) - 750,507Total assets 20,309,695 3,449,156 2,377,733 863,906 (1,090,179) 25,910,311Investment in affiliates - at equity 214 - 765,889 - - 766,103Cash paid for long-lived assetadditions

1,110,484 126,880 199,387 599,886 - 2,036,637

Businesses marked with * are referred to as the "competitive businesses," with the exception of the parent company, Entergy Corporation. Eliminations areprimarily intersegment activity.

Energy Commodity Services' net loss for the year ended December 31, 2002 includes net charges of $428.5 million to operating expenses ($238.3 millionnet of tax). These charges reflect the effect of Entergy's decision to discontinue additional greenfield power plant development and the asset impairmentsresulting from the deteriorating economics of wholesale power markets in the United States and the United Kingdom. The net charges consist of thefollowing:

The power development business obtained contracts in October 1999 to acquire 36 turbines from General Electric. Entergy's rights and obligationsunder the contracts for 22 of the turbines were sold to an independent special-purpose entity in May 2001. $178.0 million of the charges, including anoffsetting benefit of $28.5 million ($18.5 million net of tax) related to the sale of four turbines to a third party, is a provision for the net costs resulting

from cancellation or sale of the turbines subject to purchase commitments with the special-purpose entity.$204.4 million of the charges result from the write-off of Entergy Power Development Corporation's equity investment in the Damhead Creek projectand the impairment of the values of the Warren Power power plant, the Crete project, and the RS Cogen project. This portion of the charges reflects

Entergy's estimate of the effects of reduced spark spreads in the United States and the United Kingdom. These estimates are based on various sourcesof information, including discounted cash flow projections and current market prices.

$39.1 million of the charges relate to the restructuring of the non-nuclear wholesale assets business, including impairments of administrative fixedassets, estimated sublease losses, and employee-related costs for approximately 135 affected employees. These restructuring costs are included in the

"Provision for turbine commitments, asset impairments and restructuring charges" in the accompanying consolidated statement of income werecomprised of the following:

RestructuringCosts

Paid inCash

Non-CashPortion

RemainingAccrual

(in millions)Fixed asset impairments $22.5 $ - $22.5 $ -Sublease losses 10.7 5.6 - 5.1Severance and related costs 5.9 5.9 - - Total $39.1 $11.5 $22.5 $5.1

$32.7 million of the charges result from the write-off of capitalized project development costs for projects that will not be completed.The net charges include a gain of $25.7 million ($15.9 million net of tax) on the sale of projects under development in Spain in August 2002 and the

after-tax gain of $31.4 million realized on the sale of Damhead Creek in December 2002.

Geographic Areas

The following table shows Entergy's domestic and foreign operating revenues for the years ended December 31:

2003 2002 2001 (In Thousands)

Domestic $9,122,827 $8,051,992 $9,098,861Foreign 72,093 253,043 522,038

Consolidated $9,194,920 $8,305,035 $9,620,899

Long-lived assets as of December 31 were as follows:

2003 2002 2001 (In Thousands)

Domestic $18,296,934 $17,664,230 $16,468,059Foreign 1,863 773 421,870

Consolidated $18,298,797 $17,665,003 $16,889,929

NOTE 13. EQUITY METHOD INVESTMENTS

As of December 31, 2003, Entergy owns material investments in the following companies that it accounts for under the equity method of accounting:

Company Ownership Description

Entergy-Koch, LP 50% partnership

interest Engaged in two major businesses: energy commodity

trading, which includes power, gas, weatherderivatives, emissions, and cross-commodities, andgas transportation and storage

RS Cogen LLC 50% member

interest Co-generation project that produces power and steam

on an industrial and merchant basis in the LakeCharles, Louisiana area

EntergyShaw LLC 50% member

interest Provides management, engineering, procurement,

construction, and commissioning services for electricpower plants

Crete Energy Ventures, LLCCrete Turbine Holding, LLC

50% memberinterests

Own a merchant power plant located in Crete, Illinois

Entergy sold its interest in the Crete project in January 2004 and realized an insignificant gain on the sale.

Following is a reconciliation of Entergy's investments in equity affiliates:

2003 2002 2001 (In Thousands)

Beginning of year $824,209 $766,103 $136,487 Additional investments 4,668 36,372 471,102 Income from the investments 271,647 183,878 162,882 Other income 45,583 21,462 18,074 Dividends received (105,142) (73,902) (21,191)Currency translation adjustments - - 138 Dispositions and otheradjustments

12,363 (109,704) (1,389)

End of year $1,053,328 $824,209 $766,103

In accordance with the partnership agreement, Entergy contributed $72.7 million to Entergy-Koch in January 2004.

The following is a summary of combined financial information reported by Entergy's equity method investees:

2003 2002 2001 (In Thousands) Income Statement Items Operating revenues $585,404 $551,853 $693,400 Operating income $207,301 $159,342 $309,752 Net income $172,595 $68,095 $226,039 Balance Sheet Items Current assets $2,576,630 $2,334,133 Noncurrent assets $1,675,334 $1,490,355 Current liabilities $1,757,663 $1,782,385 Noncurrent liabilities $1,166,540 $729,817

Two of the unconsolidated 50/50 joint ventures, Entergy-Koch and RS Cogen, have obtained debt financing for their operations. As of December 31, 2003,the debt financing outstanding for those two entities totals $773.8 million, which is included in the liability figures given above. This debt is nonrecourse toEntergy.

Related-party transactions and guarantees

During 2003, 2002, and 2001, Entergy procured various services from Entergy-Koch consisting primarily of pipeline transportation services for natural gasand risk management services for electricity and natural gas. The total cost of such services in 2003, 2002, and 2001 was approximately $15.9 million, $11.2million, and $7.8 million, respectively. In 2003, Entergy Louisiana and Entergy New Orleans entered purchase power agreements with RS Cogen, andpurchased a total of $26.0 million of capacity and energy from RS Cogen in 2003. Entergy's operating transactions with its other equity method investeeswere not material in 2003, 2002, or 2001.

EntergyShaw constructed the Harrison County project for Entergy that was completed in 2003. Entergy guaranteed EntergyShaw's obligation to constructthe plant until approximately June 2004. Entergy's maximum liability on the guarantee is $232.5 million.

RS Cogen has an interest rate swap agreement that hedges the interest rate on a portion of its debt. Entergy guaranteed RS Cogen's obligations under theinterest rate swap agreement. The guarantee is in the amount of $16.5 million and terminates in October 2017.

NOTE 14. ACQUISITIONS AND DISPOSITIONS

Asset Acquisitions

Vermont Yankee

In July 2002, Entergy's Non-Utility Nuclear business purchased the 510 MW Vermont Yankee nuclear power plant located in Vernon, Vermont, fromVermont Yankee Nuclear Power Corporation for $180 million. Entergy received the plant, nuclear fuel, inventories, and related real estate. The liability todecommission the plant, as well as related decommissioning trust funds of approximately $310 million, was also transferred to Entergy. The acquisitionincluded a 10-year power purchase agreement (PPA) under which the former owners will buy the power produced by the plant, which is through theexpiration of the current operating license for the plant. The PPA includes an adjustment clause which provides that the prices specified in the PPA will beadjusted downward annually, beginning in 2006, if power market prices drop below the PPA prices.

The acquisition was accounted for using the purchase method. The results of operations of Vermont Yankee subsequent to the purchase date have beenincluded in Entergy's consolidated results of operations. The purchase price has been allocated to the assets acquired and liabilities assumed based on theirestimated fair values on the purchase date.

Indian Point 2

In September 2001, Entergy's Non-Utility Nuclear business acquired the 970 MW Indian Point 2 nuclear power plant located in Westchester County, NewYork from Consolidated Edison. Entergy paid approximately $600 million in cash at the closing of the purchase and received the plant, nuclear fuel,materials and supplies, a purchase power agreement (PPA), and assumed certain liabilities. On the second anniversary of the Indian Point 2 acquisition,Entergy's nuclear business will also begin to pay NYPA $10 million per year for up to 10 years in accordance with the Indian Point 3 purchase agreement.Under the PPA, Consolidated Edison will purchase 100% of Indian Point 2's output through 2004. Consolidated Edison transferred a $430 milliondecommissioning trust fund, along with the liability to decommission Indian Point 2 and Indian Point 1, to Entergy. Entergy acquired Indian Point 1 in thetransaction, a plant that has been shut down and in safe storage since the 1 970s.

The acquisition was accounted for using the purchase method. The results of operations of Indian Point 2 subsequent to the purchase date have beenincluded in Entergy's consolidated results of operations. The purchase price has been allocated to the acquired assets, including identifiable intangible assets,and liabilities assumed based on their estimated fair values on the purchase date. Intangible assets are being amortized straight-line over the remaining life ofthe plant.

Asset Dispositions

In the first quarter of 2002, Entergy sold its interests in projects in Argentina, Chile, and Peru for net proceeds of $135.5 million. After impairmentprovisions recorded for these Latin American interests in 2001, the net loss realized on the sale in 2002 is insignificant.

In August 2002, Entergy sold its interest in projects under development in Spain for a realized gain on the sale of $25.7 million. In December 2002, Entergysold its 800 MW Damhead Creek power plant in the UK resulting in an increase in net income of $31.4 million. The Damhead Creek buyer assumed allmarket and regulatory risks associated with the facility.

In August 2001, Entergy sold its Saltend power plant in the UK for a cash payment of approximately $800 million. Entergy's gain on the sale wasapproximately $88.1 million ($57.2 million after tax). In the sales transaction, Entergy or its subsidiaries made certain warranties to the purchasers relatingprimarily to the performance of certain remedial work on the facility and the assumption of responsibility for certain contingent liabilities. Entergy believesthat it has provided adequate reserves for the warranties as of December 31, 2003.

NOTE 15. RISK MANAGEMENT AND FAIR VALUES

Market and Commodity Risks

In the normal course of business, Entergy is exposed to a number of market and commodity risks. Market risk is the potential loss that Entergy may incur asa result of changes in the market or fair value of a particular instrument or commodity. All financial and commodity-related instruments, includingderivatives, are subject to market risk. Entergy is subject to a number of commodity and market risks, including:

Type of Risk Primary Affected Segments Power price risk All reportable segmentsFuel price risk All reportable segmentsForeign currency exchange rate risk All reportable segmentsEquity price and interest rate risk -investments

U.S. Utility, Non-UtilityNuclear

Entergy manages these risks through both contractual arrangements and derivatives. Contractual risk management tools include long-term power and fuelpurchase agreements, capacity contracts, and tolling agreements. Entergy also uses a variety of commodity and financial derivatives, including natural gasand electricity futures, forwards, swaps, and options; foreign currency forwards; and interest rate swaps as a part of its overall risk management strategy.Except for the energy trading activities conducted by the Energy Commodity Services segment, Entergy enters into derivatives only to manage natural risksinherent in its physical or financial assets or liabilities.

Entergy's exposure to market risk is determined by a number of factors, including the size, term, composition, and diversification of positions held, as wellas market volatility and liquidity. For instruments such as options, the time period during which the option may be exercised and the relationship betweenthe current market price of the underlying instrument and the option's contractual strike or exercise price also affects the level of market risk. A significantfactor influencing the overall level of market risk to which Entergy is exposed is its use of hedging techniques to mitigate such risk. Entergy manages marketrisk by actively monitoring compliance with stated risk management policies as well as monitoring the effectiveness of its hedging policies and strategies.Entergy's risk management policies limit the amount of total net exposure and rolling net exposure during the stated periods. These policies, includingrelated risk limits, are regularly assessed to ensure thei r appropriateness given Entergy's objectives.

Hedging Derivatives

Entergy classifies substantially all of the following types of derivative instruments held by its consolidated businesses as cash flow hedges:

Instrument Business Segment Natural gas and electricity futures andforwards

Non-Utility Nuclear, Energy CommodityServices

Foreign currency forwards U.S. Utility, Non-Utility Nuclear

Cash flow hedges with net unrealized gains of approximately $11 million at December 31, 2003 are scheduled to mature during 2004. Gains totalingapproximately $27 million were realized during 2003 on the maturity of cash flow hedges. Unrealized gains or losses result from hedging power output atthe Non-Utility Nuclear power stations and foreign currency hedges related to Euro-denominated nuclear fuel acquisitions. The related gains or losses fromhedging power are included in revenues when realized. The realized gains or losses from foreign currency transactions are included in the cost of capitalizedfuel. The maximum length of time over which Entergy is currently hedging the variability in future cash flows for forecasted transactions at December 31,2003 is approximately five years. The ineffective portion of the change in the value of Entergy's cash flow hedges during 2003 was insignificant.

Fair Values

Commodity Instruments

Fair value estimates of Energy Commodity Services' commodity instruments are made at discrete points in time based on relevant market information.Market quotes are used in determining fair value whenever they are available. When market quotes are not available (e.g., in the case of a long-datedcommodity contract), other information is used, including transactional data and internally developed models. Fair value estimates based on these othermethodologies are necessarily subjective in nature and involve uncertainties and matters of significant judgment. Therefore, actual results may differ fromthese estimates. At December 31, 2003 and 2002, the recorded values of Energy Commodity Services' energy-related commodity contracts were as follows:

2003 2002

Assets Liabilities Assets Liabilities

(In Thousands)

Consolidated subsidiaries $- $- $4,071 $8,395

Equity method investees (1) $872,959 $866,412 $754,678 $663,765

(1) As required by equity method accounting principles, only Entergy's net investment in theseinvestees is reflected in its balance sheet, and these assets and liabilities are not reflected inEntergy's balance sheet. See Note 13 to the consolidated financial statements for moreinformation on Entergy's equity method investees.

Following are the cumulative periods in which Entergy-Koch Trading's net mark-to-market assets would be realized in cash if they are held to maturity andmarket prices are unchanged:

Maturities and Sources for FairValue of Trading Contracts at December 31, 2003 0-12 months 13-24 months 25+ months Total (In Millions)

Prices actively quoted $126.3 ($87.1) ($14.6) $24.6 Prices provided by other sources 4.8 (10.1) 5.6 0.3 Prices based on models (28.0) 14.2 4.9 (8.9)

Total $103.1 ($83.0) ($4.1) $16.0

Financial Instruments

The estimated fair value of Entergy's financial instruments is determined using bid prices reported by dealer markets and by nationally recognizedinvestment banking firms. The estimated fair value of derivative financial instruments is based on market quotes. Considerable judgment is required indeveloping some of the estimates of fair value. Therefore, estimates are not necessarily indicative of the amounts that Entergy could realize in a currentmarket exchange. In addition, gains or losses realized on financial instruments held by regulated businesses may be reflected in future rates and therefore donot necessarily accrue to the benefit or detriment of stockholders.

Entergy considers the carrying amounts of most of its financial instruments classified as current assets and liabilities to be a reasonable estimate of their fairvalue because of the short maturity of these instruments. Additional information regarding financial instruments and their fair values is included in Notes 5and 7 to the consolidated financial statements.

NOTE 16. QUARTERLY FINANCIAL DATA (UNAUDITED)

Operating results for the four quarters of 2003 and 2002 were:

OperatingRevenues

OperatingIncome (Loss)

NetIncome (Loss)

(I Th d )

(In Thousands)

2003: First Quarter $2,037,723 $363,403 $400,923(a) Second Quarter 2,353,909 461,576 211,517 Third Quarter 2,700,125 619,005 371,650 Fourth Quarter 2,103,163 40,571 (33,623) 2002: First Quarter $1,860,834 $(55,670) $(72,983) Second Quarter 2,096,581 486,159 247,585 Third Quarter 2,468,875 653,695 366,800 Fourth Quarter 1,878,745 57,537 81,670

(a) Net income before the cumulative effect of accounting change for the first quarter2003 was $258,001.

Earnings per Average Common Share

2003 2002 Basic Diluted Basic Diluted First Quarter $1.77(b) $1.73(b) $(0.36) $(0.36)Second Quarter $0.91 $0.89 $1.08 $1.06 Third Quarter $1.60 $1.57 $1.61 $1.59 Fourth Quarter $(0.19) $(0.18) $0.36 $0.35

(b) Basic and diluted earning per average common share before the cumulative effect ofaccounting change for the first quarter of 2003 were $1.13 and $1.10, respectively.

ENTERGY'S BUSINESS (continued)

U.S. Utility

The U.S. Utility is Entergy's largest business segment, with five wholly-owned domestic retail electric utility subsidiaries: Entergy Arkansas, Entergy GulfStates, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans. These companies generate, transmit, distribute and sell electric power to retailand wholesale customers in Arkansas, Louisiana, Mississippi, and Texas. Entergy Gulf States and Entergy New Orleans also provide natural gas utilityservices to customers in and around Baton Rouge, Louisiana, and New Orleans, Louisiana, respectively. Also included in the U.S. Utility is System Energy,a wholly-owned subsidiary of Entergy Corporation that owns or leases 90 percent of Grand Gulf 1. System Energy sells its power and capacity from GrandGulf 1 at wholesale to four of the domestic utility companies.

These utility subsidiaries are each regulated by state utility commissions, and in the case of Entergy New Orleans, the City Council. System Energy isregulated by FERC as all of its transactions are at the wholesale level. The U.S. Utility continues to operate as a monopoly as efforts toward deregulationhave been delayed, abandoned, or not initiated in its service territories. The overall generation portfolio of the U.S. Utility, which relies heavily on naturalgas and nuclear generation, is consistent with Entergy's strong support for the environment.

The U.S. Utility is focused on providing highly reliable and cost effective electricity and gas service while working in an environment that provides thehighest level of safety for its employees. Since 1998, the U.S. Utility has significantly improved key customer service, reliability and safety metrics andcontinues to actively pursue additional improvements.

Customers

As of December 31, 2003, Entergy's domestic utility companies provided retail electric and gas service to customers in Arkansas, Louisiana, Mississippi,and Texas, as follows:

Electric Customers Gas CustomersArea Served (In Thousands) (%) (In Thousands) (%)

Entergy Arkansas Portions of Arkansas 660 25%Entergy Gulf States Portions of Texas and Louisiana 709 27% 90 38%

Entergy Louisiana Portions of Louisiana 657 25%Entergy Mississippi Portions of Mississippi 416 16%Entergy New Orleans City of New Orleans* 189 7% 147 62%

Total customers 2,631 100% 237 100%

* Excludes Algiers, which is provided electric service by Entergy Louisiana.

Electric Energy Sales

The electric energy sales of Entergy's domestic utility companies are subject to seasonal fluctuations, with the peak sales period normally occurring duringthe third quarter of each year. On August 19, Entergy reached a 2003 peak demand of 20,162 MW, compared to the 2002 peak of 20,419 MW recorded onAugust 2 of that year. Selected electric energy sales data is shown in the table below:

Selected 2003 Electric Energy Sales Data

Entergy Entergy Entergy Entergy Entergy System

Arkansas Gulf States Louisiana Mississippi New Orleans Energy Entergy (a)

(In GWh)

Electric Department:

Sales to retail

customers 19,650 33,805 27,778 12,891 5,844 - 99,968

Sales for resale:

Affiliates 7,036 1,185 1,344 112 1,312 9,812 -

Others 5,399 3,358 132 331 28 - 9,248

Total 32,085 38,348 29,254 13,334 7,184 9,812 109,216

Average use per

residential customer

(KWh) 12,669 15,791 15,382 14,631 12,556 - 14,498

(a) Includes the effect of intercompany eliminations.

The following table illustrates the domestic utility companies' 2003 combined electric sales volume as a percentage of total electric sales volume, and 2003combined electric revenues as a percentage of total 2003 electric revenue, each by customer class.

Customer Class % of Sales Volume % of Revenue Residential 30.0 36.3Commercial 23.7 25.5Industrial (a) 35.4 28.1Wholesale 8.5 7.5Governmental 2.4 2.6

(a) Major industrial customers are in the chemical, petroleum refining, and paper industries.

See "Selected Financial Data" for each of the domestic utility companies for the detail of their sales by customer class for 2001, 2002, and 2003.

Selected 2003 Natural Gas Sales Data

Entergy New Orleans and Entergy Gulf States provide both electric power and natural gas to retail customers. Entergy New Orleans and Entergy Gulf Statessold 14,859,798 and 7,116,028 Mcf, respectively, of natural gas to retail customers in 2003. In 2003, 98% of Entergy Gulf States' operating revenue wasderived from the electric utility business, and only 2% from the natural gas distribution business. For Entergy New Orleans, 81% of operating revenue wasderived from the electric utility business and 19% from the natural gas distribution business in 2003. Following is data concerning Entergy New Orleans2003 retail operating revenue sources and customer data.

Electric Operating Natural GasEntergy New Orleans Revenue Revenue

Residential 41% 54%Commercial 37% 21%Industrial 6% 11%Governmental/Municipal 16% 14%

Retail Rate Regulation

General (Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans)

The retail regulatory philosophy has shifted in some jurisdictions from traditional, cost-of-service regulation to include performance-based rate elements.Performance-based rate plans are designed to encourage efficiencies and productivity while permitting utilities and their customers to share in the benefits.

Entergy Mississippi, Entergy Louisiana, and Entergy New Orleans have implemented performance-based formula rate plans, but Entergy Louisiana'sperformance-based formula rate plan expired in 2001. The status of the introduction of competition in Entergy's retail service territories is summarizedbelow.

Jurisdiction

Status of Retail Open Access

% of Entergy's 2003 Revenues Derived

from Retail ElectricUtility Operations in the Jurisdiction

Arkansas Retail open access was repealed in February 2003. 15.4%

Texas Implementation delayed in Entergy Gulf States' service area in a settlement

approved by PUCT. In light of regulatory proceedings and approvals required,retail open access not likely before the first quarter of 2005.

14.4%

Louisiana The LPSC has deferred pursuing retail open access, pending developments at

the federal level and in other states. 43.9%

Mississippi The MPSC has recommended not pursuing open access at this time. 13.0%

New Orleans The Council has taken no action on Entergy New Orleans' proposal filed in

1997. 5.9%


Each domestic utility operating subsidiary participates in retail rate proceedings on a consistent basis. The status of material retail rate proceedings isdescribed below and in Note 2 to the domestic utility companies and System Energy financial statements.

Company Authorized

ROE

Pending Proceedings/Events Entergy Arkansas 11.0% No cases are pending. Transition cost account mechanism expired

on December 31, 2001. It is likely a filing will be made in mid-2005 in connection with the steam generator replacement at ANO.

Entergy GulfStates-Texas

10.95% Base rates have been frozen since settlement order issued in June1999. Freeze will likely extend to the start of retail open accessgiven management's current expectations as to the start of retailopen access.

Entergy GulfStates-Louisiana

11.1% The LPSC approved a settlement resolving the 4th - 8th post-merger earning reviews resulting in a $22.1 million prospectiverate reduction effective January 2003 and a refund of $16.3million. In December 2003, the LPSC staff recommended a $30.6million rate refund and a prospective rate reduction ofapproximately $50 million as a result of the 9th earnings analysis(2002). Hearings are set for April 2004. With the LPSC staff,Entergy Gulf States continues to pursue the development of aperformance-based rate structure.

Entergy Louisiana 9.7%-

11.3%(1) In January 2004, Entergy Louisiana filed with the LPSC an

application for a $167 million base rate increase and an ROE of11.4%. The currently authorized ROE midpoint is 10.5%. Hearings are scheduled for September 2004. With the LPSC staff,Entergy Louisiana continues to pursue the development of aperformance-based rate structure.

EntergyMississippi

10.64%-12.86%(2)

An annual formula rate plan is in place. The MPSC approved a$48.2 million rate increase effective January 2003 and an ROEmidpoint of 11.75%. Entergy Mississippi will make a formula rateplan filing in March 2004.

Entergy NewOrleans

10.25%-12.25%(3)

The City Council approved an agreement in May 2003 allowingfor a $30.2 million increase in base rates effective June 1, 2003and approved the implementation of formula rate plans for theelectric and gas service that will be evaluated annually until 2005.An appeal of the approval by intervenors is pending, but the ratesremain in effect. The midpoint ROE of both plans is 11.25%, witha target equity component of 42%. Entergy New Orleans willmake a formula rate plan filing in May 2004.

System Energy 10.94%

ROE approved by July 2001 FERC order. No cases pendingbefore FERC.

(1) Entergy Louisiana's formula rate plan expired with the 2001 test year. Under the expired formula,if Entergy Louisiana earned outside of the bandwidth range, rates would be adjusted on aprospective basis. If earnings were above the bandwidth range, rates would be reduced by 60percent of the amount necessary to bring earnings down to the top of the bandwidth, and ifearnings were below the bandwidth range, rates would be increased by 60 percent of thecorresponding shortfall.

(2) Under Mississippi law and Entergy Mississippi's formula rate plan, if Entergy Mississippi's earnedROE is above the top of the range-of-no-change at the top of the bandwidth, then EntergyMississippi's rates are reduced by 50 percent of the difference between the earned ROE and the topof the bandwidth. In such circumstance, Entergy Mississippi's 'Allowed ROE' for the next twelve-month period is the point halfway between such earned ROE and the top of the bandwidth --Entergy Mississippi's retail rates are set at that halfway-point ROE level. (Before the comparison ismade of the earned ROE to the bandwidth, the bandwidth can be adjusted for performancemeasures by as much as 1%. Rates are adjusted pursuant to the Entergy Mississippi's formula rateplan on a prospective basis only.) In the situation where Entergy Mississippi's earned ROE is notabove the top of the range-of-no-change at the top of the bandwidth, then Entergy Mississ ippi's'Allowed ROE' for the next twelve-month period is the top of the range-of-no-change at the top ofthe bandwidth. If earnings are below the bandwidth range, rates are increased by 50 percent of thedifference between the earned ROE and the bottom of the bandwidth. Under the provisions ofEntergy Mississippi's formula rate plan, each annual formula rate plan filing incorporates a revisedcalculation of the benchmark ROE. The benchmark ROE set out in the March 15, 2004, formularate plan filing likely will differ from the last approved ROE. Entergy Mississippi anticipates thatthe March 15, 2004, filing will show an allowed regulatory earnings range of 9.3% to 12.2%.Entergy Mississippi does not anticipate a reduction in revenues going forward.

(3) If Entergy New Orleans earns outside the bandwidth range, rates will be adjusted on a prospectivebasis. Under the gas formula rate plan, if earnings are above the bandwidth range, rates arereduced by 100 percent of the overage, and if below, increased by 100 percent of the shortfall. Inaddition, if the ROE falls between 11.5% and 12.25%, rates are reduced by 60 percent of thedifference, and if the ROE falls between 10.25% and 11%, rates are increased by 40 percent of thedifferential. Under the electric formula rate plan, rates are adjusted accordingly by 100 percent ofthe amount of any overage or shortfall. Entergy New Orleans may earn up to 13.25% under theelectric formula rate plan provided that the increase is caused by its share of energy cost savingsunder the generation performance-based recovery plan discussed below.

Entergy Arkansas

Fuel Recovery

Entergy Arkansas' rate schedules include an energy cost recovery rider to recover fuel and purchased energy costs in monthly bills. The rider utilizes priorcalendar year energy costs and projected energy sales for the twelve month period commencing on April 1 of each year to develop an energy cost rate, whichis redetermined annually and includes a true-up adjustment reflecting the over-recovery or under-recovery, including carrying charges, of the energy cost forthe prior calendar year.

Entergy Gulf States

Performance-Based Rate Plan

With the LPSC staff, Entergy Gulf States continues to pursue the development of a performance-based rate structure for its Louisiana jurisdiction.

Texas Jurisdiction - River Bend Costs

In March 1998, the PUCT issued an order disallowing recovery of $1.4 billion of company-wide River Bend plant costs which have been held in abeyancesince 1988. Entergy Gulf States appealed the PUCT's decision on this matter to a Texas District Court. A June 1999 settlement agreement addresses thetreatment of abeyed plant costs, and, as a result, Entergy Gulf States removed the reserve for these costs and reduced the carrying value of the plant asset in1999. In another settlement, Entergy Gulf States agreed not to prosecute its appeal before January 1, 2002 and agreed to cap the recovery of Entergy GulfStates' River Bend abeyed investment at $115 million net plant in service, less depreciation. The Texas District Court affirmed the PUCT decisiondisallowing recovery of the abeyed plant costs in April 2002, and Entergy Gulf States appealed that ruling to the Third District Court of Appeals. In July2003, the Third District Court of Appeals unanimously affirmed the judgment of the Travis County District Court. After considering the progress of theproceeding in light of the decision of the Court of Appeals, management has concluded that it is prudent to accrue for the loss that would be associated witha final, non-appealable decision disallowing the abeyed plant costs. The net carrying value of the abeyed plant costs was $107.7 million as of June 30, 2003,and after this accrual Entergy Gulf States has provided for all potential loss related to current or past contested costs of construction of the River Bend plant.Accrual of the loss was recorded in the second quarter 2003 and reduced net income by $65.6 million. In January 2004, the Texas Supreme Court asked forfull briefing on the merits of the case in response to Entergy Gulf States' petition for review. The abeyed plant costs are discussed in more detail in Note 2 tothe domestic utility companies and System Energy financial statements.

Fuel Recovery

Entergy Gulf States' Texas rate schedules include a fixed fuel factor to recover fuel and purchased power costs, including carrying charges, not recovered inbase rates. Under current methodology, semi-annual revisions of the fixed fuel factor may be made in March and September based on the market price ofnatural gas. Entergy Gulf States will likely continue to use this methodology until retail open access begins in Texas. To the extent actual costs vary from thefixed fuel factor, refunds or surcharges are required or permitted. The amounts collected under the fixed fuel factor through the start of retail open access aresubject to fuel reconciliation proceedings before the PUCT. At the start of retail open access for Entergy Gulf States in Texas, which is not expected beforethe first quarter of 2005, fuel and purchased power cost recovery will be subject to the fuel component of the price-to-beat rates approved by the PUCT. ThePUCT fuel cost reviews that were resolved during the past year or are currently pending are discussed in Note 2 to the domestic utility companies andSystem Energy financial statements.

Entergy Gulf States' Louisiana electric rates include a fuel adjustment designed to recover the cost of fuel and purchased power costs. The fuel adjustmentcontains a surcharge or credit for deferred fuel expense and related carrying charges arising from the monthly reconciliation of actual fuel costs incurredwith fuel cost revenues billed to customers.

Entergy Gulf States' Louisiana gas rates include a purchased gas adjustment based on estimated gas costs for the billing month adjusted by a surcharge orcredit for deferred fuel expense arising from the monthly reconciliation of actual fuel costs incurred with fuel cost revenues billed to customers.

Entergy Louisiana

Performance-Based Rate Plan

With the LPSC staff, Entergy Louisiana continues to pursue the development of a performance-based rate structure.

Fuel Recovery

Entergy Louisiana's rate schedules include a fuel adjustment clause designed to recover the cost of fuel. The fuel adjustment contains a surcharge or creditfor deferred fuel expense and related carrying charges arising from the monthly reconciliation of actual fuel costs incurred with fuel cost revenues billed tocustomers.

In September 2002, Entergy Louisiana settled a proceeding that concerned a contract entered into by Entergy Louisiana to purchase through the year 2031energy generated by a hydroelectric facility known as the Vidalia project. In the settlement, the LPSC approved Entergy Louisiana's proposed treatment ofthe regulatory impact of a tax accounting election related to that project. In general, the settlement permits Entergy Louisiana to keep a portion of the taxbenefit in exchange for bearing the risk associated with sustaining the tax treatment. The LPSC settlement divided the term of the Vidalia contract into twosegments: 2002-2012 and 2013-2031. During the first eight years of the 2002-2012 segment, Entergy Louisiana agreed to credit rates by flowing through itsfuel adjustment calculation $11 million each year, beginning monthly in October 2002. Entergy Louisiana must credit rates in this way and by this amounteven if Entergy Louisiana is unable to sustain the tax deduction. E ntergy Louisiana also must credit rates by $11 million each year for an additional twoyears unless either the tax accounting method elected is retroactively repealed or the Internal Revenue Service denies the entire deduction related to the taxaccounting method. Entergy Louisiana agreed to credit ratepayers additional amounts unless the tax accounting election is not sustained, if it is challenged.During the years 2013-2031, Entergy Louisiana and its ratepayers would share the remaining benefits of this tax accounting election. Note 9 to the domesticutility companies and System Energy financial statements contains further discussion of the obligations related to the Vidalia project.

Entergy Louisiana has reduced its indebtedness and preferred stock with a portion of the cash. In accordance with the terms of the settlement, EntergyLouisiana requested SEC approval to return up to $350 million of common equity capital to Entergy Corporation in order to maintain Entergy Louisiana'scurrent capital structure. In December 2002, Entergy Louisiana repurchased $120 million of common stock from Entergy Corporation and paid a dividend of$122.6 million pursuant to the SEC approval. The provisions of the settlement provide that the LPSC shall not recognize or use Entergy Louisiana's use ofthis cash in setting any of Entergy Louisiana's rates. Therefore, to the extent Entergy Louisiana's use of the proceeds would ordinarily have reduced its ratebase, no change in rate base shall be reflected for ratemaking purposes. The SEC approval for additional return of equity capital is now expired.

Entergy Mississippi

Performance-Based Formula Rate Plan

Entergy Mississippi files a performance-based formula rate plan every 12 months that compares the annual earned rate of return to, and adjusts it against, abenchmark rate of return. The benchmark is calculated under a separate formula within the formula rate plan. The formula rate plan allows for periodic smalladjustments in rates, up to an amount that would produce a change in Entergy Mississippi's overall revenue of almost 2%, based on a comparison of actualearned returns to benchmark returns and upon certain performance factors. In accordance with the MPSC's December 2002 rate order, there was no formularate plan filing in 2003 for the 2002 test year. The next formula rate plan filing will be submitted in March 2004 for the 2003 test year, and filings are due tocontinue annually thereafter.

Fuel Recovery

Entergy Mississippi's rate schedules include energy cost recovery riders to recover fuel and purchased energy costs. The rider utilizes projected energy costsfiled quarterly by Entergy Mississippi to develop an energy cost rate. The energy cost rate is redetermined each calendar quarter and includes a true-upadjustment reflecting the over-recovery or under-recovery of the energy cost as of the second quarter preceding the redetermination.

In May 2003, Entergy Mississippi filed and the MPSC approved a change in Entergy Mississippi's energy cost recovery rider. Under the MPSC's order,Entergy Mississippi has deferred until 2004 the collection of fuel under-recoveries for the first and second quarters of 2003 that would have been collectedin the third and fourth quarters of 2003, respectively. The deferred amount of $77.6 million plus carrying charges will be collected through the energy costrecovery rider over a twelve-month period that began in January 2004.

Entergy New Orleans

Formula Rate Plans

In May 2003, the City Council approved the implementation of formula rate plans for electric and gas service that will be evaluated annually until 2005.Entergy New Orleans is required to make a filing with the Council in May 2004 based upon a 2003 test year. Under the formula rate plans, the midpointROE of both plans is 11.25%, with a target equity component of 42%. Any change in rates would be prospective, with the first billing cycle effective afterSeptember 1, 2004. Entergy New Orleans' can earn between 10.25% and 12.25% under the electric plan and between 11% and 11.5% under the gas plan,with earnings within those ranges not resulting in a change in rates. An appeal of the approval by intervenors is pending, but the rates remain in effect.

In May 2003, the City Council approved implementation of a generation performance-based rate calculation in the electric fuel adjustment clause underwhich Entergy New Orleans will receive 10% of calculated fuel and purchased power cost savings in excess of $20 million, based on a defined benchmark,subject to a 13.25% return on equity limitation for electric operations as provided for in the electric formula rate plan. Entergy New Orleans will bear 10%of any "negative" fuel and purchased power cost savings.

Fuel Recovery

Entergy New Orleans' electric rate schedules include a fuel adjustment tariff designed to reflect no more than targeted fuel and purchased power costs,adjusted by a surcharge or credit for deferred fuel expense arising from the monthly reconciliation of actual fuel and purchased power costs incurred withfuel cost revenues billed to customers, including carrying charges. The adjustment also includes the difference between non-fuel Grand Gulf 1 costs paid byEntergy New Orleans and the estimate of such costs, which are included in base rates, as provided in Entergy New Orleans' Grand Gulf 1 rate settlements.Entergy New Orleans' gas rate schedules include an adjustment to reflect estimated gas costs for the billing month, adjusted by a surcharge or credit similarto that included in the electric fuel adjustment clause, including carrying charges. In November 2003, the Council passed a resolution implementing a

package of measur es developed by Entergy New Orleans and the Council Advisors to protect customers from potential gas price spikes during the 2003 -2004 winter heating season. These measures include: expansion of Entergy New Orleans' financial hedging plan for its purchase of wholesale gas, anddeferral of collection of up to $4 million of gas costs in the event that the average residential customer's gas bill were to exceed a threshold level, whichmanagement does not expect.

Franchises

Entergy Arkansas holds exclusive franchises to provide electric service in approximately 306 incorporated cities and towns in Arkansas. These franchisesare unlimited in duration and continue unless the municipalities purchase the utility property. In Arkansas, franchises are considered to be contracts and,therefore, are terminable upon breach of the terms of the franchise.

In Louisiana, Entergy Gulf States holds non-exclusive franchises, permits, or certificates of convenience and necessity to provide electric service inapproximately 55 incorporated municipalities and the unincorporated areas of approximately 19 parishes, and to provide gas service in the City of BatonRouge and the unincorporated areas of two parishes. In Texas, Entergy Gulf States holds a certificate of convenience and necessity from the PUCT toprovide electric service to areas within approximately 24 counties in eastern Texas, and holds non-exclusive franchises to provide electric service inapproximately 65 incorporated municipalities. Entergy Gulf States typically is granted 50-year franchises in Texas and 60-year franchises in Louisiana.Entergy Gulf States' current electric franchises will expire during 2007 - 2045 in Texas and during 2015 - 2046 in Louisiana.

Entergy Louisiana holds non-exclusive franchises to provide electric service in approximately 116 incorporated Louisiana municipalities. Most of thesefranchises have 25-year terms, although six of these municipalities have granted 60-year franchises. Entergy Louisiana also supplies electric service inapproximately 353 unincorporated communities, all of which are located in Louisiana parishes in which it holds non-exclusive franchises.

Entergy Mississippi has received from the MPSC certificates of public convenience and necessity to provide electric service to areas within 45 counties,including a number of municipalities, in western Mississippi. Under Mississippi statutory law, such certificates are exclusive. Entergy Mississippi maycontinue to serve in such municipalities upon payment of a statutory franchise fee, regardless of whether an original municipal franchise is still in existence.

Entergy New Orleans provides electric and gas service in the City of New Orleans pursuant to city ordinances (except electric service in Algiers, which isprovided by Entergy Louisiana). These ordinances contain a continuing option for the City of New Orleans to purchase Entergy New Orleans' electric andgas utility properties. A resolution to study the advantages for ratepayers that might result from an acquisition of these properties was filed in a committee ofthe Council in January 2001. The committee has deferred consideration of and has taken no further action regarding that resolution. The full Council mustapprove the resolution to commence such a study before it can become effective.

The business of System Energy is limited to wholesale power sales. It has no distribution franchises.

Property and Other Generation Resources

Generating Stations

The total capability of the generating stations owned and leased by the domestic utility companies and System Energy as of December 31, 2003, is indicatedbelow:

Owned and Leased Capability MW(1)Gas

Turbine andInternal

Company Total Gas/Oil Nuclear Coal Combustion Hydro

Entergy Arkansas 4,552 1,524 1,694 1,189 75 70Entergy Gulf States 6,483 4,890 966 627 - -Entergy Louisiana 5,357 4,270 1,075 - 12 -Entergy Mississippi 2,908 2,493 - 408 7 -Entergy New Orleans 886 875 - - 11 -System Energy 1,086 - 1,086 - - -Total 21,272 14,052 4,821 2,224 105 70

(1) "Owned and Leased Capability" is the dependable load carrying capability as demonstrated underactual operating conditions based on the primary fuel (assuming no curtailments) that each stationwas designed to utilize.

Entergy's load and capacity projections are reviewed periodically to assess the need and timing for additional generating capacity and interconnections inlight of the availability and price of power, the location of new loads, and economy. Peak load in the U.S. Utility service territory is typically around 21,000MW, with minimum load typically around 9,000 MW. Allowing for an adequate reserve margin, Entergy has been short approximately 3,000 MW during thesummer peak load period, which until recently it made up almost entirely with purchases from the spot market as needed. In the fall of 2002, Entergy begana process of issuing requests for proposal for supply-side resources. The first request for proposal sought resources to meet both the domestic utilitycompanies' summer 2003 and longer-term resource needs through a broad range of wholesale power products, including short-term (less than one year),limited-term (1 to 3 years) and long-term contractual products and asset acqui sitions. The following table illustrates the results of the request for proposalprocess for limited and short-term products. All of the signed contracts were with non-affiliates, with the exception of 185 MW from RS Cogen contractedthrough the Fall 2002 request for proposal.

Selectedfor

Negotiation

ContractsSigned

Notes Fall 2002 550 MW 425 MW Limited-term resources contracted. Entergy

Services also pursued discussions with several

bidders for life-of-unit purchased poweragreements or the acquisition of an ownershipinterest in existing generating facilities. Thesenegotiations resulted in the Perryville acquisitionagreement, discussed below.

Supplemental 2002 500 MW 220 MW Short-term purchase for the summer 2003. Spring 2003 380 MW 380 MW Limited-term resources contracted. Entergy

Services continues to evaluate five short-listedlong-term resource proposals received in responseto the Spring 2003 Request for Proposals and iscurrently pursuing due diligence efforts andadditional discussions with these bidders.

Fall 2003 390 MW 390 MW Two separate resources contracted for a term of

three years with deliveries to begin in the summerof 2004.

In January 2004, Entergy Louisiana signed an agreement to acquire the 718 MW Perryville power plant for $170 million. The plant is owned by a subsidiaryof Cleco Corporation, which subsidiary submitted a bid in response to Entergy's Fall 2002 request for proposals for supply-side resources. The signing of theagreement followed a voluntary Chapter 11 bankruptcy filing by the plant's owner. Entergy expects that Entergy Louisiana will own 100 percent of thePerryville plant, and that Entergy Louisiana will sell 75 percent of the output to Entergy Gulf States under a long-term cost-of-service power purchaseagreement. The purchase of the plant, expected to be completed by December 2004, is contingent upon obtaining necessary approvals from the bankruptcycourt and from state and federal regulators, including approval of full cost recovery, giving consideration to the need for the power and the prudence ofEntergy Louisiana and Entergy Gulf States for engaging in the transaction. In a ddition, Entergy Louisiana and Entergy Gulf States executed an interimpower purchase agreement with the plant's owner through the date of the acquisition's closing (so long as that occurs by September 2005) for 100 percent ofthe output of the Perryville plant.

In addition to the purchases from non-affiliates shown above, Entergy Louisiana, Entergy New Orleans, and Entergy Arkansas made filings with theirrespective retail regulators as a result of the proposal process seeking approval to enter into transactions with affiliates as shown in the following table:

Company Proposed Transactions Status of Approval inRetail Jurisdiction

EntergyLouisiana

1. Purchased a 140 to 156 MW capacity purchase calloption from RS Cogen for June 2003 through April2006

2. Entered a life-of-unit purchase power agreement(PPA) to purchase approximately 51MW (increasingto 61 MW in 2010) of output from Entergy Power'sshare of Independence 2

3. Enter a life-of-unit PPA with Entergy Gulf States topurchase two-thirds of the output of the 30% of RiverBend formerly owned by Cajun (approximately 200MW)

4. Enter a life-of-resources PPA with Entergy Arkansasto purchase approximately 110 MW of capacity notincluded in Entergy Arkansas' retail rate base,consisting of a portion of the output from ANO,White Bluff, Independence, and Entergy Arkansas'share of Grand Gulf.

The LPSC foundcontracts 1) and 2) tobe prudent andauthorized EntergyLouisiana to executethese contracts. LPSChearing on proposals 3)and 4) is scheduled inMarch 2004.

Entergy NewOrleans

1. Purchased a 45 to 50 MW capacity purchase calloption from RS Cogen for June 2003 through April2006

2. Entered a life-of-unit PPA to purchase approximately50 MW (increasing to 60 MW in 2010) of outputfrom Entergy Power's share of Independence 2

3. Entered a life-of-unit PPA with Entergy Gulf Statesto purchase one-third of the output of the 30% ofRiver Bend formerly owned by Cajun (approximately100 MW)

4. Entered a life-of-resources PPA with EntergyArkansas to purchase approximately 110 MW ofcapacity not included in Entergy Arkansas' retail ratebase, consisting of a portion of the output from ANO,White Bluff, Independence, and Entergy Arkansas'share of Grand Gulf.

In May 2003, inconnection with thesettlement relating toEntergy New Orleans'cost-of-service studyand revenuerequirement, the CityCouncil authorizedEntergy New Orleansto enter into contractsfor the proposedtransactions. SeeManagement'sFinancial Discussionand Analysis foradditional discussion ofthe rate settlement.

EntergyArkansas

1. Enter into the life-of-resources PPAs to sell power asdiscussed in both Entergy Louisiana's and EntergyNew Orleans' proposal 4) above.

In May 2003, theAPSC found the PPAsinvolving EntergyArkansas in the publicinterest. The orderreserved a second

phase of the proceedingto identify appropriatecustomer protectionmechanisms.

Entergy also filed with the FERC the affiliate agreements described above. In May 2003, the FERC accepted the agreements for filing, subject to refund,with the contracts becoming effective on June 1, 2003. The FERC also established a hearing process to review the justness and reasonableness of theagreements. Several parties have intervened or filed protests regarding the request-for-proposals process and the agreements filed with the FERC, and theproceeding is set for hearing in June 2004.

In October 2003, the LPSC approved on an interim basis a method of calculating the avoided cost payments for energy that Entergy Gulf States and EntergyLouisiana make to qualified facilities pursuant to PURPA. Up to 2,220 MW of qualifying facility power is now being put to Entergy in Louisiana, much of itduring off-peak periods when wholesale power prices are typically lower than the avoided cost price calculated under the prior method for that same hour.On an interim basis, the LPSC approved calculating the payments in a manner that more accurately reflects the market price of energy. The LPSC-approvedcalculation is expected to reduce the amount that Entergy Gulf States and Entergy Louisiana customers pay for fuel and purchased power. Entergy's RSCogen joint venture operates a qualified facility, and management expects its results to be negatively affected by the LPSC-approved calculation. During theinterim period, the LPSC will require Entergy to keep r ecords of the required payments calculated under both the interim method and the previous method,and if the LPSC decides to go back to the previous methodology, additional payments to the qualified facilities will be required. If such additional paymentsare required to be made, they will be recoverable through the fuel adjustment charges billed by Entergy Gulf States and Entergy Louisiana to their retailcustomers.

Interconnections

Entergy's generating units are interconnected by a transmission system operating at various voltages up to 500 kV. These generating units consist primarilyof steam-electric production facilities and are centrally dispatched and operated. Entergy's domestic utility companies are interconnected with manyneighboring utilities. In addition, the domestic utility companies are members of the Southeastern Electric Reliability Council. The primary purpose ofSERC is to ensure the reliability and adequacy of the electric bulk power supply in the southeast region of the United States. SERC is a member of the NorthAmerican Electric Reliability Council.

Gas Property

As of December 31, 2003, Entergy New Orleans distributed and transported natural gas for distribution solely within New Orleans, Louisiana, through atotal of 33 miles of gas transmission pipeline, 1,482 miles of gas distribution pipeline, and 1,031 miles of gas service pipeline from the distribution mains tothe customers. As of December 31, 2003, the gas properties of Entergy Gulf States, which are located in and around Baton Rouge, Louisiana, were notmaterial to Entergy Gulf States' financial position.

Titles

Entergy's generating stations and major transmission substations are generally located on properties owned in fee simple. Most of the transmission anddistribution lines are constructed over private property or public rights-of-way pursuant to easements or appropriate franchises. The domestic utilitycompanies generally have the right of eminent domain, whereby they may perfect title to, or secure easements or servitudes on, private property for theirutility operations.

Substantially all of the physical properties and assets owned by Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy are subject tothe liens of mortgages securing the first mortgage bonds of such company. The Lewis Creek generating station is owned by GSG&T, Inc., a subsidiary ofEntergy Gulf States, and is not subject to the lien of the Entergy Gulf States mortgage securing its first mortgage bonds. Lewis Creek is leased to andoperated by Entergy Gulf States. All of the debt outstanding under the original first mortgages of Entergy Mississippi and Entergy New Orleans is retiredand original first mortgages cancelled. As a result, the general and refunding mortgages of Entergy Mississippi and Entergy New Orleans constitute a firstmortgage lien on substantially all of the respective physical properties and assets of these two companies.

Fuel Supply

The generation portfolio of the U.S. Utility contains a high percentage of natural gas and nuclear generation. The sources of generation and average fuel costper kWh for the domestic utility companies and System Energy for the years 2001-2003 were:

Natural Gas Fuel Oil Nuclear Fuel Coal

Year

%of

Gen

CentsPer

kWh

%of

Gen

CentsPer

kWh

%of

Gen

CentsPer

kWh

%of

Gen

CentsPer

kWh 2003 26 6.53 4 5.04 52 .48 18 1.262002 39 3.88 - 15.78 46 .47 15 1.372001 34 4.62 8 4.33 43 .50 15 1.58

Actual 2003 and projected 2004 sources of generation for the domestic utility companies and System Energy, including proposed power purchases fromaffiliates under power purchase agreements in 2004, are:

Natural Gas Fuel Oil Nuclear Coal 2003 2004 2003 2004 2003 2004 2003 2004 Entergy Arkansas (a) 2% - - - 64% 66% 34% 33%Entergy Gulf States 44% 31% 1% - 36% 40% 19% 29%Entergy Louisiana 43% 35% 5% 2% 51% 61% 1% 2%Entergy Mississippi 22% 12% 31% 27% - - 47% 61%Entergy NewOrleans

65% 47% - - 24% 38% 11% 15%

System Energy - - - - 100%(b) 100%(b) - -

U.S. Utility (a) 26% 18% 4% 2% 52% 59% 18% 21%

(a) Hydroelectric power provided less than 1% of Entergy Arkansas' generation in 2003 and isexpected to provide approximately 1% of its generation in 2004.

(b) Capacity and energy from System Energy's interest in Grand Gulf 1 was historically allocatedas follows: Entergy Arkansas - 36%; Entergy Louisiana - 14%; Entergy Mississippi - 33%; andEntergy New Orleans - 17%. Pursuant to the approval of power purchase agreements, EntergyArkansas is selling a portion of its owned capacity and energy from Grand Gulf 1 to EntergyLouisiana and Entergy New Orleans.

Natural Gas

The domestic utility companies have long-term firm and short-term interruptible gas contracts. Long-term firm contracts comprise less than 26% of thedomestic utility companies' total requirements but can be called upon, if necessary, to satisfy a significant percentage of the utility companies' needs. Short-term contracts and spot-market purchases satisfy additional gas requirements. Entergy Gulf States has a transportation service agreement with a gas supplierthat provides flexible natural gas service to certain generating stations by using such supplier's pipeline and gas storage facility.

Many factors, including wellhead deliverability, storage and pipeline capacity, and demand requirements of end users, influence the availability and price ofnatural gas supplies for power plants. Demand is tied to weather conditions as well as to the prices of other energy sources. Entergy's supplies of natural gasare expected to be adequate in 2004. However, pursuant to federal and state regulations, gas supplies to power plants may be interrupted during periods ofshortage. To the extent natural gas supplies are disrupted or natural gas prices significantly increase, the domestic utility companies will use alternate fuels,such as oil, or rely to a larger extent on coal, nuclear generation, and purchased power.

Coal

Entergy Arkansas has a long-term contract for low-sulfur Wyoming coal for Independence. This contract, which expires in 2011, provides for approximately90% of Independence's expected coal requirements for 2004. Entergy Arkansas has entered into three medium term (three year) contracts for approximately52% of White Bluff's coal supply needs. These contracts are staggered in term so that one is renewed every year. Entergy Arkansas has an additional 20% ofits 2004 coal requirement committed in a number of one- to two-year contracts. Additional coal requirements for both Independence and White Bluff aresatisfied by spot market or over the counter purchases. Additionally, Entergy Arkansas has a long-term railroad transportation contract for the delivery ofcoal to both White Bluff and Independence that expires in 2011. A second carrier now delivers a portion of White Bluff's coal requirements under a long-term transportation agre ement that began in 2002 and expires on December 31, 2006.

Entergy Gulf States has a test burn agreement for the supply of low-sulfur Wyoming coal for Nelson Unit 6. The company is negotiating with this supplierfor an agreement that would be sufficient to satisfy its 2004 requirements for that unit at current consumption rates. The operator of Big Cajun 2, Unit 3,Louisiana Generating LLC, has advised Entergy Gulf States that it has coal supply and transportation contracts that should provide an adequate supply ofcoal for the operation of Big Cajun 2, Unit 3 for the foreseeable future. Additionally, Entergy Gulf States has transportation requirements contracts withrailroads to deliver coal to Nelson Unit 6 through December 31, 2004. Each of the two contracts governs the movement of about half of the plant'srequirements and the base contract provides flexibility for shipping up to all of the plant's requirements.

Nuclear Fuel

The nuclear fuel cycle consists of the following:

mining and milling of uranium ore to produce a concentrate;

conversion of the concentrate to uranium hexafluoride gas;

enrichment of the hexafluoride gas;

fabrication of nuclear fuel assemblies for use in fueling nuclear reactors; and

disposal of spent fuel.

System Fuels, a company owned by Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans, is responsible for contracts toacquire nuclear material to be used in fueling Entergy's utility nuclear units, except for River Bend. System Fuels also maintains inventories of suchmaterials during the various stages of processing. The domestic utility companies purchase enriched uranium hexafluoride from System Fuels, but contractseparately for the fabrication of their own nuclear fuel. The requirements for River Bend are met pursuant to contracts made by Entergy Gulf States.

Based upon currently planned fuel cycles, Entergy's nuclear units have contracts and inventory that provide adequate materials and services. Existingcontracts for uranium concentrate, conversion of the concentrate to uranium hexafluoride, and enrichment of the uranium hexafluoride will provide asignificant percentage of these materials and services over the next several years. Uranium market supply became much tighter in 2003 and early 2004 thanthat in previous years. Costs and risks of obtaining supplies have increased for nuclear fuel users. It will be necessary for Entergy to enter into additionalarrangements to acquire nuclear fuel in the future. It is not possible to predict the ultimate cost of such arrangements.

Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy each have made arrangements to lease nuclear fuel and related equipmentand services. The lessors finance the acquisition and ownership of nuclear fuel through credit agreements and the issuance of notes. These arrangements aresubject to periodic renewal. See Note 10 to the domestic utility companies and System Energy financial statements for a discussion of nuclear fuel leases.

Natural Gas Purchased for Resale

Entergy New Orleans has several suppliers of natural gas. Its system is interconnected with three interstate and three intrastate pipelines. Entergy NewOrleans' primary suppliers currently are Bridgeline Gas Distributors and Louisiana Gas Services. Entergy New Orleans has a "no-notice" service gaspurchase contract with Bridgeline Gas Marketing, LLC which guarantees Entergy New Orleans gas delivery at specific delivery points and at any volumewithin the minimum and maximum set forth in the contract amounts. The Bridgeline Gas Marketing, LLC gas supply is transported to Entergy New Orleanspursuant to a transportation service agreement with Entergy-Koch's Gulf South Pipeline Co. This service is subject to FERC-approved rates. Entergy NewOrleans has firm contracts with its two intrastate suppliers and also makes interruptible spot market purchases. In recent years, natural gas deliveries toEntergy New Orleans have been subject primarily to weather-related curtailments. However, E ntergy New Orleans experienced no such curtailments in2003.

As a result of the implementation of FERC-mandated interstate pipeline restructuring in 1993, curtailments of interstate gas supply could occur if EntergyNew Orleans' suppliers failed to perform their obligations to deliver gas under their supply agreements. Gulf South Pipeline could curtail transportationcapacity only in the event of pipeline system constraints. Based on the current supply of natural gas, and absent extreme weather-related curtailments,Entergy New Orleans does not anticipate any interruptions in natural gas deliveries to its customers.

Entergy Gulf States purchases natural gas for resale under a firm contract from Enbridge Marketing (U.S.) Inc. (formerly Mid Louisiana Gas Company)entered into September 2002 spanning five years. The contract will continue annually at the end of the term unless prior notice is given by Entergy GulfStates.

Wholesale Rate Matters

State or local regulatory authorities, as described above, regulate the retail rates of Entergy's domestic utility companies. FERC regulates wholesale rates(including intrasystem sales pursuant to the System Agreement) and interstate transmission of electricity, as well as rates for System Energy's sales ofcapacity and energy from Grand Gulf 1 to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans pursuant to the Unit PowerSales Agreement.

System Agreement (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, andSystem Energy)

The domestic utility companies historically have engaged in the coordinated planning, construction, and operation of generation and transmission facilitiespursuant to the terms of the System Agreement. Under the terms of the System Agreement, generating capacity and other power resources are jointlyoperated by the domestic utility companies. The System Agreement provides, among other things, that parties having generating reserves greater than theirload requirements (long companies) shall receive payments from those parties having deficiencies in generating reserves (short companies). Such paymentsare at amounts sufficient to cover certain of the long companies' costs for intermediate and peaking oil/gas-fired generation, including operating expenses,fixed charges on debt, dividend requirements on preferred stock, and a fair rate of return on common equity investment. Under the System Agreement, thesecharges are based on costs associated with the long companies' steam electric generating units fueled by oil or gas. In addition, for all energy exchangedamong the domestic utility companies under the System Agreement, the companies purchasing exchange energy are required to pay the cost of fuelconsumed in generating such energy plus a charge to cover other associated costs.

In June 2001, the domestic utility companies, the LPSC, and the City Council filed the following amendments to the System Agreement pursuant to asettlement agreement:

the Texas retail jurisdictional division of Entergy Gulf States will terminate its participation in the System Agreement, except for the aspectsrelated to transmission equalization, when Texas implements retail open access for Entergy Gulf States, and that division will sell up to five

percent of its generation to those other domestic utility companies who choose to purchase their share of the five percent; and

the service schedule developed to track changes in energy costs resulting from the Entergy-Gulf States Utilities merger is modified to includeone final true-up of fuel costs when the Texas retail jurisdictional division of Entergy Gulf States ceases participation in the System Agreement,

after which the service schedule will no longer be applicable for any purpose.

The LPSC and the City Council commenced a proceeding at FERC in June 2001. Pursuant to a settlement agreement approved by the City Council in May2003, the City Council withdrew as a complainant from the proceeding, but continues to participate as an intervenor. In this proceeding, the LPSC allegesthat the rough production cost equalization required by FERC under the System Agreement and the Unit Power Sales Agreement has been disrupted bychanged circumstances. The LPSC requests that FERC amend the System Agreement or the Unit Power Sales Agreement or both to achieve full productioncost equalization or to restore rough production cost equalization. The complaint does not seek a change in the total amount of the costs allocated by eitherthe System Agreement or the Unit Power Sales Agreement. In addition the LPSC alleges that provisions of the System Agreement relating to minimum-runand must-run units, the methodology of billing versus dispatch, and the use of a rolling twelve-mont h average of system peaks (12 CP), increase costs paidby ratepayers in the LPSC's jurisdiction. Several parties intervened in the proceeding, including the APSC and the MPSC. The APSC and the MPSCresponses opposed the relief sought by the LPSC.

In its complaint, the LPSC alleges that the domestic utility companies' annual production costs over the period 2002 to 2007 will be over or (under) theaverage for the domestic utility companies by the following amounts:

Entergy Arkansas ($130) to ($278) millionEntergy Gulf States -Louisiana

$11 to $87 million

Entergy Louisiana $139 to $132 millionEntergy Mississippi ($27) to $13 millionEntergy New Orleans $7 to $46 million

This range of results is a function of assumptions regarding such things as future natural gas prices, the future market price of electricity, and other factors. IfFERC grants the relief requested by the LPSC, the relief may result in a material increase in production costs allocated to companies whose costs currentlyare projected to be less than the average and a material decrease in production costs allocated to companies whose costs currently are projected to exceed theaverage. Management believes that any changes in the allocation of production costs resulting from a FERC decision should result in similar rate changesfor retail customers. Therefore, management does not believe that this proceeding will have a material effect on the financial condition of any of thedomestic utility companies, although the outcome of the proceeding at FERC cannot be predicted at this time.

In February 2002, the FERC established a refund effective period for the proceeding consisting of the 15 months following September 13, 2001. Asubsequent extension of the procedural schedule extended the refund effective period by 120 days.

In January 2003, the domestic utility companies filed testimony in the case, showing that over the life of the System Agreement the relative total productioncosts of the domestic utility companies are roughly equal, and suggesting that no changes to the System Agreement such as those sought by the LPSC areappropriate. In April 2003, witnesses on behalf of the FERC staff filed testimony in the proceeding suggesting that full production cost equalization shouldnot be adopted by the FERC in this case, and that when measured over a suitably long period, the total production costs of the domestic utility companieswere roughly equal and were likely to remain so, given the Entergy System's proposed resource plan. Hearings in the proceeding ended in late-August 2003.The Initial Decision of the FERC ALJ was released on February 6, 2004. The ALJ concludes that full production cost equalization should not beimplemented; that the Entergy System currently is not in rough production cost equali zation and is not likely to be in rough production cost equalization forthe foreseeable future; and that the appropriate remedy to achieve rough equalization is to have the low cost companies compensate the high cost companieswhenever one or more companies' annual total production costs from 2003 forward differ by more than +/- 7.5% from the Entergy System average annualtotal production costs, or whenever the three year average of one or more companies' total production costs (commencing with the three years 2004 through2006, and yearly thereafter) differ by more than +/- 5% from the Entergy System average total production costs during any three year cycle. In the

calculation of what each company's total production costs are, the ALJ determined that the full cost of Vidalia project power purchases by Entergy Louisianashould be included, but the ALJ rejected other adjustments proposed by the LPSC. Also, the ALJ determined that the average of the four highest monthlydemand peaks for the year (4 CP) sho uld be used for calculating reserve sharing costs, rather than the current 12 CP method. Finally, the ALJ determinedthat there is no valid issue concerning "billing versus dispatch" in the rate schedule by which exchange energy is priced, MSS-3, that MSS-3 has not beenmisapplied or misinterpreted by Entergy, and that MSS-3 should not be changed. The ALJ's Initial Decision did not specifically address refund exposure.

Entergy continues to assess the potential effects of the ALJ's Initial Decision, and how it will respond to the decision. It appears that the shift in totalproduction costs under the terms of the ALJ's Initial Decision would not be as great as that sought in the LPSC's complaint, but would still be substantial. Asan Initial Decision, it is not a FERC order, and Entergy and the other parties in the proceeding will have additional opportunities to explain their positions inthe proceeding prior to the issuance of a FERC decision. FERC does not have a deadline by which it has to decide the proceeding and management does notexpect a FERC decision before the fourth quarter 2004.

On February 10, 2004, the APSC issued an "Order of Investigation," in which it discusses the negative effect that implementation of the FERC ALJ's InitialDecision would have on Entergy Arkansas' customers. The APSC order includes a preliminary estimate that the FERC ALJ's Initial Decision would shiftapproximately $125 million of costs for the year 2003 to Entergy Arkansas' retail customers, and would shift an average of approximately $113 million peryear for the years 2004-2011 to Entergy Arkansas' retail customers. The APSC order establishes an investigation into whether Entergy Arkansas' continuedparticipation in the System Agreement is in the best interest of its customers, and whether there are steps that Entergy Arkansas or the APSC can take "toprotect [Entergy Arkansas' customers] from future attempts by Louisiana, or any other Entergy retail regulator, to shift its high costs to Arkansas." EntergyArkansas' initial testimony in the proceeding is due in April 2004.


The LPSC instituted a companion ex-parte System Agreement investigation to litigate several of the System Agreement issues that the LPSC is litigatingbefore the FERC in the previously discussed System Agreement proceeding. This companion proceeding will require the LPSC to interpret variousprovisions of the System Agreement, including those relating to minimum-run and must-run units, the propriety of the methods used for billing and dispatchon the Entergy System, and the use of a rolling, twelve-month average of system peaks for allocating certain costs. In addition, by this companionproceeding the LPSC is questioning whether Entergy Louisiana and Entergy Gulf States were prudent for not seeking changes to the System Agreementpreviously, so as to lower costs imposed upon their ratepayers and to increase costs imposed upon ratepayers of other domestic utility companies. The LPSCstaff has filed testimony suggesting that the remedy for the alleged imprudence of Entergy Louisiana and Entergy Gulf States should be a reduction inallowed rate of return on common equity of 100 basis points. The domestic utility companies have challenged the propriety of the LPSC's litigating SystemAgreement issues. Nevertheless, on January 16, 2002 the LPSC affirmed a decision of its ALJ upholding the LPSC staff's right to litigate System Agreementissues at the LPSC, rather than before the FERC. The procedural schedule is suspended at this time and an evidentiary hearing is not scheduled. Anunrelated case between the LPSC and Entergy Louisiana raised the question of whether a state regulator is pre-empted by federal law from reviewing andinterpreting FERC rate schedules that are part of the System Agreement, and from subsequently enforcing that interpretation. The LPSC interpreted aSystem Agreement rate schedule in the unrelated case, and then sought to enforce its interpretation. The Louisiana Supreme Court affirmed. In 2003, theU.S. Supreme Court ruled in Entergy Louisiana's favor and rev ersed the decisions of the LPSC and the Louisiana Supreme Court.

Transmission

In 2000, FERC issued an order encouraging utilities to voluntarily place their transmission facilities under the control of independent RTOs (regionaltransmission organizations) by December 15, 2001. Delays in implementing the FERC order have occurred due to a variety of reasons, including the factthat utility companies, other stakeholders, and federal and state regulators continue to work to resolve various issues related to the establishment of suchRTOs. Entergy's domestic utility companies were participating with other transmission owners within the southeastern United States to establish an RTO, theproposed SeTrans RTO, but the sponsors determined that the regulatory approvals necessary for the development of the SeTrans RTO were unlikely to beobtained at the present time and in December 2003 suspended further development activity. Although SeTrans development is suspended, Entergy continuesto focus its efforts on reforms that can further the core objectives of FERC's 2000 ord er: achieving greater independence in the provision of transmissionservice and a more efficient method of pricing that service. Entergy intends to work with FERC and Entergy's retail regulators on certain voluntary steps tofurther those objectives.

As currently contemplated, and assuming applicable regulatory support and approvals can be obtained, Entergy plans to contract with an independenttransmission entity to oversee the granting of transmission service on the Entergy system as well as the implementation of the weekly procurement processthat Entergy has proposed. Entergy will submit to the FERC for its approval the proposed contract setting forth the independent entity's duties andobligations as well as other documents necessary to implement this proposed structure. The proposed structure does not transfer control of Entergy'stransmission system to the independent entity, but rather will vest with the independent entity broad oversight authority over transmission planning andoperations.

Entergy also intends that the independent transmission entity will administer a transition to participant funding that should increase the efficiency oftransmission pricing on the Entergy system. Entergy intends for the independent transmission entity to determine whether transmission upgrades associatedwith new requests for service should be funded directly by the party requesting such service or by a broader group of transmission customers. Thisdetermination would be made in accordance with protocols approved by the FERC and any party contesting such determination, including Entergy, would berequired to seek review at the FERC.

On February 13, 2004 a group of ten market participants filed with the FERC a response to the announcement that the SeTrans sponsors had suspendedfurther development efforts. In their response, the participants allege that absent the SeTrans RTO the dominant utilities in the Southeastern United States(Entergy and Southern) will continue to maintain control over the transmission system and will continue to have the ability to exercise market power in thewholesale market. The market participants urge the FERC to: (1) order Entergy and Southern to immediately turn over control of their OASIS system to anindependent entity; (2) initiate a formal investigation into competitive conditions in the Southeastern United States; (3) issue a show cause order regardingrevocation of Entergy's and Southern's market-based rate authority; and (4) either order Entergy and Southern into an RTO or initiate proceedings to appointa market monitor and conduct various audits of Entergy's and Southern's pr actices and procedures related to the granting of transmission service and theplanning of the transmission system. Entergy believes that the allegations contained in the response are without merit and plans to vigorously defend itself.See additional discussion related to this issue in the FERC's Supply Margin Assessment section below.

In September 2001, the LPSC ordered Entergy Gulf States and Entergy Louisiana to show cause as to why these companies should not be enjoined fromtransferring their transmission assets, or control of those transmission assets, to an ITC (independent transmission company), RTO, or any similarorganization, asserting that FERC does not have jurisdiction to mandate an ITC or RTO. This proceeding is pending.

FERC's Supply Margin Assessment

In November 2001, FERC issued an order that established a new generation market power screen (called Supply Margin Assessment) for purposes ofevaluating a utility's request for market-based rate authority, applied that new screen to the Entergy System (among others), determined that Entergy and theothers failed the screen within their respective control areas, and ordered these utilities to implement certain mitigation measures as a condition to theircontinued ability to buy and sell at market-based rates. Among other things, the mitigation measures would require that Entergy transact at cost-based rateswhen it is buying or selling in the hourly wholesale market within its control area. Entergy requested rehearing of the order, and FERC has delayed theimplementation of certain mitigation measures until such time as it has had the opportunity to consider the rehearing request. In June 2003, the FERCproposed and ultimately adopted new market behavior rules and tariff provisions that would be applied to any market-based sale. Entergy modified itsmarket-based rate tariffs to reflect the new provisions but has requested rehearing of FERC's order. Additionally, during December 2003 the FERCannounced it was holding additional technical conferences on proposed modifications to its Supply Margin Assessment screen. Two technical conferenceswere held during January 2004. Entergy has filed comments in this proceeding urging the FERC to rely on an "uncommitted capacity" version of any marketscreen in order to reflect a utility's native load obligations. It is Entergy's belief that cost-based regulation effectively mitigates both the ability and theincentive to exercise market power to the extent of the native load obligations. A FERC rule on Supply Margin Assessment could be issued by the end ofMarch 2004.

Separately, Entergy-Koch Trading filed its triennial market power update on January 26, 2004. Three market participants intervened and urged the FERC toreject Entergy-Koch Trading's triennial update and terminate Entergy-Koch Trading's, the domestic utility companies', and their affiliates' market-based rateauthority for sales within the Entergy control area unless and until adequate mitigation measures have been implemented. If the FERC were to revokeEntergy-Koch Trading's, the domestic utility companies', and their affiliates' market based rate authority for wholesale sales within the Entergy control area,these entities would be limited to making wholesale sales pursuant to cost-based rate schedules approved by the FERC. Entergy's wholesale sales within itscontrol area could be cost-justified and the wholesale electricity sales of Entergy-Koch Trading within Entergy's control area are of a limited amount;therefore management does not believe that the revocation of market-based r ate authority would have a material effect on the financial results of Entergy. Inspite of this, Entergy intends to vigorously defend its market-based rate authority.

In a separate, but related proceeding, in December 2003, the FERC determined that the acquisition by Oklahoma Gas & Electric (OG&E) of a generatingfacility within its control area from a non-affiliated entity would undermine competition and was, accordingly, not consistent with the public interest. Basedon this conclusion, the FERC then set the matter for hearing to determine what mitigation remedies would be necessary to address the market power issues.The FERC's determination that the acquisition would raise market power concerns was premised on an analysis that relied on OG&E's total capacity, not itsuncommitted capacity. This proceeding, and the FERC's ultimate ruling, could significantly affect a utility's ability to acquire needed non-affiliatedgeneration resources in its service territory, such as the pending purchase of the Perryville power plant by Entergy Louisiana.

Interconnection Orders

In January 2003, the FERC issued two orders in proceedings involving Interconnection Agreements between each of the domestic utility companies (exceptEntergy New Orleans) and certain generators interconnecting to the domestic utility companies' transmission system. In the orders, the FERC authorized thegenerators to abrogate certain provisions of the interconnection agreements in order to avail themselves of new FERC policies developed after thegenerators' execution of the agreements. Under the FERC's orders, capital costs that the generators had agreed to bear will now be shifted to Entergy's nativeload and other transmission customers. Other generators that previously had executed interconnection agreements agreeing to bear similar costs have alsofiled complaints to obtain the same or similar relief against the domestic utility companies. In the event that the generators that have interconnected to theEntergy transmission system are successful in obtaining such relief, it i s estimated that approximately $280 million of costs will be shifted from theinterconnecting generators to the domestic utility companies' other transmission customers, including the domestic utility companies' bundled-rate retailcustomers. Entergy intends to pursue all regulatory and legal avenues available to it in order to have these orders reversed, and the affected interconnectionagreements reinstated as agreed to by the generators. The domestic utility companies had appealed previously to the Court of Appeals for the D.C. Circuitthe FERC orders initially establishing the new FERC policy that was applied retroactively in the January orders. In the orders currently pending before theD.C. Circuit, the FERC had applied the new policy on a prospective basis. In an opinion issued in February 2003, the D.C. Circuit denied Entergy's petitionfor review in one proceeding, concluding that the FERC had not acted in an arbitrary and capricious manner when it changed its policy from that of directlyassign ing certain interconnection costs to the generator to a policy in which those costs are borne by all customers on the domestic utility companies'transmission system. A related proceeding concerning a similar change in policy for another segment of interconnection costs is still pending before the D.C.Circuit.

In July 2003, the FERC issued its final rule on the standardization of generation interconnection agreements and procedures (Order 2003). Among otherthings, Order 2003 incorporates pricing policies that require the transmission provider's other customers to bear the vast majority of costs required when anew generator interconnects to its transmission system or requests transmission upgrades necessary for the generator to be considered a network resource forload serving entities within the transmission provider's control area. Order 2003 also requires that generators that fund upgrades receive their money back,with interest, in no more than five years. Order 2003, which the FERC has indicated is to be applied only to prospective interconnection agreements, becameeffective on January 20, 2004. Consistent with their past practices, the generators that had previously executed interconnection agreements with Entergy andthat have transmission credits outstanding have filed complaints at the FERC seeking to avail themselves of the more beneficial crediting aspects of theFERC's final rule. Entergy has opposed such relief and the proceedings are pending. On March 5, 2004, the FERC voted out an order on rehearingresponding to certain issues raised with respect to Order 2003. While management is still analyzing the order on rehearing, it appears that the FERC hasmodified Order 2003 to, among other things, eliminate the requirement that the generators receive their money back in no more than five years and include arequirement that the generators receive credits only when transmission service is taken from the specific generating facility served by the interconnection orupgrade. Because the order on rehearing was just issued, however, management's analysis of the effects of the order is ongoing.

FERC Notice of Proposed Rulemaking - Standard Market Design

In July 2002, FERC issued a notice of proposed rulemaking to establish a standardized transmission service and wholesale electric market design (SMDNOPR). The proposed rule would have required, among other things, that all transmission owners turn control of their facilities over to an independenttransmission provider. Comments on the proposed rule were filed in 2002 and 2003. Several technical conferences on the issues contained in the SMDNOPR were also held during November and December 2002. Certain retail regulators within Entergy's service territory expressed opposition to the proposedrulemaking. In a letter sent to the Chairman of the FERC, retail regulators from Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, North CarolinaSouth Carolina, Tennessee, and Virginia expressed their belief that an "incremental and voluntary approach" to RTO formation and wholesale marketdevelopment is necessary and appropriate for the Southeast. In the letter, the retail regulators identified certain threshold issues that FERC must commit to(including, among other things, that the FERC would not assert jurisdiction over the transmission component of bundled retail service, that native loadcustomers would retain the same or equivalent rights to use the transmission system as they have today, the immediate implementation of participantfunding, and that RTO formation should be supported by evidence that the costs of RTO formation are outweighed by the benefits) prior to further detaileddiscussions between the FERC and retail regulators concerning the development of RTOs and SMD. A similar letter was submitted separately by retailregulators from Mississippi. In response to the comments received by all market participants, in April 2003 the FERC issued a white paper on the SMDissues. While the white paper responded to many of the concerns raised by members of the industry as well as the retail regulators, the white paper continuedto require u tilities to turn control of their transmission system over to an independent entity and did not eliminate the jurisdictional issues raised by such atransfer of control.

Additionally, in November 2003, the FERC issued an order making a preliminary finding that "the laws, rules, and regulations of Virginia and Kentucky arepreventing AEP from fulfilling both its voluntary commitment in 1999, as part of merger proceedings, to join an RTO and its application to join an RTOpursuant to the Commission's Order No. 2000" and that, pursuant to Section 205(a) of the Public Utility Regulatory Policies Act (PURPA), the Commission"may exempt AEP from those provisions of Kentucky and Virginia law or rule or regulation." Based on these preliminary findings, the FERC then set thematter for hearing. A hearing was held in late January/early February 2004 and the Administrative Law Judge is scheduled to issue his initial decision duringMarch 2004.

Separately, the conference report on the Fiscal Year 2003 Omnibus Appropriations bill signed into law contains language directing the Department ofEnergy to prepare an independent analysis of the effect of the proposed SMD rule on wholesale and retail electric prices, the safety and reliability ofgeneration and transmission facilities, and state utility regulation.

System Energy and Related Agreements

System Energy recovers costs related to its interest in Grand Gulf 1 through rates charged to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, andEntergy New Orleans for capacity and energy under the Unit Power Sales Agreement (described below). In December 1995, System Energy implemented a$65.5 million rate increase, subject to refund. In July 2001, the rate increase proceeding became final, with FERC approving a prospective 10.94% return onequity, which is less than System Energy sought. FERC's decision also affected other aspects of System Energy's charges to the domestic utility companiesthat it supplies with power. In 1998, FERC approved requests by Entergy Arkansas and Entergy Mississippi to accelerate a portion of their Grand Gulfpurchased power obligations. Entergy Arkansas' and Entergy Mississippi's acceleration of Grand Gulf purchased power obligations ceased effective July2001 and July 2003, respectively, as approve d by FERC.

Unit Power Sales Agreement

The Unit Power Sales Agreement allocates capacity, energy, and the related costs from System Energy's 90% ownership and leasehold interests in GrandGulf 1 to Entergy Arkansas (36%), Entergy Louisiana (14%), Entergy Mississippi (33%), and Entergy New Orleans (17%). Each of these companies isobligated to make payments to System Energy for its entitlement of capacity and energy on a full cost-of-service basis regardless of the quantity of energydelivered, so long as Grand Gulf 1 remains in commercial operation. Payments under the Unit Power Sales Agreement are System Energy's only source ofoperating revenue. The financial condition of System Energy depends upon the continued commercial operation of Grand Gulf 1 and the receipt of suchpayments. Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans generally recover payments made under the Unit PowerSales Agreement through rates charged to their customers.

In the case of Entergy Arkansas and Entergy Louisiana, payments are also recovered through sales of electricity from their respective retained shares ofGrand Gulf 1. Under a settlement agreement entered into with the APSC in 1985 and amended in 1988, Entergy Arkansas retains 22% of its 36% share ofGrand Gulf 1-related costs and recovers the remaining 78% of its share in rates. In the event that Entergy Arkansas is not able to sell its retained share tothird parties, it may sell such energy to its retail customers at a price equal to its avoided cost, which is currently less than Entergy Arkansas' cost from itsretained share. Entergy Arkansas has life-of-resources purchased power agreements with Entergy Louisiana and Entergy New Orleans pending regulatoryapprovals that sell the output of Entergy Arkansas' retained share of Grand Gulf to those companies. In a series of LPSC orders, court decisions, andagreements from late 1985 to mid-1988, Entergy Louisiana was granted rate relief with respect to costs associated with Entergy Louisiana's share of capacityand energy from Grand Gulf 1, subject to certain terms and conditions. Entergy Louisiana retains and does not recover from retail ratepayers, 18% of its14% share of the costs of Grand Gulf 1 capacity and energy and recovers the remaining 82% of its share in rates. Entergy Louisiana is allowed to recoverthrough the fuel adjustment clause 4.6 cents per kWh for the energy related to its retained portion of these costs. Non-fuel operation and maintenance costsfor Grand Gulf 1 are recovered through Entergy Louisiana's base rates. Alternatively, Entergy Louisiana may sell such energy to non-affiliated parties atprices above the fuel adjustment clause recovery amount, subject to the LPSC's approval.

Availability Agreement

The Availability Agreement among System Energy and Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans was enteredinto in 1974 in connection with the financing by System Energy of Grand Gulf. The Availability Agreement provided that System Energy join in the SystemAgreement on or before the date on which Grand Gulf 1 was placed in commercial operation and make available to Entergy Arkansas, Entergy Louisiana,Entergy Mississippi, and Entergy New Orleans all capacity and energy available from System Energy's share of Grand Gulf.

Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans also agreed severally to pay System Energy monthly for the right toreceive capacity and energy from Grand Gulf in amounts that (when added to any amounts received by System Energy under the Unit Power SalesAgreement) would at least equal System Energy's total operating expenses for Grand Gulf (including depreciation at a specified rate) and interest charges.The September 1989 write-off of System Energy's investment in Grand Gulf 2, amounting to approximately $900 million, is being amortized for AvailabilityAgreement purposes over 27 years.

The allocation percentages under the Availability Agreement are fixed as follows: Entergy Arkansas - 17.1%; Entergy Louisiana - 26.9%; EntergyMississippi - 31.3%; and Entergy New Orleans - 24.7%. The allocation percentages under the Availability Agreement would remain in effect and wouldgovern payments made under such agreement in the event of a shortfall of funds available to System Energy from other sources, including payments underthe Unit Power Sales Agreement.

System Energy has assigned its rights to payments and advances from Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleansunder the Availability Agreement as security for its first mortgage bonds and reimbursement obligations to certain banks providing letters of credit inconnection with the equity funding of the sale and leaseback transactions described in Note 10 to the financial statements under "Sale and LeasebackTransactions - Grand Gulf 1 Lease Obligations." In these assignments, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy NewOrleans further agreed that, in the event they were prohibited by governmental action from making payments under the Availability Agreement (forexample, if FERC reduced or disallowed such payments as constituting excessive rates), they would then make subordinated advances to System Energy inthe same amounts and at the same times as the prohibited payments. System Energy would not be al lowed to repay these subordinated advances so long asit remained in default under the related indebtedness or in other similar circumstances.

Each of the assignment agreements relating to the Availability Agreement provides that Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, andEntergy New Orleans will make payments directly to System Energy. However, if there is an event of default, those payments must be made directly to theholders of indebtedness that are the beneficiaries of such assignment agreements. The payments must be made pro rata according to the amount of therespective obligations secured.

The obligations of Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans to make payments under the AvailabilityAgreement are subject to the receipt and continued effectiveness of all necessary regulatory approvals. Sales of capacity and energy under the AvailabilityAgreement would require that the Availability Agreement be submitted to FERC for approval with respect to the terms of such sale. No such filing withFERC has been made because sales of capacity and energy from Grand Gulf are being made pursuant to the Unit Power Sales Agreement. If, for any reason,sales of capacity and energy are made in the future pursuant to the Availability Agreement, the jurisdictional portions of the Availability Agreement would

be submitted to FERC for approval. Other aspects of the Availability Agreement are subject to the jurisdiction of the SEC, whose approval has beenobtained, under PUHCA.

Since commercial operation of Grand Gulf 1 began, payments under the Unit Power Sales Agreement to System Energy have exceeded the amounts payableunder the Availability Agreement. Therefore, no payments under the Availability Agreement have ever been required. If Entergy Arkansas or EntergyMississippi fails to make its Unit Power Sales Agreement payments, and System Energy is unable to obtain funds from other sources, Entergy Louisiana andEntergy New Orleans could become subject to claims or demands by System Energy or its creditors for payments or advances under the AvailabilityAgreement (or the assignments thereof) equal to the difference between their required Unit Power Sales Agreement payments and their required AvailabilityAgreement payments because their Availability Agreement obligations exceed their Unit Power Sales Agreement obligations.

The Availability Agreement may be terminated, amended, or modified by mutual agreement of the parties thereto, without further consent of any assigneesor other creditors.


System Energy and Entergy Corporation have entered into the Capital Funds Agreement, whereby Entergy Corporation has agreed to supply System Energywith sufficient capital to (i) maintain System Energy's equity capital at an amount equal to a minimum of 35% of its total capitalization (excluding short-term debt) and (ii) permit the continued commercial operation of Grand Gulf 1 and pay in full all indebtedness for borrowed money of System Energy whendue.

Entergy Corporation has entered into various supplements to the Capital Funds Agreement. System Energy has assigned its rights under such supplements assecurity for its first mortgage bonds and for reimbursement obligations to certain banks providing letters of credit in connection with the equity funding ofthe sale and leaseback transactions described in Note 10 to the financial statements under "Sale and Leaseback Transactions - Grand Gulf 1 LeaseObligations." Each such supplement provides that permitted indebtedness for borrowed money incurred by System Energy in connection with the financingof Grand Gulf may be secured by System Energy's rights under the Capital Funds Agreement on a pro rata basis (except for the Specific Payments, asdefined below). In addition, in the supplements to the Capital Funds Agreement relating to the specific indebtedness being secured, Entergy Corporation hasagreed to make cash capital contributions directly to System Energy sufficie nt to enable System Energy to make payments when due on such indebtedness(Specific Payments). However, if there is an event of default, Entergy Corporation must make those payments directly to the holders of indebtednessbenefiting from the supplemental agreements. The payments (other than the Specific Payments) must be made pro rata according to the amount of therespective obligations benefiting from the supplemental agreements.

The Capital Funds Agreement may be terminated, amended, or modified by mutual agreement of the parties thereto, upon obtaining the consent, if required,of those holders of System Energy's indebtedness then outstanding who have received the assignments of the Capital Funds Agreement.

Service Companies

Entergy Services, a corporation wholly-owned by Entergy Corporation, provides management, administrative, accounting, legal, engineering, and otherservices primarily to the domestic utility companies. Entergy Operations is also wholly-owned by Entergy Corporation and provides nuclear management,operations and maintenance services under contract for ANO, River Bend, Waterford 3, and Grand Gulf 1, subject to the owner oversight of EntergyArkansas, Entergy Gulf States, Entergy Louisiana, and System Energy, respectively. Entergy Services and Entergy Operations provide their services to thedomestic utility companies and System Energy on an "at cost" basis, pursuant to service agreements approved by the SEC under PUHCA.

Earnings Ratios of Domestic Utility Companies and System Energy

The domestic utility companies' and System Energy's ratios of earnings to fixed charges and ratios of earnings to combined fixed charges and preferreddividends pursuant to Item 503 of SEC Regulation S-K are as follows:

Ratios of Earnings to Fixed ChargesYears Ended December 31,

2003 2002 2001 2000 1999 Entergy Arkansas 3.17 2.79 3.29 3.01 2.08Entergy Gulf States 1.51 2.49 2.36 2.60 2.18Entergy Louisiana 3.93 3.14 2.76 2.33 3.48Entergy Mississippi 3.06 2.48 2.14 2.33 2.44Entergy NewOrleans

1.73 (b) (c) 2.66 3.00

System Energy 3.66 3.25 2.12 2.41 1.90

Ratios of Earnings to Combined FixedCharges and Preferred Dividends

Years Ended December 31, 2003 2002 2001 2000 1999 Entergy Arkansas 2.79 2.53 2.99 2.70 1.80Entergy Gulf States (a) 1.45 2.40 2.21 2.39 1.86Entergy Louisiana 3.46 2.86 2.51 2.93 3.09Entergy Mississippi 2.77 2.27 1.96 2.09 2.18Entergy New Orleans 1.59 (b) (c) 2.43 2.74

(a) "Preferred Dividends" in the case of Entergy Gulf States also include dividends on preferencestock, which was redeemed in July 2000.

(b) For Entergy New Orleans, earnings for the twelve months ended December 31, 2002 were notadequate to cover fixed charges and combined fixed charges and preferred dividends by $0.7million and $3.4 million, respectively.

( ) F E t N O l i f th t l th d d D b 31 2001 t

(c) For Entergy New Orleans, earnings for the twelve months ended December 31, 2001 were notadequate to cover fixed charges and combined fixed charges and preferred dividends by $6.6million and $9.5 million, respectively.

Non-Utility Nuclear

Entergy's Non-Utility Nuclear business owns and operates five nuclear power plants and is primarily focused on selling electric power produced by thoseplants to wholesale customers. This business also provides operations and management services to nuclear power plants owned by other utilities in theUnited States. Operations and management services, including decommissioning services, are provided through Entergy's wholly-owned subsidiary, EntergyNuclear, Inc.

Entergy's Non-Utility Nuclear business currently owns assets located in the northeastern portion of the United States as shown on the map below:

Property

Generating Stations

Entergy's Non-Utility Nuclear business owns the following nuclear power plants:

Power Plant

Acquired

Location

Maximum Capacity

Reactor Type

License Expiration

Date Pilgrim July 1999 Plymouth, MA 688 MW Boiling Water Reactor 2012FitzPatrick Nov. 2000 Oswego, NY 825 MW Boiling Water Reactor 2014Indian Point 3 Nov. 2000 Westchester

County, NY 994 MW Pressurized Water Reactor 2015

Indian Point 2 Sept. 2001 WestchesterCounty, NY

984 MW Pressurized Water Reactor 2013

Vermont Yankee July 2002 Vernon, VT 510 MW Boiling Water Reactor 2012

Non-Utility Nuclear added 46 MW of capacity in 2003 through uprates, and plans an additional 202 MW of uprates through 2005. Planned uprates totaling95 MW for Vermont Yankee are currently pending approval by the NRC and the Public Service Board of Vermont.

Interconnections

The Pilgrim and Vermont Yankee plants are dispatched as a part of Independent System Operator (ISO) New England and the James A. FitzPatrick andIndian Point Energy Center plants are dispatched by the New York Independent System Operator (NYISO). The primary purpose of ISO New England is todirect the operations of the major generation and transmission facilities in the New England region and the primary purpose of NYISO is to direct theoperations of the major generation and transmission facilities in New York state.

Energy and Capacity Sales

Entergy's Non-Utility Nuclear business has entered into unit-contingent power purchase agreements (PPAs), with the exception noted below, withcreditworthy counterparties to sell the energy produced by its power plants at prices established in the PPAs. Following is a summary of the amount of theNon-Utility Nuclear business' output that is currently sold forward under physical or financial contracts at fixed prices:

2004 2005 2006 2007 2008Non-Utility Nuclear: % of planned generation soldforward

100% 52% 32% 16% 4%

Planned generation (GWh) 32,787 34,164 34,853 34,517 34,513Average price per MWh $38 $37 $35 $34 $38

The Vermont Yankee acquisition included a 10-year PPA, which is through the expiration of the current operating license for the plant, under which theformer owners will buy the power produced by the plant. The PPA includes an adjustment clause under which the prices specified in the PPA will beadjusted downward annually, beginning in November 2005, if power market prices drop below PPA prices. Accordingly, because the price is not fixed, thetable above does not report power from that plant as sold forward after October 2005. Approximately 2% of Non-Utility Nuclear's planned generation in2005, 13% in 2006, 12% in 2007, and 13% in 2008 is under contract from Vermont Yankee after October 2005.

Under the PPAs with NYPA for the output of power from Indian Point 3 and FitzPatrick, the Non-Utility Nuclear business is obligated to produce at anaverage capacity factor of 85% with a financial true-up payment to NYPA should NYPA's cost to purchase power due to an output shortfall be higher thanthe PPAs' price. The calculation of any true-up payments is based on two two-year periods. For the first period, which ran through November 20, 2002,Indian Point 3 and FitzPatrick operated at 95% and 97%, respectively, under the true-up formula. Credits of up to 5% reflecting period one generation above85% can be used to offset any output shortfalls in the second period, which runs through the end of the PPAs on December 31, 2004.

Included in the planned generation sold forward percentages are contracts entered into in 2003 that are not unit contingent but are firm contracts containingliquidated damages provisions. These firm contracts are for 1% of Non-Utility Nuclear's planned generation in 2005, 4% in 2006, 2% in 2007, and 0% in2008.

In addition to selling the power produced by its plants, the Non-Utility Nuclear business sells installed capacity to load-serving distribution companies inorder for those companies to meet requirements placed on them by the Independent System Operators in their area. Following is a summary of the amount ofthe Non-Utility Nuclear business' installed capacity that is currently sold forward, and the blended amount of the Non-Utility Nuclear business' plannedgeneration output and installed capacity that is currently sold forward:

2004 2005 2006 2007 2008Non-Utility Nuclear: Percent of capacity sold forward: Bundled capacity and energy contracts 55% 15% 12% 13% 13% Capacity contracts 28% 15% 6% 3% 0%Total 83% 30% 18% 16% 13%Planned MW in operation 4,111 4,203 4,203 4,203 4,203Average capacity contract price per kW per month $2.4 $1.3 $0.6 $0.7 N/ABlended Capacity and Energy (based on revenues) % of planned generation and capacity sold forward 99% 49% 28% 13% 4%Average contract revenue per MWh $39 $37 $35 $34 $38

As of December 31, 2003, approximately 99% of Entergy's counterparties to Non-Utility Nuclear's energy and capacity contracts have investment gradecredit ratings.

Power and capacity not sold forward under contracts with fixed prices are subject to price fluctuations in the market. Entergy may be required to providecredit support in the form of guarantees in order to secure PPAs.

Fuel Supply

Nuclear Fuel

The nuclear fuel requirements for Pilgrim, FitzPatrick, Indian Point 2, Indian Point 3, and Vermont Yankee are met pursuant to contracts made by Entergy'sNon-Utility Nuclear business. Entergy Nuclear Fuels Company is responsible for contracts to acquire nuclear materials, except for fuel fabrication, for thesenon-utility nuclear plants.

Other Business Activities

Entergy Nuclear, Inc. also pursues service agreements with other nuclear power plants owners who seek the advantages of Entergy's scale and expertise butdo not necessarily want to sell their assets. Services provided by either Entergy Nuclear, Inc. or other Non-Utility Nuclear subsidiaries include engineering,operations and maintenance, fuel procurement, management and supervision, technical support and training, administrative support, and other managerial ortechnical services required to operate, maintain, and decommission nuclear electric power facilities. Entergy Nuclear, Inc. currently providesdecommissioning services for the Maine Yankee nuclear power plant and continues to pursue opportunities for Non-Utility Nuclear with other nuclear plantowners through operating agreements or innovative arrangements such as structured leases.

In September 2003, Entergy's Non-Utility Nuclear business agreed to provide administrative support services for the 800 MW Cooper Nuclear Stationlocated near Brownville, Nebraska. The contract is for 10 years, the remaining term of the plant's operating license. Entergy will receive $12 million in2004, $13 million in 2005, and $14 million in 2006 and each of the remaining years of the contract. Entergy can also receive up to $6 million more per yearbeginning in 2007 if top decile in the industry safety and regulatory goals are met. In addition, Entergy will be reimbursed for all employee-related expenses.

Entergy Nuclear, Inc. also is a party to two business arrangements that assist Entergy Nuclear, Inc. in providing operation and management services. EntergyNuclear, Inc., in partnership with Framatome ANP, offers operating license renewal and life extension services to nuclear power plants in the United States.Entergy Nuclear Inc., through its subsidiary, TLG Services, offers decommissioning, engineering, and related services to nuclear power plant owners.

Other Matters

Groups of concerned citizens and local public officials have raised concerns about safety issues associated with Entergy's Indian Point power plants locatedin New York. They argue that Indian Point's security measures and emergency plans do not provide reasonable assurance to protect the public health andsafety. The NRC has legal jurisdiction over these matters. In a decision that became final on December 13, 2002, the NRC denied a petition filed byRiverkeeper, Inc. asking the NRC to order Entergy to suspend operations, revoke the operating license or adopt other measures resulting in a temporaryshutdown of Indian Point 2 and Indian Point 3. The NRC found that after September 11, 2001, it ordered enhanced security measures at all nuclear facilitiesand found that as a result of the collective measures taken since September 11, 2001, the security at Indian Point provides adequate protection of publichealth and s afety. The NRC further found that the existing emergency response plans are flexible enough to respond to a wide variety of adverse conditions,including a terrorist attack. The NRC further found that the current spent fuel storage system adequately protects the public health and safety. Riverkeeperhas petitioned the United States Second Circuit Court of Appeals for a review of this final action of the NRC, and in February 2004 the Second Circuitaffirmed the NRC and dismissed the petition for review.

In addition, certain concerns are being raised regarding the adequacy of the emergency evacuation plans for Indian Point. These matters initially must bereviewed by the Federal Emergency Management Agency (FEMA). Jurisdiction as to the overall adequacy of emergency planning and preparedness forIndian Point lies with the NRC. Entergy believes that the emergency evacuation plans for Indian Point are adequate to ensure the public health and safety incompliance with NRC requirements. Entergy is working with New York state and county officials, FEMA, the NRC, and other federal agencies to makeadditional improvements to the plans that may be warranted and to assure them as to the adequacy of the plans.

On July 25, 2003, FEMA issued its notice of certification of the Indian Point Emergency Plan. NRC followed soon thereafter with its endorsement. OnAugust 22, 2003, Westchester County filed an administrative appeal of the FEMA ruling that the Emergency Plans are adequate to protect the public healthand safety. FEMA regulations on emergency plans provide for appeals in only two situations: (1) FEMA's approval or disapproval of a radiologicalemergency response plan (RERP) for a nuclear power facility; and (2) FEMA's determination to withdraw approval for a state or local RERP. In both cases,the appeal process is the same.

Energy Commodity Services

The Energy Commodity Services segment includes the operations of Entergy-Koch (50% owned by Entergy) and Entergy's non-nuclear wholesale assetsbusiness. Entergy-Koch is engaged in two major businesses: energy commodity marketing and trading that includes physical and financial natural gas andpower as well as other energy and weather-related contracts through Entergy-Koch Trading and gas transportation and storage through Gulf South Pipeline.Entergy's non-nuclear wholesale assets business owns power plants capable of generating about 1,800 MW of electricity for sale in the wholesale market.Previously, Entergy's Energy Commodity Services business also engaged in power development activities through Entergy Wholesale Operations, but theseactivities were discontinued in early 2002.

Entergy-Koch, LP

Entergy-Koch is a limited partnership owned 50% each by Entergy and Koch Industries, Inc, through subsidiaries. Entergy-Koch began operations onFebruary 1, 2001. Entergy contributed most of the assets and trading contracts of its power marketing and trading business and $414 million cash to theventure and Koch contributed its approximately 8,000-mile Koch Gateway Pipeline (renamed Gulf South Pipeline), gas storage facilities, and Koch EnergyTrading, which marketed and traded electricity, gas, weather derivatives, and other energy-related commodities and services. As specified in the partnershipagreement, Entergy contributed an additional $72.7 million to the partnership in January 2004.

Entergy-Koch is engaged in two major businesses: Entergy-Koch Trading and Gulf South Pipeline. Each of these businesses targets contributions from 40-60% of Entergy-Koch's earnings. Entergy-Koch currently has over 700 employees and over $3.7 billion in assets.

Entergy-Koch Trading

Entergy-Koch Trading buys and sells physical and financial natural gas and power as well as other energy and weather-related contracts in the United States,the United Kingdom, Western Europe, and Canada. It provides energy management services using knowledge systems that promote fundamental andquantitative understanding of market risk. Entergy-Koch Trading uses advanced analytics and knowledge of the marketplace, natural gas pipelines, powertransmission infrastructure, transportation management, gas storage, and weather.

Regulatory Investigations Relating to Trading Business

In April 2003, Entergy-Koch Trading received a subpoena from the Commodity Futures Trading Commission (CFTC) seeking information on gas andpower trading activities of Entergy-Koch Trading and affiliated companies, which would include Entergy Power Marketing Corp. (in operation prior to theformation of Entergy-Koch on February 1, 2001), including information about trading activities relating to "wash trades" as well as information furnished toenergy industry publications in 2001 and 2002.

In January 2004, the CFTC filed and approved an order settling the administrative action against Entergy-Koch Trading. Entergy-Koch Trading agreed topay a civil penalty of $3 million without admitting or denying the CFTC's findings. The order cites Entergy-Koch Trading for reporting false priceinformation. The CFTC has notified Entergy-Koch Trading and Entergy that this settlement concludes the issues that were the subject of their investigation.

Gulf South Pipeline

Gulf South Pipeline owns and operates an interstate natural gas pipeline system in the Gulf Coast region and provides critical links to many major marketsnationwide. Gulf South Pipeline gathers natural gas from the Gulf South region and transports it to local distribution companies, industrial facilities, powergenerators, utility companies, other pipelines, and natural gas marketing companies. The Gulf South Pipeline's existing system comprises approximately8,000 miles of pipeline, including both transmission and gathering systems, with connections to more than 100 pipelines including Texas Eastern, Transcoand Florida Gas Transmission. The pipeline system covers parts of Texas, Louisiana, Mississippi, Alabama, and Florida and connects to the Henry Hub,located in Vermilion Parish, Louisiana.

Gulf South's operational flexibility is enhanced by its Bistineau and Jackson storage facilities with total working storage capacity of 68.5 Bcf. Additionally,Gulf South Pipeline is developing a natural gas salt dome storage facility - Magnolia Gas Storage located near Napoleonville, Louisiana. This new facility,which was expected to be in service by early 2004, complements the existing storage at Bistineau and Jackson, and offers multiple pipeline interconnectsproviding increased reliability for customers and opportunities for Gulf South to improve gas flows across its system. The facility is expected to have aninitial working capacity of approximately 4.1 Bcf and be expanded to 6.5 Bcf in 2007. In December 2003, natural gas bubbling occurred at the site. GulfSouth has been involved in mitigating the effects of the incident, and is still evaluating how the incident will affect its plans to provide storage services atMagnolia, but the facility will not be in service early in 2004 as originally planned.

Entergy-Koch, LP Agreement Details

Although the ownership interests of Entergy and Koch Industries are equal, the capital accounts are different. As described above, each contributed differentassets to the partnership with those contributed by Koch valued at more than those contributed by Entergy. Through the end of 2003, substantially all of the

partnership profits were allocated to Entergy to allow the capital accounts to equalize. In all years, losses and distributions from operations are allocatedequally to the capital accounts based on ownership interest. Distributions in the event of liquidation are shared based on capital accounts, as revalued at thetime of the liquidation.

In January 2004, at the time Entergy made its additional cash contribution to the partnership, Entergy-Koch's assets were revalued for capital accountpurposes. After this revaluation the capital accounts of Entergy and Koch Industries are approximately equal and future profit allocations other than forweather trading and international trading will be equal. The weather trading and international trading allocations are unequal only within a specified range,such that the overall earnings allocation should not materially differ from 50/50.

Beginning in 2004, a partner may transfer its interest to a third party, only if it has first offered to sell its interest to the other partner at the approximate salesprice and the other partner has not accepted the offer. Certain buy/sell rights are triggered (a) at the option of the non-defaulting partner, upon a change ofcontrol of, or material breach of the agreement by, either partner or (b) at the option of either partner. Under the buy/sell rights, the initiating partner mayoffer to sell all its partnership interest at a specified price and other terms or to buy all of the other partner's partnership interest at the same price and sameother terms. The non-initiating partner then may elect either to sell its partnership interest to the other partner or to buy the partnership interest of the otherpartner on the offered terms.

Non-Nuclear Wholesale Assets Business

Property

Generating Stations

The capacity of the generating stations owned in Entergy's non-nuclear wholesale assets business as of December 31, 2003 is indicated below:

Plant

Location

Ownership Net Owned

Capacity(1)

Type Ritchie Unit 2, 544 MW Helena, AR 100% 544 MW Gas/OilIndependence Unit 2, 842MW

Newark, AR 14% 121 MW(2) Coal

Warren Power, 300 MW Vicksburg, MS 100% 300 MW Gas TurbineTop of Iowa, 80 MW Worth County,

IA 99% 80 MW Wind

Crete, 320 MW Crete, IL 50% 160 MW Gas TurbineRS Cogen, 425 MW Lake Charles,

LA 50% 212 MW Gas/Steam

Harrison County, 550 MW Marshall, TX 70% 385 MW Gas Turbine

(1) "Net Owned Capacity" refers to the nameplate rating on the generating unit.

(2) The owned MW capacity is the portion of the plant capacity owned by Entergy Power. For acomplete listing of Entergy's joint-owned generating stations, refer to "Jointly-OwnedGenerating Stations" in Note 1 to the Entergy Corporation and Subsidiaries financialstatements.

Entergy sold its interest in the Crete power plant in January 2004.

Energy and Capacity Sales

Following is a summary of the amount of Energy Commodity Services' output and installed capacity that is currently sold forward under physical orfinancial contracts at fixed prices:

2003 2004 2005 2006 2007Energy Commodity Services: Capacity Planned MW in operation 1,911 1,911 1,911 1,911 1,911% of capacity sold forward 43% 43% 34% 31% 26%Energy Planned generation (GWh) 3,321 3,348 3,337 3,545 4,015% of planned generation sold forward 64% 67% 52% 42% 39%Blended Capacity and Energy (based on revenues) % of planned energy and capacity sold forward 62% 66% 50% 41% 35%Average contract revenue per MWh $26 $25 $27 $31 $28

The increase in the planned generation sold forward percentages from the percentages reported in the 2002 Form 10-K is attributable to the EntergyLouisiana and Entergy New Orleans contracts involving RS Cogen and Independence 2 entered into in 2003 that are described more fully in Part I, Item 1,"Generation." These contracts are still subject to a FERC review proceeding scheduled for hearing later in 2004.

Regulation of Entergy's Business

PUHCA

The Public Utility Holding Company Act of 1935, as amended, regulates companies like Entergy Corporation that serve as holding companies to domesticoperating utilities. Some of the more significant impacts of PUHCA are that it:

limits the operations of a registered holding company system to a single, integrated public utility system, plus related systems and businesses;

regulates transactions among affiliates within a holding company system;

governs the issuance, acquisition, and disposition of securities and assets by registered holding companies and their subsidiaries;

limits the entry by registered holding companies and their subsidiaries into businesses other than electric and/or gas utility businesses; and

requires SEC approval for certain utility mergers and acquisitions.

Entergy continues to support the broad industry effort to pass legislation in the United States Congress to repeal PUHCA and transfer certain aspects of theoversight of public utility holding companies from the SEC to FERC. Entergy believes that PUHCA inhibits its ability to compete in the evolving electricenergy marketplace and largely duplicates the oversight activities otherwise performed by FERC, other federal regulators, and state and local regulators.

Federal Power Act

The Federal Power Act regulates:

the transmission and wholesale sale of electric energy in interstate commerce;

the licensing of certain hydroelectric projects; and

certain other activities, including accounting policies and practices of electric and gas utilities.

The Federal Power Act gives FERC jurisdiction over the rates charged by System Energy for Grand Gulf 1 capacity and energy provided to EntergyArkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans and over some of the rates charged by Entergy Arkansas and Entergy GulfStates. FERC also regulates the rates charged for intrasystem sales pursuant to the System Agreement.

Entergy Arkansas holds a FERC license that expires in 2053 for two hydroelectric projects totaling 70 MW of capacity.

State Regulation

Entergy Arkansas is subject to regulation by the APSC, which includes the authority to:

oversee utility service;

set retail rates;

determine reasonable and adequate service;

require proper accounting;

control leasing;

control the acquisition or sale of any public utility plant or property constituting an operating unit or system;

set rates of depreciation;

issue certificates of convenience and necessity and certificates of environmental compatibility and public need; and

regulate the issuance and sale of certain securities.

Entergy Gulf States may be subject to the jurisdiction of the municipal authorities of a number of incorporated cities in Texas with appellate jurisdiction oversuch matters residing in the PUCT. Entergy Gulf States' Texas business is also subject to regulation by the PUCT as to:

retail rates and service in rural areas;

customer service standards;

certification of new transmission lines; and

extensions of service into new areas.

Entergy Gulf States' Louisiana electric and gas business and Entergy Louisiana are subject to regulation by the LPSC as to:

utility service;

retail rates and charges;

certification of generating facilities;

power or capacity purchase contracts; and

depreciation, accounting, and other matters.

Entergy Louisiana is also subject to the jurisdiction of the Council with respect to such matters within Algiers in Orleans Parish.

Entergy Mississippi is subject to regulation by the MPSC as to the following:

utility service;

service areas;

facilities; and

retail rates.

Entergy Mississippi is also subject to regulation by the APSC as to the certificate of environmental compatibility and public need for the IndependenceStation, which is located in Arkansas.

Entergy New Orleans is subject to regulation by the Council as to the following:

utility service;

retail rates and charges;

standards of service;

depreciation, accounting, and issuance and sale of certain securities; and

other matters.

Regulation of the Nuclear Power Industry

Atomic Energy Act of 1954 and Energy Reorganization Act of 1974

Under the Atomic Energy Act of 1954 and the Energy Reorganization Act of 1974, the operation of nuclear plants is heavily regulated by the NRC, whichhas broad power to impose licensing and safety-related requirements. The NRC has broad authority to impose fines or shut down a unit, or both, dependingupon its assessment of the severity of the situation, until compliance is achieved. Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and SystemEnergy, as owners of all or portions of ANO, River Bend, Waterford 3, and Grand Gulf 1, respectively, and Entergy Operations, as the licensee and operatorof these units, are subject to the jurisdiction of the NRC. Entergy has made substantial capital expenditures at these nuclear plants because of revised safetyrequirements of the NRC in the past, and additional expenditures could be required in the future. Entergy's Non-Utility Nuclear business is subject to theNRC's jurisdiction as the owner and operator of Pilgrim, Indian Point Energy Center, FitzPatrick, and Vermont Yankee. Substantial capital expenditures atthese nuclear plants because of revised safety requirements of the NRC could be required in the future.

Nuclear Waste Policy Act of 1982

Under the Nuclear Waste Policy Act of 1982, the DOE is required, for a specified fee, to construct storage facilities for, and to dispose of, all spent nuclearfuel and other high-level radioactive waste generated by domestic nuclear power reactors. Entergy's nuclear owner/licensee subsidiaries provide for theestimated future disposal costs of spent nuclear fuel in accordance with the Nuclear Waste Policy Act of 1982. The affected Entergy companies entered intocontracts with the DOE, whereby the DOE will furnish disposal service at a cost of one mill per net kWh generated and sold after April 7, 1983, plus a one-time fee for generation prior to that date. Entergy Arkansas is the only Entergy company that generated electric power with nuclear fuel prior to that date andhas a recorded liability as of December 31, 2003 of $154 million for the one-time fee. Entergy's Non-Utility Nuclear business has accepted assignment of thePilgrim, FitzPatrick, Indian Point 3, Indian Point 2, and Vermont Yankee spent fuel disposal contracts with the DOE held by their previous owners. Theprevious owners have paid or retained liability for the fees for all generation prior to the purchase dates of those plants. The fees payable to the DOE may beadjusted in the future to assure full recovery. Entergy considers all costs incurred for the disposal of spent nuclear fuel, except accrued interest, to be propercomponents of nuclear fuel expense. Provisions to recover such costs have been or will be made in applications to regulatory authorities.

The permanent spent fuel repository in the U.S. has been legislated to be Yucca Mountain, Nevada. DOE will now proceed with the licensing and, if thelicense is granted by the NRC, eventual construction of the repository will begin and receipt of spent fuel may begin as early as approximately 2010,according to the DOE. Considerable uncertainty remains regarding the time frame under which the DOE will begin to accept spent fuel from Entergy'sfacilities for storage or disposal, and could be several years after 2015. As a result, future expenditures will be required to increase spent fuel storagecapacity at Entergy's nuclear plant sites.

As a result of DOE's failure to begin disposal of spent nuclear fuel in 1998 pursuant to the Nuclear Waste Policy Act of 1982 and the spent fuel disposalcontracts, Entergy's nuclear owner/licensee subsidiaries have incurred and will continue to incur damages. These subsidiaries in November 2003 beganlitigation to recover the damages caused by DOE's delay in performance. Management cannot predict the timing or amount of any potential recovery.

Pending DOE acceptance and disposal of spent nuclear fuel, the owners of nuclear plants are responsible for their own spent fuel storage. Current on-sitespent fuel storage capacity at Grand Gulf 1 and River Bend is estimated to be sufficient until approximately 2007 and 2004, respectively, at which time drycask storage facilities will be placed into service. The spent fuel pool at Waterford 3 was recently expanded through the replacement of the existing storageracks with higher density storage racks. This expansion should provide sufficient storage for Waterford 3 until after 2015. An ANO storage facility using drycasks began operation in 1996 and has been expanded since and will be further expanded as needed. The spent fuel storage facility at Pilgrim is licensed toprovide enough storage capacity until approximately 2012. The first dry spent fuel storage casks were loaded at FitzPatrick in 2002, and further casks will beloaded there as needed. Indian Point and Vermont Yank ee currently have sufficient spent fuel storage capacity until approximately 2006, at which timemanagement expects planned additional dry cask storage capacity to begin operation.

Nuclear Plant Decommissioning

Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy recover from customers through electric rates the estimateddecommissioning costs for ANO, the portion of River Bend subject to retail rate regulation, Waterford 3, and Grand Gulf 1, respectively. These amounts aredeposited in trust funds that can only be used for future decommissioning costs. Entergy periodically reviews and updates estimated decommissioning coststo reflect inflation and changes in regulatory requirements and technology, and then makes applications to the regulatory authorities to reflect, in rates, thechanges in projected decommissioning costs.

In June 2001, Entergy Arkansas received notification from the NRC of approval for a renewed operating license authorizing operations at ANO 1 throughMay 2034. In October 2003, a request was filed with the NRC to extend the operating license of ANO 2 for an additional 20 years. The APSC orderedEntergy Arkansas to use a 20-year life extension assumption for ANO 1 and 2, which resulted in the cessation of the collection of funds to decommissionANO 1 and 2 beginning in 2001. Entergy Arkansas' projections show that with the assumption of 20 years of extended operational life for both units, thecurrent fund balance with earnings over the extended life will be sufficient to decommission both units. Every five years, Entergy Arkansas is required bythe APSC to update the estimated costs to decommission ANO. In March 2003, Entergy Arkansas filed with the APSC its third five-year estimate of ANOdecommissioning costs. The updated estimate indicated the current cost to decommission the two ANO units would be $936 million compared to $813million in the 1997 estimate. In September 2003, the APSC approved a stipulation between the APSC Staff and Entergy Arkansas resolving issues in thedecommissioning cost estimate proceeding. Entergy Arkansas and the APSC Staff agreed to exclude, at this time, certain spent fuel management costsbecause of uncertainty associated with the responsibility of the DOE for all or a portion of those costs as a result of Entergy Arkansas' contract with the DOEto start taking spent fuel from ANO beginning in 1998. Entergy Arkansas reserves the right to seek a decision from the APSC on this issue prior to the nextrequired decommissioning cost filing should significant changes in relevant facts and circumstances warrant.

In December 2002, the LPSC approved a settlement between Entergy Gulf States and the LPSC staff. The settlement included, among other things, theapproval to cease collection of funds to decommission River Bend based on an assumed license extension for River Bend.

As part of the Pilgrim, Indian Point 1 and 2, and Vermont Yankee purchases, Boston Edison, Consolidated Edison, and VYNPC, respectively, transferreddecommissioning trust funds, along with the liability to decommission the plants, to Entergy. Entergy believes that the decommissioning trust funds will beadequate to cover future decommissioning costs for these plants without any additional deposits to the trusts.

For the Indian Point 3 and FitzPatrick plants purchased in 2000, NYPA retained the decommissioning trusts and the decommissioning liability. NYPA andEntergy executed decommissioning agreements, which specify their decommissioning obligations. NYPA has the right to require Entergy to assume thedecommissioning liability provided that it assigns the corresponding decommissioning trust, up to a specified level, to Entergy. If the decommissioningliability is retained by NYPA, Entergy will perform the decommissioning of the plants at a price equal to the lesser of a pre-specified level or the amount inthe decommissioning trusts. Entergy believes that the amounts available to it under either scenario are sufficient to cover the future decommissioning costswithout any additional contributions to the trusts. In conjunction with the Pilgrim acquisition, Entergy received Pilgrim's decommissioning trust fund.Entergy believes that Pilgrim's decommissioning fund will be adequate to cover f uture decommissioning costs for the plant without any additional depositsto the trust. As part of the Indian Point 1 and 2 purchase, Consolidated Edison transferred the decommissioning trust fund and the liability to decommissionIndian Point 1 and 2 to Entergy. Entergy also funded an additional $25 million to the decommissioning trust fund and believes that the trust will be adequateto cover future decommissioning costs for Indian Point 1 and 2 without any additional deposits to the trust.

Additional information with respect to decommissioning costs for ANO, River Bend, Waterford 3, Grand Gulf 1, Pilgrim, Indian Point 1, Indian Point 2,Indian Point 3, and FitzPatrick is found in Note 9 to the financial statements.

Energy Policy Act of 1992

The Energy Policy Act of 1992 requires all electric utilities (including Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy) thatpurchased uranium enrichment services from the DOE to contribute up to a total of $150 million annually over approximately 15 years (adjusted forinflation, up to a total of $2.25 billion) for decontamination and decommissioning of enrichment facilities. At December 31, 2003, three years ofassessments remain. In accordance with the Energy Policy Act of 1992, contributions to decontamination and decommissioning funds are recovered throughrates in the same manner as other fuel costs. The estimated annual contributions by Entergy for decontamination and decommissioning fees are discussed inNote 9 to the financial statements.

Price Anderson Act

The Price-Anderson Act limits public liability for a single nuclear incident to approximately $100.6 million per reactor (with currently 105 nuclear industryreactors participating). Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, System Energy, and Entergy's Non-Utility Nuclear business haveprotection with respect to this liability through a combination of private insurance and an industry assessment program, as well as insurance for propertydamage, costs of replacement power, and other risks relating to nuclear generating units. Insurance applicable to the nuclear programs of Entergy isdiscussed in Note 9 to the financial statements.

Environmental Regulation

Entergy's facilities and operations are subject to regulation by various governmental authorities having jurisdiction over air quality, water quality, control oftoxic substances and hazardous and solid wastes, and other environmental matters. Management believes that its affected companies are in substantialcompliance with environmental regulations currently applicable to their facilities and operations. Because environmental regulations are subject to change,future compliance costs cannot be precisely estimated.

Clean Air Act and Subsequent Amendments

The Clean Air Act and its subsequent Amendments (the Clean Air Act) established several programs that currently or in the future may affect Entergy'sfossil-fueled generation facilities:

New source review and preconstruction permits for new sources of criteria air pollutants and significant modifications to existing facilities;

Acid rain program for control of sulfur dioxide (SO2) and nitrogen oxides (NOx);

Ozone non-attainment area program for control of NOx and volatile organic compounds;

Hazardous air pollutant emissions reduction program; and

Operating permits program for administration and enforcement of these and other Clean Air Act programs.

New Source Review

Preconstruction permits are required for new facilities and for existing facilities that undergo a modification that is not classified as routine repair,maintenance, or replacement. Units that undergo a non-routine modification must obtain a permit modification and may be required to install additional airpollution control technologies. Entergy has an established process for identifying modifications requiring additional permitting approval and has followedthe regulations and associated guidance provided by the states and the federal government with regard to the determination of routine repair, maintenance,and replacement. In recent years, however, EPA has begun an enforcement initiative, aimed primarily at coal plants, to identify modifications that it does notconsider routine and that have failed to obtain a permit modification. Entergy to date has not been included in any of these enforcement actions.Nevertheless, various courts and EPA have been inconsistent in their judgme nts regarding what modifications are considered routine. EPA recently haspromulgated a regulation to attempt to clarify this issue, but the regulation has been challenged, and its effectiveness has been stayed by the federal courthearing the case. Because of the conflicting and changing definitions from courts and the EPA, several industries, including the electric generation industry,have exposure in this area.

Acid Rain Program

The Act provides SO2 allowances to most of the affected Entergy generating units for emissions based upon past emission levels and operatingcharacteristics. Each allowance is an entitlement to emit one ton of SO2 per year. Utilities are required to possess allowances for SO2 emissions fromaffected generating units. Virtually all Entergy fossil-fueled generating units are subject to SO2 allowance requirements. Entergy could be required topurchase additional allowances when it generates power using fuel oil. Fuel oil usage is determined by economic dispatch and influenced by the price ofnatural gas and on the availability and cost of purchased power.

Ozone Non-attainment

Entergy Gulf States and Entergy Louisiana each operate fossil-fueled generating units in geographic areas that are not in attainment of the currently-enforcednational ambient air quality standards. For Entergy Gulf States the areas are the Houston-Galveston, Texas area and the Beaumont-Port Arthur, Texas area.For Entergy Louisiana the area is the Baton Rouge, Louisiana area. Areas in non-attainment are classified as "moderate," "serious," or "severe." When anarea is in noncompliance, EPA requires state regulatory authorities to prepare state implementation plans meant to cause progress toward bringing the areainto attainment with applicable standards. Texas and Louisiana submitted plans for the Beaumont-Port Arthur and Baton Rouge areas that included anextension of the regulatory deadline to gain attainment. EPA initially approved these plans and the deadline extensions, but through litigation and a decisionof the United States Court of Appeals for the Fifth Circuit in December 2002, the approval of the state plans has been withdrawn as violating provisions anddeadlines required by the Clean Air Act.

EPA now is proposing that the Beaumont-Port Arthur area should be reclassified from "moderate" to "serious" or "severe" and has reclassified the BatonRouge area from "serious" to "severe" effective June 2003. These actions will require that Texas and Louisiana adopt plans to restrict the emission of certainair pollutants and to make progress toward eventual attainment of national standards (the Louisiana plan must be submitted to EPA by June 2004). Thecontent and impact on Entergy companies of these developing state plans is unknown, but Entergy Gulf States and Entergy Louisiana continue to monitorevents in their respective areas. If new NOx control equipment is required to be installed, the cost could be as much as $5 million for the facilities inLouisiana in 2004 and early 2005. Entergy Gulf States continues to assess possible costs for the Texas facilities.

In April and December 2004, EPA is expected to begin designating new non-attainment areas that correspond to more stringent standards for ozone andparticulate matter first adopted by EPA in 1997. Areas in which Entergy operates that have never been designated as "non-attainment" may be so designatedunder these new standards. The states involved will then be required to develop implementation plans to return the areas to attainment, choosing betweenregulatory options that can vary greatly from region to region. These plans could require operational or equipment changes at Entergy company facilities.Entergy continues to monitor these regulatory activities and to plan for necessary future action at its facilities.

Hazardous Air Pollutants

In December 2000, the EPA made a determination that coal and oil-fired steam electric generating units should be regulated under the section of the CleanAir Act relating to emissions of hazardous air pollutants (HAPs). The principal HAPs of concern are mercury from coal and nickel from oil. EPA hasproposed regulations for these sources and has set a deadline of December 2004 for finalizing the rules. Entergy owns units that would be subject to theseregulations. The regulations may require coal and oil-fired units to reduce mercury and nickel emissions through various methods, including installation ofcontrols, switching fuels or fuel suppliers, reducing utilization of units, or some combination of these methods. The earliest expected compliance date forthis rule would be 2007, and Entergy could begin to incur costs of compliance as early as 2006 and the work could take up to three years. Entergy currentlyestimates that pollution control capital projects at its five coal uni ts to comply with the rules could be as much as $130 million. These costs should be offsetby advances in control technology or in proposed cap and trade provisions which are not final at this time.

Future Legislative and Regulatory Developments

In addition to the specific instances described above, there are a number of legislative and regulatory initiatives relating to the reduction of emissions that areunder consideration at the federal, state, and international level. Because of the nature of Entergy's business, the adoption of each of these could affect itsoperations. These initiatives include:

designation by the EPA and state environmental agencies of areas that are not in attainment with national ambient air quality standards;

EPA initiatives related to interstate transport of pollutants and their impacts on fine particulates and regional haze;

introduction of several bills in Congress proposing further limits on NOx, SO2, mercury, or limits on carbon dioxide (CO2) emissions; and

pursuit by the Bush administration of a voluntary program intended to reduce CO2 emissions.

Entergy continues to monitor these actions in order to analyze their potential operational and cost implications. In anticipation of the potential imposition ofCO2 emission limits on the electric industry in the future, Entergy has initiated actions designed to reduce its exposure to potential new governmentalrequirements related to CO2 emissions. These actions include establishment of a formal program to stabilize power plant CO2 emissions at year 2000 levelsthrough 2005 and support for national legislation that would increase planning certainty for electric utilities while addressing emissions in a responsible andflexible manner. By virtue of its proportionally large investment in low or non-emitting gas-fired and nuclear generation technologies, Entergy's overall CO2emission "intensity," or rate of CO2 emitted per kilowatt-hour of electricity generated, is already among the lowest in the industry. Total CO2 emiss ionsrepresenting the company's ownership share of power plants in the United States were approximately 53.24 million tons in 2000, 49.58 million tons in 2001,44.20 million tons in 2002, and 36.78 million tons in 2003.

In January 2004, the EPA proposed the Interstate Air Quality Rule which intends to reduce SO2 and NOx emissions from plants in order to improve airquality in the northeastern United States. The impact of this proposed rule is unclear at this time, but the rule has the potential to require significant pollutioncontrol capital costs. The financial impact could be offset by proposed emission markets; however, the allocation of the emission allowances and the set upof the market will determine the ultimate cost to Entergy. Entergy is concerned that the allocation may be unfairly skewed towards states with relativelyhigher emissions. Entergy will continue to study the proposed rule's impact to its generation fleet and will work to ensure that all states are treated fairly inthe allocation of emission credits.

Clean Water Act

The 1972 amendments to the Federal Water Pollution Control Act (known as the Clean Water Act or CWA) provide the statutory basis for the NationalPollutant Discharge Elimination System (NPDES) permit program and the basic structure for regulating the discharge of pollutants from point sources towaters of the United States. The CWA requires all discharges of pollutants to waters of the United States to be permitted.

316(b) Cooling Water Intake Structures

The EPA issued new regulations in February 2004 governing the intake of water at large existing power plants that employ cooling water intake structures.The rule seeks to reduce perceived impacts on aquatic resources by requiring covered facilities to implement technology or other measures to meet EPA-targeted reductions in water use and corresponding perceived aquatic impacts. The rule was the subject of extensive comment during promulgation and islikely to be challenged in court. Entergy will continue to evaluate the rule, including consideration of options for complying with the rule if it remainssubstantially in its current form. Those options considered may include operational controls, the installation of equipment to address perceived aquaticimpacts, other mitigation measures, or combinations of these alternatives.

Entergy's Non-Utility Nuclear business is currently in negotiations with EPA for renewal of the Pilgrim NPDES permit and is involved in an administrativepermitting process with the New York environmental authority for renewal of the Indian Point 2 and 3 discharge permit. In November 2003, the New YorkState Department of Environmental Conservation (NYDEC) issued a draft permit indicating that closed cycle cooling would be considered the "best

technology available" for minimizing perceived adverse environmental impacts attributable to the intake and discharge of cooling water at Indian Point 2and 3, if Entergy moves forward to obtain license extensions for these facilities. The draft permit would require Entergy to take certain steps to assess thefeasibility of retrofitting the site to install cooling towers before re-licensing Indian Point 2 and 3, whose current licenses with the NRC expire in 2013 and2015. The draft permit could also require, upon its becoming effective, the fa cilities to take an annual 42 unit-day outage and provide a payment into aNYDEC account until the start of cooling tower construction. Entergy is participating in the administrative process in order to have the draft permit modifiedprior to final issuance, and opposes any requirement to install cooling towers or begin annual forced outages at Indian Point 2 and 3.

Oil Pollution Prevention Regulation

The EPA published a revised Oil Pollution Prevention regulation in July 2002. The regulation affects Entergy's operation of its approximately 3,500transmission and distribution electrical equipment installations that are potentially subject to the rule. While the published rule provides a great deal offlexibility to the regulated community insofar as allowable strategies, it also provides the EPA discretion in evaluation of compliance with the rule. The EPAOil Program Headquarters staff is currently in the process of training the EPA Regions on the rule and its enforcement. Entergy is currently working directlywith the EPA Oil Program Headquarters staff to have Entergy's electrical equipment oil pollution prevention strategy formally recognized as an industrystandard.

Comprehensive Environmental Response, Compensation, and Liability Act of 1980

The Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (CERCLA), authorizes the EPA and, indirectly, thestates, to mandate clean-up, or reimbursement of clean-up costs, by owners or operators of sites from which hazardous substances may be or have beenreleased. Parties that transported hazardous substances to these sites or arranged for the disposal of the substances are also deemed liable by CERCLA.CERCLA has been interpreted to impose strict, joint, and several liability on responsible parties. The domestic utility companies have sent waste materialsto various disposal sites over the years. In addition, environmental laws now regulate certain of the companies' operating procedures and maintenancepractices which historically were not subject to regulation. Some of Entergy's disposal sites have been the subject of governmental action under CERCLA,resulting in site clean-up activities. The domestic utility companies have particip ated to various degrees in accordance with their respective potentialliabilities in such site clean-ups and have developed experience with clean-up costs. The affected companies have established reserves for suchenvironmental clean-up and restoration activities.

Other Environmental Matters

Entergy Gulf States

Several class action and other suits have been filed in state and federal courts seeking relief from Entergy Gulf States and others for damages caused by thedisposal of hazardous waste and for asbestos-related disease allegedly resulting from exposure on Entergy Gulf States' premises (see "Litigation" below).

Entergy Gulf States is currently involved in a remedial investigation of the Lake Charles Service Center site, located in Lake Charles, Louisiana. Amanufactured gas plant (MGP) is believed to have operated at this site from approximately 1916 to 1931. Coal tar, a by-product of the distillation processemployed at MGPs, was apparently routed to a portion of the property for disposal. The same area has also been used as a landfill. In 1999, Entergy GulfStates signed a second Administrative Consent Order (AOC) with the EPA to perform removal action at the site. In 2002, approximately 7,400 tons ofcontaminated soil and debris were excavated and disposed of from an area within the service center. In 2003, a cap was constructed over the remedial area toprevent the migration of contamination to the surface. Entergy Gulf States anticipates commencement of a ten-year groundwater monitoring study uponissuance of a negotiated order by EPA. EPA is expected to issue the order in early 2004. Entergy Gulf States believes that its ultimate responsibility for thissite will not materially exceed its existing clean-up provision of $11.6 million.

In 1994, Entergy Gulf States performed a site assessment in conjunction with a construction project at the Louisiana Station Generating Plant (LouisianaStation). In 1995, a further assessment confirmed subsurface soil and groundwater impact to three areas on the plant site. After validation, a notification wasmade to the LDEQ and a phased process was executed to remediate each area of concern. The final phase of groundwater clean up and monitoring atLouisiana Station is expected to continue through 2005. The remediation cost incurred through December 31, 2003 for this site was $6.5 million. Futurecosts are not expected to exceed the existing provision of $1 million.

Entergy Louisiana and Entergy New Orleans

Several class action and other suits have been filed in state and federal courts seeking relief from Entergy Louisiana and Entergy New Orleans and others fordamages caused by the disposal of hazardous waste and for asbestos-related disease allegedly resulting from exposure on Entergy Louisiana's and EntergyNew Orleans' premises (see "Litigation" below).

The Southern Transformer Shop located in New Orleans served both Entergy Louisiana and Entergy New Orleans. This transformer shop is now closed andenvironmental assessments are being performed and communications with EPA and LDEQ are underway to determine what remediation may be necessary.Based on preliminary findings, an expected clean-up cost of $750,000 has been reserved for this project.

During 1993, the LDEQ issued new rules for solid waste regulation, including regulation of wastewater impoundments. Entergy Louisiana and Entergy NewOrleans have determined that certain of their power plant wastewater impoundments were affected by these regulations and chose to remediate and repair orclose them. Completion of this work is pending LDEQ approval. LDEQ has issued notices of deficiencies for certain of these sites. As a result, recordedliabilities in the amounts of $5.8 million for Entergy Louisiana and $0.5 million for Entergy New Orleans existed at December 31, 2003 for wastewaterremediation and repairs and closures. Management of Entergy Louisiana and Entergy New Orleans believes these reserves are adequate based on currentestimates.

Entergy Arkansas, Entergy Gulf States, and Entergy Louisiana

The Texas Commission on Environmental Quality (Commission) notified Entergy Arkansas, Entergy Gulf States, and Entergy Louisiana in Septemberthrough November 2003 that the Commission believes those entities are potentially responsible parties (PRPs) concerning contamination existing at the SanAngelo Electric Service Company (SESCO) facility in San Angelo, Texas. The facility operated as a transformer repair and scrapping facility from the1930s until 2003. Both soil and groundwater contamination exists at the site. Entergy Gulf States and Entergy Louisiana sent transformers to this facilityduring the 1980s. There has been no indication that Entergy Arkansas ever used this facility. Entergy Gulf States, Entergy Louisiana, and Entergy Arkansashave responded to an information request from the Commission and will continue to cooperate in this investigation. It is likely that Entergy Gulf States andEntergy Louisiana will be required to contribute to the remediation of contaminated gr oundwater at the site, but the contributions likely will be less thanthose of other SESCO customers that continued to use the site long after 1990, and the list of PRPs who likely will share in the cost is long. An estimate ofliability cannot be provided at this time.

Litigation

Certain states in which Entergy operates have proven to be unusually litigious environments. Judges and juries in Louisiana, Mississippi, and Texas havedemonstrated a willingness to grant large verdicts, including punitive damages, to plaintiffs in personal injury, property damage, and business tort cases.Entergy uses legal and appropriate means to contest litigation threatened or filed against it, but the litigation environment in these states poses a significantbusiness risk.

Ratepayer Lawsuits (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and Entergy New Orleans)

Entergy New Orleans Fuel Clause Lawsuit

In April 1999, a group of ratepayers filed a complaint against Entergy New Orleans, Entergy Corporation, Entergy Services, and Entergy Power in statecourt in Orleans Parish purportedly on behalf of all Entergy New Orleans ratepayers. The plaintiffs seek treble damages for alleged injuries arising from thedefendants' alleged violations of Louisiana's antitrust laws in connection with certain costs passed on to ratepayers in Entergy New Orleans' fuel adjustmentfilings with the City Council. In particular, plaintiffs allege that Entergy New Orleans improperly included certain costs in the calculation of fuel charges andthat Entergy New Orleans imprudently purchased high-cost fuel from other Entergy affiliates. Plaintiffs allege that Entergy New Orleans and the otherdefendant Entergy companies conspired to make these purchases to the detriment of Entergy New Orleans' ratepayers and to the benefit of Entergy'sshareholders, in violation of Louisiana's antitrust laws. Plaintiffs als o seek to recover interest and attorneys' fees. Entergy filed exceptions to the plaintiffs'allegations, asserting, among other things, that jurisdiction over these issues rests with the City Council and FERC. If necessary, at the appropriate time,Entergy will also raise its defenses to the antitrust claims. The suit in state court has been stayed by stipulation of the parties pending a decision by the CityCouncil in the proceeding discussed in the next paragraph.

Plaintiffs also filed this complaint with the City Council in order to initiate a review by the City Council of the plaintiffs' allegations and to force restitutionto ratepayers of all costs they allege were improperly and imprudently included in the fuel adjustment filings. Testimony was filed on behalf of the plaintiffsin this proceeding asserting, among other things, that Entergy New Orleans and other defendants have engaged in fuel procurement and power purchasingpractices and included costs in Entergy New Orleans' fuel adjustment that could have resulted in New Orleans customers being overcharged by more than$100 million over a period of years. Hearings were held in February and March 2002. In February 2004, the City Council approved a resolution that resultsin a refund to customers of $11.3 million, including interest during the months of June through September 2004. The resolution concludes, among otherthings, that the record does not support an allegation that Entergy New Orleans' actions or inactions, either alone or in concert with Entergy or any of itsaffiliates, constituted a misrepresentation or a suppression of the truth made in order to obtain an unjust advantage of Entergy New Orleans, or to cause loss,inconvenience or harm to its ratepayers. The plaintiffs have appealed the City Council resolution to the state court in Orleans Parish.

Entergy New Orleans Rate of Return Lawsuit

In April 1998, a group of residential and business ratepayers filed a complaint against Entergy New Orleans in state court in Orleans Parish purportedly onbehalf of all ratepayers in New Orleans. The plaintiffs allege that Entergy New Orleans overcharged ratepayers by at least $300 million since 1975 inviolation of limits on Entergy New Orleans' rate of return that the plaintiffs allege were established by ordinances passed by the Council in 1922. Theplaintiffs seek, among other things, (i) a declaratory judgment that such franchise ordinances have been violated; and (ii) a remand to the Council for theestablishment of the amount of overcharges plus interest. Entergy New Orleans believes the lawsuit is without merit. Entergy New Orleans has charged onlythose rates authorized by the Council in accordance with applicable law. In May 2000, a court of appeal granted Entergy New Orleans' exception tojurisdiction in the case and dismissed the proceeding. The Louisiana Supreme Cou rt denied the plaintiff's request for a writ of certiorari. The plaintiffs thencommenced a similar proceeding before the Council. The plaintiffs and the advisors for the Council each filed their first round of testimony in January 2002.In their testimony, the plaintiffs allege that Entergy New Orleans earned in excess of the legally authorized rate of return during the period 1979 to 2000 andthat Entergy New Orleans should be required to refund between $240 million and $825 million to its ratepayers. In the testimony submitted by the Counciladvisors, the advisors allege that Entergy New Orleans has not earned in excess of its authorized rate of return for the period at issue and that no refund istherefore warranted. A hearing scheduled in June 2002 was canceled and the proceeding has been continued without a proposed trial date.

In October 2002, plaintiffs moved to stay the entire regulatory proceeding pending resolution of their appeal in state court of the Council's denial of a motionin which they had sought to force the Council to recuse itself and to have the Council Advisors disqualified from representing the Council. In their motion tostay, plaintiffs also requested that the proceeding be stayed until the final resolution of a separate lawsuit filed by the Alliance for Affordable Energy againstthe Council seeking to force the Council to join the proceeding as a party-litigant. On January 24, 2003, a Louisiana State court judge dismissed both theplaintiffs' appeal and the Alliance's separate lawsuit on the ground that she did not have jurisdiction to adjudicate the claims. The plaintiffs appealed theruling and in October 2003, the court of appeal affirmed the decision of the trial court. In November 2003, the plaintiffs filed a writ application seeking reliefat the Louisiana Supreme Court, which was denied in February 2004. In December 2003, the Council Advisors filed a motion in the Council proceedings tobifurcate the hearing in this matter, such that the effect of the provision of the 1922 Ordinance in setting lawful rates would be considered first. Only if it isdetermined that this provision establishes a limitation, would the remaining issues be reached. No ruling has yet been made with respect to the motion tobifurcate.

Texas Power Price Lawsuit

In August 2003, a lawsuit was filed in the district court of Chambers County, Texas by Texas residents on behalf of a purported class apparently of the Texasretail customers of Entergy Gulf States who were billed and paid for electric power from January 1, 1994 to the present. The named defendants are EntergyCorporation, Entergy Services, Entergy Power, Entergy Power Marketing Corp., Arkansas Electric Cooperative Corporation and Entergy Arkansas. EntergyGulf States is not a named defendant, but is alleged to be a co-conspirator.

Plaintiffs allege that the defendants implemented a "price gouging accounting scheme" to sell to plaintiffs and similarly situated utility customers higherpriced power generated by the defendants while rejecting and/or reselling to off-system utilities, less expensive power offered and/or purchased from off-system suppliers and/or generated by the Entergy system. In particular, plaintiffs allege that the defendants manipulated and continue to manipulate thedispatch of generation so that power is purchased from affiliated expensive resources instead of buying cheaper off-system power.

Plaintiffs estimate that customers in Texas were charged at least $57 million above prevailing market prices for power. Plaintiffs seek actual, consequentialand exemplary damages, costs and attorneys' fees, and disgorgement of profits. In September 2003, the Entergy defendants removed the lawsuit to thefederal court in Galveston, and in October 2003, filed a pleading seeking dismissal of the plaintiffs' claims. In October 2003, the plaintiffs filed a motion toremand the case to state court. In January 2004, the federal court determined that it did not have jurisdiction over the subject matter of the lawsuit, andremanded the case to the state district court in Chambers County. Management cannot predict the outcome of this litigation at this time.

Entergy Gulf States Merger Savings Lawsuit

In February 2002, various plaintiffs, who claim to be customers of Entergy Gulf States in Texas and further claim to be class representatives for all othersimilarly situated customers, filed a lawsuit against Entergy Gulf States and Entergy Corporation in the district court of Jefferson County, Texas. Thepetition alleges that Entergy Corporation and Entergy Gulf States violated the 1993 agreement entered by parties to the Entergy-Gulf States Utilities mergerdocket in Texas by failing to pass 100% of Texas retail non-fuel merger-related savings to Entergy Gulf States' ratepayers in Texas beginning on January 1,2002. The petition alleges that the non-fuel merger-related savings accrue at a rate of about $2 million per month. The petition seeks damages, exemplarydamages, and attorney's fees and costs, in addition to certification of the case as a class action. The district court has denied Entergy Gulf States' and Entergy

Corpor ation's motions to transfer venue and to dismiss or abate on the basis of the PUCT's jurisdiction over this matter. In September 2002, Entergy GulfStates and Entergy Corporation sought mandamus relief at the Ninth District Court of Appeals which was denied. After the Court of Appeals deniedrehearing, in January 2003, Entergy Corporation and Entergy Gulf States filed a petition for mandamus relief at the Texas Supreme Court. The PUCT hasfiled an amicus brief concurring in Entergy Gulf States' position that the matters at issue in the lawsuit fall within the PUCT's exclusive jurisdiction. TheTexas Supreme Court heard oral argument in November 2003. Management cannot predict the outcome of this litigation at this time.

Entergy Louisiana Formula Ratemaking Plan Lawsuit

In May 1998, a group of ratepayers filed a complaint against Entergy Louisiana and the LPSC in state court in East Baton Rouge Parish purportedly onbehalf of all Entergy Louisiana ratepayers. The plaintiffs allege that the formula ratemaking plan authorized by the LPSC has allowed Entergy Louisiana toearn amounts in excess of a fair return. The plaintiffs seek, among other things, (i) a declaratory judgment that the formula ratemaking plan is an improperratemaking practice; and (ii) a refund of the amounts allegedly charged in excess of proper ratemaking practices. This case has not been active, andabandonment issues are being evaluated. At this time, management cannot determine the amount of damages being sought.

Street Lighting Lawsuit (Entergy New Orleans)

In February 2002, the City of New Orleans (City) filed a petition against Entergy New Orleans in state court in Orleans Parish, seeking declaratory relief,injunctive relief, an unspecified amount of monetary damages, and attorney and consulting fees and costs. The City's petition alleged that Entergy NewOrleans had breached its obligations to the City related to the provision of street lighting maintenance services. After mediation, the City dismissed itslawsuit with prejudice in October 2002 and the parties agreed that any amounts that may be owed by Entergy New Orleans will be determined by anindependent third party audit. In December 2003 the audit concluded, and Entergy New Orleans paid the City $6.7 million to resolve the proceeding andterminate the contract with the City to provide street lighting services.

Murphy Oil Lawsuit (Entergy Corporation and Entergy Louisiana)

Residents located near the Murphy Oil Refinery in Meraux, Louisiana filed several lawsuits in state court in St. Bernard Parish, Louisiana against MurphyOil, Entergy Louisiana, and others for injuries they allegedly suffered as a result of an explosion at the refinery in June 1995. The lawsuits were consolidatedand a class of plaintiffs was certified. Plaintiffs alleged, among other things, that an electrical fault at an Entergy Louisiana substation contributed to causingthe explosion. Murphy Oil filed a cross-claim against Entergy Louisiana based on the same allegation, in which Murphy Oil seeks recovery of any damagesit has paid to the plaintiffs. Claiborne P. Deming, who became a director of Entergy Corporation in 2002, is the President and Chief Executive Officer ofMurphy Oil.

Murphy Oil and other defendants settled with the plaintiffs for $8.8 million, but Entergy Louisiana did not participate in the settlement. Entergy Louisianacontinues to defend itself in the proceeding. Entergy Louisiana also has insurance in place for claims of this type. A trial for the remaining parties in theproceeding was held in September 2003 and a decision is pending.

Fiber Optic Cable Litigation (Entergy Corporation, Entergy Gulf States, and Entergy Louisiana)

In 1998, a group of property owners filed a class action suit against Entergy Corporation, Entergy Gulf States, Entergy Services and ETHC in state court inJefferson County, Texas purportedly on behalf of all property owners in each of the states throughout the Entergy service area who have conveyed easementsto the defendants. The lawsuit alleged that Entergy installed fiber optic cable across their property without obtaining appropriate easements. The plaintiffssought actual damages for the use of the land and a share of the profits made through use of the fiber optic cables and punitive damages. The state courtpetition was voluntarily dismissed, and the plaintiffs commenced a class action suit with the same claims in the United States District Court in Beaumont,Texas. Both sides have filed motions for summary judgment, which were heard by the court in late 2001. In 2003, the district judge ruled that as a matter oflaw, all of the Texas easements permit Entergy to utilize the fi ber for their own communications. Further, the Court ruled that approximately two-thirds ofthe Texas easements allow Entergy to use the fiber for external or third party communications. Entergy believes that any damages suffered by the remainingone-third plaintiff landowners are negligible and that there is no basis for the claim seeking a share of profits. The Court has scheduled a class certificationhearing for March 17, 2004. At this time, management cannot determine the specific amount of damages being sought.

Several property owners have filed a class action suit against Entergy Louisiana, Entergy Services, ETHC, and Entergy Technology Company in state courtin St. James Parish, Louisiana purportedly on behalf of all property owners in Louisiana who have conveyed easements to the defendants. The lawsuitalleges that Entergy installed fiber optic cable across their property without obtaining appropriate easements. The plaintiffs seek actual damages for the useof the land and a share of the profits made through use of the fiber optic cables and punitive damages. Entergy removed the case to federal court in NewOrleans; however, the District Court remanded the case back to state court. Entergy is appealing this ruling. On December 23, 2003, the state court held aclass certification hearing. In January 2004 the judge advised the parties that he would certify a class, but, to date, he has not entered his judgment. Once thejudgment is entered, Entergy will appeal the dec ision. At this time, management cannot determine the specific amount of damages being sought.

Asbestos and Hazardous Waste Suits (Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans)

Numerous lawsuits have been filed in federal and state courts in Texas, Louisiana, and Mississippi primarily by contractor employees in the 1950-1980timeframe against Entergy Gulf States, Entergy Louisiana, Entergy New Orleans, and Entergy Mississippi as premises owners of power plants, for damagescaused by alleged exposure to asbestos or other hazardous material. Many other defendants are named in these lawsuits as well. Currently, there areapproximately 419 lawsuits involving just over 7,000 claims. Reserves have been established that should be adequate to cover any exposure. Additionally,negotiations continue with insurers to recover more reimbursement, while new coverage is being secured to minimize anticipated future potential exposures.Management believes that loss exposure has been and will continue to be handled successfully so that the ultimate resolution of these matters will not bematerial, in the aggregate, to the companies' financial position or results of o peration.

Employment Litigation (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, andSystem Energy)

Entergy Corporation and the domestic utility companies are defendants in numerous lawsuits that have been filed by former employees alleging that theywere wrongfully terminated and/or discriminated against on the basis of age, race, and/or sex. Entergy Corporation and the domestic utility companies arevigorously defending these suits and deny any liability to the plaintiffs. However, no assurance can be given as to the outcome of these cases, and at thistime management cannot estimate the total amount of damages sought.

Included in the employment litigation are two cases filed in state court in Claiborne County, Mississippi in December 2002. The two cases were filed byformer employees of Entergy Operations who were based at Grand Gulf. Entergy Operations and Entergy employees are named as defendants. The casesmake employment-related claims, and seek in total $53 million in alleged actual damages and $168 million in punitive damages. Entergy cannot predict theultimate outcome of this proceeding.

Power Generation Mexico, Inc. Lawsuit

Power Generation Mexico, Inc. (PGI) filed suit against Entergy Power Development Corporation (EPDC), Entergy Power Netherlands Company, B.V., andEntergy Corporation in the San Francisco Superior Court in May 2001. PGI asserts that EPDC agreed to develop several power projects and to receivecertain fees and equity interest for its efforts, and that EPDC failed to fulfill its obligations and deliberately frustrated development of the projects, allegedlyto PGI's detriment. PGI seeks damages that in the discovery process it claims to be approximately $21 million. Entergy has filed a cross complaint allegingfraud and breach of the development agreement. Trial is set to commence in April 2004. Entergy cannot predict the ultimate outcome of this proceeding.

Futures and Options Trading Lawsuit

On August 18, 2003, Cornerstone Propane Partners, L.P. filed a lawsuit in the United States District Court for the Southern District of New York against 40named defendants, including Entergy-Koch Trading and Entergy Corporation. The lawsuit was filed on behalf of a purported class of all persons whopurchased and/or sold natural gas futures and options contracts traded on the New York Mercantile Exchange (NYMEX) between January 1, 2000 andDecember 31, 2002 and who suffered losses by reason of the defendants' alleged manipulation of the natural gas market. The plaintiffs amended theircomplaint in January 2004 and did not rename Entergy Corporation as a defendant. Entergy Corporation was dismissed as a defendant in the proceeding inFebruary 2004. Entergy-Koch Trading remains a defendant in the proceeding.

Research Spending

Entergy is a member of the Electric Power Research Institute (EPRI). EPRI conducts a broad range of research in major technical fields related to theelectric utility industry. Entergy participates in various EPRI projects based on Entergy's needs and available resources. The domestic utility companiescontributed $1.5 million in 2003, $2.1 million in 2002, and $4 million in 2001 to EPRI. The Non-Utility Nuclear business contributed $3 million in 2003and 2002 and $2 million in 2001 to EPRI.

Employees

Employees are an integral part of Entergy's commitment to serving its customers. As of December 31, 2003, Entergy employed 14,773 people.

Entergy Arkansas 1,516Entergy Gulf States 1,676Entergy Louisiana 918Entergy Mississippi 810Entergy New Orleans 375System Energy -Entergy Operations 2,902Entergy Services 2,755Entergy Nuclear Operations 3,357Other subsidiaries 255Total Full-time 14,564Part-time 209Total Entergy 14,773

Approximately 4,900 employees are represented by the International Brotherhood of Electrical Workers Union, the Utility Workers Union of America, andthe International Brotherhood of Teamsters Union.

ENTERGY ARKANSAS, INC.



Net Income


Net income decreased $9.6 million due to a decrease in net revenue, an increase in depreciation and amortization expenses, and an increase in the effectiveincome tax rate for 2003 compared to 2002. The decrease was substantially offset by a decrease in other operation and maintenance expenses, an increase inother income, and decreased interest charges.


Net income decreased $42.5 million due to increases in other operation and maintenance expenses and depreciation and amortization expenses and adecrease in other income. The decrease was partially offset by an increase in net revenue and decreased interest charges.

Net Revenue



(In Millions) 2002 net revenue $1,095.9

March 2002 settlement agreement (154.0)V l / th (7 7)

Volume/weather (7.7)

Asset retirement obligation 30.1


Energy cost recovery true-up 10.2

Other 7.6

2003 net revenue $998.7

The March 2002 settlement agreement resolved a request for recovery of ice storm costs incurred in December 2000 with an offset of those costs for fundscontributed to pay for future stranded costs. A 1997 settlement provided for the collection of earnings in excess of an 11% return on equity in a transitioncost account (TCA) to offset stranded costs if retail open access were implemented. In May 2002, Entergy Arkansas filed its 2001 earnings evaluation reportwith the APSC. In June 2002, the APSC approved a final contribution of $5.9 million to the TCA.

In mid- and late December 2000, two separate ice storms left 226,000 and 212,500 Entergy Arkansas customers, respectively, without electric power in itsservice area. Entergy Arkansas filed a proposal to recover costs plus carrying charges associated with power restoration caused by the ice storms. In an orderissued in June 2001, the APSC decided not to give final approval to Entergy's proposed storm cost recovery at that time. The APSC action resulted in thedeferral in 2001 of storm damage costs expensed in 2000 as reflected in Entergy Arkansas' financial statements. Entergy Arkansas then filed its final stormdamage cost determination, which reflected costs of approximately $195 million. In May 2002, the APSC approved a settlement agreement submitted byEntergy Arkansas, the APSC staff, and the Arkansas Attorney General. In the March 2002 settlement, the parties agreed that $153 million of the ice stormcosts would be classified as incremental ice storm expenses that can be offset against the TCA on a rate class basis, and any excess of ice storm costs overthe amount available in the TCA would be deferred and amortized over 30 years, although such excess costs were not allowed to be included as a separatecomponent of rate base. The allocated ice storm expenses exceeded the available TCA funds by $15.8 million which was recorded as a regulatory asset inJune 2002. In accordance with the settlement agreement and following the APSC's approval of the 2001 earnings review, Entergy Arkansas filed to return$18.1 million of the TCA to certain large general service class customers that paid more into the TCA than their allocation of storm costs. The APSCapproved the return of funds to the large general service customer class in the form of refund checks in August 2002. As part of the implementation of theMarch 2002 settlement agreement provisions, the TCA pr ocedure ceased with the 2001 earnings evaluation.

Of the remaining ice storm costs, $32.2 million was addressed through established ratemaking procedures, including $22.2 million classified as capitaladditions, while $3.8 million of the ice storm costs was not recovered through rates.

The effect on net income of the March 2002 settlement agreement and 2001 earnings review is a $2.2 million increase in 2003, because of the offsettingdecrease in operation and maintenance expenses discussed below.

The volume/weather variance is the result of less favorable sales volume primarily due to the effect of colder winter weather in December 2002.

The asset retirement obligation variance is due to the implementation of SFAS 143, "Accounting for Asset Retirement Obligations," adopted in January2003. See "Critical Accounting Estimates" for more details on SFAS 143. The increase is offset by an increase in decommissioning expense and has noeffect on net income.

The net wholesale revenue variance is primarily due to an increase in sales volume to Entergy New Orleans pursuant to a purchased power agreement andalso due to higher wholesale prices and volume.

The energy cost recovery true-up refers to the difference between the estimated deferred fuel expense and the actual calculation of recoverable fuel expense,which occurs on an annual basis. In 2002, the deferred fuel expense estimate was larger than the actual recoverable fuel expense, which decreased netrevenue. In 2003, the actual recoverable fuel expense was larger than the deferred fuel expense estimate, which increased net revenue.

Gross operating revenues, fuel and purchased power expenses, and other regulatory credits

Gross operating revenues increased primarily due to an increase of $95.7 million in gross wholesale revenue due to the same factors that increased netwholesale revenue and also due to increased sales to affiliates in addition to the Entergy New Orleans sales mentioned above. The increase was partiallyoffset by a decrease of $74.4 million in fuel cost recovery revenues due to a decrease in the annual recovery rider in October 2002 (fuel cost recoveryrevenues are discussed in Note 2 to the domestic utility companies and System Energy financial statements).

Fuel and purchased power expenses decreased primarily due to the displacement of higher-priced natural gas generation by lower-priced purchased powerand coal generation.

Other regulatory credits decreased primarily due to the March 2002 settlement agreement and 2001 earnings review mentioned above, which increased otherregulatory credits in 2002 to offset other operation and maintenance expenses of $159.9 million related to the December 2000 ice storms. The decrease waspartially offset by the asset retirement obligation mentioned above, which increased regulatory credits in 2003 to offset the increase in decommissioningexpense.



(In Millions) 2001 net revenue $982.5

March 2002 settlement agreement 180.7

Volume/weather 20.3

System Energy refund in 2001 (62.7)Net wholesale revenue (22.9)Other (2.0)2002 net revenue $1,095.9

The March 2002 settlement agreement is discussed above. The effect on net income in 2002 is a decrease of $2.2 million.

The volume/weather variance is due to an increase in electricity usage in the service territory. Billed usage increased a total of 191 GWh in the residentialand commercial sectors.

The effect of the System Energy refund resulted from System Energy's application to FERC in May 1995 for a rate increase, which it implemented inDecember 1995, subject to refund. The request sought changes to System Energy's rate schedule, including increases in the revenue requirement associatedwith decommissioning costs, the depreciation rate, and the rate of return on common equity. In July 2000, FERC approved a lower rate of return than therate sought by System Energy. Upon receipt of a final FERC order in July 2001, Entergy Arkansas recorded entries to spread the impacts of FERC's order tothe various revenue, expense, asset, and liability accounts affected, as if the order had been in place since commencement of the case in 1995. Theaccounting entries necessary to record the effects of the order reduced Entergy Arkansas' purchased power expenses by $62.7 million in 2001, whichresulted in a corresponding increase in net revenue in 2001.

The net wholesale revenue variance is primarily due to a decrease in volume and revenue related to sales to municipalities and co-operatives, partially due tothe expiration of a municipal wholesale customer contract in June 2002.


Gross operating revenues decreased primarily due to a decrease of $120.9 million in gross wholesale revenue due to the same factors that decreased netwholesale revenue, as well as a decrease in the average price of energy sold to affiliated wholesale customers. The decrease was also due to a decrease of$91.8 million in fuel cost recovery revenues due to decreases in the annual recovery rider in April 2002 and again in October 2002.

Fuel and purchased power expenses decreased primarily due to a decrease in the market prices of natural gas and purchased power.

Other regulatory credits increased primarily due to the March 2002 settlement agreement and 2001 earnings review discussed above.



Other operation and maintenance expenses decreased primarily due to expenses in 2002 of $159.9 million due to the March 2002 settlement agreement and2001 earnings review which allowed Entergy Arkansas to recover a large majority of 2000 and 2001 ice storm repair expenses through the previously-collected transition cost account amounts (which is offset by a corresponding decrease in other regulatory credits and has no effect on net income).Decreases of $18.7 million in administrative and general expenses and $4.7 million in contract labor costs also contributed to the decrease. The decrease waspartially offset by the following:

voluntary severance accruals of $31.8 million in 2003; and

an increase of $10.4 million in benefits costs.

Decommissioning expense increased due to the implementation of SFAS 143, "Accounting for Asset Retirement Obligations." The increase indecommissioning expense is offset by increases in other regulatory credits and interest and dividend income and has no effect on net income.

Depreciation and amortization expenses increased primarily due to an increase in plant in service.

Other income increased primarily due to:

an increase of $7.3 million in interest and dividend income due to the implementation of SFAS 143, "Accounting for Asset RetirementObligations." As mentioned above, the increase is offset in decommissioning expense and has no effect on net income; and

an increase of $4.8 million in the allowance for equity funds used during construction due to an increase in construction work in progress.

Interest charges decreased primarily due to:

an increase in interest expense in 2002 resulting from a true-up of the annual fuel recovery rider in March 2002 of $4.5 million;

interest recorded in 2002 of $4.1 million (offset by a corresponding decrease in other regulatory credits and has no effect on net income) on thetransition cost account obligation, which is now terminated as a result of the March 2002 settlement agreement; and

an increase of $3.0 million in the allowance for borrowed funds used during construction due to an increase in construction work in progress.


Other operation and maintenance expenses increased primarily due to:

increased expenses of $159.9 million due to the March 2002 settlement agreement and 2001 earnings review which allowed Entergy Arkansasto recover a large majority of 2000 and 2001 ice storm repair expenses through the previously-collected transition cost account amounts (offset

by an increase in other regulatory credits and has no effect on operating income);

increased expenses of $24.5 million due to the reversal in 2001 of ice storm costs previously charged to expense in 2000;

an increase of $10.3 million in benefit costs; and

an increase in expense of $6.6 million to reflect the current estimate of the liability for the future disposal of low-level radioactive wastematerials.

The increase in other operation and maintenance expenses was partially offset by a $16 million decrease due to turbine refurbishing costs expensed in 2001at a plant after its lease expired.

Depreciation and amortization expenses increased due to an increase in plant in service combined with revisions made to the useful lives of certainintangible plant assets to more appropriately reflect their actual lives, which lowered expense in 2001 in accordance with regulatory treatment.

Other income decreased primarily due to a decrease in interest income of $7.1 million recorded on the deferred fuel balance due to the balance shifting froman asset to a liability in 2002.


a decrease of $3.3 million due to a lower interest rate on spent nuclear fuel disposal costs;

decreased interest of $2.8 million on intercompany money pool borrowings due to Entergy Arkansas being in a lending position in 2002; and

interest expense of $2.7 million in 2001 on a $63 million credit facility that was outstanding in 2001 but not in 2002.

Income Taxes

The effective income tax rates for 2003, 2002, and 2001 were 45.5%, 34.5%, and 37.3%, respectively. See Note 3 to the domestic utility companies andSystem Energy financial statements for a reconciliation of the federal statutory rate of 35.0% to the effective income tax rate.


Cash Flow

Cash flows for the years ended December 31, 2003, 2002, and 2001 were as follows:

2003 2002 2001(In Thousands)

Cash and cash equivalents at beginning of period $95,513 $103,466 $7,838

Cash flow provided by (used in):Operating activities 437,520 357,421 413,178 Investing activities (337,509) (249,438) (326,602)Financing activities (186,690) (115,936) 9,052 Net increase (decrease) in cash and cashequivalents

(86,679) (7,953) 95,628

Cash and cash equivalents at end of period $8,834 $95,513 $103,466

Operating Activities

Cash flow from operations increased $80.1 million in 2003 compared to 2002 primarily due to income taxes paid of $2.2 million in 2003 versus incometaxes paid of $83.9 million in 2002, and money pool activity. The increase in cash flow from operations was partially offset by an increase in deferred fuelcosts in 2003 versus a decrease in 2002.

Entergy Arkansas' receivables from or (payables) to the money pool were as follows as of December 31 for each of the following years:

2003 2002 2001 2000(In Thousands)

($69,153) $4,279 $23,794 ($30,719)

Money pool activity provided $73.4 million of Entergy Arkansas' operating cash flow in 2003, provided $19.5 million in 2002, and used $54.5 million in2001. See Note 4 to the domestic utility companies and System Energy financial statements for a description of the money pool.

Cash flow from operations decreased $55.8 million in 2002 compared to 2001 primarily due to an increase in income taxes paid.


The increase of $88.1 million in net cash used in investing activities in 2003 compared to 2002 was primarily due to an increase in construction expendituresof $57.4 million and the maturity of $38.4 million of other temporary investments in the first quarter of 2002. Construction expenditures increased primarilydue to the following:

a FERC ruling that shifted responsibility for transmission upgrade work performed for independent power producers to Entergy Arkansas; and

ANO 1 steam generator, reactor vessel head and transformer replacement projects.

The decrease of $77.2 million in net cash used in investing activities in 2002 was primarily due to the aforementioned $38.4 million of other temporaryinvestments made in 2001 that provided cash in 2002 upon maturity.


The increase of $70.8 million in net cash used in financing activities in 2003 compared to 2002 was primarily due to the net redemption of $109.3 million oflong-term debt in 2003 compared to the net issuance of $18.4 million in 2002, partially offset by the payment of $56.3 million less in common stockdividends during the same period.

Entergy Arkansas used $115.9 million of cash in financing activities in 2002 compared to providing $9.1 million of cash in 2001 primarily due to a netissuance of $18.4 million of long-term debt in 2002 compared to a net issuance of $97.4 million in 2001. An increase of $43.4 million in common stockdividends paid to Entergy Corporation also contributed to the decrease in net cash provided.

See Note 5 to the domestic utility companies and System Energy financial statements for details on long-term debt.

Uses of Capital

Entergy Arkansas requires capital resources for:

construction and other capital investments;

debt and preferred stock maturities;

working capital purposes, including the financing of fuel and purchased power costs; and

dividend and interest payments.

Following are the amounts of Entergy Arkansas' planned construction and other capital investments, existing debt and lease obligations, and other purchaseobligations:

2004 2005-2006

2007-2008

after 2008 Total

(In Millions)Planned construction and capital investment (1) $285 $614 N/A N/A $899Long-term debt $- $147 $- $1,191 $1,338Capital lease obligations $10 $15 $5 $3 $33Operating leases $21 $34 $23 $62 $140Purchase obligations (2) $504 $837 $836 $3,352 $5,529Nuclear fuel lease obligations (3) $52 $51 N/A N/A $103

(1) Includes $190 million each year for maintenance capital, which is planned spending on routinecapital projects that are necessary to support reliability of service, equipment or systems and tosupport normal customer growth.

(2) As defined by SEC rule. For Entergy Arkansas almost all of the total consists of unconditional fueland purchased power obligations, including its obligations under the Unit Power Sales Agreement,which is discussed in Note 9 to the domestic utility companies and System Energy financialstatements.

(3) It is expected that additional financing under the leases will be arranged as needed to acquireadditional fuel, to pay interest, and to pay maturing debt. If such additional financing cannot bearranged, however, the lessee in each case must repurchase sufficient nuclear fuel to allow thelessor to meet its obligations.

On July 25, 2002, the Board authorized Entergy Arkansas and Entergy Operations to replace the ANO 1 steam generators and reactor vessel closure head.Entergy management estimates the cost of the fabrication and replacement to be approximately $235 million, of which approximately $135 million will beincurred through 2004. Management expects that the replacement will occur during a planned refueling outage in 2005. Entergy Arkansas filed in January2003 a request for a declaratory order by the APSC that the investment in the replacement is in the public interest analogous to the order received in 1998prior to the replacement of the steam generators for ANO 2. The APSC found that the replacement is in the public interest in a declaratory order issued inMay 2003. See ''Nuclear Matters'' below for further discussion of the ANO 1 steam generators and reactor vessel closure head.

In addition to the steam generators and reactor vessel closure head replacement, the planned capital investment estimate for Entergy Arkansas also reflectscapital required to support existing business and customer growth. The estimated capital expenditures are subject to periodic review and modification andmay vary based on the ongoing effects of regulatory constraints, market volatility, economic trends, environmental compliance, and the ability to accesscapital. Management provides more information on construction expenditures and long-term debt and preferred stock maturities in Notes 5, 7, and 9 to thedomestic utility companies and System Energy financial statements.

As a wholly-owned subsidiary, Entergy Arkansas pays dividends to Entergy Corporation from its earnings at a percentage determined monthly. EntergyArkansas is restricted by long-term debt indentures in the payment of cash dividends or other distributions on its common and preferred stock. As ofDecember 31, 2003, Entergy Arkansas had restricted retained earnings unavailable for distribution to Entergy Corporation of $309.4 million.

Sources of Capital

Entergy Arkansas' sources to meet its capital requirements include:


cash on hand;

debt issuances; and

bank financing under new or existing facilities.

In 2003, Entergy Arkansas issued $365 million of long-term debt and used the net proceeds, combined with the proceeds from a $100 million November2002 issuance, to redeem outstanding debt of $470 million. Entergy Arkansas is expected to continue refinancing or redeeming higher-cost debt andpreferred stock prior to maturity, to the extent market conditions and interest and dividend rates are favorable.

All debt and common and preferred stock issuances by Entergy Arkansas require prior regulatory approval. Preferred stock and debt issuances are alsosubject to issuance tests set forth in corporate charters, bond indentures, and other agreements. Entergy Arkansas has sufficient capacity under these tests tomeet its foreseeable capital needs.

Short-term borrowings by Entergy Arkansas, including borrowings under the money pool, are limited to an amount authorized by the SEC, which is $235million. Under the SEC order authorizing the short-term borrowing limits, Entergy Arkansas cannot incur new short-term indebtedness if its common equitywould comprise less than 30% of its capital. Entergy Arkansas has a 364-day credit facility available with an expiration date of April 2004 in the amount of$63 million, of which none was drawn at December 31, 2003. See Note 4 to the domestic utility companies and System Energy financial statements forfurther discussion of Entergy Arkansas' short-term borrowing limits.



Major changes are occurring in the wholesale and retail electric utility business, including in the electric transmission business. In April 1999, the Arkansaslegislature enacted Act 1556, the Arkansas Electric Consumer Choice Act, providing for competition in the electric utility industry through retail openaccess. In December 2001, the APSC recommended to the Arkansas General Assembly that legislation be enacted during the 2003 legislative session toeither repeal Act 1556 or further delay retail open access until at least 2010. In February 2003, the Arkansas legislature voted to repeal Act 1556 and therepeal was signed into law by the governor.

At FERC, restructuring at the wholesale level has begun but has been delayed. It is too early to predict the ultimate effects of changes in U.S. energymarkets. Restructuring issues are complex and are continually affected by events at the national, regional, state, and local levels. However, these changesmay result, in the long term, in fundamental changes in the way traditional integrated utilities and holding company systems, like the Entergy system,conduct their business. Some of these changes may be positive for Entergy, while others may not be.

System Agreement Proceedings


The LPSC and the Council commenced a proceeding at FERC in June 2001. Pursuant to a settlement agreement approved by the City Council in May 2003,the City Council withdrew as a complainant from the proceeding, but continues to participate as an intervenor. In this proceeding, the LPSC alleges that therough production cost equalization required by FERC under the System Agreement and the Unit Power Sales Agreement has been disrupted by changedcircumstances. The LPSC requests that FERC amend the System Agreement or the Unit Power Sales Agreement or both to achieve full production costequalization or to restore rough production cost equalization. The complaint does not seek a change in the total amount of the costs allocated by either theSystem Agreement or the Unit Power Sales Agreement. In addition the LPSC alleges that provisions of the System Agreement relating to minimum-run andmust-run units, the methodology of billing versus dispatch, and the use of a rolling twelve-month average of system peaks, increase costs paid by ratepayersin the LPSC's jurisdiction. Several parties intervened in the proceeding, including the APSC and the MPSC. The APSC and the MPSC responses opposedthe relief sought by the LPSC.

In its complaint, the LPSC alleges that Entergy Arkansas' annual production costs over the period 2002 to 2007 will be $130 million to $278 million underthe average for the domestic utility companies. This range of results is a function of assumptions regarding such things as future natural gas prices, the futuremarket price of electricity, and other factors. If FERC grants the relief requested by the LPSC, the relief may result in a material increase in production costsallocated to companies whose costs currently are projected to be less than the average and a material decrease in production costs allocated to companieswhose costs currently are projected to exceed the average. Management believes that any changes in the allocation of production costs resulting from aFERC decision should result in similar rate changes for retail customers. Therefore, management does not believe that this proceeding will have a materialeffect on the financial condition of Entergy Arkansas, alt hough neither the timing nor the outcome of the proceedings at FERC can be predicted at this time.In February 2002, the FERC set the matter for hearing and established a refund effective period consisting of the 15 months following September 13, 2001.A subsequent extension of the procedural schedule extended the refund effective period by 120 days.

In January 2003 the domestic utility companies filed testimony in the case, showing that over the life of the System Agreement the relative total productioncosts of the domestic utility companies are roughly equal, and suggesting that no changes to the System Agreement such as those sought by the LPSC areappropriate. In April 2003, witnesses on behalf of the FERC staff filed testimony in the proceeding suggesting that full production cost equalization shouldnot be adopted by the FERC in this case, and that when measured over a suitably long period, the total production costs of the domestic utility companieswere roughly equal and were likely to remain so, given the Entergy System's proposed resource plan. Hearings in the proceeding ended in late-August 2003.The Initial Decision of the FERC ALJ was released on February 6, 2004. The ALJ concludes that full production cost equalization should not beimplemented; that the Entergy System currently is not in rough production cost equaliz ation and is not likely to be in rough production cost equalization forthe foreseeable future; and that the appropriate remedy to achieve rough equalization is to have the low cost companies compensate the high cost companieswhenever one or more companies' annual total production costs from 2003 forward differ by more than +/- 7.5% from the Entergy System average annualtotal production costs, or whenever the three year average of one or more companies' total production costs (commencing with the three years 2004 through2006, and yearly thereafter) differ by more than +/- 5% from the Entergy System average total production costs during any three year cycle. In thecalculation of what each company's total production costs are, the ALJ determined that the full cost of Vidalia project power purchases by Entergy Louisianashould be included, but the ALJ rejected other adjustments proposed by the LPSC. Also, the ALJ determined that the average of the four highest monthlydemand peaks for the year (4 CP) shou ld be used for calculating reserve sharing costs, rather than the current 12 CP method. Finally, the ALJ determinedthat there is no valid issue concerning "billing versus dispatch" in the rate schedule by which exchange energy is priced, MSS-3, that MSS-3 has not beenmisapplied or misinterpreted by Entergy, and that MSS-3 should not be changed. The ALJ's Initial Decision did not specifically address refund exposure.





Entergy Arkansas has certain market and credit risks inherent in its business operations. Market risks represent the risk of changes in the value ofcommodity and financial instruments, or in future operating results or cash flows, in response to changing market conditions. Credit risk is risk of loss fromnonperformance by suppliers, customers, or financial counterparties to a contract or agreement.


Entergy Arkansas' nuclear decommissioning trust funds are exposed to fluctuations in equity prices and interest rates. The NRC requires Entergy Arkansasto maintain trusts to fund the costs of decommissioning ANO 1 and ANO 2. The funds are invested primarily in equity securities; fixed-rate, fixed-incomesecurities; and cash and cash equivalents. Management believes that its exposure to market fluctuations will not affect results of operations for the ANOtrust funds because of the application of regulatory accounting principles. The decommissioning trust funds are discussed more thoroughly in Notes 1 and 9to the domestic utility companies and System Energy financial statements.

State and Local Rate Regulatory Risks

The rates that Entergy Arkansas charges for its services are an important item influencing Entergy Arkansas' financial position, results of operations, andliquidity. Entergy Arkansas is closely regulated and the rates charged to its customers are determined in regulatory proceedings. A governmental agency, theAPSC, is primarily responsible for approval of the rates charged to customers. Entergy Arkansas' fuel costs recovered from customers are also subject toregulatory scrutiny.

Nuclear Matters

Entergy Arkansas owns and operates, through an affiliate, ANO 1 and 2. Entergy Arkansas is, therefore, subject to the risks related to owning and operatingnuclear plants. These include risks from the use, storage, handling and disposal of high-level and low-level radioactive materials, limitations on the amountsand types of insurance commercially available for losses in connection with nuclear operations, and technological and financial uncertainties related todecommissioning nuclear plants at the end of their licensed lives, including the sufficiency of funds in decommissioning trusts. In the event of anunanticipated early shutdown of either ANO 1 or 2, Entergy Arkansas may be required to file with the APSC a rate mechanism to provide additional fundsor credit support to satisfy regulatory requirements for decommissioning.

In August 2001, the NRC issued a bulletin requesting all pressurized water reactor owners and operators to report on the structural integrity of their reactorvessel head penetration nozzles to justify continued operations past December 31, 2001. These types of reactors are susceptible to stress corrosion crackingof the reactor vessel head nozzles. ANO 1 and 2 are pressurized water reactors. In March 2001, an inspection of ANO 1 revealed one leaking control roddrive mechanism nozzle, which was subsequently repaired. During a planned refueling outage that began in October 2002, visual inspection of the reactorvessel head at ANO 1 revealed one nozzle leak. Further ultrasonic testing showed the presence of seven additional minor indications that could potentiallydevelop into leaks. Entergy Arkansas made repairs during the outage. Entergy Arkansas has received favorable responses from the NRC for continuedoperations of ANO 1 and 2.

Inspections of the ANO 1 steam generators during planned outages also have revealed cracks in certain steam generator tubes, which have been repaired,plugged, or left in-service using a NRC approved alternate repair criteria. The current condition and number of cracks are within acceptable NRC criteria toallow the unit to remain in operation and ANO 1 output has not been affected to date. Using current projections of steam generator tube plugging, the currentbest estimate is that replacement of the ANO Unit 1 steam generators will be required by 2013, but management decided that replacement of the generatorsduring a scheduled refueling outage in September 2005 was prudent. Entergy Operations currently does not expect ANO Unit 1 to have to conduct mid-cycle outages for steam generator inspection before 2005. ANO 2's steam generators were replaced during a refueling outage in the second half of 2000.

In December 2001, Entergy issued a request for proposal to provide replacement steam generators for ANO 1. Entergy subsequently entered a contract fordelivery of the replacement generators in August 2005 in time for installation during the scheduled refueling outage. In January 2003, Entergy Arkansasfiled a Petition for Declaratory Order to request a finding by the APSC that replacement of the steam generators and reactor vessel closure head at ANO 1 isin the public interest. The APSC found that the replacement is in the public interest in a declaratory order issued in May 2003.

Environmental Risks

Entergy Arkansas' facilities and operations are subject to regulation by various governmental authorities having jurisdiction over air quality, water quality,control of toxic substances and hazardous and solid wastes, and other environmental matters. Management believes that Entergy Arkansas is in substantialcompliance with environmental regulations currently applicable to its facilities and operations. Because environmental regulations are subject to change,future compliance costs cannot be precisely estimated.


The preparation of Entergy Arkansas' financial statements in conformity with generally accepted accounting principles requires management to makeestimates and judgments that can have a significant effect on reported financial position, results of operations, and cash flows. Management has identifiedthe following estimates as critical accounting estimates because they are based on assumptions and measurements that involve an unusual degree ofuncertainty, and there is the potential that different assumptions and measurements could produce estimates that are significantly different than thoserecorded in Entergy Arkansas' financial statements.


Regulations require that ANO 1 and ANO 2 be decommissioned after the facilities are taken out of service, and funds are collected and deposited in trustfunds during the facilities' operating lives in order to provide for this obligation. Entergy Arkansas conducts periodic decommissioning cost studies(typically updated every five years) to estimate the costs that will be incurred to decommission the facilities. See Note 9 to the domestic utility companiesand System Energy financial statements for details regarding Entergy Arkansas' obligation recorded for its estimated decommissioning liability. Thefollowing key assumptions have a significant effect on these estimates:

Cost Escalation Factors - Entergy Arkansas' decommissioning studies include an assumption that decommissioning costs will escalate overpresent cost levels by an annual factor approximating CPI-U. A 50 basis point change in this assumption could change the ultimate cost of

decommissioning a facility by as much as 11%.

Timing - The date of the plant's retirement must be estimated and an assumption must be made whether decommissioning will beginimmediately upon plant retirement, or whether the plant will be held in "safestore" status for later decommissioning, as permitted by applicable

regulations. While the impact of these assumptions cannot be determined with precision, assuming either license extension or use of a"safestore" status can significantly decrease the present value of these obligations.

Spent Fuel Disposal - Federal regulations require the Department of Energy to provide a permanent repository for the storage of spent nuclearfuel, and legislation has been passed by Congress to develop this repository at Yucca Mountain, Nevada. However, until this site is available,

nuclear plant operators must provide for interim spent fuel storage on the nuclear plant site, which can require the construction and maintenanceof dry cask storage sites or other facilities. The costs of developing and maintaining these facilities can have a significant impact (as much as

16% of estimated decommissioning costs). These estimates could change in the future based on the timing of the opening of the YuccaMountain facility, the schedule for shipments to that facility when it is opened, or other factors.

Technology and Regulation - To date, there is limited practical experience in the United States with actual decommissioning of large nuclearfacilities. As experience is gained and technology changes, cost estimates could also change. If regulations regarding nuclear decommissioning

were to change, this could have a potentially significant impact on cost estimates. The impact of these potential changes is not presentlydeterminable. Entergy Arkansas' decommissioning cost studies assume current technologies and regulations.

Through 2001, Entergy Arkansas collected the projected costs of decommissioning ANO 1 and ANO 2 through rates charged to customers. Now, based onassumptions approved by the APSC, including an assumed license extension for ANO 2 (ANO 1's license has actually been extended) and the sufficiency ofpreviously collected funds, Entergy Arkansas is not collecting the cost to decommission ANO 1 and 2 in its current rates. The assumptions will be reviewedannually and reflected in Entergy Arkansas' filing of its annual determination of the nuclear decommissioning rate rider. The amounts that were collectedthrough rates, which were based upon decommissioning cost studies, were deposited in decommissioning trust funds.

Prior to the implementation of SFAS 143, the obligations recorded by Entergy Arkansas for decommissioning were classified as a component ofaccumulated depreciation. The amounts recorded for these obligations were comprised of collections from customers and earnings on the trust funds.

SFAS 143

Entergy Arkansas implemented SFAS 143, "Accounting for Asset Retirement Obligations," effective January 1, 2003. Nuclear decommissioning costscomprise substantially all of Entergy Arkansas' asset retirement obligations, and the measurement and recording of Entergy Arkansas' decommissioningobligations outlined above changed significantly with the implementation of SFAS 143. The most significant differences in the measurement of theseobligations are outlined below:

Recording of full obligation - SFAS 143 requires that the fair value of an asset retirement obligation be recorded when it is incurred. Thiscaused the recorded decommissioning obligation of Entergy Arkansas to increase significantly, as Entergy Arkansas had previously only

recorded this obligation as the related costs were collected from customers, and as earnings were recorded on the related trust funds.

Fair value approach - SFAS 143 requires that these obligations be measured using a fair value approach. Among other things, this entails theassumption that the costs will be incurred by a third party and will therefore include appropriate profit margins and risk premiums. Entergy

Arkansas' decommissioning studies to date have been based on Entergy Arkansas performing the work, and have not included any such marginsor premiums. Inclusion of these items increases cost estimates.

Discount rate - SFAS 143 requires that these obligations be discounted using a credit-adjusted risk-free rate.

The net effect of implementing this standard for Entergy Arkansas was recorded as a regulatory asset, with no resulting impact on Entergy Arkansas' netincome. Entergy Arkansas recorded this regulatory asset because its existing rate mechanism is based on the original or historical cost standard that allowsEntergy Arkansas to recover all ultimate costs of decommissioning existing assets from current and future customers. Upon implementation, assets andliabilities increased by approximately $532 million in 2003 as a result of recording the asset retirement obligation at its fair value as determined under SFAS143, increasing total utility plant by $106 million, reducing accumulated depreciation by $252 million, and recording the related regulatory asset of $174million.


Entergy sponsors defined benefit pension plans which cover substantially all employees. Additionally, Entergy provides postretirement health care and lifeinsurance benefits for substantially all employees who reach retirement age while still working for Entergy. Entergy's reported costs of providing thesebenefits, as described in Note 11 to the domestic utility companies and System Energy financial statements, are impacted by numerous factors including theprovisions of the plans, changing employee demographics, and various actuarial calculations, assumptions, and accounting mechanisms. Because of thecomplexity of these calculations, the long-term nature of these obligations, and the importance of the assumptions utilized, Entergy's estimate of these costsis a critical accounting estimate.

Assumptions








In determining its expected long-term rate of return on plan assets, Entergy reviews past long-term performance, asset allocations, and long-term inflationassumptions. Entergy targets an asset allocation for its pension plan assets of roughly 66% equity securities, 30% fixed income securities and 4% otherinvestments. The target allocation for Entergy's other postretirement benefit assets is 45% equity securities and 55% fixed income securities. Based on recentmarket trends, Entergy decreased its expected long-term rate of return on plan assets from 9% in 2001 to 8.75% for 2002 and 2003. The trend of reducedinflation caused Entergy to reduce its assumed rate of increase in future compensation levels from 4.6% in 2001 to 3.25% in 2002 and 2003.

Cost Sensitivity




Pension Cost Impact on Projected

Benefit Obligation Increase/(Decrease) Discount rate (0.25%) $953 $18,603Rate of return on plan assets (0.25%) $1,106 -Rate of increase incompensation

0.25% $654 $4,917



Change in Assumption

Impact on 2003

Postretirement Benefit Cost


Obligation Increase/(Decrease) Health care cost trend 0.25% $914 $4,696Discount rate (0.25%) $511 $5,333





Costs and Funding

Total pension cost for Entergy Arkansas in 2003 was $18.3 million, including a $10.8 million charge related to the Voluntary Severance Program. EntergyArkansas is projecting 2004 pension cost to be $14.6 million due to a decrease in the discount rate from 6.75% to 6.25% and the phased-in effect of poorasset performance. Entergy Arkansas was not required to make contributions to its pension plan in 2003, however it anticipates making $5.3 million incontributions in 2004.

Due to negative pension plan asset returns from 2000 to 2002, Entergy Arkansas' accumulated benefit obligation at December 31, 2003 and 2002 exceededplan assets. As a result, Entergy Arkansas was required to recognize an additional minimum liability as prescribed by SFAS 87. At December 31, 2003Entergy Arkansas increased its additional minimum liability to $54.9 million from $29.6 million at December 31, 2002. Entergy Arkansas increased itsintangible asset for the unrecognized prior service cost to $13.3 million at December 31, 2003 from $10.6 million at December 31, 2002. Entergy Arkansasalso increased the regulatory asset to $41.6 million at December 31, 2003 from $19 million at December 31, 2002. Net income for 2003 and 2002 were notimpacted.

Total postretirement health care and life insurance benefit costs for Entergy Arkansas in 2003 were $29.4 million, including a $10.1 million charge related tothe Voluntary Severance Program. In December 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 became law. The Actintroduces a prescription drug benefit under Medicare (Part D) as well as a federal subsidy to employers who provide a retiree prescription drug benefit thatis at least actuarially equivalent to Medicare Part D. Currently, specific authoritative guidance on the accounting for the federal subsidy is pending. EntergyArkansas expects 2004 postretirement health care and life insurance benefit costs to approximate $18.2 million.


To the Board of Directors and Shareholders ofEntergy Arkansas, Inc.:

We have audited the accompanying balance sheets of Entergy Arkansas, Inc. as of December 31, 2003 and 2002, and the related statements of income,retained earnings, and cash flows (pages 163 through 168 and applicable items in pages 270 through 331) for each of the three years in the period endedDecember 31, 2003. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on thesefinancial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan andperform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on atest basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide areasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material respects, the financial position of Entergy Arkansas, Inc. as of December 31, 2003 and2002, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2003 in conformity with accountingprinciples generally accepted in the United States of America.

As discussed in Note 1 and Note 9 to the notes to respective financial statements, Entergy Arkansas, Inc. adopted the provisions of Statement of FinancialAccounting Standards No. 143, Accounting for Asset Retirement Obligations, and Financial Accounting Standards Board Interpretation No. 46,Consolidation of Variable Interest Entities, in 2003.



ENTERGY ARKANSAS, INC. INCOME STATEMENTS

For the Years Ended December 31, 2003 2002 2001

(In Thousands)

OPERATING REVENUES Domestic electric $1,589,670 $1,561,110 $1,776,776 ---------- ---------- ----------

OPERATING EXPENSES Operation and Maintenance:

Fuel, fuel-related expenses, and gas purchased for resale 153,866 294,244 397,080 Purchased power 476,447 355,211 397,885 Nuclear refueling outage expenses 23,638 24,387 28,695 Other operation and maintenance 402,108 543,677 364,409 Decommissioning 35,887 - 13 Taxes other than income taxes 37,385 38,127 35,186 Depreciation and amortization 202,497 187,525 174,539 Other regulatory credits - net (39,347) (184,270) (721) ---------- ---------- ---------- TOTAL 1,292,481 1,258,901 1,397,086 ---------- ---------- ----------

OPERATING INCOME 297,189 302,209 379,690 ---------- ---------- ----------

OTHER INCOME

Allowance for equity funds used during construction 12,153 7,324 6,115 Interest and dividend income 9,790 2,467 8,983 Miscellaneous - net (4,332) (6,442) (5,109) ---------- ---------- ---------- TOTAL 17,611 3,349 9,989 ---------- ---------- ----------

INTEREST AND OTHER CHARGES

Interest on long-term debt 87,666 89,923 95,360 Other interest - net 3,555 13,287 14,163 Allowance for borrowed funds used during construction (7,726) (4,699) (3,962) ---------- ---------- ---------- TOTAL 83,495 98,511 105,561 ---------- ---------- ----------

INCOME BEFORE INCOME TAXES 231,305 207,047 284,118

Income taxes 105,296 71,404 105,933 ---------- ---------- ----------

NET INCOME 126,009 135,643 178,185

Preferred dividend requirements and other 7,776 7,776 7,744 ---------- ---------- ----------

EARNINGS APPLICABLE TO

COMMON STOCK $118,233 $127,867 $170,441 ========== ========== ==========

See Notes to Respective Financial Statements.

ENTERGY ARKANSAS, INC. STATEMENTS OF CASH FLOWS


(In Thousands)

OPERATING ACTIVITIES Net income $126,009 $135,643 $178,185

Noncash items included in net income: Other regulatory credits - net (39,347) (184,270) (721) Depreciation, amortization, and decommissioning 238,384 187,525 174,552 Deferred income taxes and investment tax credits 48,357 54,955 6,389 Allowance for equity funds used during construction (12,153) (7,324) (6,115)

Changes in working capital: Receivables (29,616) 50,898 (16,073) Fuel inventory 4,159 (6,509) 5,437 Accounts payable 40,615 39,077 (206,185) Taxes accrued (16,262) (88,019) 64,018 Interest accrued (6,348) (2,772) 2,920 Deferred fuel costs (46,333) 59,849 89,184 Other working capital accounts (14,278) (15,491) 23,283 Provision for estimated losses and reserves 8,686 (9,952) (978)

Changes in other regulatory assets (54,745) 182,244 (39,924) Other 190,392 (38,433) 139,206 -------- -------- -------- Net cash flow provided by operating activities 437,520 357,421 413,178 -------- -------- --------

INVESTING ACTIVITIES

Construction expenditures (334,556) (277,189) (280,755) Allowance for equity funds used during construction 12,153 7,324 6,115 Nuclear fuel purchases (60,685) (68,127) (19,103) Proceeds from sale/leaseback of nuclear fuel 60,685 68,127 19,103

Decommissioning trust contributions and realized change in trust assets (8,279) (17,970) (10,105) Changes in other temporary investments - net - 38,397 (38,397) Other regulatory investments (6,827) - (3,460) -------- -------- -------- Net cash flow used in investing activities (337,509) (249,438) (326,602) -------- -------- --------

FINANCING ACTIVITIES

Proceeds from the issuance of long-term debt 361,726 188,407 97,384 Retirement of long-term debt (471,040) (170,000) - Changes in short-term borrowings - (667) -

Dividends paid: Common stock (69,600) (125,900) (82,500) Preferred stock (7,776) (7,776) (5,832) -------- -------- -------- Net cash flow provided by (used in) financing activities (186,690) (115,936) 9,052 -------- -------- --------

Net increase (decrease) in cash and cash equivalents (86,679) (7,953) 95,628

Cash and cash equivalents at beginning of period 95,513 103,466 7,838 -------- -------- --------

Cash and cash equivalents at end of period $8,834 $95,513 $103,466 ======== ======== ========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for:

Interest - net of amount capitalized $91,142 $100,965 $101,330 Income taxes $2,177 $83,911 $31,939

Noncash investing and financing activities: Proceeds from long-term debt issued for the purpose

of refunding prior long-term debt - - $47,000 Long-term debt refunded with proceeds from

long-term debt issued in prior period - ($47,000) -


ENTERGY ARKANSAS, INC. BALANCE SHEETS

ASSETS

December 31, 2003 2002 (In Thousands)

CURRENT ASSETS

Cash and cash equivalents: Cash $8,834 $28,174

Temporary cash investments - at cost, which approximates market - 67,339 ---------- ---------- Total cash and cash equivalents 8,834 95,513 ---------- ----------

Accounts receivable: Customer 69,036 67,674 Allowance for doubtful accounts (9,020) (8,031) Associated companies 50,390 32,352 Other 30,930 16,619 Accrued unbilled revenues 64,732 67,838 ---------- ---------- Total accounts receivable 206,068 176,452 ---------- ---------- Deferred fuel costs 10,557 - Accumulated deferred income taxes 18,362 5,061 Fuel inventory - at average cost 6,722 10,881 Materials and supplies - at average cost 80,506 78,533 Deferred nuclear refueling outage costs 19,793 25,858 Prepayments and other 23,938 8,335 ---------- ---------- TOTAL 374,780 400,633 ---------- ----------

OTHER PROPERTY AND INVESTMENTS

Investment in affiliates - at equity 11,212 11,215 Decommissioning trust funds 360,485 334,631 Non-utility property - at cost (less accumulated depreciation) 1,456 1,460 Other 4,832 4,832 ---------- ---------- TOTAL 377,985 352,138 ---------- ----------

UTILITY PLANT

Electric 5,948,090 5,644,477 Property under capital lease 24,047 30,354

Construction work in progress 238,807 132,792 Nuclear fuel under capital lease 102,691 88,101 Nuclear fuel 7,466 10,543 ---------- ---------- TOTAL UTILITY PLANT 6,321,101 5,906,267 Less - accumulated depreciation and amortization 2,627,441 2,446,881 ---------- ---------- UTILITY PLANT - NET 3,693,660 3,459,386 ---------- ----------

DEFERRED DEBITS AND OTHER ASSETS

Regulatory assets: SFAS 109 regulatory asset - net 128,311 111,748 Other regulatory assets 437,544 205,707 Other 45,798 39,899 ---------- ---------- TOTAL 611,653 357,354 ---------- ----------

TOTAL ASSETS $5,058,078 $4,569,511 ========== ==========


ENTERGY ARKANSAS, INC. BALANCE SHEETS

LIABILITIES AND SHAREHOLDERS' EQUITY


CURRENT LIABILITIES

Currently maturing long-term debt $ - $255,000 Accounts payable:

Associated companies 106,958 37,833 Other 92,638 121,148 Customer deposits 37,693 35,886 Taxes accrued - 16,262 Interest accrued 21,424 27,772 Deferred fuel costs - 42,603 Obligations under capital leases 59,089 58,745 System Energy refund 3,444 3,764 Other 13,480 17,734 ---------- ---------- TOTAL 334,726 616,747 ---------- ----------

NON-CURRENT LIABILITIES

Accumulated deferred income taxes and taxes accrued 996,455 821,829 Accumulated deferred investment tax credits 73,280 78,231 Obligations under capital leases 67,648 59,711 Other regulatory liabilities 52,923 - Decommissioning 567,546 310,687 Accumulated provisions 40,149 31,463 Long-term debt 1,338,378 1,186,856 Other 192,200 117,847 ---------- ---------- TOTAL 3,328,579 2,606,624 ---------- ----------

SHAREHOLDERS' EQUITY

Preferred stock without sinking fund 116,350 116,350 Common stock, $0.01 par value, authorized 325,000,000

shares; issued and outstanding 46,980,196 shares in 2003 and 2002 470 470 Paid-in capital 591,127 591,127 Retained earnings 686,826 638,193 ---------- ---------- TOTAL 1,394,773 1,346,140 ---------- ----------

Commitments and Contingencies

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $5,058,078 $4,569,511 ========== ==========


ENTERGY ARKANSAS, INC. STATEMENTS OF RETAINED EARNINGS


(In Thousands)

Retained Earnings, January 1 $638,193 $636,226 $548,285

Add: Net income 126,009 135,643 178,185

Deduct:

Dividends declared: Preferred stock 7,776 7,776 7,744 Common stock 69,600 125,900 82,500 -------- -------- -------- Total 77,376 133,676 90,244

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

Retained Earnings, December 31 $686,826 $638,193 $636,226 ======== ======== ========




2003 2002 2001 2000 1999 (In Thousands) Operating revenues $1,589,670 $1,561,110 $1,776,776 $1,762,635 $1,541,894Net income $126,009 $135,643 $178,185 $137,047 $69,313Total assets $5,058,078 $4,569,511 $4,451,580 $4,228,211 $3,917,111Long-term obligations (1) $1,406,026 $1,246,567 $1,417,262 $1,401,062 $1,265,846

(1) Includes long-term debt (excluding currently maturing debt) and noncurrent capital leaseobligations.

ENTERGY GULF STATES, INC.



Net Income


Entergy Gulf States experienced a significant decline in net income in 2003 compared to 2002 primarily due to the following:

$107.7 million accrual for the loss that would be associated with a final, nonappealable decision disallowing abeyed River Bend plant costs. SeeNote 2 to the domestic utility companies and System Energy financial statements for more details regarding the River Bend abeyed plant costs;

$21.3 million net-of-tax cumulative effect of accounting change due to the implementation of SFAS 143. See "Critical Accounting Estimates"below for more information on the implementation of SFAS 143;

a decrease in net revenue of $20.6 million; and

an increase in operation and maintenance expenses of $19.2 million.

This was partially offset by a lower effective income tax rate.


Net income decreased slightly in 2002 compared to 2001 primarily due to decreased net revenue, increased other operation and maintenance expenses,increased depreciation and amortization expenses, and decreased other income, partially offset by decreased interest charges and a lower effective incometax rate.

Net Revenue



(In Millions) 2002 net revenue $1,130.7 Volume/weather 17.8 Fuel write-offs in 2002 15.3


Base rate decreases (23.3)NISCO gain recognized in 2002 (15.2)Rate refund provisions (11.3)Other (14.1)2003 net revenue $1,110.1

The volume/weather variance is due to higher electric sales volume in the service territory. Billed usage increased a total of 517 GWh in the residential andcommercial sectors. The increase was partially offset by a decrease in industrial usage of 470 GWh due to the loss of two large industrial customers tocogeneration. The customers accounted for approximately 1% of Entergy Gulf States' net revenue in 2002. Entergy Gulf States expects to lose one additionalcustomer to cogeneration in 2005. Current sales to that customer account for approximately $11 million of Entergy Gulf States' net revenue annually.Entergy Gulf States does not currently

expect additional significant losses to cogeneration because of the current economics of the electricity markets and Entergy Gulf States' marketing efforts inretaining industrial customers.

In 2002, deferred fuel costs of $8.9 million related to a Texas fuel reconciliation case were written off and $6.5 million in expense resulted from anadjustment in the deferred asset plan percentage as the result of uprates at River Bend.

The increase in net wholesale revenue is primarily due to an increase in sales volume to municipal and co-op customers and also to affiliated systems relatedto Entergy Louisiana and Entergy New Orleans generation resource planning coupled with an increase in the market price of natural gas.

The base rate decreases were effective June 2002 and January 2003, both in the Louisiana jurisdiction. The January 2003 base rate decrease of $22.1 millionhad a minimal impact on net income due to a corresponding reduction in nuclear depreciation and decommissioning expenses associated with the change inaccounting to reflect an assumed extension of River Bend's useful life.

In 2002, a gain of $15.2 million was recognized for the Louisiana portion of the 1988 Nelson Units 1 and 2 sale. Entergy Gulf States received approval fromthe LPSC to discontinue applying amortization of the gain against recoverable fuel, resulting in the recognition of the deferred gain in income.

Rate refund provisions decreased net revenue due to additional provisions recorded in 2003 compared to 2002 for potential rate actions and refunds.

Gross operating revenues and fuel and purchased power expenses

Gross operating revenues increased primarily due to increased fuel cost recovery revenues of $440.2 million as a result of higher fuel rates in both theLouisiana and Texas jurisdictions.

Fuel and purchased power expenses increased $471.1 million due to an increase in the market prices of natural gas and purchased power.



(In Millions) 2001 net revenue $1,147.1 Fuel Price 37.3 Volume/weather 36.5

Net wholesale revenue (38.6)Regulatory items - net (21.2)Fuel write-offs (15.3)Other (15.1)2002 net revenue $1,130.7

The price variance is due to an increase in the fuel price applied to unbilled sales in the Louisiana jurisdiction.

The volume/weather variance is due to more favorable sales volume and weather. Billed usage increased a total of 669 GWh in the residential andcommercial sectors.

The decrease in net wholesale revenue is due to a decrease in sales volume.

The decrease in regulatory items - net is primarily due to the following:

$14.3 million decrease related to the settlement of the fourth through eighth post-merger earnings reviews in Louisiana;

$24.0 million decrease relating the deferral in 2001 of capacity charges included in purchased power costs for the summers of 2000 and 2001and the amortization of these capacity charges in 2002. The amortization of the summer 2000 capacity charges ended in May 2002. The

amortization of the capacity charges for the summer of 2001 began in June 2002 and ended in May 2003; and

$15.2 million increase due to the gain recognition of the Louisiana portion of the 1988 Nelson Units 1 and 2 sale.

Fuel write-offs represent deferred fuel costs of $8.9 million related to the Texas fuel reconciliation case that were written off and a $6.5 million adjustmentin the deferred asset plan percentage as the result of uprates at River Bend.

Gross operating revenues

Gross operating revenues decreased primarily due to decreased fuel cost recovery revenues of $456.7 million as a result of lower fuel rates in both theLouisiana and Texas jurisdictions.

Entergy Gulf States experienced decreased usage in the industrial sector in 2002 due to contractual modifications that reclassified sales associated withcertain customers from retail to wholesale. Under the terms of the former contract with these customers, Entergy Gulf States was also required to purchasethe electricity produced by the customers' generating units. As a result of the cessation of the purchased power obligation, the reclassification of these salesdid not have a material impact on Entergy Gulf States' net revenue or earnings.



Other operation and maintenance expenses increased primarily due to voluntary severance accruals of $22.5 million.

Decommissioning expense increased primarily due to the implementation of SFAS 143. The increase in decommissioning expense is offset by increases inother regulatory credits and interest and dividend income and has no effect on net income.

Depreciation and amortization expenses decreased primarily due to decreased rates associated with the assumed life extension of River Bend, partially offsetby higher depreciation due to an increase in plant in service. The decrease in depreciation related to the assumed license extension of River Bend has aminimal impact on net income because it is offset by the January 2003 base rate decrease discussed in "Net Income" above.

Other income decreased primarily due to the abeyed River Bend plant cost accrual discussed above.

Interest expense on long-term debt increased primarily due to the issuance of $340 million of First Mortgage Bonds in November 2002, $600 million in June2003, and $440 million in July 2003, partially offset by the retirement of $293 million of First Mortgage Bonds in March 2003 and $745 million in the thirdquarter of 2003.




an increase of $9.5 million in maintenance outage costs at several plants; and

an increase of $2 million in higher nuclear expenses.

The increase in other operation and maintenance expenses was partially offset by $7.2 million in reduced unbundling and transition to competition costs.

Depreciation and amortization expenses increased $13.1 million due to an increase in plant in service combined with revisions made to the useful lives ofcertain intangible plant assets to more appropriately reflect their actual lives, which lowered expense in 2001 in accordance with regulatory treatment.

Other income decreased primarily due to decreased interest income of $11.4 million recorded on the deferred fuel balance somewhat offset by the settlementof liability insurance coverage for $5.6 million.


lower interest expense of $12.2 million as a result of the retirement of $148 million of First Mortgage Bonds in January 2002;

lower interest expense of $9.3 million on variable-rate First Mortgage Bonds; and

an adjustment of $5.5 million in 2001 to the liability for deferred compensation for certain former Entergy Gulf States employees in accordancewith an actuarial study.

Income Taxes



Cash Flow


2003 2002 2001(In Thousands)


Cash flow provided by (used in):Operating activities 425,963 500,654 338,486

Investing activities (446,639) (351,456) (363,416)Financing activities (91,698) 45,478 80,379 Net increase (decrease) in cash and cashequivalents

(112,374) 194,676 55,449



Cash flow from operations decreased $74.6 million in 2003 compared to 2002 primarily due to money pool activity, higher working capital needs, andincreased vendor payments in 2003 relating to storm expense accruals in late-2002. The decrease was partially offset by lower income tax payments.

Cash flow from operations increased in 2002 compared to 2001 primarily due to an increase in payables due to the timing of fuel payments, partially offsetby the decreased collection of deferred fuel in 2002 due to collections in 2001 of higher balances.

Entergy Gulf States' receivables from or (payables) to the money pool were as follows as of December 31 for each of the following years:

2003 2002 2001 2000(In Thousands)

$69,354 $18,131 $27,665 $23,437

Money pool activity used $51.2 million of Entergy Gulf States' operating cash flows in 2003, provided $9.5 million in 2002, and used $4.2 million in 2001.See Note 4 to the domestic utility companies and System Energy financial statements for a description of the money pool.


Net cash used in investing activities increased $95.2 million in 2003 compared to 2002 primarily due to an increase of $23.6 million in other temporaryinvestments in 2003 compared to the maturity of $44.6 million of other temporary investments that provided cash in 2002. The increase was also due to anincrease of $37.7 million in under-recovered fuel and purchased power expenses in Texas that have been deferred and are expected to be collected over aperiod greater than twelve months. See Note 1 to the domestic utility companies and System Energy financial statements for further discussion of theaccounting for fuel costs.

Net cash used in investing activities decreased slightly in 2002 compared to 2001 because of the maturity in 2002 of $44.6 million of other temporaryinvestments made in 2001. The decrease in net cash used was almost entirely offset by an increase of $39.4 million in other regulatory investments, whichare deferred fuel costs expected to be collected over a period greater than twelve months, and capital expenditures. Capital expenditures increased $37.6million primarily due to increased spending on environmental projects.


Entergy Gulf States used $91.7 million of cash in financing activities in 2003 compared to providing $45.5 million of cash in 2002 primarily due to the netretirement of $15.4 million of long-term debt in 2003 compared to the net issuance of $143.4 million of long-term debt in 2002. The increase in cash used infinancing activities was partially offset by a decrease in dividends paid of $23.3 million.

In 2003, Entergy Gulf States implemented a planned financing program to address its 2003 and 2004 long-term debt maturities and to restructure its debtportfolio, which resulted in extended maturities, lowered rates, and sufficient flexibility in its portfolio to allow Entergy Gulf States to economically managethe expected implementation of retail open access in Texas and the subsequent unbundling of Entergy Gulf States to the extent it affects Entergy Gulf States'debt portfolio.

The following table lists First Mortgage Bonds issued by Entergy Gulf States in 2003:

Net cash used in investing activities increased $95.2 million in 2003 compared to 2002 primarily due to an increase of $23.6 million in other temporaryinvestments in 2003 compared to the maturity of $44.6 million of other temporary investments that provided cash in 2002. The increase was also due to anincrease of $37.7 million in under-recovered fuel and purchased power expenses in Texas that have been deferred and are expected to be collected over aperiod greater than twelve months. See Note 1 to the domestic utility companies and System Energy financial statements for further discussion of theaccounting for fuel costs.

Net cash used in investing activities decreased slightly in 2002 compared to 2001 because of the maturity in 2002 of $44.6 million of other temporaryinvestments made in 2001. The decrease in net cash used was almost entirely offset by an increase of $39.4 million in other regulatory investments, whichare deferred fuel costs expected to be collected over a period greater than twelve months, and capital expenditures. Capital expenditures increased $37.6million primarily due to increased spending on environmental projects.


Entergy Gulf States used $91.7 million of cash in financing activities in 2003 compared to providing $45.5 million of cash in 2002 primarily due to the netretirement of $15.4 million of long-term debt in 2003 compared to the net issuance of $143.4 million of long-term debt in 2002. The increase in cash used infinancing activities was partially offset by a decrease in dividends paid of $23.3 million.

In 2003, Entergy Gulf States implemented a planned financing program to address its 2003 and 2004 long-term debt maturities and to restructure its debtportfolio, which resulted in extended maturities, lowered rates, and sufficient flexibility in its portfolio to allow Entergy Gulf States to economically managethe expected implementation of retail open access in Texas and the subsequent unbundling of Entergy Gulf States to the extent it affects Entergy Gulf States'debt portfolio.

The following table lists First Mortgage Bonds issued by Entergy Gulf States in 2003:

Issue Date Description Maturity Amount(In Thousands)

June 2003 3.6% Series June 2008 $325,000 June 2003 Libor + 0.90% Series June 2007 275,000

July 2003 6.2% Series July 2033 240,000 July 2003 5.25% Series August 2015 200,000

$1,040,000

The following table lists First Mortgage Bonds retired by Entergy Gulf States in 2003:

Retirement Date Description Maturity Amount(In Thousands)

March 2003 6.75% Series March 2003 $33,000 March 2003 Libor + 1.2% Series June 2003 260,000 July 2003 8.94% Series January 2022 150,000 August 2003 8.7% Series April 2024 294,950 September 2003 Libor + 1.3% Series September 2004 300,000

$1,037,950

Entergy Gulf States plans to retire, at maturity, $292 million of 8.25% Series First Mortgage Bonds due April 1, 2004 using cash on hand and internallygenerated funds.

Net cash provided by financing activities decreased $34.9 million in 2002 compared to 2001 primarily due to a decrease of $30.3 million in net issuances oflong-term debt.


Uses of Capital

Entergy Gulf States requires capital resources for:





Following are the amounts of Entergy Gulf States' planned construction and other capital investments, existing debt and lease obligations, and otherpurchase obligations:

2004 2005-2006 2007-2008 after 2008 Total (In Millions)Planned construction and capital investment (1) $357 $527 N/A N/A $884Long-term debt $354 $98 $800 $1,092 $2,344Capital leases $9 - - - $9Operating leases $28 $48 $27 $130 $233Purchase obligations (2) $54 $10 $6 $32 $102Other long-term liabilities $3 $7 $7 - $17Nuclear fuel lease obligations (3) $27 $37 N/A N/A $64

(1) Includes approximately $220 million each year for maintenance capital, which is plannedspending on routine capital projects that are necessary to support reliability of service, equipmentor systems and to support normal customer growth.

(2) As defined by SEC rule. For Entergy Gulf States it includes unconditional fuel and purchasedpower obligations and other purchase obligations.


The planned capital investment estimate for Entergy Gulf States reflects capital required to support existing business and customer growth. The estimatedcapital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints, environmentalcompliance, market volatility, economic trends, business restructuring, and the ability to access capital. Management provides more information onconstruction expenditures and long-term debt and preferred stock maturities in Notes 5, 7, and 9 to the domestic utility companies and System Energyfinancial statements.

As a wholly-owned subsidiary, Entergy Gulf States dividends its earnings to Entergy Corporation at a percentage determined monthly. Entergy Gulf States isrestricted by long-term debt indentures in the payment of cash dividends or other distributions on its common and preferred stock. Currently, all of EntergyGulf States' retained earnings are available for distribution.

Sources of Capital

Entergy Gulf States' sources to meet its capital requirements include:


cash on hand;

debt issuances; and


All debt and common and preferred stock issuances by Entergy Gulf States require prior regulatory approval. Preferred stock and debt issuances are alsosubject to issuance tests set forth in its corporate charter, bond indentures, and other agreements. Entergy Gulf States has sufficient capacity under these teststo meet its foreseeable capital needs.

Short-term borrowings by Entergy Gulf States, including borrowings under the money pool, are limited to an amount authorized by the SEC, $340 million.Under the SEC order authorizing the short-term borrowing limits, Entergy Gulf States cannot incur new short-term indebtedness if its common equity wouldcomprise less than 30% of its capital. In addition, this order restricts Entergy Gulf States from publicly issuing new long-term debt unless its senior secureddebt will be rated as investment grade. See Note 4 to the domestic utility companies and System Energy financial statements for further discussion ofEntergy Gulf States' short-term borrowing limits.


Transition to Retail Competition

Retail open access commenced in portions of Texas on January 1, 2002. The staff of the PUCT filed a petition to delay retail open access in Entergy GulfStates' service area, and Entergy Gulf States reached a settlement agreement with the PUCT to delay retail open access until at least September 15, 2002. InSeptember 2002, the PUCT ordered Entergy Gulf States to file on January 24, 2003 a proposal for an interim solution (retail open access without a FERC-approved RTO) if it appeared by January 15, 2003 that a FERC-approved RTO would not be functional by January 1, 2004. On January 24, 2003, EntergyGulf States filed its proposal, which among other elements, included:

the recommendation that retail open access in Entergy Gulf States' Texas service territory, including corporate unbundling, occur by January 1,2004, or else be delayed until at least January 1, 2007. If retail open access is delayed past January 1, 2004, Entergy Gulf States seeks

authorization to separate into two bundled utilities, one subject to the retail jurisdiction of the PUCT and one subject to the retail jurisdiction ofthe LPSC;

the recommendation that Entergy's transmission organization, possibly with the oversight of another entity, will continue to serve as thetransmission authority for purposes of retail open access in Entergy Gulf States' service territory; and

the recommendation that the decision points be identified that would require prior to January 1, 2004, the PUCT's determination, based uponobjective criteria, whether to proceed with further efforts toward retail open access in Entergy Gulf States' Texas service territory.

The PUCT considered the proposal at a March 2003 hearing, and issued an order in April 2003. The order set forth a sequence of proceedings and activitiesdesigned to initiate an interim solution. These proceedings and activities include ruling on market protocols; initiating a proceeding to certify an independentorganization to administer the market protocols and ensure nondiscriminatory access to transmission and distribution systems; resuming business separationproceedings; re-invigorating the pilot project; and initiating a market-readiness proceeding. The PUCT issued an order on rehearing in late-July 2003 inwhich it identified December 2004 as the target date for the beginning of the interim solution. Consistent with the order, and after negotiations with otherparties and following a series of contested hearings and the PUCT approval of a settlement agreement on the market protocols, Entergy Services made afiling at the FERC and has received approval on an expedited b asis of the market protocols subject to FERC jurisdiction. This ruling, when final andappealable, will allow for the reinvigorated pilot to begin upon the PUCT approval of Entergy Gulf States' independent organization request. The PUCT iscurrently scheduled to conduct a hearing on this request in June 2004.

Business Separation Plan

Entergy Gulf States' business separation plan provides for the separation of its generation, transmission, distribution, and retail electric functions. It has beenamended during the course of various PUCT and LPSC proceedings and is subject to further change and regulatory proceedings.

Entergy Gulf States filed the business separation plan with the PUCT in January 2000 and amended that plan in June and November 2000 and January 2001.In July 2000, the PUCT approved the amended business separation plan in an interim order. In January 2001, the PUCT consolidated remaining action onthe business separation plan into the unbundled cost of service proceeding discussed below. In December 2001, the PUCT abated the proceeding andindicated it will consider a final order in a timely manner consistent with the settlement agreement delaying retail open access. The outcome of the LPSCproceedings described below, which have resulted in amendments to the plan beyond what was approved by the PUCT, have been and will continue to bereported to the PUCT and the Office of Public Utility Counsel and may require additional PUCT action before the business separation plan is final.

The LPSC opened a docket to identify the changes in corporate structure and operations of Entergy Gulf States, and their potential impact on Louisianaretail ratepayers, resulting from restructuring in Texas. In those proceedings, Entergy Gulf States and the LPSC staff reached a settlement on certain Texasbusiness separation plan issues described above, and after a May 2001 hearing, the LPSC issued an interim order in July 2001 approving the settlement. InJuly 2001, Entergy Gulf States and the LPSC Staff completed an additional settlement on business separation plan issues relating to the separation of Texasdistribution and transmission. A hearing on the distribution and transmission settlement has been held and the LPSC approved the settlement in September2001. With respect to issues related to the separation of generation, the LPSC had scheduled a hearing in November 2001 to address settled issues. In light ofthe delay in the commencement of retail open access, the procedur al schedule in the LPSC docket was suspended to assess the impact of the PUCTapproval of the settlement agreement delaying retail open access.

The plan approved by the LPSC in September 2001, as described above, provides that Entergy Gulf States will be separated into the following principalcompanies:

a Texas distribution company, which will own and operate Entergy Gulf States' electric distribution system in Texas;

an intermediate transmission company;

a Texas generation company (which may be more than one legal entity), which initially will purchase capacity and energy from the generatingassets allocated to Texas load (Texas generating assets), and eventually will own those assets;

Texas retail electric providers, which will provide competitive retail electric service in Texas; and

Entergy Gulf States-Louisiana.

Pursuant to the LPSC-approved plan, Entergy Gulf States-Louisiana would:

own and operate Entergy Gulf States' electric distribution system in Louisiana, the Texas generating assets (until they are transferred to theTexas generation company), the remainder of Entergy Gulf States' generating assets, and Entergy Gulf States' other businesses that are not

separated, and own Entergy Gulf States' transmission assets allocated to Louisiana (until they are transferred to the intermediate transmissioncompany described in the next bullet); and

indirectly own a portion of an intermediate transmission company, which will own Entergy Gulf States' electric transmission assets allocated toTexas, and later Entergy Gulf States' transmission assets allocated to Louisiana.

Under the LPSC-approved plan, Entergy Gulf States' assets and liabilities (other than its long-term debt and liabilities) would be allocated among thesecompanies generally based upon categorizing them by function. Entergy Gulf States would allocate assets and liabilities not associated with a single functionbased upon specified factors. In an April 2001 filing with the LPSC discussing its separation methodology, Entergy Gulf States included a balance sheetseparated by jurisdiction and function. The balance sheet was based on September 30, 1999 balances. In this balance sheet, Entergy Gulf States allocatedapproximately 27% of the net utility plant balance to Texas generation, approximately 12% to Texas distribution, approximately 6% to Texas transmission,approximately 7% to Louisiana transmission, and less than 1% to Texas retail. Applying these percentages to Entergy Gulf States' December 31, 2003 netutility plant book value of $4.7 billion, for illustrative purposes only, results in net book values of approximately $1.3 billion for Texas generation,approximately $560 million for Texas distribution, approximately $280 million for Texas transmission, approximately $330 million for Louisianatransmission, approximately $20 million for Texas retail, and approximately $2.2 billion for the remainder of Entergy Gulf States-Louisiana. The actualallocations could materially differ from these figures because of a number of factors, including changes to the plan and the allocation methodology. Inaddition, the actual allocations will be based on allocation factors and account balances as of a different date.

The business separation plan provides that Entergy Gulf States-Louisiana would retain liability for all of its long-term debt and liabilities and that theproperty transferred to the Texas companies will be released from the lien of Entergy Gulf States' mortgage on the basis of property additions. Pursuant toseparate agreements, the Texas distribution company and the intermediate transmission company will each assume a portion of Entergy Gulf States' long-term debt and liabilities, which assumptions will not act to release Entergy Gulf States-Louisiana's liability. The Texas distribution company and theintermediate transmission company will undertake to pay the outstanding assumed long-term debt and liabilities within 1 year and 3 years, respectively, ofthe assumption. Entergy must provide a contingent indemnity with respect to the intermediate transmission company's assumed portion of Entergy GulfStates' long-term debt and liabilities in the event that the obligations under the debt assumption agreement have not been extinguished within one year of theassumption. The Texas generation company will be required to pay an allocated portion of the outstanding principal amount of Entergy Gulf States' long-term debt and liabilities each time that Texas generating assets are transferred to it, and the transfers must be completed within 3 years of the commencementof retail open access.

After the transfer of the Texas distribution and transmission assets contemplated by the LPSC-approved business separation plan, the distribution andtransmission businesses conducted by the Texas distribution company and the intermediate transmission company, respectively, would continue to beregulated as to rates by the PUCT and the FERC, respectively

Generation-related Issues

Regarding the generation-related issues referred to in the preceding paragraph, Entergy Gulf States has not yet reached agreement with the LPSC staff oncertain matters related to the separation of the Texas generating assets. Entergy Gulf States has proposed that Texas generating assets be a jurisdictionalportion (approximately 45 - 50%) of each generating plant and that Entergy Gulf States-Louisiana continue to operate the plants. Entergy Gulf States hasalso suggested that certain generating assets be allocated by specific plant such that the Texas generating assets have approximately the Texas jurisdictionalportion of the capacity and value of all of Entergy Gulf States' generating assets.

When the Texas generating assets are transferred to the Texas generation company, the Texas generation company is expected to sell most of this capacityand energy to Entergy's affiliated Texas retail electric providers at a negotiated rate and sell any remainder to the market. Entergy's affiliated Texas retailelectric providers will use the capacity and energy to provide retail electric service to retail customers in Texas, including Entergy's price-to-beat obligation,which requires it to sell electricity to residential and small commercial customers in the service territory of the Texas distribution company at a rate equal tothe existing base rates plus a fuel component.

Up to 20% of capacity and energy from the Texas generating assets must be sold to third parties under PUCT rules, or to Entergy's domestic utilitycompanies that elect to purchase it, as described below:

Under the Texas restructuring legislation and a stipulation, Entergy Gulf States offered to sell at auction entitlements to approximately 15%(approximately 425MW) of its Texas-jurisdictional installed generation capacity. Auctions occurred in September 2001, but because of thedelay in retail open access, Entergy has unwound the auction transactions, and no liability exists for them. Additional capacity auctions are

suspended until at least 60 days prior to the introduction of retail open access. The obligation to auction capacity entitlements continues for upto 60 months after retail open access occurs, or until 40% of current customers have chosen an alternative supplier, whichever comes first.

Under the settlement of proceedings affecting the System Agreement, which are described in Item I. Part 1. "U.S. Utility - Rate Matters -Wholesale Rate Matters - System Agreement," Entergy's domestic utility companies have the option to purchase up to 5% of the megawatt

capacity of the Texas generating assets. If the capacity purchase is elected, it will be for the period from the inception of retail open access inTexas for Entergy Gulf States through June 2008.

Beginning on the date retail open access begins, the market power measures in the Texas restructuring law will prohibit the Texas generation company andits affiliates from owning and controlling more than 20% of the installed generation capacity located in, or capable of delivering electricity to, a powerregion. The implications of this limit are uncertain. It is possible that the Texas generation company (or its affiliates) could be required to auction additionalcapacity entitlements, divest some of the Texas generating assets, or seek other means of mitigation if it is found to have ownership and control in excess ofthis limit.

Resumption of Business Separation Proceedings at the LPSC

In January 2004, the LPSC Staff and Entergy Gulf States filed a joint motion in the LPSC docket to convene a status conference for the purpose ofestablishing a procedural schedule to address primarily the separation of Entergy Gulf States' generation resources. The status conference was conducted inFebruary 2004. The presiding Administrative Law Judge established a procedural schedule that, among other things, calls for Entergy Gulf States to filetestimony on March 1, 2004, and sets this case for hearing on September 13-17, 2004. In its March 1, 2004 filing, Entergy Gulf States proposed twosignificant modifications to the plan previously approved by the LPSC.

First, Entergy Gulf States proposed to separate the Texas-jurisdictional generation resources immediately upon unbundling, resulting in the co-ownership ofall Entergy Gulf States' generating plants by Entergy Gulf States-Louisiana and the Texas generation company, unless an agreement can be reached andapproved by the LPSC on the allocation of certain generating assets by specific plant. The Texas generation company would assume the long-term debtallocable to the Texas jurisdictional generation assets through a Debt Assumption Agreement. The Debt Assumption Agreement would be secured by a firstpriority lien in favor of Entergy Gulf States-Louisiana on all the assets separated to the Texas generation company, and the Texas generation company wouldprovide the funds necessary to retire the assumed long-term debt no later than three years after the commencement of retail open access in Entergy GulfStates' Texas service territory. In addition, this Debt Assumption Agreement would be s upported by an Entergy Corporation indemnity, which would beexecuted simultaneously with the Debt Assumption Agreement, on terms similar to the contingent indemnity previously approved by the LPSC inconnection with the separation of transmission assets. The indemnity would terminate at the same time as the Debt Assumption Agreement.

Second, Entergy Gulf States proposed that its Texas jurisdictional transmission and distribution assets would be immediately separated to a Texastransmission and distribution company providing transmission and distribution services to Entergy Gulf States' Texas customers. The Texas transmission anddistribution company would own the distribution assets located in Texas and would co-own Entergy Gulf States' transmission assets with Entergy GulfStates-Louisiana. The Texas transmission and distribution company would assume the long-term debt allocable to the Texas jurisdictional transmission anddistribution assets through a Debt Assumption Agreement. The Debt Assumption Agreement would be secured by a first priority lien in favor of EntergyGulf States-Louisiana on all of the assets separated to the Texas transmission and distribution company. The Texas transmission and distribution companywill provide the funds necessary to retire the assumed long-term-debt within one year. If t he long-term debt is not retired by that time, Entergy Corporationwill grant a contingent indemnity in favor of Entergy Gulf States-Louisiana until such time as the long-term debt is retired, which is not to be later than threeyears after the commencement of retail open access in Entergy Gulf States' Texas service territory.

Other PUCT Restructuring-related Proceedings

In March 2001, Entergy Gulf States filed with the PUCT a non-unanimous settlement agreement in the unbundled cost proceeding that establishes the Texasdistribution company's revenue requirement. The settlement agreement is between Entergy Gulf States, the PUCT staff, and other parties. Pursuant to ageneric order by the PUCT, the Texas distribution company's allowed return on equity will be 11.25%. The capital structure prescribed by the PUCT is 60%debt and 40% equity. A rider to recover nuclear decommissioning costs will be implemented. Also in the settlement agreement, the parties agreed thatEntergy Gulf States' Texas-jurisdictional stranded costs and benefits are $0, and no charge to recover stranded costs or credit to refund excess mitigation willbe implemented. Entergy Gulf States agreed in the settlement to refund any excess earnings resulting from the restructuring law's annual report process for2000 and 2001, which management does not expect to have a material financi al effect. After a hearing in April 2001, the PUCT voted to approve a rateorder consistent with the terms of the settlement. A written interim order was signed in May 2001. In December 2001, the PUCT abated the proceeding andindicated its intent to defer a final ruling on this proceeding until a date closer to the commencement of retail open access.

The settlement that has delayed the commencement of retail open access requires a new power region certification proceeding for Entergy Gulf States'service territory in Texas. If Entergy Gulf States' power region in Texas is not certified by the PUCT before retail open access is introduced, Entergy'saffiliated Texas retail electric provider could be required to maintain rates at the price-to-beat levels for residential and small commercial customers inEntergy Gulf States' service territory beyond January 1, 2007. Entergy's affiliated Texas retail electric provider could also be required to offer rates toindustrial and large commercial customers in Entergy Gulf States' service territory that are no higher than the rates that, on a bundled basis, were in effect onJanuary 1, 1999, subject to fuel factor adjustments. Entergy's affiliated Texas retail electric provider might also face requests for restrictions on its ability tocompete for retail customers in parts of its power region in Texas outside of its current service area.

In July 2001, Entergy Gulf States filed an application for approval of the fuel factor portion of Entergy's affiliated Texas retail electric provider's price-to-beat rates, and the gas prices included in that filing were updated in October 2001. After the gas price update, Entergy Gulf States recommended that thePUCT approve an average fuel factor of approximately $29/MWh adjusted, if necessary, to maintain an adequate competitive margin. After hearing, an ALJrecommended in November 2002 a lower fuel factor than Entergy Gulf States requested. In September 2003, the PUCT issued a written order that approvedthe Price to Beat (PTB) fuel factor for Entergy Gulf States, which is to be implemented upon the commencement of retail open access in its Texas serviceterritory. This PTB fuel factor is subject to revision based on PUCT rules. The PUCT declined consideration of a request for rehearing sought by certaincities in Texas served by Entergy Gulf States and the Office of Public Uti lity Counsel. The Office of Public Utility Counsel has appealed this decision to theTexas courts. Management cannot predict the ultimate outcome of the proceeding at this time.

In June 2001, Entergy Gulf States filed tariffs for the non-fuel component of the price-to-beat rates. The tariffs are based on Entergy Gulf States' current baserates. In September 2001, Entergy Gulf States entered into a unanimous settlement regarding the non-fuel component of price-to-beat rates. In February2002, the PUCT voted to approve the settlement. In May 2002, certain Texas cities served by Entergy Gulf States Texas appealed the PUCT order. Theappeal is currently pending in state district court in Texas County.


The rates that Entergy Gulf States charges for its services are an important item influencing its financial position, results of operations, and liquidity. EntergyGulf States is closely regulated and the rates charged to its customers are determined in regulatory proceedings, except for a portion of its operations.Governmental agencies, the LPSC and the PUCT, are primarily responsible for approval of the rates charged to customers.

In December 2002, the LPSC approved a settlement between Entergy Gulf States and the LPSC staff pursuant to which Entergy Gulf States agreed to makea base rate refund of $16.3 million, including interest, and to implement a $22.1 million prospective base rate reduction effective January 2003. Thesettlement discharged any potential liability for claims that relate to Entergy Gulf States' fourth, fifth, sixth, seventh, and eighth earnings reviews. EntergyGulf States made the refund in February 2003. In addition to resolving and discharging all liability associated with the fourth through eighth earningsreviews, the settlement provides that Entergy Gulf States shall be authorized to continue to reflect in rates a ROE of 11.1% until a different ROE isauthorized by a final resolution disposing of all issues in the proceeding that was commenced with Entergy Gulf States' May 2002 filing.

In May 2002, Entergy Gulf States filed its ninth and last required post-merger analysis with the LPSC. The filing includes an earnings review filing for the2001 test year that resulted in a rate decrease of $11.5 million, which was implemented effective June 2002. In its latest testimony filed in December 2003,the LPSC staff recommended a rate refund of $30.6 million and a prospective rate reduction of approximately $50 million. Hearings are scheduled to beginin April 2004.

In addition to rate proceedings, Entergy Gulf States' fuel costs recovered from customers are subject to regulatory scrutiny. Entergy Gulf States' retail ratematters and proceedings, including fuel cost recovery-related issues, are discussed in Note 2 to the domestic utility companies and System Energy financialstatements.


The domestic utility companies historically have engaged in the coordinated planning, construction, and operation of generation and transmission facilitiespursuant to the terms of the System Agreement. Under the terms of the System Agreement, generating capacity and other power resources are jointlyoperated by the domestic utility companies. The System Agreement provides, among other things, that parties having generating reserves greater than theirload requirements (long companies) shall receive payments from those parties having deficiencies in generating reserves (short companies). Such payments

are at amounts sufficient to cover certain of the long companies' costs for intermediate and peaking oil/gas-fired generation, including operating expenses,fixed charges on debt, dividend requirements on preferred stock, and a fair rate of return on common equity investment. Under the System Agreement, thesecharges are based on costs associated with the long companies' steam electric generating units fueled by oil or gas. In addition, for all energy exchangedamong the domestic utility companies under the System Agreement, the companies purchasing exchange energy are required to pay the cost of fuelconsumed in generating such energy plus a charge to cover other associated costs.


In its complaint, the LPSC alleges that Entergy Gulf States' Louisiana annual production costs over the period 2002 to 2007 will be $11 million to $87million over the average for the domestic utility companies. This range of results is a function of assumptions regarding such things as future natural gasprices, the future market price of electricity, and other factors. If FERC grants the relief requested by the LPSC, the relief may result in a material increase inproduction costs allocated to companies whose costs currently are projected to be less than the average and a material decrease in production costs allocatedto companies whose costs currently are projected to exceed the average. Management believes that any changes in the allocation of production costsresulting from a FERC decision should result in similar rate changes for retail customers. Therefore, management does not believe that this proceeding willhave a material effect on the financial condition of Entergy Gul f States, although neither the timing nor the outcome of the proceedings at FERC can bepredicted at this time. In February 2002, the FERC established a refund effective period consisting of the 15 months following September 13, 2001. Asubsequent extension of the procedural schedule extended the refund effective period by 120 days.





The LPSC instituted a companion ex-parte System Agreement investigation to litigate several of the System Agreement issues that the LPSC is litigatingbefore the FERC in the previously discussed System Agreement proceeding. This companion proceeding will require the LPSC to interpret variousprovisions of the System Agreement, including those relating to minimum-run and must-run units, the propriety of the methods used for billing and dispatchon the Entergy System, and the use of a rolling, twelve-month average of system peaks for allocating certain costs. In addition, by this companionproceeding the LPSC is questioning whether Entergy Louisiana and Entergy Gulf States were prudent for not seeking changes to the System Agreementpreviously, so as to lower costs imposed upon their ratepayers and to increase costs imposed upon ratepayers of other domestic utility companies. The LPSCstaff has filed testimony suggesting that the remedy for the alleged imprudence of Entergy Louisiana and Entergy Gulf States should be a reduction inallowed rate of return on common equity of 100 basis points. The domestic utility companies have challenged the propriety of the LPSC's litigating SystemAgreement issues. Nevertheless, on January 16, 2002 the LPSC affirmed a decision of its ALJ upholding the LPSC staff's right to litigate System Agreementissues at the LPSC, rather than before the FERC. The procedural schedule is suspended at this time and an evidentiary hearing is not scheduled. Anunrelated case between the LPSC and Entergy Louisiana raised the question of whether a state regulator is pre-empted by federal law from reviewing andinterpreting FERC rate schedules that are part of the System Agreement, and from subsequently enforcing that interpretation. The LPSC interpreted aSystem Agreement rate schedule in the unrelated case, and then sought to enforce its interpretation. The Louisiana Supreme Court affirmed. In 2003, theU.S. Supreme Court ruled in Entergy Louisiana's favor and rev ersed the decisions of the LPSC and the Louisiana Supreme Court.

Industrial, Commercial, and Wholesale Customers

Entergy Gulf States' large industrial and commercial customers continually explore ways to reduce their energy costs. In particular, cogeneration is an optionavailable to a portion of Entergy Gulf States' industrial customer base. Entergy Gulf States responds by working with industrial and commercial customers

and negotiating electric service contracts to provide competitive rates that match specific customer needs and load profiles. Despite these actions, EntergyGulf States lost two large industrial customers to cogeneration in 2002. The customers accounted for approximately 1% of Entergy Gulf States' net revenuein 2002. Entergy Gulf States expects to lose one additional customer to cogeneration in 2005. Current sales to that customer account for approximately $11million of Entergy Gulf States' net revenue annually. Entergy Gulf States actively participates in economic development, customer retention, andreclamation activities to increase industrial and commercial demand, from both new and existing customers. As a result of those efforts, one large industrialcustomer is in the process of shutting down its cogeneration unit and is under contract to receive 100% of its electric power from Entergy Gulf States and anagreement has been executed to provide service to a new large industrial customer locating in Louisiana. Entergy Gulf States does not currently expectadditional significant losses to cogeneration because of the current economics of the electricity markets and Entergy Gulf States' marketing efforts inretaining industrial customers.


Entergy Gulf States has certain market and credit risks inherent in its business operations. Market risks represent the risk of changes in the value ofcommodity and financial instruments, or in future operating results or cash flows, in response to changing market conditions. Credit risk is risk of loss fromnonperformance by suppliers, customers, or financial counterparties to a contract or agreement.


Entergy Gulf States' nuclear decommissioning trust funds expose it to fluctuations in equity prices and interest rates. The NRC requires Entergy Gulf Statesto maintain trusts to fund the costs of decommissioning River Bend. The funds are invested primarily in equity securities; fixed-rate, fixed-incomesecurities; and cash and cash equivalents. Management believes that its exposure to market fluctuations will not affect results of operations for the RiverBend trust funds because of the application of regulatory accounting principles. The decommissioning trust funds are discussed more thoroughly in Note 9to the domestic utility companies and System Energy financial statements.

Foreign Currency Exchange Rate Risk

Entergy Gulf States entered into a foreign currency forward contract to hedge the Euro-denominated payments due under certain purchase contracts. As ofDecember 31, 2003, the total notional amount of the foreign currency forward contracts is 17.2 million Euro and the forward currency rate is .8742. Thisforward contract matures in July 2004 and the mark-to-market valuation at December 31, 2003 was a net asset of $6.5 million. The counterparty bankobligated on this agreement is rated by Standard & Poor's Rating Services at AA on its senior debt obligations as of December 31, 2003.

Nuclear Matters

Entergy Gulf States owns and operates, through an affiliate, River Bend. Entergy Gulf States is, therefore, subject to the risks related to owning andoperating a nuclear plant. These include risks from the use, storage, handling and disposal of high-level and low-level radioactive materials, limitations onthe amounts and types of insurance commercially available for losses in connection with nuclear operations, and technological and financial uncertaintiesrelated to decommissioning nuclear plants at the end of their licensed lives, including the sufficiency of funds in decommissioning trusts. In the event of anunanticipated early shutdown of River Bend, Entergy Gulf States may be required to provide additional funds or credit support to satisfy regulatoryrequirements for decommissioning.

Environmental Risks

Entergy Gulf States' facilities and operations are subject to regulation by various governmental authorities having jurisdiction over air quality, water quality,control of toxic substances and hazardous and solid wastes, and other environmental matters. Management believes that Entergy Gulf States is in substantialcompliance with environmental regulations currently applicable to its facilities and operations. Because environmental regulations are subject to change,future compliance costs cannot be precisely estimated.

Litigation Risks

The states of Louisiana and Texas in which Entergy Gulf States operates have proven to be unusually litigious environments. Judges and juries in thesestates have demonstrated a willingness to grant large verdicts, including punitive damages, to plaintiffs in personal injury, property damage, and business tortcases. Entergy Gulf States uses legal and appropriate means to contest litigation threatened or filed against it, but the litigation environment in these statesposes a significant business risk.


The preparation of Entergy Gulf States' financial statements in conformity with generally accepted accounting principles requires management to makeestimates and judgments that can have a significant effect on reported financial position, results of operations, and cash flows. Management has identifiedthe following estimates as critical accounting estimates because they are based on assumptions and measurements that involve an unusual degree ofuncertainty, and there is the potential that different assumptions and measurements could produce estimates that are significantly different than thoserecorded in Entergy Gulf States' financial statements.


Regulations require that River Bend be decommissioned after the facility is taken out of service, and funds are collected and deposited in trust funds duringthe facility's operating life in order to provide for this obligation. Entergy Gulf States conducts periodic decommissioning cost studies (typically updatedevery three to five years) to estimate the costs that will be incurred to decommission the facility. See Note 9 to the domestic utility companies and SystemEnergy financial statements for details regarding Entergy Gulf States' most recent study and the obligations recorded by Entergy Gulf States related todecommissioning. The following key assumptions have a significant effect on these estimates:

Cost Escalation Factors - Entergy Gulf States' decommissioning studies include an assumption that decommissioning costs will escalate overpresent cost levels by an annual factor averaging approximately CPI-U to 4.5%. A 50 basis point change in this assumption could change the

ultimate cost of decommissioning a facility by as much as 11%.

Timing - The date of the plant's retirement must be estimated and an assumption must be made whether decommissioning will beginimmediately upon plant retirement, or whether the plant will be held in "safestore" status for later decommissioning, as permitted by applicableregulations. Entergy Gulf States' decommissioning studies for River Bend assume immediate decommissioning upon expiration of the original

plant license. While the impact of these assumptions cannot be determined with precision, assuming either license extension or use of a"safestore" status can significantly decrease the present value of these obligations.

Spent Fuel Disposal - Federal regulations require the Department of Energy to provide a permanent repository for the storage of spent nuclearfuel, and recent legislation has been passed by Congress to develop this repository at Yucca Mountain, Nevada. However, until this site is

available, nuclear plant operators must provide for interim spent fuel storage on the nuclear plant site, which can require the construction andmaintenance of dry cask storage sites or other facilities.

The costs of developing and maintaining these facilities can have a significant impact (as much as 16% of estimateddecommissioning costs). Entergy Gulf States' decommissioning studies include cost estimates for spent fuel storage. However,these estimates could change in the future based on the timing of the opening of the Yucca Mountain facility, the schedule forshipments to that facility when it is opened, or other factors.


were to change, this could have a potentially significant impact on cost estimates. The impact of these potential changes is not presentlydeterminable. Entergy Gulf States' decommissioning cost studies assume current technologies and regulations.

Entergy Gulf States collects the projected costs of decommissioning River Bend through rates charged to customers for the portion of the plant subject tocost-based ratemaking. The amounts collected through rates, which are based upon decommissioning cost studies, are deposited in decommissioning trustfunds. In December 2002, decommissioning collections from customers for the Louisiana-regulated portion of River Bend were suspended as a result of thesettlement with the LPSC of Entergy Gulf States' fourth through eighth earnings reviews. If decommissioning cost study estimates were changed andapproved by regulators, collections from customers would also change.

Approximately half of River Bend is not subject to cost-based ratemaking. When Entergy Gulf States acquired the 30% share of River Bend formerly ownedby Cajun, Entergy Gulf States obtained decommissioning trust funds of $132 million. Entergy Gulf States believes that these funds will be sufficient tocover the costs of decommissioning this portion of River Bend, and no further collections or deposits are being made for these costs. Additionally, under theDeregulated Asset Plan in the Louisiana jurisdiction of Entergy Gulf States, a portion of River Bend (approximately 16% of its total capacity) is excludedfrom rate base, and no amounts have been or are being collected from customers for decommissioning for this portion of the plant.

Prior to the implementation of SFAS 143, the obligations recorded by Entergy Gulf States for decommissioning were classified either as a component ofaccumulated depreciation (the regulated portion of River Bend) or as a deferred credit (the nonregulated portion of River Bend) in the line item entitled"Decommissioning." The amounts recorded for these obligations were comprised of collections from customers and earnings on the trust funds.

SFAS 143

Entergy Gulf States implemented SFAS 143, "Accounting for Asset Retirement Obligations," effective January 1, 2003. Nuclear decommissioning costscomprise substantially all of Entergy Gulf States' asset retirement obligations, and the measurement and recording of Entergy Gulf States' decommissioningobligations outlined above changed significantly with the implementation of SFAS 143. The most significant differences in the measurement of theseobligations are outlined below:

Recording of full obligation - SFAS 143 requires that the fair value of an asset retirement obligation be recorded when it is incurred. Thiscaused the recorded decommissioning obligation of Entergy Gulf States to increase significantly, as Entergy Gulf States had previously only


Fair value approach - SFAS 143 requires that these obligations be measured using a fair value approach. Among other things, this entails theassumption that the costs will be incurred by a third party and will therefore include appropriate profit margins and risk premiums. Entergy GulfStates' decommissioning studies to date have been based on Entergy Gulf States performing the work, and have not included any such margins

or premiums. Inclusion of these items increases cost estimates.


The net effect of implementing this standard for the portion of River Bend subject to cost-based ratemaking was recorded as a regulatory asset, with noresulting impact on Entergy Gulf States' net income. Entergy Gulf States recorded this regulatory asset because its existing rate mechanism is based on theoriginal or historical cost standard that allows Entergy Gulf States to recover all ultimate costs of decommissioning existing assets from current and futurecustomers. Upon implementation, assets and liabilities increased in 2003 as a result of increasing the asset retirement obligation by $129 million to its fairvalue as determined under SFAS 143, reducing accumulated depreciation by $63 million, and recording the related regulatory asset of $32 million. The neteffect of implementing SFAS 143 for the portion of River Bend not subject to cost-based ratemaking resulted in an earnings decrease of $21 million net-of-tax as a result of a one-time cumulative effect of accounting change. Applying SFAS 143 is not expected to have a material effect on Entergy Gulf States'earnings on an ongoing basis after its implementation.


The application of SFAS 71, "Accounting for the Effects of Certain Types of Regulation," has a significant and pervasive impact on accounting andreporting for Entergy Gulf States.

Entergy Gulf States' financial statements primarily reflect assets and costs based on existing cost-based ratemaking regulation in accordance with SFAS 71,"Accounting for the Effects of Certain Types of Regulation." Under traditional ratemaking practice, Entergy Gulf States is granted a geographic franchise tosell electricity. In return, Entergy Gulf States must make investments and incur obligations to serve customers. Prudently incurred costs are recovered fromcustomers along with a return on investment. Regulators may require Entergy Gulf States to defer collecting from customers some operating costs until afuture date. These deferred costs are recorded as regulatory assets in the financial statements. In order to continue applying SFAS 71 to its financialstatements, Entergy Gulf States' rates must be set on a cost-of-service basis by an authorized body and the rates must be charged to and collected fromcustomers.

As the generation portion of the utility industry moves toward competition, it is likely that generation rates will no longer be set on a cost-of-service basis.When that occurs, the generation portion of the business could be required to discontinue application of SFAS 71. The result of discontinuing application ofSFAS 71 would be the removal of regulatory assets and liabilities from the balance sheet, and could include the recording of asset impairments. This result isbecause some of the costs or commitments incurred under a regulated pricing system might be impaired or not recovered in a competitive market. Thesecosts are referred to as stranded costs.

Retail open access legislation is in place in Texas, but the implementation of retail open access in Entergy Gulf States' territory is likely delayed until at leastthe first quarter of 2005. Several proceedings necessary to implement retail open access are still pending, including proceedings to implement Entergy GulfStates' business separation plan and to pursue retail open access in the absence of an RTO in Entergy Gulf States' Texas service area. In addition, the LPSChas not approved for the Louisiana jurisdictional operations the transfer of generation assets to Entergy's Texas generation company. Therefore, neither the

necessary regulatory actions nor the opportunity for a reasonable determination of the effect of deregulation has occurred that are prerequisites for EntergyGulf States to discontinue the application of regulatory accounting principles to its Texas generation operation.



Assumptions









Cost Sensitivity





Benefit Obligation Increase/(Decrease) Discount rate (0.25%) $631 $15,172Rate of return on plan assets (0.25%) $1,194 -Rate of increase incompensation

0.25% $495 $3,896



Change in

Assumption

Impact on 2003








Costs and Funding

Total pension cost for Entergy Gulf States in 2003 was $1.8 million, including a $5 million charge related to the Voluntary Severance Program. Entergy GulfStates is projecting 2004 pension cost to be $3.1 million due to a decrease in the discount rate from 6.75% to 6.25% and the phased-in effect of poor assetperformance. Entergy Gulf States was not required to make contributions to its pension plan in 2003, however, it anticipates making $37 thousand incontributions in 2004.

Due to negative pension plan asset returns from 2000 to 2002, Entergy Gulf States' accumulated benefit obligation at December 31, 2002 exceeded planassets. As a result, Entergy Gulf States was required to recognize an additional minimum liability as prescribed by SFAS 87. At December 31, 2003 EntergyGulf States reversed its additional minimum liability and offsetting intangible asset of $7.1 million that were recorded at December 31, 2002. Net income for2003 and 2002 were not impacted.

Total postretirement health care and life insurance benefit costs for Entergy Gulf States in 2003 were $26.5 million, including a $6.8 million charge relatedto the Voluntary Severance Program. In December 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 became law. TheAct introduces a prescription drug benefit under Medicare (Part D) as well as a federal subsidy to employers who provide a retiree prescription drug benefitthat is at least actuarially equivalent to Medicare Part D. Currently, specific authoritative guidance on the accounting for the federal subsidy is pending.Entergy Gulf States expects 2004 postretirement health care and life insurance benefit costs to be approximately $20.1 million.


To the Board of Directors and Shareholders ofEntergy Gulf States, Inc.:

We have audited the accompanying balance sheets of Entergy Gulf States, Inc. as of December 31, 2003 and 2002, and the related statements of income,retained earnings and comprehensive income, and cash flows (pages 190 through 194 and applicable items in pages 270 through 331) for each of the threeyears in the period ended December 31, 2003. These financial statements are the responsibility of the Company's management. Our responsibility is toexpress an opinion on these financial statements based on our audits.


In our opinion, such financial statements present fairly, in all material respects, the financial position of Entergy Gulf States, Inc. as of December 31, 2003and 2002, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2003 in conformity withaccounting principles generally accepted in the United States of America.

As discussed in Note 1 and Note 9 to the notes to respective financial statements, Entergy Gulf States, Inc. adopted the provisions of Statement of FinancialAccounting Standards No. 143, Accounting for Asset Retirement Obligations, and Financial Accounting Standards Board Interpretation No. 46,Consolidation of Variable Interest Entities, in 2003.



ENTERGY GULF STATES, INC. INCOME STATEMENTS


(In Thousands)

OPERATING REVENUES Domestic electric $2,579,916 $2,141,873 $2,590,836 Natural gas 59,821 42,006 57,724 ---------- ---------- ---------- TOTAL 2,639,737 2,183,879 2,648,560 ---------- ---------- ----------

OPERATING EXPENSES

Operation and Maintenance: Fuel, fuel-related expenses, and

gas purchased for resale 693,612 692,901 1,061,037 Purchased power 838,498 368,140 467,196 Nuclear refueling outage expenses 14,045 12,190 11,159 Other operation and maintenance 457,428 438,259 422,667 Decommissioning 14,268 3,980 6,247 Taxes other than income taxes 117,009 120,295 118,670 Depreciation and amortization 199,583 204,202 191,120 Other regulatory credits - net (2,476) (7,818) (26,728) ---------- ---------- ---------- TOTAL 2,331,967 1,832,149 2,251,368 ---------- ---------- ----------

OPERATING INCOME 307,770 351,730 397,192

OTHER INCOME (DEDUCTIONS)

Allowance for equity funds used during construction 15,855 11,010 9,248 Interest and dividend income 17,902 8,866 24,818

Miscellaneous - net (109,389) 3,560 (4,694) ---------- ---------- ---------- TOTAL (75,632) 23,436 29,372 ---------- ---------- ----------



INCOME BEFORE INCOME TAXES AND

CUMULATIVE EFFECT OF ACCOUNTING CHANGE 88,144 240,075 261,482

Income taxes 24,249 65,997 82,038 ---------- ---------- ----------

INCOME BEFORE CUMULATIVE EFFECT

OF ACCOUNTING CHANGE 63,895 174,078 179,444

CUMULATIVE EFFECT OF ACCOUNTING CHANGE (net of income taxes of $12,713) (21,333) - - ---------- ---------- ----------

NET INCOME 42,562 174,078 179,444


EARNINGS APPLICABLE TO COMMON STOCK

COMMON STOCK $37,861 $169,190 $174,419 ========== ========== ==========


(Page left blank intentionally)

ENTERGY GULF STATES, INC. STATEMENTS OF CASH FLOWS


(In Thousands)


Noncash items included in net income: Reserve for regulatory adjustments 12,605 11,147 (27,374) Other regulatory credits - net (2,476) (7,818) (26,728) Depreciation, amortization, and decommissioning 213,851 208,182 197,367 Deferred income taxes and investment tax credits 24,574 (11,576) 4,320 Allowance for equity funds used during construction (15,855) (11,010) (9,248) Cumulative effect of accounting change 21,333 - -

Changes in working capital: Receivables (96,409) 18,155 59,132 Fuel inventory (1,469) 4,617 (16,753) Accounts payable (17,013) 83,428 (151,090) Taxes accrued (35,914) (54,690) (41,764) Interest accrued (1,900) (4,544) (125) Deferred fuel costs 59,165 65,556 161,396 Other working capital accounts (11,906) (19,551) 6,183 Provision for estimated losses and reserves 115,878 1,478 (3,593) Changes in other regulatory assets 3,983 (51,490) (54,613) Other 114,954 94,692 61,932 -------- -------- -------- Net cash flow provided by operating activities 425,963 500,654 338,486 -------- -------- --------


Construction expenditures (348,507) (355,334) (317,776) Allowance for equity funds used during construction 15,855 11,010 9,248 Nuclear fuel purchases (39,959) (21,820) (14,148) Proceeds from sale/leaseback of nuclear fuel 38,029 21,923 15,222

Decommissioning trust contributions and realized change in trust assets (11,428) (12,488) (11,319) Changes in other temporary investments - net (23,579) 44,643 (44,643) Other regulatory investments (77,050) (39,390) - -------- -------- -------- Net cash flow used in investing activities (446,639) (351,456) (363,416) -------- -------- --------


Proceeds from the issuance of long-term debt 1,032,682 337,481 298,554 Retirement of long-term debt (1,048,129) (194,057) (124,829) Redemption of preferred stock (3,450) (1,858) (4,573)

Dividends paid: Common stock (68,100) (91,200) (83,700) Preferred stock (4,701) (4,888) (5,073) -------- -------- -------- Net cash flow provided by (used in) financing activities (91,698) 45,478 80,379 -------- -------- --------

Net increase (decrease) in cash and cash equivalents (112,374) 194,676 55,449



SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid/(received) during the period for:

Interest - net of amount capitalized $152,655 $143,961 $169,067 Income taxes ($30,987) $98,734 $107,726


ENTERGY GULF STATES, INC. BALANCE SHEETS

ASSETS


CURRENT ASSETS


Temporary cash investments - at cost, which approximates market 185,276 292,813 ---------- ---------- Total cash and cash equivalents 206,030 318,404 ---------- ---------- Other temporary investments 23,579 -

Accounts receivable: Customer 115,729 81,879 Allowance for doubtful accounts (4,856) (5,893) Associated companies 76,726 21,356 Other 27,243 40,156 Accrued unbilled revenues 114,442 95,377 ---------- ---------- Total accounts receivable 329,284 232,875 ---------- ---------- Deferred fuel costs 118,449 100,564 Accumulated deferred income taxes 6,116 1,681 Fuel inventory - at average cost 50,863 49,394 Materials and supplies - at average cost 99,357 99,190 Prepayments and other 51,236 47,206 ---------- ---------- TOTAL 884,914 849,314 ---------- ----------


Decommissioning trust funds 267,917 240,735 Non-utility property - at cost (less accumulated depreciation) 139,911 192,975 Other 21,852 20,737 ---------- ---------- TOTAL 429,680 454,447 ---------- ----------

UTILITY PLANT

Electric 8,208,394 7,895,009 Property under capital lease 11,009 19,795 Natural gas 69,180 60,810 Construction work in progress 325,888 306,209 Nuclear fuel under capital lease 63,684 41,447 ---------- ---------- TOTAL UTILITY PLANT 8,678,155 8,323,270 Less - accumulated depreciation and amortization 3,953,275 3,796,512 ---------- ---------- UTILITY PLANT - NET 4,724,880 4,526,758 ---------- ----------


Regulatory assets: SFAS 109 regulatory asset - net 442,062 452,887 Other regulatory assets 320,363 257,741 Long-term receivables 19,375 23,192 Other 33,588 35,194 ---------- ---------- TOTAL 815,388 769,014 ---------- ----------

TOTAL ASSETS $6,854,862 $6,599,533 ========== ==========


ENTERGY GULF STATES, INC. BALANCE SHEETS



CURRENT LIABILITIES

Currently maturing long-term debt $354,000 $293,000 Accounts payable:

Associated companies 84,000 51,383 Other 156,166 205,796 Customer deposits 47,044 48,061 Taxes accrued - 35,914 Nuclear refueling outage costs 8,238 14,244 Interest accrued 36,970 38,870 Obligations under capital leases 34,075 36,157 Other 14,755 15,441 ---------- ---------- TOTAL 735,248 738,866 ---------- ----------


Accumulated deferred income taxes and taxes accrued 1,422,776 1,310,028 Accumulated deferred investment tax credits 144,323 156,401 Obligations under capital leases 40,618 25,085 Other regulatory liabilities 13,885 5,557 Decommissioning and retirement cost liabilities 298,785 237,775 Transition to competition 79,098 79,098 Regulatory reserves 57,343 44,738 Accumulated provisions 75,868 65,289 Long-term debt 1,989,613 2,046,917 Preferred stock with sinking fund 20,852 - Other 233,985 93,396 ---------- ---------- 4,377,146 4,064,284 ---------- ----------

Preferred stock with sinking fund - 24,327


Preferred stock without sinking fund 47,327 47,327 Common stock, no par value, authorized 200,000,000

shares; issued and outstanding 100 shares in 2003 and 2002 114,055 114,055 Paid-in capital 1,157,484 1,157,459 Retained earnings 419,690 449,929 Accumulated other comprehensive income 3,912 3,286 ---------- ---------- TOTAL 1,742,468 1,772,056 ---------- ----------




ENTERGY GULF STATES, INC. STATEMENTS OF RETAINED EARNINGS AND COMPREHENSIVE INCOME

For the Years Ended December 31,

2003 2002 2001 (In Thousands)

RETAINED EARNINGS Retained Earnings - Beginning of period $449,929 $371,939 $285,128

Add - Net Income 42,562 $42,562 174,078 $174,078 179,444 $179,444

Deduct:

Dividends declared on common stock 68,100 91,200 83,700 Preferred dividend requirements and other 4,701 4,701 4,888 4,888 5,025 5,025

Capital stock and other expenses - - 3,908 -------- -------- -------- Total 72,801 96,088 92,633 -------- -------- --------

Retained Earnings - End of period $419,690 $449,929 $371,939 ======== ======== ========

ACCUMULATED OTHER COMPREHENSIVE INCOME (Net of Taxes): Balance at beginning of period:

Accumulated derivative instrument fair value changes $3,286 $ - $ -

Net derivative instrument fair value changes arising during the period 626 626 3,286 3,286 - - ------ ------- ------ --------- ------ --------

Balance at end of period: Accumulated derivative instrument fair value changes $3,912 $3,286 $ -

Comprehensive Income ====== $38,487 ====== $172,476 ====== $174,419 ======= ========= ========


ENTERGY GULF STATES, INC. AND SUBSIDIARIES


2003 2002 2001 2000 1999 (In Thousands) Operating revenues $2 639 737 $2 183 879 $2 648 560 $2 511 240 $2 127 208

Operating revenues $2,639,737 $2,183,879 $2,648,560 $2,511,240 $2,127,208

Net income $42,562 $174,078 $179,444 $180,343 $125,000Total assets $6,854,862 $6,599,533 $6,209,741 $6,134,017 $5,733,022Long-term obligations (1) $2,051,083 $2,096,329 $2,130,245 $1,978,149 $1,966,269

(1) Includes long-term debt (excluding currently maturing debt), preferred stock with sinking fund, andnoncurrent capital lease obligations.

ENTERGY LOUISIANA, INC.



Net Income


Net income increased slightly primarily due to increased net revenue and decreased interest charges, almost entirely offset by increased other operation andmaintenance expenses, increased depreciation and amortization expenses, and increased taxes other than income taxes.


Net income increased $12.2 million primarily due to increased net revenue, decreased taxes other than income taxes, and decreased interest charges, partiallyoffset by increased other operation and maintenance expenses and increased depreciation and amortization expenses.

Net Revenue




Fuel price 59.1 Asset retirement obligation 8.2

Volume (16.2)Vidalia settlement (9.2)Other 8.9

2003 net revenue $973.7

The fuel price variance is due to a revised estimate made in December 2002 of the fuel cost component of the price applied to unbilled sales and furtherrevision of that estimate in the first quarter of 2003.

The asset retirement obligation variance is due to the implementation of SFAS 143, "Accounting for Asset Retirement Obligations," adopted in January2003. See "Critical Accounting Estimates" for more details on SFAS 143. The increase is offset by decommissioning expense and has no effect on netincome.

The volume variance is due to a decrease in electricity usage in the service territory. Billed usage decreased 1,868 GWh in the industrial sector including theloss of a large industrial customer to cogeneration.

The $9.2 million decrease is due to the September 2002 settlement related to the Vidalia contract. See "Liquidity and Capital Resources" below for moredetails.

Gross operating revenues, fuel and purchased power expenses, and other regulatory charges

Gross operating revenues increased primarily due to:

an increase of $277.2 million in fuel cost recovery revenues due to higher fuel rates; and

an increase of $94.7 million in gross wholesale revenue due to increased sales to affiliated systems.

Fuel and purchased power expenses increased primarily due to an increase in the market prices of natural gas and purchased power.

Other regulatory charges decreased primarily due to:

a decrease of $8.2 million due to the change in accounting for asset retirement obligations in compliance with SFAS 143, adopted in January2003. This decrease has no effect on net income; and

a decrease of $5.9 million due to deferred capacity charges recorded in the third quarter as allowed by the LPSC related to generation resourceplanning.





Fuel price 45.0 Volume 79.5 System Energy refund in 2001 (68.1)Summer capacity charges (23.0)Other (6.3)2002 net revenue $922.9

The fuel price variance is due to an increase in the price applied to unbilled sales partially offset by a revised estimate made in December 2002 to the fuelcomponent of unbilled revenue.

The volume variance is due to an increase in electricity usage in the service territory. Billed usage increased a total of 1,042 GWh primarily in the residentialand industrial sectors.

The effect of the System Energy refund resulted from System Energy's application to FERC in May 1995 for a rate increase, which it implemented inDecember 1995, subject to refund. The request sought changes to System Energy's rate schedule, including increases in the revenue requirement associatedwith decommissioning costs, the depreciation rate, and the rate of return on common equity. In July 2000, FERC approved a lower rate of return than therate sought by System Energy. Upon receipt of a final FERC order in July 2001, Entergy Louisiana recorded entries to spread the impacts of FERC's order tothe various revenue, expense, asset, and liability accounts affected, as if the order had been in place since commencement of the case in 1995. Theaccounting entries necessary to record the effects of the order reduced Entergy Louisiana's purchased power expenses by $68.1 million in 2001, whichresulted in a corresponding increase in net revenue in 2001.

Summer capacity charges decreased net revenue due to the deferral in 2001 of capacity charges included in purchased power costs for the summers of 2000and 2001 and the amortization of these capacity charges in 2002. The amortization of the summer 2000 capacity charges ended in July 2002. Theamortization of the capacity charges for the summer of 2001 began in August 2002 and ended in July 2003.

Gross operating revenues, fuel and purchased power expenses, and other regulatory charges

Gross operating revenues decreased primarily due to a decrease in fuel cost recovery revenues of $202.9 million due to lower fuel rates, partially offset by anincrease in price applied to unbilled sales of $45 million and an increase in sales volume of $79.5 million, as discussed above.

Fuel and purchased power expenses decreased primarily due to:

the decline in natural gas prices in 2002;

a decrease in the average price of purchased power; and

a decrease in deferred fuel expense due to lower fuel revenues.

The decrease was partially offset by the reduction of purchased power expenses in 2001 as a result of the FERC-ordered refund from System Energy asdiscussed above.

Other regulatory charges increased primarily due to the deferred capacity charges discussed above.




voluntary severance program accruals of $19.7 million; and

an increase of $13.4 million in benefit costs.

Decommissioning expenses increased $10.1 million primarily due to the implementation of SFAS 143, "Accounting for Asset Retirement Obligations,"adopted in January 2003. See "Critical Accounting Estimates" for more details on SFAS 143. The increase in decommissioning expense is offset byregulatory credits and interest and dividend income and has no effect on net income.

Taxes other than income taxes increased primarily due to the franchise tax adjustments of $10.8 million recorded in 2002 as a result of a favorable courtdecision that allowed Entergy Louisiana to receive a refund for certain franchise taxes previously expensed and paid under protest.

Depreciation and amortization expenses increased primarily due to an increase in plant in service.

Interest charges decreased primarily due to decreased interest on long-term debt of $25.5 million due to the redemption of $150 million of First MortgageBonds in June 2003 and the redemption of $187 million of First Mortgage Bonds from April through December of 2002, partially offset by the issuance of$150 million of First Mortgage Bonds in March 2002.



an increase of $13.3 million in fossil expenses due to maintenance outages at the Ninemile Point, Little Gypsy, and Waterford fossil plants andturbine inspection costs at the Sterlington fossil plant;


an increase of $4.4 million in outside services employed; and

an increase of $4.4 million in transportation costs.

Taxes other than income taxes decreased due to franchise tax adjustments of $10.8 million as a result of a favorable court decision which allowed EntergyLouisiana to receive a refund for certain franchise taxes previously expensed and paid under protest.

Depreciation and amortization expenses increased primarily due to an increase in plant in service combined with revisions made to the useful lives of certainintangible plant assets to more appropriately reflect their actual lives, which lowered expense in 2001 in accordance with regulatory treatment.

Interest charges decreased primarily due to the following:

adjustments of $3.5 million to interest expense previously recorded on franchise tax accruals as a result of the franchise tax adjustmentdiscussed above;

a decrease of $5.9 million in interest on long-term debt due to the refinancing and net redemption of First Mortgage Bonds in the amounts of$18.7 million in 2001 and $140 million in 2002; and

interest of $4.6 million accrued in 2001 on reserves provided for fuel-related refunds that were made in the summer of 2001.

Income taxes

The effective income tax rates for 2003, 2002, and 2001 were 40.0%, 36.9%, and 39.4%. See Note 3 to the domestic utility companies and System Energyfinancial statements for a reconciliation of the federal statutory rate of 35.0% to the effective income tax rate.


Cash Flow


2003 2002 2001(In Thousands)


Cash flow provided by (used in):Operating activities 413,939 1,035,777 430,515 Investing activities (268,372) (212,333) (218,331)Financing activities (448,580) (554,052) (213,735)Net increase (decrease) in cash and cashequivalents

(303,013) 269,392 (1,551)



Cash flow from operations decreased $621.8 million in 2003 and increased $605.3 million in 2002 as a result of Entergy Louisiana changing its method ofaccounting for tax purposes related to the contract to purchase power from the Vidalia project (the contract is discussed in Note 9 to the domestic utilitycompanies and System Energy financial statements). The new tax accounting method provided a cumulative cash flow benefit of approximately $867million in 2002, which is expected to reverse in the years 2005 through 2031. The election did not reduce book income tax expense. The timing of thereversal of this benefit depends on several variables, including the price of power. In a settlement approved by the LPSC, Entergy Louisiana will keep aportion of the benefit in exchange for crediting customer rates. The credit will be $11 million annually through at least 2010. See Part I, Item I for additionaldetails concerning the settlement.

Entergy Louisiana has reduced its indebtedness and preferred stock with a portion of the cash. In accordance with the terms of the settlement, EntergyLouisiana requested SEC approval to return up to $350 million of common equity capital to Entergy Corporation in order to maintain Entergy Louisiana'scurrent capital structure. In December 2002, Entergy Louisiana repurchased $120 million of common stock from Entergy Corporation and paid a dividend of$122.6 million pursuant to the SEC approval. The provisions of the settlement provide that the LPSC shall not recognize or use Entergy Louisiana's use ofthis cash in setting any of Entergy Louisiana's rates. Therefore, to the extent Entergy Louisiana's use of the proceeds would ordinarily have reduced its ratebase, no change in rate base shall be reflected for ratemaking purposes. The SEC approval for additional return of equity capital is now expired.

Entergy Louisiana's receivables from or (payables) to the money pool were as follows as of December 31 for each of the following years:

2003 2002 2001 2000(In Thousands)

($41,317) $18,854 $3,812 $22,907

Money pool activity provided $60.2 million of Entergy Louisiana's operating cash flow in 2003, used $15.0 million in 2002, and provided $19.1 million in2001. See Note 4 to the domestic utility companies and System Energy financial statements for a description of the money pool.


The increase of $56.0 million in net cash used by investing activities in 2003 was primarily due to increased spending of $47.9 million on customer service,transmission, and nuclear projects.


The decrease of $105.5 million in net cash used by financing activities in 2003 was primarily due to:

a decrease of $125.9 million in common stock dividends paid; andthe repurchase of $120 million of common stock from Entergy Corporation in 2002.

The decrease in net cash used was partially offset by the following:

the retirement in 2003, at maturity, of $150 million of 8.5% Series First Mortgage Bonds using cash on hand and the retirement of $110.95million of 5.35% Series St. Charles Parish Bonds using a combination of cash on hand and short-term borrowings compared to the net

retirement of $134.6 million in 2002; andprincipal payments of $35.4 million in 2003 for the Waterford 3 Lease Obligation compared to principal payments of $15.9 million in 2002.

The increase of $340.3 million in net cash used by financing activities in 2002 was primarily due to:

the net retirement of an additional $120.9 million of first mortgage bonds in 2002;

an increase in common stock dividends paid of $136.8 million; and

the repurchase of $120 million of common stock from Entergy Corporation.

See Note 5 to the domestic utility companies and System Energy financial statements for details of long-term debt.

Uses of Capital

Entergy Louisiana requires capital resources for:





Following are the amounts of Entergy Louisiana's planned construction and other capital investments, existing debt and lease obligations, and other purchaseobligations:

2004 2005-2006 2007-2008 After 2008 Total (In Millions)Planned construction and capital investment (1) $454 $375 N/A N/A $829Long-term debt $15 $55 $115 $717 $902Operating leases $13 $12 $4 $2 $31Purchase obligations (2) $1,062 $821 $580 $1,649 $4,112Nuclear fuel lease obligations (3) $36 $30 N/A N/A $66

(1) Includes $150 million each year for maintenance capital, which is planned spending on routinecapital projects that are necessary to support reliability of service, equipment or systems and tosupport normal customer growth.

(2) As defined by SEC rule. For Entergy Louisiana almost all of the total consists of unconditional fueland purchased power obligations, including its obligations under the Vidalia purchased poweragreement and the Unit Power Sales Agreement, both of which are discussed in Note 9 to thedomestic utility companies and System Energy financial statements.


The planned capital investment estimate for Entergy Louisiana reflects capital required to support existing business and customer growth. The estimatedcapital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints, environmentalcompliance, market volatility, economic trends, business restructuring, and the ability to access capital. Management provides more information onconstruction expenditures and long-term debt and preferred stock maturities in Notes 5, 7, and 9 to the domestic utility companies and System Energyfinancial statements.

In January 2004, Entergy Louisiana signed an agreement to acquire the 718 MW Perryville power plant for $170 million. The plant is owned by a subsidiaryof Cleco Corporation, which subsidiary submitted a bid in response to Entergy's Fall 2002 request for proposals for supply-side resources. The signing of theagreement followed a voluntary Chapter 11 bankruptcy filing by the plant's owner. Entergy expects that Entergy Louisiana will own 100 percent of thePerryville plant, and that Entergy Louisiana will sell 75 percent of the output to Entergy Gulf States under a long-term cost-of-service power purchaseagreement. The purchase of the plant, expected to be completed by December 2004, is contingent upon obtaining necessary approvals from the bankruptcycourt and from state and federal regulators, including approval of full cost recovery, giving consideration to the need for the power and the prudence ofEntergy Louisiana and Entergy Gulf States for engaging in the transaction. In a ddition, Entergy Louisiana and Entergy Gulf States executed an interimpower purchase agreement with the plant's owner through the date of the acquisition's closing (so long as that occurs by September 2005) for 100 percent ofthe output of the Perryville plant.

As a wholly-owned subsidiary, Entergy Louisiana dividends its earnings to Entergy Corporation at a percentage determined monthly. Currently, all ofEntergy Louisiana's retained earnings are available for distribution.

Sources of Capital

Entergy Louisiana's sources to meet its capital requirements include:


cash on hand;

debt issuances; and

bank financing under new and existing facilities.

In 2002, Entergy Louisiana issued $150 million of long-term debt and used a portion of the proceeds to redeem $115 million of outstanding debt. Theremaining net proceeds were used to reduce short-term indebtedness incurred for working capital and other purposes. Entergy Louisiana is expected tocontinue refinancing or redeeming higher-cost debt and preferred stock prior to maturity, to the extent market conditions and interest and dividend rates arefavorable.

All debt and common and preferred stock issuances by Entergy Louisiana require prior regulatory approval. Preferred stock and debt issuances are alsosubject to issuance tests set forth in corporate charters, bond indentures, and other agreements. Entergy Louisiana has sufficient capacity under these tests tomeet its foreseeable capital needs.

Short-term borrowings by Entergy Louisiana, including borrowings under the money pool, are limited to an amount authorized by the SEC, $225 million.Under the SEC order authorizing the short-term borrowing limits, Entergy Louisiana cannot incur new short-term indebtedness if its common equity wouldcomprise less than 30% of its capital. In addition, Entergy Louisiana is restricted from publicly issuing new long-term debt unless its senior secured debt willbe rated as investment grade. Entergy Louisiana has a 364-day credit facility available expiring May 2004 in the amount of $15 million of which none wasdrawn at December 31, 2003. See Note 4 to the domestic utility companies and System Energy financial statements for further discussion of EntergyLouisiana's short-term borrowing limits.



Major changes are occurring in the wholesale and retail electric utility business, including in the electric transmission business. In a July 2001 report to theLPSC, the LPSC staff concluded that retail competition is not in the public interest at this time for any customer class. Nevertheless, the LPSC staffrecommended that retail open access be made available for certain large industrial customers as early as January 2003. An eligible customer choosing to goto competition would be required to provide its utility with a minimum of six months notice prior to the date of retail open access. The LPSC staff reportalso recommended that all customers who do not currently co- or self-generate, or have co- or self-generation under construction as of a date to be specifiedby the LPSC, remain liable for their share of stranded costs. During its October 2001 meeting, the LPSC adopted dates by which a total of 800 MW of co- orself-generation could be developed in Lo uisiana without being affected by stranded costs. During its November 2001 meeting, the LPSC decided not toadopt a plan for retail open access at this time, but to have collaborative group meetings concerning open access from time to time, and to have the LPSCstaff monitor developments in neighboring states and to report to the LPSC regarding the progress of retail access developments in those states. No furtheraction has been taken by the LPSC at this time.

At FERC, the pace of restructuring at the wholesale level has begun but has been delayed. It is too early to predict the ultimate effects of changes in U.S.energy markets. Restructuring issues are complex and are continually affected by events at the national, regional, state, and local levels. However, thesechanges may result, in the long-term, in fundamental changes in the way traditional integrated utilities and holding company systems, like the Entergysystem, conduct their business. Some of these changes may be positive for Entergy, while others may not be.

State Rate Regulation

The rates that Entergy Louisiana charges for its services are an important item influencing its financial position, results of operations, and liquidity. EntergyLouisiana is closely regulated and the rates charged to its customers are determined in regulatory proceedings. A governmental agency, the LPSC, isprimarily responsible for approval of the rates charged to customers.

In January 2004, Entergy Louisiana made a rate filing with the LPSC requesting a base rate increase of approximately $167 million. In that filing, EntergyLouisiana noted that approximately $73 million of the base rate increase was attributable to the acquisition of a generating station and certain powerpurchase agreements that, based on current natural gas prices, would produce fuel and purchased power savings for customers that substantially mitigate the

impact of the requested base rate increase. The filing also requested an allowed ROE of 11.4%. Entergy Louisiana's previously authorized ROE midpointcurrently in effect is 10.5%. A procedural schedule has not yet been established.

Performance-based formula rate plan filings expired in 2001 for Entergy Louisiana. In conjunction with the LPSC staff, Entergy Louisiana continues topursue development of a generation incentive structure.

In addition to rate proceedings, Entergy Louisiana's fuel costs recovered from customers are subject to regulatory scrutiny. This regulatory risk representsEntergy Louisiana's largest potential exposure to price changes in the commodity markets.

Entergy Louisiana's retail rate matters and proceedings, including fuel cost recovery-related issues, are discussed in Note 2 to the domestic utility companiesand System Energy financial statements.




In its complaint, the LPSC alleges that Entergy Louisiana's annual production costs over the period 2002 to 2007 will be $132 million to $139 million overthe average for the domestic utility companies. This range of results is a function of assumptions regarding such things as future natural gas prices, the futuremarket price of electricity, and other factors. If FERC grants the relief requested by the LPSC, the relief may result in a material increase in production costsallocated to companies whose costs currently are projected to be less than the average and a material decrease in production costs allocated to companieswhose costs currently are projected to exceed the average. Management believes that any changes in the allocation of production costs resulting from aFERC decision should result in similar rate changes for retail customers. Therefore, management does not believe that this proceeding will have a materialeffect on the financial condition of Entergy Louisiana, al though neither the timing nor the outcome of the proceedings at FERC can be predicted at thistime. In February 2002, the FERC set the matter for hearing and established a refund effective period consisting of the 15 months following September 13,2001. A subsequent extension of the procedural schedule extended the refund effective period by 120 days.





The LPSC instituted a companion ex-parte System Agreement investigation to litigate several of the System Agreement issues that the LPSC is litigatingbefore the FERC in the previously discussed System Agreement proceeding. This companion proceeding will require the LPSC to interpret various

provisions of the System Agreement, including those relating to minimum-run and must-run units, the propriety of the methods used for billing and dispatchon the Entergy System, and the use of a rolling, twelve-month average of system peaks for allocating certain costs. In addition, by this companionproceeding the LPSC is questioning whether Entergy Louisiana and Entergy Gulf States were prudent for not seeking changes to the System Agreementpreviously, so as to lower costs imposed upon their ratepayers and to increase costs imposed upon ratepayers of other domestic utility companies. The LPSCstaff has filed testimony suggesting that the remedy for the alleged imprudence of Entergy Louisiana and Entergy Gulf States should be a reduction inallowed rate of return on common equity of 100 basis points. The domestic utility companies have challenged the propriety of the LPSC's litigating SystemAgreement issues. Nevertheless, on January 16, 2002 the LPSC affirmed a decision of its ALJ upholding the LPSC staff's right to litigate System Agreementissues at the LPSC, rather than before the FERC. The procedural schedule is suspended at this time and an evidentiary hearing is not scheduled. Anunrelated case between the LPSC and Entergy Louisiana raised the question of whether a state regulator is pre-empted by federal law from reviewing andinterpreting FERC rate schedules that are part of the System Agreement, and from subsequently enforcing that interpretation. The LPSC interpreted aSystem Agreement rate schedule in the unrelated case, and then sought to enforce its interpretation. The Louisiana Supreme Court affirmed. In 2003, theU.S. Supreme Court ruled in Entergy Louisiana's favor and rev ersed the decisions of the LPSC and the Louisiana Supreme Court.

Industrial and Commercial Customers

Entergy Louisiana's large industrial and commercial customers continually explore ways to reduce their energy costs. In particular, cogeneration is an optionavailable to a portion of Entergy Louisiana's industrial customer base. Entergy Louisiana responds by working with industrial and commercial customersand negotiating electric service contracts to provide competitive rates that match specific customer needs and load profiles. Despite these actions, EntergyLouisiana lost a large industrial customer to cogeneration in late 2002. The customer accounted for approximately 2% of its net revenue in 2001. EntergyLouisiana actively participates in economic development, customer retention, and reclamation activities to increase industrial and commercial energydemand, from both existing and new customers. Entergy Louisiana does not currently expect additional significant losses to cogeneration because of thecurrent economics of the electricity markets and Entergy Louisiana's ma rketing efforts in retaining industrial customers.


Entergy Louisiana has certain market and credit risks inherent in its business operations. Market risks represent the risk of changes in the value ofcommodity and financial instruments, or in future operating results or cash flows, in response to changing market conditions. Credit risk is risk of loss fromnonperformance by suppliers, customers, or financial counterparties to a contract or agreement.


Entergy Louisiana's nuclear decommissioning trust funds expose it to fluctuations in equity prices and interest rates. The NRC requires Entergy Louisiana tomaintain trusts to fund the costs of decommissioning Waterford 3. The funds are invested primarily in equity securities; fixed-rate, fixed-income securities;and cash and cash equivalents. Management believes that its exposure to market fluctuations will not affect results of operations for the Waterford 3 trustfunds because of the application of regulatory accounting principles. The decommissioning trust funds are discussed more thoroughly in Notes 1 and 9 to thedomestic utility companies and System Energy financial statements.

Nuclear Matters

Entergy Louisiana owns and operates, through an affiliate, Waterford 3. Entergy Louisiana is, therefore, subject to the risks related to owning and operatinga nuclear plant. These include risks from the use, storage, handling and disposal of high-level and low-level radioactive materials, limitations on the amountsand types of insurance commercially available for losses in connection with nuclear operations, and technological and financial uncertainties related todecommissioning nuclear plants at the end of their licensed lives, including the sufficiency of funds in decommissioning trusts. In the event of anunanticipated early shutdown of Waterford 3, Entergy Louisiana may be required to provide additional funds or credit support to satisfy regulatoryrequirements for decommissioning.

Environmental Risks

Entergy Louisiana's facilities and operations are subject to regulation by various governmental authorities having jurisdiction over air quality, water quality,control of toxic substances and hazardous and solid wastes, and other environmental matters. Management believes that Entergy Louisiana is in substantialcompliance with environmental regulations currently applicable to its facilities and operations. Because environmental regulations are subject to change,future compliance costs cannot be precisely estimated.

Litigation Risks

The state of Louisiana has proven to be an unusually litigious environment. Judges and juries in Louisiana have demonstrated a willingness to grant largeverdicts, including punitive damages, to plaintiffs in personal injury, property damage, and business tort cases. Entergy Louisiana uses legal and appropriatemeans to contest litigation threatened or filed against it, but the litigation environment poses a significant business risk.


The preparation of Entergy Louisiana's financial statements in conformity with generally accepted accounting principles requires management to makeestimates and judgments that can have a significant effect on reported financial position, results of operations, and cash flows. Management has identifiedthe following estimates as critical accounting estimates because they are based on assumptions and measurements that involve an unusual degree ofuncertainty, and there is the potential that different assumptions and measurements could produce estimates that are significantly different than thoserecorded in Entergy Louisiana's financial statements.


Regulations require that Waterford 3 be decommissioned after the facility is taken out of service, and funds are collected and deposited in trust funds duringthe facility's operating life in order to provide for this obligation. Entergy Louisiana conducts periodic decommissioning cost studies (typically updatedevery three to five years) to estimate the costs that will be incurred to decommission the facility. See Note 9 to the domestic utility companies and SystemEnergy financial statements for details regarding Entergy Louisiana's most recent study and the obligations recorded by Entergy Louisiana related todecommissioning. The following key assumptions have a significant effect on these estimates:

Cost Escalation Factors - Entergy Louisiana's decommissioning studies include an assumption that decommissioning costs will escalate overpresent cost levels by an annual factor averaging approximately 4.4%. A 50 basis point change in this assumption could change the ultimate cost

of decommissioning a facility by as much as 11%.

Timing - The date of the plant's retirement must be estimated and an assumption must be made whether decommissioning will beginimmediately upon plant retirement, or whether the plant will be held in "safestore" status for later decommissioning, as permitted by applicableregulations. Entergy Louisiana's decommissioning studies for Waterford 3 assume immediate decommissioning upon expiration of the original



available, nuclear plant operators must provide for interim spent fuel storage on the nuclear plant site, which can require the construction andmaintenance of dry cask storage sites or other facilities. The costs of developing and maintaining these facilities can have a significant impact

(as much as 16% of estimated decommissioning costs). Entergy Louisiana's decommissioning studies include cost estimates for spent fuelstorage. However, these estimates could change in the future based on the timing of the opening of the Yucca Mountain facility, the schedule for

shipments to that facility when it is opened, or other factors.


were to change, this could have a potentially significant impact on cost estimates. The impact of these potential changes is not presentlydeterminable. Entergy Louisiana's decommissioning cost studies assume current technologies and regulations.

Entergy Louisiana collects substantially all of the projected costs of decommissioning Waterford 3 through rates charged to customers. The amountscollected through rates, which are based upon decommissioning cost studies, are deposited in decommissioning trust funds. These collections plus earningson the trust fund investments are estimated to be sufficient to fund the future decommissioning costs. If decommissioning cost study estimates were changedand approved by regulators, collections from customers would also change.

Prior to the implementation of SFAS 143, the obligations recorded by Entergy Louisiana for decommissioning were classified as a component ofaccumulated depreciation. The amounts recorded for these obligations were comprised of collections from customers and earnings on the trust funds.

SFAS 143

Entergy Louisiana implemented SFAS 143, "Accounting for Asset Retirement Obligations," effective January 1, 2003. Nuclear decommissioning costscomprise substantially all of Entergy Louisiana's asset retirement obligations, and the measurement and recording of Entergy Louisiana's decommissioningobligations outlined above changed significantly with the implementation of SFAS 143. The most significant differences in the measurement of theseobligations are outlined below:

Recording of full obligation - SFAS 143 requires that the fair value of an asset retirement obligation be recorded when it is incurred. Thiscaused the recorded decommissioning obligation of Entergy Louisiana to increase significantly, as Entergy Louisiana had previously only


Fair value approach - SFAS 143 requires that these obligations be measured using a fair value approach. Among other things, this entails theassumption that the costs will be incurred by a third party and will therefore include appropriate profit margins and risk premiums. EntergyLouisiana's decommissioning studies to date have been based on Entergy Louisiana performing the work, and have not included any such

margins or premiums. Inclusion of these items increases cost estimates.


The net effect of implementing this standard for Entergy Louisiana was recorded as a regulatory asset, with no resulting impact on Entergy Louisiana's netincome. Entergy Louisiana recorded this regulatory asset because its existing rate mechanism is based on the original or historical cost standard that allowsEntergy Louisiana to recover all ultimate costs of decommissioning existing assets from current and future customers. Upon implementation, assets andliabilities increased by approximately $305 million in 2003 as a result of recording the asset retirement obligation at its fair value of $305 million asdetermined under SFAS 143, increasing total utility plant by $99 million, reducing accumulated depreciation by $82 million, and recording the relatedregulatory asset of $124 million.



Assumptions








In determining its expected long-term rate of return on plan assets, Entergy reviews past long-term performance, asset allocations, and long-term inflationassumptions. Entergy targets an asset allocation for its pension plan assets of roughly 66% equity securities, 30% fixed income securities and 4% otherinvestments. The target allocation for Entergy's other postretirement benefit assets is 45% equity securities and 55% fixed income securities. Based on recent

market trends, Entergy decreased its expected long-term rate of return on plan assets from 9% in 2001 to 8.75% for 2002 and 2003. The trend of reducedinflation caused Entergy to reduce its assumed rate of increase in future compensation levels from 4.6% in 2001 to 3.25% in 2002 and 2003.

Cost Sensitivity





Benefit Obligation Increase/(Decrease) Discount rate (0.25%) $215 $11,016Rate of return on plan assets (0.25%) $826 -Rate of increase incompensation

0.25% $287 $2,756



Change in

Assumption

Impact on 2003








Costs and Funding

Total pension cost for Entergy Louisiana in 2003 was $3.6 million, including a $5.4 million charge related to the Voluntary Severance Program. EntergyLouisiana is projecting 2004 pension cost to be $2.3 million due to a decrease in the discount rate from 6.75% to 6.25% and the phased-in effect of poorasset performance. Entergy Louisiana was not required to make contributions to its pension plan in 2003, however it anticipates making $8.6 million incontributions in 2004.

Due to negative pension plan asset returns from 2000 to 2002, Entergy Louisiana's accumulated benefit obligation at December 31, 2002 exceeded planassets. As a result, Entergy Louisiana was required to recognize an additional minimum liability as prescribed by SFAS 87. At December 31, 2003 EntergyLouisiana reversed its additional minimum liability of $44.2 and the offsetting intangible asset of $5.4 million and regulatory asset of $38.8 million thatwere recorded at December 31, 2002. Net income for 2003 and 2002 were not impacted.

Total postretirement health care and life insurance benefit costs for Entergy Louisiana in 2003 were $19.4 million, including a $5.5 million charge related tothe Voluntary Severance Program. In December 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 became law. The Actintroduces a prescription drug benefit under Medicare (Part D) as well as a federal subsidy to employers who provide a retiree prescription drug benefit thatis at least actuarially equivalent to Medicare Part D. Currently, specific authoritative guidance on the accounting for the federal subsidy is pending. EntergyLouisiana expects 2004 postretirement health care and life insurance benefit costs to approximate $13.1 million.


To the Board of Directors and Shareholders ofEntergy Louisiana, Inc.:

We have audited the accompanying balance sheets of Entergy Louisiana, Inc. as of December 31, 2003 and 2002, and the related statements of income,retained earnings, and cash flows (pages 211 through 216 and applicable items in pages 270 through 331) for each of the three years in the period endedDecember 31, 2003. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on thesefinancial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan andperform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a

test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide areasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material respects, the financial position of Entergy Louisiana, Inc. as of December 31, 2003and 2002, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2003 in conformity withaccounting principles generally accepted in the United States of America.

As discussed in Note 1 and Note 9 to the notes to respective financial statements, Entergy Louisiana, Inc. adopted the provisions of Statement of FinancialAccounting Standards No. 143, Accounting for Asset Retirement Obligations, and Financial Accounting Standards Board Interpretation No. 46,Consolidation of Variable Interest Entities, in 2003.



ENTERGY LOUISIANA, INC. INCOME STATEMENTS


(In Thousands)

OPERATING REVENUES Domestic electric $2,165,570 $1,815,352 $1,901,913 ---------- ---------- ----------


Fuel, fuel-related expenses, and gas purchased for resale 525,645 436,568 620,415 Purchased power 668,337 438,627 410,435 Nuclear refueling outage expenses 11,130 11,502 12,624 Other operation and maintenance 376,770 340,803 299,532 Decommissioning 20,569 10,422 10,422 Taxes other than income taxes 70,084 60,698 77,376 Depreciation and amortization 192,972 182,871 171,217 Other regulatory charges (credits) - net (2,160) 17,219 (24,738) ---------- ---------- ---------- TOTAL 1,863,347 1,498,710 1,577,283 ---------- ---------- ----------

OPERATING INCOME 302,223 316,642 324,630 ---------- ---------- ----------

OTHER INCOME

Allowance for equity funds used during construction 6,900 5,195 4,531 Interest and dividend income 8,820 7,668 6,234 Miscellaneous - net (3,100) (3,244) (3,904) ---------- ---------- ---------- TOTAL 12,620 9,619 6,861 ---------- ---------- ----------




Income taxes 97,408 84,765 86,287 ---------- ---------- ----------

NET INCOME 146,154 144,709 132,550



COMMON STOCK $139,440 $137,995 $125,055 ========== ========== ==========



ENTERGY LOUISIANA, INC. STATEMENTS OF CASH FLOWS


2003 2002 2001 (In Thousands)

OPERATING ACTIVITIES

Net income $146,154 $144,709 $132,550 Noncash items included in net income:

Reserve for regulatory adjustments 1,858 - (11,456) Other regulatory charges (credits) - net (2,160) 17,219 (24,738) Depreciation, amortization, and decommissioning 213,541 193,293 181,639 Deferred income taxes and investment tax credits 859,157 39,849 (27,382) Allowance for equity funds used during construction (6,900) (5,195) (4,531)

Changes in working capital: Receivables (4,418) (68,936) 131,313 Accounts payable 49,028 7,370 (50,121) Taxes accrued (804,805) 779,590 (2,897) Interest accrued (10,324) (3,971) (1,012) Deferred fuel costs (56,211) (41,891) 151,544 Other working capital accounts 10,395 (118,718) (71,119) Provision for estimated losses and reserves 12,194 5,818 4,321 Changes in other regulatory assets 59,169 (23,879) 2,569 Other (52,739) 110,519 19,835 -------- ---------- -------- Net cash flow provided by operating activities 413,939 1,035,777 430,515 -------- ---------- --------


Construction expenditures (257,754) (209,826) (203,059) Allowance for equity funds used during construction 6,900 5,195 4,531 Nuclear fuel purchases (41,525) (50,473) - Proceeds from sale/leaseback of nuclear fuel 41,525 50,473 -

Decommissioning trust contributions and realized change in trust assets (17,506) (13,854) (13,651) Changes in other investments - net (12) 6,152 (6,152) -------- ---------- -------- Net cash flow used in investing activities (268,372) (212,333) (218,331) -------- ---------- --------


Proceeds from the issuance of long-term debt - 144,679 - Retirement of long-term debt (296,366) (300,617) (35,088) Redemption of preferred stock - - (35,000) Repurchase of common stock - (120,000) -

Dividends paid: Common stock (145,500) (271,400) (134,600) Preferred stock (6,714) (6,714) (9,047) -------- ---------- -------- Net cash flow used in financing activities (448,580) (554,052) (213,735) -------- ---------- --------

Net increase (decrease) in cash and cash equivalents (303,013) 269,392 (1,551)

Cash and cash equivalents at beginning of period 311,800 42,408 43,959 -------- ---------- --------

Cash and cash equivalents at end of period $8,787 $311,800 $42,408 ======== ========== ========


Interest - net of amount capitalized $84,089 $99,998 $110,971 Income taxes $35,128 ($781,540) $111,507


ENTERGY LOUISIANA, INC. BALANCE SHEETS ASSETS


CURRENT ASSETS


Temporary cash investments - at cost, which approximates market - 296,670 ---------- ---------- Total cash and cash equivalents 8,787 311,800 ---------- ----------

Accounts receivable: Customer 93,393 95,009 Allowance for doubtful accounts (4,487) (4,090) Associated companies 9,074 30,722 Other 12,334 17,949 Accrued unbilled revenues 138,164 104,470 ---------- ---------- Total accounts receivable 248,478 244,060 ---------- ---------- Deferred fuel costs 30,609 - Accumulated deferred income taxes - 4,400 Materials and supplies - at average cost 74,349 78,327 Deferred nuclear refueling outage costs 19,226 10,017 Prepayments and other 67,623 117,720 ---------- ---------- TOTAL 449,072 766,324 ---------- ----------


Investment in affiliates - at equity 14,230 14,230 Decommissioning trust funds 151,996 125,054 Non-utility property - at cost (less accumulated depreciation) 21,307 21,489 Other 2,177 2,165 ---------- ---------- TOTAL 189,710 162,938 ---------- ----------

UTILITY PLANT

Electric 5,836,914 5,557,776 Property under capital lease 250,102 241,071 Construction work in progress 172,405 147,122 Nuclear fuel under capital lease 65,066 50,893 ---------- ---------- TOTAL UTILITY PLANT 6,324,487 5,996,862 Less - accumulated depreciation and amortization 2,686,778 2,502,785 ---------- ---------- UTILITY PLANT - NET 3,637,709 3,494,077 ---------- ----------


Regulatory assets: SFAS 109 regulatory asset - net 156,111 157,642 Other regulatory assets 217,689 145,205 Long-term receivables 1,511 1,511 Other 22,737 26,007 ---------- ---------- TOTAL 398,048 330,365 ---------- ----------

TOTAL ASSETS $4,674,539 $4,753,704 ========== ==========


ENTERGY LOUISIANA, INC. BALANCE SHEETS



CURRENT LIABILITIES


Associated companies 101,191 54,622 Other 121,875 119,416 Customer deposits 61,215 63,255 Accumulated deferred income taxes 566 - Interest accrued 20,229 30,553 Deferred fuel costs - 25,602 Obligations under capital leases 35,506 33,927 Other 5,110 8,941 ---------- ---------- TOTAL 360,501 632,682 ---------- ----------


Accumulated deferred income taxes and taxes accrued 1,728,156 1,695,570 Accumulated deferred investment tax credits 101,258 106,539 Obligations under capital leases 29,560 16,966 Other regulatory liabilities 12,204 6,601 Decommissioning and retirement cost liabilities 352,120 148,551 Accumulated provisions 86,534 74,340 Long-term debt 887,687 902,353 Other 47,981 95,504 ---------- ---------- TOTAL 3,245,500 3,046,424 ---------- ----------



shares; issued 165,173,180 shares in 2003 and 2002 1,088,900 1,088,900 Capital stock expense and other (1,718) (1,718) Retained earnings 856 6,916 Less - treasury stock, at cost (18,202,573 shares in 2003 and 2002) 120,000 120,000 ---------- ---------- TOTAL 1,068,538 1,074,598 ---------- ----------




ENTERGY LOUISIANA, INC. STATEMENTS OF RETAINED EARNINGS


2003 2002 2001 (In Thousands)


Add:

Net income 146,154 144,709 132,550

Deduct: Dividends declared:

Preferred stock 6,714 6,714 7,495 Common stock 145,500 271,400 134,600 Capital stock expenses - - 453 -------- -------- -------- Total 152,214 278,114 142,548 -------- -------- --------

Retained Earnings, December 31 $856 $6,916 $140,321 ======== ======== ========




2003 2002 2001 2000 1999 (In Thousands) Operating revenues $2,165,570 $1,815,352 $1,901,913 $2,062,437 $1,806,594Net income $146,154 $144,709 $132,550 $162,679 $191,770Total assets $4,674,539 $4,753,704 $4,149,701 $4,289,409 $4,084,650Long-term obligations (1) $917,247 $919,319 $1,197,473 $1,411,345 $1,274,006

(1) Includes long-term debt (excluding currently maturing debt), preferred stock with sinking fund, andnoncurrent capital lease obligations.

ENTERGY MISSISSIPPI, INC.



Net Income


Net income increased $14.7 million primarily due to an increase in net revenue, partially offset by an increase in depreciation and amortization expenses,decreased interest income, and increased other operation and maintenance expenses.


Net income increased $12.8 million primarily due to an increase in net revenue and decreased interest charges, partially offset by a decrease in interestincome, an increase in depreciation and amortization expenses, and an increase in other operation and maintenance expenses.

Net Revenue



(In Millions) 2002 net revenue $380.2 Base rates 48.3 Other (1.9)2003 net revenue $426.6

The increase in base rates was effective January 2003. The rate increase is discussed in Note 2 to the domestic utility companies and System Energy'sfinancial statements.

Gross operating revenue, fuel and fuel-related expenses, and other regulatory charges (credits)


the base rate increase effective January 2003; and

an increase of $29.7 million in fuel cost recovery revenues due to quarterly changes in the fuel factor resulting from increases in market pricesof natural gas and purchased power.

The increase was partially offset by a decrease of $35.9 million in gross wholesale revenue as a result of decreased generation and purchases that resulted inless energy available for resale sales.

Fuel and fuel-related expenses decreased primarily due to the under-recovery of fuel and purchased power costs and decreased generation, partially offset byan increase in the market price of purchased power.

Other regulatory charges (credits) have no material effect on net income due to recovery and/or refund of such expenses. Other regulatory charges increasedprimarily due to an over-recovery of deferred capacity charges related to the Grand Gulf rate rider and the cessation of the Grand Gulf Accelerated RecoveryTariff that was suspended in July 2003.



(In Millions) 2001 net revenue $342.8 Volume/weather 10.1 Forfeiture and service revenue 9.1 Price 3.1 Other 15.1 2002 net revenue $380.2

The volume/weather variance is due to increased electricity usage in the service territory and the effect of more favorable weather. Billed usage increased atotal of 208 GWh in all sectors.

Forfeiture and service revenue increased due to new customer fees and late charges.

The price variance increase is a result of a formula rate plan revenue increase effective May 2002.

Gross operating revenue, fuel and purchased power expenses, and other regulatory credits

Gross operating revenues decreased primarily due to:

a decrease of $64.5 million in fuel recovery revenues primarily due to lower fuel factors resulting from decreases in the market prices of naturalgas and purchased power; and

a decrease of $47.3 million in gross wholesale revenue as a result of decreased generation and purchases that resulted in less energy availablefor resale sales.

Fuel and purchased power expenses decreased primarily due to:

the displacement of oil generation by lower priced gas generation. Oil generation was used in 2001 due to significant increases in the marketprice of natural gas;

a decrease in generation; and

a decrease in the average market price of purchased power.

Other regulatory credits decreased primarily due to the settlement of the System Energy rate proceeding in 2001 which ceased the deferral of costsassociated with purchases from System Energy.



Other operation and maintenance expenses increased due to:

voluntary severance program accruals of $7.1 million; and


These increases were partially offset by a decrease of $4.0 million in plant maintenance expense due to outage costs at a fossil plant in 2002.

Depreciation and amortization expense increased due to an increase in plant in service.

Interest and dividend income decreased as result of carrying charges associated with under-recovery of fuel during 2002.



an increase of $5.5 million in plant maintenance expenses due to unscheduled outage costs at a fossil plant; and


Depreciation and amortization expenses increased due to increased plant in service combined with revisions made to the useful lives of certain intangibleplant assets to more appropriately reflect their actual lives, which lowered expense in 2001 in accordance with regulatory treatment.

Interest and dividend income decreased due to the System Energy refund in 2001 eliminating the need to accrue interest on the deferred System Energy coststhat Entergy Mississippi was not recovering currently through rates.

Interest on long-term debt decreased primarily due to the retirement of $65 million of 6.875% Series First Mortgage Bonds in June 2002.

Income Taxes



Cash Flow


2003 2002 2001(In Thousands)


Cash flow provided by (used in):Operating activities 253,288 156,868 178,110 Investing activities (264,495) (135,122) (175,822)Financing activities (72,676) 71,927 46,647 Net increase (decrease) in cash and cashequivalents

(83,883) 93,673 48,935



Cash flow from operations increased by $96.4 million in 2003 primarily due to a $78 million tax refund and increased net income, partially offset by moneypool activity. Money pool activity decreased operating cash flow due to Entergy Mississippi's lending position in the money pool.

Cash flow from operations decreased by $21.2 million in 2002 due to the net effect of the System Energy refund, partially offset by increased net incomeand money pool activity.

Entergy Mississippi's receivables from or (payables) to the money pool were as follows as of December 31 for each of the following years:

2003 2002 2001 2000(In Thousands)

$22,076 $8,702 $11,505 ($30,719)

Money pool activity used $13.4 million of Entergy Mississippi's operating cash flows in 2003, provided $2.8 million of its operating cash flows in 2002, andused $42.2 million of its operating cash flows in 2001. See Note 4 to the domestic utility companies and System Energy financial statements for a

description of the money pool.


The increase of $129.4 million in net cash flow used in investing activities in 2003 was primarily due to cash used for other regulatory investments of $72.6million as a result of under-recovered fuel and purchased power costs.

In May 2003, Entergy Mississippi filed and the MPSC approved a change in Entergy Mississippi's energy cost recovery rider. Under the MPSC's order,Entergy Mississippi has deferred until 2004 the collection of fuel under-recoveries for the first and second quarters of 2003 that would have been collectedin the third and fourth quarters of 2003. The deferred amount of $77.6 million plus carrying charges will be collected over a twelve-month period beginningJanuary 2004.

The increase was also due to other temporary cash investments of $18.6 million that provided cash in 2002 upon maturity.

The decrease of $40.7 million in net cash flow used in investing activities in 2002 was primarily due to other temporary cash investments of $18.6 millionmade in 2001 that provided cash in 2002 when they matured.


The increase of $144.6 million in net cash flow used in financing activities in 2003 was primarily due to a decrease in net issuances of long-term debt.

The increase of $25.3 million in net cash flow provided by financing activities in 2002 was primarily due to an increase in net issuances of long-term debt,partially offset by an increase in dividends paid of $7.7 million


Uses of Capital

Entergy Mississippi requires capital resources for:





Following are the amounts of Entergy Mississippi's planned construction and other capital investments, and existing debt obligations:

2004 2005-2006 2007-2008 After 2008 Total (In Millions)Planned construction and capital investment (1) $150 $263 N/A N/A $413Long-term debt $75 - $180 $475 $730Operating leases $7 $10 $2 $1 $20Purchase obligations (2) $203 $390 $389 $2,587 $3,569

(1) Consists almost entirely of maintenance capital, which is planned spending on routine capitalprojects that are necessary to support reliability of service, equipment or systems and to supportnormal customer growth.

(2) As defined by SEC rule. For Entergy Mississippi almost all of the total consists of unconditionalfuel and purchased power obligations, including its obligations under the Unit Power SalesAgreement, which is discussed in Note 9 to the domestic utility companies and System Energyfinancial statements.

The planned capital investment estimate for Entergy Mississippi reflects capital required to support existing business and customer growth. The estimatedcapital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints, environmentalcompliance, market volatility, economic trends, and the ability to access capital. Management provides more information on construction expenditures andlong-term debt and preferred stock maturities in Notes 5, 7, and 9 to the domestic utility companies and System Energy financial statements.

As a wholly-owned subsidiary, Entergy Mississippi dividends its earnings to Entergy Corporation at a percentage determined monthly. Entergy Mississippiis restricted by its long-term debt indentures in the payment of cash dividends or other distributions on its common and preferred stock. As of December 31,2003, Entergy Mississippi had restricted retained earnings unavailable for distribution to Entergy Corporation of $41.9 million.

Sources of Capital

Entergy Mississippi's sources to meet its capital requirements include:


cash on hand;

debt issuances; and


Entergy Mississippi issued $295 million of First Mortgage Bonds in 2003 as follows:

Issue Date Description Maturity Amount

Issue Date Description Maturity Amount

(In Thousands) January 2003 5.15% Series February 2013 $100,000March 2003 4.35% Series April 2008 100,000May 2003 4.95% Series June 2018 95,000 $295,000

Proceeds from the $100 million issuance in March 2003 were used for general corporate purposes, including the retirement of short-term indebtedness andworking capital needs. Higher fuel costs in the first quarter of 2003 contributed to the working capital needs. A portion of the proceeds from the otherissuances, together with proceeds from the issuances of First Mortgage Bonds in October and November 2002 were used to redeem the following:

Retirement Date Description Maturity Amount(In Thousands)

February 2003 7.75% Series February 2003 $120,000February 2003 6.25% Series February 2003 70,000March 2003 6.625% Series November 2003 65,000March 2003 8.25% Series July 2004 25,000June 2003 Libor + 0.65% Series May 2004 50,000 $330,000

Entergy Mississippi also has $75 million of currently maturing long-term debt due May 2004, a portion of which Entergy Mississippi expects to repay atmaturity using a portion of the proceeds from the May 2003 issuance. Entergy Mississippi is expected to continue refinancing or redeeming higher-cost debtand preferred stock prior to maturity, to the extent market conditions and interest and dividend rates are favorable.

All debt and common and preferred stock issuances by Entergy Mississippi require prior regulatory approval. Preferred stock and debt issuances are alsosubject to issuance tests set forth in corporate charters, bond indentures, and other agreements. Entergy Mississippi has sufficient capacity under these teststo meet its foreseeable capital needs.

Short-term borrowings by Entergy Mississippi, including borrowings under the money pool, are limited to an amount authorized by the SEC, of $160million. Under the SEC order authorizing the short-term borrowing limits, Entergy Mississippi cannot incur new short-term indebtedness if the issuer'scommon equity would comprise less than 30% of its capital. Entergy Mississippi has a 364-day credit facility available expiring May 2004 in the amount of$25 million of which none was drawn at December 31, 2003. See Note 4 to the domestic utility companies and System Energy financial statements forfurther discussion of Entergy Mississippi's short-term borrowing limits.



Major changes are occurring in the wholesale and retail electric utility business, including in the electric transmission business. The MPSC hasrecommended not pursuing open access at this time. At FERC, the pace of restructuring at the wholesale level has begun but has been delayed. It is too earlyto predict the ultimate effects of changes in U.S. energy markets. Restructuring issues are complex and are continually affected by events at the national,regional, state, and local levels. However, these changes may result, in the long-term, in fundamental changes in the way traditional integrated utilities andholding company systems, like the Entergy system, conduct their business. Some of these changes may be positive for Entergy, while others may not be.

State and Local Rate Regulation

The rates that Entergy Mississippi charges for its services are an important item influencing its financial position, results of operations, and liquidity. EntergyMississippi is closely regulated and the rates charged to its customers are determined in regulatory proceedings. A governmental agency, the MPSC, isprimarily responsible for approval of the rates charged to customers. Entergy Mississippi did not have any new rate proceedings in 2003.

As approved by the MPSC, Entergy Mississippi implemented a $48.2 million rate increase effective January 2003.

Entergy Mississippi's fuel costs recovered from customers are subject to regulatory scrutiny. Entergy Mississippi's retail rate matters and proceedings,including fuel cost recovery-related issues are discussed more thoroughly in Note 2 to the domestic utility companies and System Energy financialstatements.



The LPSC and the Council commenced a proceeding at FERC in June 2001. Pursuant to a settlement agreement approved by the City Council in May 2003,the City Council withdrew as a complainant from the proceeding, but continues to participate as an intervenor. In this proceeding, the LPSC alleges that therough production cost equalization required by FERC under the System Agreement and the Unit Power Sales Agreement has been disrupted by changedcircumstances. The LPSC requests that FERC amend the System Agreement or the Unit Power Sales Agreement or both to achieve full production costequalization or to restore rough production cost equalization. The complaint does not seek a change in the total amount of the costs allocated by either theSystem Agreement or the Unit Power Sales Agreement. In addition the LPSC alleges that provisions of the System Agreement relating to minimum-run andmust-run units, the methodology of billing versus dispatch, and the use of a rolling twelve-month average of system peaks, increase costs paid by ratepayers

in the LPSC's jurisdiction. Several parties intervened in the proceeding, including the APSC and the MPSC. The APSC and the MPSC responses opposedthe relief sought by the LPSC.

In its complaint, the LPSC alleges that Entergy Mississippi's annual production costs over the period 2002 to 2007 will be $27 million under to $13 millionover the average for the domestic utility companies. This range of results is a function of assumptions regarding such things as future natural gas prices, thefuture market price of electricity, and other factors. If FERC grants the relief requested by the LPSC, the relief may result in a material increase inproduction costs allocated to companies whose costs currently are projected to be less than the average and a material decrease in production costs allocatedto companies whose costs currently are projected to exceed the average. Management believes that any changes in the allocation of production costsresulting from a FERC decision should result in similar rate changes for retail customers. Therefore, management does not believe that this proceeding willhave a material effect on the financial condition of Entergy Mississ ippi, although neither the timing nor the outcome of the proceedings at FERC can bepredicted at this time. In February 2002, the FERC set the matter for hearing and established a refund effective period consisting of the 15 months followingSeptember 13, 2001. A subsequent extension of the procedural schedule extended the refund effective period by 120 days.






Entergy Mississippi has certain market and credit risks inherent in its business operations. Market risks represent the risk of changes in the value ofcommodity and financial instruments, or in future operating results or cash flows, in response to changing market conditions. Credit risk is risk of loss fromnonperformance by suppliers, customers, or financial counterparties to a contract or agreement.

Litigation Risks

The state of Mississippi has proven to be an unusually litigious environment. Judges and juries in Mississippi have demonstrated a willingness to grant largeverdicts, including punitive damages, to plaintiffs in personal injury, property damage, and business tort cases. In November 2002 the MississippiLegislature passed House Bill 19, which was generally characterized as tort reform legislation. House Bill 19 included, among other things, provisionsdealing with the venue of civil actions, the status of innocent sellers as defendants, limitations on the amount of punitive damages, and the elimination of a15 percent appeal penalty. Entergy Mississippi uses legal and appropriate means to contest litigation threatened or filed against it but the litigationenvironment in this jurisdiction is a significant business risk.


The preparation of Entergy Mississippi's financial statements in conformity with generally accepted accounting principles requires management to makeestimates and judgments that can have a significant effect on reported financial position, results of operations, and cash flows. Management has identifiedthe following estimates as critical accounting estimates because they are based on assumptions and measurements that involve an unusual degree ofuncertainty, and there is the potential that different assumptions and measurements could produce estimates that are significantly different than thoserecorded in Entergy Mississippi's financial statements.



Assumptions









Cost Sensitivity






0.25% $190 $1,410



Change in Assumption

Impact on 2003








Costs and Funding

Total pension cost for Entergy Mississippi in 2003 was $1.9 million, including a $1.9 million charge related to the Voluntary Severance Program. EntergyMississippi is projecting 2004 pension cost to $2.3 million due to a decrease in the discount rate from 6.75% to 6.25% and the phased-in effect of poor assetperformance. Entergy Mississippi was not required to make contributions to its pension plan in 2003, however, it anticipates making $3 million incontributions in 2004.

Due to negative pension plan asset returns from 2000 to 2002, Entergy Mississippi's accumulated benefit obligation at December 31, 2003 and 2002exceeded plan assets. As a result, Entergy Mississippi was required to recognize an additional minimum liability as prescribed by SFAS 87. At December31, 2003 Entergy Mississippi reduced its additional minimum liability to $7.3 million from $13 million at December 31, 2002. Entergy Mississippidecreased its intangible asset for the unrecognized prior service cost to $0.9 million at December 31, 2003 from $3.2 million at December 31, 2002. EntergyMississippi also decreased the regulatory asset to $6.4 million at December 31, 2003 from $9.8 million at December 31, 2002. Net income for 2003 and2002 were not impacted.

Total postretirement health care and life insurance benefit costs for Entergy Mississippi in 2003 were $7 million, including a $1.3 million charge related tothe Voluntary Severance Program. In December 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 became law. The Actintroduces a prescription drug benefit under Medicare (Part D) as well as a federal subsidy to employers who provide a retiree prescription drug benefit thatis at least actuarially equivalent to Medicare Part D. Currently, specific authoritative guidance on the accounting for the federal subsidy is pending. EntergyMississippi expects 2004 postretirement health care and life insurance benefit costs to approximate $5.2 million.


To the Board of Directors and Shareholders ofEntergy Mississippi, Inc.:

We have audited the accompanying balance sheets of Entergy Mississippi, Inc. as of December 31, 2003 and 2002, and the related statements of income,retained earnings, and cash flows (pages 230 through 234 and applicable items in pages 270 through 331) for each of the three years in the period endedDecember 31, 2003. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on thesefinancial statements based on our audits.


In our opinion, such financial statements present fairly, in all material respects, the financial position of Entergy Mississippi, Inc. as of December 31, 2003and 2002, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2003 in conformity withaccounting principles generally accepted in the United States of America.




INCOME STATEMENTS


(In Thousands)

OPERATING REVENUES Domestic electric $1,035,360 $991,095 $1,093,741 ---------- -------- ----------


Fuel, fuel-related expenses, and gas purchased for resale 155,168 318,350 415,347 Purchased power 449,971 315,963 365,540 Other operation and maintenance 174,192 170,052 155,646 Taxes other than income taxes 47,734 47,993 47,956 Depreciation and amortization 62,984 55,409 48,933 Other regulatory charges (credits) - net 3,664 (23,438) (29,993) ---------- -------- ---------- TOTAL 893,713 884,329 1,003,429 ---------- -------- ----------

OPERATING INCOME 141,647 106,766 90,312 ---------- -------- ----------

OTHER INCOME

Allowance for equity funds used during construction 4,576 3,844 2,559 Interest and dividend income 1,030 4,213 18,904 Miscellaneous - net (2,242) (2,572) (2,915) ---------- -------- ---------- TOTAL 3,364 5,485 18,548 ---------- -------- ----------


Interest on long-term debt 43,879 42,580 46,950 Other interest - net 3,585 2,884 4,041 Allowance for borrowed funds used during construction (3,942) (3,467) (2,215) ---------- -------- ---------- TOTAL 43,522 41,997 48,776 ---------- -------- ----------


Income taxes 34,431 17,846 20,464 ---------- -------- ----------

NET INCOME 67,058 52,408 39,620

Preferred dividend requirements and other 3,369 3,369 3,082 ---------- -------- ----------


COMMON STOCK $63,689 $49,039 $36,538 ========== ======== ==========


ENTERGY MISSISSIPPI, INC. STATEMENTS OF CASH FLOWS


(In Thousands)


Noncash items included in net income: Reserve for regulatory adjustments 992 -

Other regulatory charges (credits) - net 3,664 (23,438) (29,993) Depreciation and amortization 62,984 55,409 48,933 Deferred income taxes and investment tax credits 34,836 (7,940) (68,133) Allowance for equity funds used during construction (4,576) (3,844) (2,559)

Changes in working capital: Receivables (23,179) (2,000) 1,059 Fuel inventory 575 (828) (1,388) Accounts payable 1,244 16,736 (46,976) Taxes accrued 18,133 (10,576) (378) Interest accrued (5,922) 2,027 4,568 Deferred fuel costs 21,669 67,981 54,453 Other working capital accounts 11,255 (22,897) 13,672 Provision for estimated losses reserves (1,137) 386 821 Changes in other regulatory assets (9,061) (6,028) 130,333 Other 74,753 39,472 34,078 -------- -------- -------- Net cash flow provided by operating activities 253,288 156,868 178,110 -------- -------- --------


Construction expenditures (188,995) (157,532) (159,815) Allowance for equity funds used during construction 4,576 3,844 2,559 Changes in other temporary investments - net (7,506) 18,566 (18,566) Other regulatory investments (72,570) - - -------- -------- -------- Net cash flow used in investing activities (264,495) (135,122) (175,822) -------- -------- --------


Proceeds from the issuance of long-term debt 292,393 167,596 69,616 Retirement of long-term debt (330,000) (65,000) -

Dividends paid: Common stock (31,700) (27,300) (19,600) Preferred stock (3,369) (3,369) (3,369) -------- -------- -------- Net cash flow provided by (used in) financing activities (72,676) 71,927 46,647 -------- -------- --------





Interest - net of amount capitalized $51,126 $40,572 $43,915 Income taxes ($78,091) $28,440 $88,657


ENTERGY MISSISSIPPI, INC. BALANCE SHEETS ASSETS


CURRENT ASSETS


Temporary cash investment - at cost

which approximates market 57,457 136,939 ---------- ---------- Total cash and cash equivalents 63,838 147,721 ---------- ---------- Other temporary investments 7,506 -

Accounts receivable: Customer 59,729 52,480 Allowance for doubtful accounts (1,375) (1,633) Associated companies 25,935 11,978 Other 6,400 6,434 Accrued unbilled revenues 31,209 29,460 ---------- ---------- Total accounts receivable 121,898 98,719 ---------- ---------- Deferred fuel costs 89,078 38,177 Accumulated deferred income taxes - 7,822 Fuel inventory - at average cost 5,077 5,652 Materials and supplies - at average cost 17,682 18,650 Prepayments and other 9,583 18,777 ---------- ---------- TOTAL 314,662 335,518 ---------- ----------


Investment in affiliates - at equity 5,531 5,531 Non-utility property - at cost (less accumulated depreciation) 6,466 6,594 ---------- ---------- TOTAL 11,997 12,125 ---------- ----------

UTILITY PLANT

Electric 2,243,852 2,076,828 Property under capital lease 136 175 Construction work in progress 108,829 102,783 ---------- ---------- TOTAL UTILITY PLANT 2,352,817 2,179,786 Less - accumulated depreciation and amortization 837,492 797,249 ---------- ---------- UTILITY PLANT - NET 1,515,325 1,382,537 ---------- ----------



TOTAL ASSETS $1,949,299 $1,832,372 ========== ==========


ENTERGY MISSISSIPPI, INC. BALANCE SHEETS



CURRENT LIABILITIES


Associated companies 62,705 50,973 Other 28,212 38,700 Customer deposits 33,861 33,264 Taxes accrued 39,041 20,908 Accumulated deferred income taxes 7,120 - Interest accrued 13,772 19,694 Obligations under capital leases 41 39 Other 2,567 2,070 ---------- ---------- TOTAL 262,319 420,648 ---------- ----------


Accumulated deferred income taxes and taxes accrued 385,395 292,809 Accumulated deferred investment tax credits 15,092 16,497 Obligations under capital leases 95 136 Accumulated provisions 6,876 8,013 Long-term debt 654,956 510,104 Other 60,082 51,670 ---------- ---------- TOTAL 1,122,496 879,229 ---------- ----------



shares; issued and outstanding 8,666,357 shares in 2003 and 2002 199,326 199,326 Capital stock expense and other (59) (59) Retained earnings 314,836 282,847 ---------- ----------

TOTAL 564,484 532,495 ---------- ----------




ENTERGY MISSISSIPPI, INC. STATEMENTS OF RETAINED EARNINGS


(In Thousands)


Add: Net income 67,058 52,408 39,620

Deduct:

Dividends declared: Preferred stock 3,369 3,369 3,082 Common stock 31,700 27,300 19,600 -------- -------- -------- Total 35,069 30,669 22,682 -------- -------- --------

Retained Earnings, December 31 $314,836 $282,847 $261,108 ======== ======== ========




2003 2002 2001 2000 1999 (In Thousands) Operating revenues $1,035,360 $991,095 $1,093,741 $937,371 $832,819Net income $67,058 $52,408 $39,620 $38,973 $41,588Total assets $1,949,299 $1,832,372 $1,683,026 $1,683,939 $1,460,017Long-term obligations (1) $655,051 $510,240 $589,937 $584,678 $464,756

(1) Includes long-term debt (excluding currently maturing debt) and noncurrent capital leaseobligations.

ENTERGY NEW ORLEANS, INC.



Net Income (Loss)


Entergy New Orleans had net income of $7.9 million in 2003 compared to a net loss in 2002. The increase is due to an increase in net revenue and adecrease in interest expense, partially offset by increases in other operation and maintenance expenses and depreciation and amortization expenses.


Entergy New Orleans experienced a smaller net loss in 2002 compared to 2001. The decreased net loss is primarily due to an increase in net revenue and adecrease in taxes other than income taxes, partially offset by increases in other operation and maintenance expenses, interest and other charges, anddepreciation and amortization expenses.

Net Revenue


Net revenue, which is Entergy's measure of gross margin, consists of operating revenues net of: 1) fuel, fuel-related, and purchased power expenses, 2) otherregulatory credits, and 3) amortization of rate deferrals. Following is an analysis of the change in net revenue comparing 2003 to 2002.

(In Millions) 2002 net revenue $183.7 Base rates 15.9 Rate refund provisions 9.1 Other (0.4)2003 net revenue $208.3

The increase in base rates was effective June 2003. The rate increase is discussed in Note 2 to the domestic utility companies and System Energy financialstatements.

Rate refund provisions increased net revenue due to larger accruals for potential rate actions and refunds in 2002.

Gross operating revenues and fuel and purchased power expenses


an increase of $78.4 million in gross wholesale revenue primarily due to increased sales to affiliated systems;

an increase of $43.0 million in gross natural gas revenue primarily due to an increase in the market price of natural gas and an increase in baserate revenue; and

an increase of $19.8 million in gross retail electric revenue primarily due to an increase in base rate revenue and an increase in the market priceof natural gas.

Fuel and purchased power expenses increased primarily due to an increase in the market price of natural gas.



(In Millions) 2001 net revenue $170.9 Volume/weather 6.9 Fuel price 11.0 Rate refund provisions (7.3)Other 2.2 2002 net revenue $183.7

The volume/weather variance is due to increased electricity usage in the service territory. Billed usage increased a total of 258 GWh in the residential,commercial, and governmental sectors after adjusting for the effects of weather.

The fuel price variance is due to an increase in the price applied to unbilled sales.

Rate refund provisions decreased net revenue due to an increase in accruals for potential rate actions and refunds.


Gross operating revenues decreased primarily due to decreased electric fuel cost recovery revenues of $81.4 million and decreased gas revenues of $44.8million, both due to a decrease in the market price of natural gas.

Fuel and purchased power expenses decreased primarily due to decreases in the market price of natural gas and purchased power.

Other regulatory credits decreased primarily due to the following decreases:

$5.5 million as a result of the completion of the Grand Gulf 1 Rate Deferral Plan in 2001;

$3.7 million as a result of an over-recovery of Grand Gulf 1-related costs in 2002 compared to an under-recovery in 2001; and

$3.3 million as a result of the deferral in 2001 of capacity charges included in purchased power costs for summer capacity that Entergy NewOrleans expected to recover in the future.



Other operation and maintenance expenses increased primarily due to the following:

voluntary severance program accruals of $4.7 million;


an increase of $2.2 million in billing, customer inquiry, and collection costs; and

an increase of $2.0 million in maintenance outage costs at a fossil plant.

Depreciation and amortization expenses increased due to an increase in plant in service.

Miscellaneous - net decreased primarily due to a gain on the sale of a parcel of property at a non-operating plant site in 2002.

Interest and other charges decreased primarily due to interest accrued in 2002 for potential rate actions and refunds and a true-up of those accruals in May2003.


Other operation and maintenance expenses increased primarily due to the following:


an increase of $2.4 million in rate proceedings costs; and

an increase of $2.1 million in fossil plant expenses due to increased asbestos litigation reserves in 2002 and the write-off of obsolete materials.

Taxes other than income taxes decreased primarily due to a decrease in local franchise taxes of $5.9 million due to lower retail revenue.

Miscellaneous - net increased primarily due to a gain on the sale of a parcel of property at a non-operating plant site in 2002.

Interest charges increased $3.2 million primarily due to interest recorded for potential rate actions and refunds.

Income Taxes



Cash Flow


2003 2002 2001(In Thousands)


Cash flow provided by (used in):Operating activities 7,194 72,143 77,706 Investing activities (64,806) (41,647) (74,061)Financing activities (3,966) (2,433) 28,237 Net increase (decrease) in cash and cashequivalents

(61,578) 28,063 31,882



Cash flow from operations decreased by $64.9 million in 2003 compared to 2002 primarily due to decreased fuel cost recoveries and the timing of collectionof receivables due to an increase in retail customer receivables days outstanding.

Cash flow from operations decreased by $5.6 million in 2002 compared to 2001 primarily due to the payment of the System Energy refund to customers inthe first quarter of 2002 partially offset by an increase in payables in 2002 compared to 2001 due to the timing of fuel payments.

Entergy New Orleans' receivables from or (payables) to the money pool were as follows as of December 31 for each of the following years:

2003 2002 2001 2000(In Thousands)

$1,783 $3,500 $9,208 ($5,734)

Money pool activity provided $1.7 million of Entergy New Orleans' operating cash flow in 2003, provided $5.7 million in 2002, and used $14.9 million in2001. See Note 4 to the domestic utility companies and System Energy financial statements for a description of the money pool.


The increase of $23.2 million in net cash used in investing activities in 2003 was primarily due to the maturity of $14.9 million of other temporaryinvestments in 2002 and increased construction expenditures due to customer service spending.

The decrease of $32.4 million in net cash used in investing activities in 2002 was primarily due to other temporary investments made in 2001 that providedcash when they matured in 2002.


The increase of $1.5 million in net cash used in financing activities in 2003 was primarily due to additional common stock dividends paid of $2.2 million.

In July 2003, Entergy New Orleans issued $30 million of 3.875% Series First Mortgage Bonds due August 2008 and $70 million of 5.25% Series FirstMortgage Bonds due August 2013. The proceeds from these issuances were used to redeem, prior to maturity, $30 million of 7% Series First MortgageBonds due July 2008, $40 million of 8% Series bonds due March 2006, and $30 million of 6.65% Series First Mortgage Bonds due March 2004. Theissuances and redemptions are not shown on the cash flow statement because the proceeds from the issuances were placed in a trust for use in theredemptions and never held as cash by Entergy New Orleans.

Financing activities used a small amount of cash in 2002 compared to providing cash in 2001 primarily due to the net issuance of $30 million of long-termdebt in 2001.


Uses of Capital

Entergy New Orleans requires capital resources for:





Following are the amounts of Entergy New Orleans' planned construction and other capital investments and existing debt obligations:

2004 2005-2006

2007-2008

After2008

Total

(In Millions) Planned construction and capital investment (1) $48 $86 N/A N/A $134Long-term debt - $30 $30 $169 $229Purchase obligations (2) $149 $257 $222 $1,312 $1,940

(1) Consists almost entirely of maintenance capital, which is planned spending on routine capitalprojects that are necessary to support reliability of service, equipment or systems and to supportnormal customer growth.

(2) As defined by SEC rule. For Entergy New Orleans almost all of the total consists of unconditionalfuel and purchased power obligations, including its obligations under the Unit Power SalesAgreement, which is discussed in Note 9 to the domestic utility companies and System Energyfinancial statements.

The planned capital investment estimate for Entergy New Orleans reflects capital required to support existing business. The estimated capital expendituresare subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints, environmental compliance, marketvolatility, economic trends, and the ability to access capital. Management provides more information on construction expenditures and long-term debt andpreferred stock maturities in Notes 5, 7, and 9 to the domestic utility companies and System Energy financial statements.

As a wholly-owned subsidiary, Entergy New Orleans dividends its earnings to Entergy Corporation at a percentage determined monthly. Currently, all ofEntergy New Orleans' retained earnings are available for distribution.

Sources of Capital

Entergy New Orleans' sources to meet its capital requirements include:


cash on hand; and

debt issuances.

The net proceeds of Entergy New Orleans' debt issuance in 2002 were used to redeem, prior to maturity, $25 million of 7% Series First Mortgage Bonds dueMarch 1, 2003. In 2003, Entergy New Orleans refinanced $100 million of long-term debt. Entergy New Orleans is expected to continue refinancing orredeeming higher-cost debt and preferred stock prior to maturity, to the extent market conditions and interest and dividend rates are favorable.

All debt and common and preferred stock issuances by Entergy New Orleans require prior regulatory approval. Preferred stock and debt issuances are alsosubject to issuance tests set forth in corporate charters, bond indentures, and other agreements. Entergy New Orleans has sufficient capacity under these teststo meet its foreseeable capital needs.

As shown in the Earnings Ratios presented in Item 1 of this Form 10-K, Entergy New Orleans' earnings for the twelve months ended December 31, 2002and 2001 were not adequate to cover its fixed charges and preferred dividends. Under its mortgage covenants, Entergy New Orleans did not currently havethe capacity to issue new incremental mortgage-backed debt. Entergy New Orleans' financial results improved in 2003, after the City Council's approval ofthe settlement of its rate filing, and it now has limited capacity to issue new incremental mortgage-backed debt. In an October 2002 report, Moody'sInvestors Service states that its rating outlook for Entergy New Orleans is negative due to the declining credit measures and the uncertainty of Entergy NewOrleans' pending rate case. The rate case has now been settled, but Moody's has retained the negative outlook at this time. Moody's currently rates EntergyNew Orleans senior secured debt at Baa2.

Short-term borrowings by Entergy New Orleans, including borrowings under the money pool, are limited to an amount authorized by the SEC, $100 million.Under restrictions contained in its articles of incorporation, Entergy New Orleans could incur approximately $38 million of new unsecured debt as ofDecember 31, 2003. Under the SEC order authorizing the short-term borrowing limits, Entergy New Orleans cannot incur new short-term indebtedness if itscommon equity would comprise less than 30% of its capital. See Note 4 to the domestic utility companies and System Energy financial statements forfurther discussion of Entergy New Orleans' short-term borrowing limits.





In its complaint, the LPSC alleges that Entergy New Orleans' annual production costs over the period 2002 to 2007 will be $7 million to $46 million over theaverage for the domestic utility companies. This range of results is a function of assumptions regarding such things as future natural gas prices, the futuremarket price of electricity, and other factors. If FERC grants the relief requested by the LPSC, the relief may result in a material increase in production costsallocated to companies whose costs currently are projected to be less than the average and a material decrease in production costs allocated to companieswhose costs currently are projected to exceed the average. Management believes that any changes in the allocation of production costs resulting from aFERC decision should result in similar rate changes for retail customers. Therefore, management does not believe that this proceeding will have a materialeffect on the financial condition of Entergy New Orleans, a lthough neither the timing nor the outcome of the proceedings at FERC can be predicted at thistime. In February 2002, the FERC set the matter for hearing and established a refund effective period consisting of the 15 months following September 13,2001. A subsequent extension of the procedural schedule extended the refund effective period by 120 days.






Entergy New Orleans has certain market and credit risks inherent in its business. Market risks represent the risk of changes in the value of commodity andfinancial instruments, or in future operating results or cash flows, in response to changing market conditions. Credit risk is risk of loss from nonperformanceby suppliers, customers, or financial counterparties to a contract or agreement.


The rates that Entergy New Orleans charges for its services are an important item influencing its financial position, results of operations, and liquidity.Entergy New Orleans is closely regulated and the rates charged to its customers are determined in regulatory proceedings. A governmental agency, the CityCouncil, is primarily responsible for approval of the rates charged to customers.

In March 2003, Entergy New Orleans and the Advisors to the City Council presented to the City Council an agreement in principle and the City Councilapproved that agreement in May 2003 allowing for a $30.2 million increase in base rates effective June 1, 2003. The City Council also approvedimplementation of formula rate plans for electric and gas service that will be evaluated annually until 2005. The midpoint return on equity of both plans is11.25%, with a target equity component of 42%. The electric plan provides for a bandwidth of 10.25% to 12.25% and the gas plan provides for a bandwidthof 11% to 11.5%, with earnings within those ranges not resulting in a change in rates. In addition, the City Council approved implementation of a generationperformance-based rate calculation in the fuel adjustment clause under which Entergy New Orleans will receive 10% of calculated fuel and purchased powercost savings in excess of $20 million, subject to a 13.25% return on equity limitation for electric operations as provided for in the electric formula rate plan.Entergy New Orleans will bear 10% of any "negative" fuel and purchased power cost savings. Certain intervenors in the proceeding have appealed the CityCouncil's approval to the Civil District Court for the Parish of Orleans. Entergy New Orleans and the City Council will oppose the appeal, but the outcomecannot be predicted.

In approving the agreement in principle, the City Council indicated that if it decides in favor of the plaintiffs in either of the lawsuits described in Part I, Item1 of the Form 10-K in the paragraphs entitled "Entergy New Orleans Fuel Clause Lawsuit" and "Entergy New Orleans Rate of Return Lawsuit, " the effectof that decision on the rate agreement would have to be determined. The City Council also indicated that the Entergy New Orleans purchased poweragreements described in Part I, Item 1, "Generating Stations" in this report are fundamental to the rate agreement, and a FERC decision or order requiring amaterial change in the purchased power agreements may result in a City Council investigation to determine what prospective action, if any, would bewarranted by any such FERC decision or order to preserve the benefits that were otherwise projected to accrue to customers under the rate settlement.

In addition to rate proceedings, Entergy New Orleans' fuel costs recovered from customers are subject to regulatory scrutiny.

Entergy New Orleans' retail and wholesale rate matters and proceedings, including fuel cost recovery- related issues, are discussed more thoroughly in Note2 to the domestic utility companies and System Energy financial statements.

Environmental Risks

Entergy New Orleans' facilities and operations are subject to regulation by various governmental authorities having jurisdiction over air quality, waterquality, control of toxic substances and hazardous solid wastes, and other environmental matters. Management believes that Entergy New Orleans is insubstantial compliance with environmental regulations currently applicable to its facilities and operations. Because environmental regulations are subject tochange, future compliance costs cannot be precisely estimated.

Litigation Risks

The territory in which Entergy New Orleans operates has proven to be an unusually litigious environment. Judges and juries in New Orleans havedemonstrated a willingness to grant large verdicts, including punitive damages, to plaintiffs in personal injury, property damage, and business tort cases.Entergy New Orleans uses legal and appropriate means to contest litigation threatened or filed against it, but the litigation environment poses a significantbusiness risk.


The preparation of Entergy New Orleans' financial statements in conformity with generally accepted accounting principles requires management to makeestimates and judgments that can have a significant effect on reported financial position, results of operations, and cash flows. Management has identifiedthe following estimates as critical accounting estimates because they are based on assumptions and measurements that involve an unusual degree ofuncertainty, and there is the potential that different assumptions and measurements could produce estimates that are significantly different than thoserecorded in Entergy New Orleans' financial statements.



Assumptions









Cost Sensitivity






0.25% $69 $709



Change in

Assumption

Impact on 2003








Costs and Funding

Total pension cost for Entergy New Orleans in 2003 was $3.6 million, including a $0.5 million charge related to the Voluntary Severance Program. EntergyNew Orleans is projecting 2004 pension cost to be $2.6 million due to a decrease in the discount rate from 6.75% to 6.25% and the phased-in effect of poorasset performance. Entergy New Orleans was not required to make contributions to its pension plan in 2003, however it anticipates making $4.7 million incontributions in 2004.

Due to negative pension plan asset returns from 2000 to 2002, Entergy New Orleans' accumulated benefit obligation at December 31, 2003 and 2002exceeded plan assets. As a result, Entergy New Orleans was required to recognize an additional minimum liability as prescribed by SFAS 87. At December31, 2003 Entergy New Orleans increased its additional minimum liability to $13.1 million from $4.8 million at December 31, 2002. Entergy New Orleansincreased its intangible asset for the unrecognized prior service cost to $2.8 million at December 31, 2003 from $1.8 million at December 31, 2002. EntergyNew Orleans also increased the regulatory asset to $10.3 million at December 31, 2003 from $3 million at December 31, 2002. Net income for 2003 and2002 were not impacted.

Total postretirement health care and life insurance benefit costs for Entergy New Orleans in 2003 were $6.4 million, including a $1 million charge related tothe Voluntary Severance Program. In December 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 became law. The Actintroduces a prescription drug benefit under Medicare (Part D) as well as a federal subsidy to employers who provide a retiree prescription drug benefit thatis at least actuarially equivalent to Medicare Part D. Currently, specific authoritative guidance on the accounting for the federal subsidy is pending. EntergyNew Orleans expects 2004 postretirement health care and life insurance benefit costs to approximate $4.6 million.


To the Board of Directors and Shareholders ofEntergy New Orleans, Inc.:

We have audited the accompanying balance sheets of Entergy New Orleans, Inc. as of December 31, 2003 and 2002, and the related statements ofoperations, retained earnings, and cash flows (pages 248 through 252 and applicable items in pages 270 through 331) for each of the three years in the periodended December 31, 2003. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion onthese financial statements based on our audits.


In our opinion, such financial statements present fairly, in all material respects, the financial position of Entergy New Orleans, Inc. as of December 31, 2003and 2002, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2003 in conformity withaccounting principles generally accepted in the United States of America.



ENTERGY NEW ORLEANS, INC. STATEMENTS OF OPERATIONS


(In Thousands)

OPERATING REVENUES Domestic electric $527,660 $424,527 $502,672 Natural gas 126,356 83,347 128,178 -------- -------- -------- TOTAL 654,016 507,874 630,850 -------- -------- --------

OPERATING EXPENSES


gas purchased for resale 214,735 163,323 240,781 Purchased power 231,787 158,191 220,268 Other operation and maintenance 108,217 98,511 92,023 Taxes other than income taxes 42,198 40,099 46,878 Depreciation and amortization 30,004 27,699 24,922 Other regulatory charges (credits) - net (843) 2,701 (12,049) Amortization of rate deferrals - - 10,977 -------- -------- -------- TOTAL 626,098 490,524 623,800 -------- -------- --------

OPERATING INCOME 27,918 17,350 7,050 -------- -------- --------

OTHER INCOME

Allowance for equity funds used during construction 2,085 1,835 1,987 Interest and dividend income 825 689 5,005 Miscellaneous - net (1,453) 584 (2,675) -------- -------- -------- TOTAL 1,457 3,108 4,317 -------- -------- --------


Interest on long-term debt 17,436 18,011 17,699 Other interest - net 350 4,939 1,962 Allowance for borrowed funds used during construction (2,145) (1,840) (1,703) -------- -------- -------- TOTAL 15,641 21,110 17,958 -------- -------- --------

INCOME (LOSS) BEFORE INCOME TAXES 13,734 (652) (6,591)

Income taxes 5,875 (422) (4,396) -------- -------- --------

NET INCOME (LOSS) 7,859 (230) (2,195)

Preferred dividend requirements and other 965 965 965 -------- -------- --------

EARNINGS (LOSS) APPLICABLE TO

COMMON STOCK $6,894 ($1,195) ($3,160) ======== ======== ========



ENTERGY NEW ORLEANS, INC. STATEMENTS OF CASH FLOWS


(In Thousands)

OPERATING ACTIVITIES Net income (loss) $7,859 ($230) ($2,195)

Noncash items included in net income (loss): Amortization of rate deferrals - - 10,977 Other regulatory charges(credits) - net (843) 2,701 (12,049) Depreciation and amortization 30,004 27,699 24,922 Deferred income taxes and investment tax credits 15,401 6,729 (24,198) Allowance for equity funds used during construction (2,085) (1,835) (1,987)

Changes in working capital: Receivables (41,308) 10,540 33,183 Fuel inventory (2,296) (203) 1,123 Accounts payable 17,817 18,070 (40,364) Taxes accrued (1,999) 1,999 (5,823) Interest accrued (276) (544) 913 Deferred fuel costs (12,162) 4,686 38,430 Other working capital accounts (7,553) (4,971) 9,115 Provision for estimated losses and reserves (1,634) (3,348) (2,669) Changes in other regulatory assets (9,473) (3,061) 33,833 Other 15,742 13,911 14,495 -------- -------- -------- Net cash flow provided by operating activities 7,194 72,143 77,706 -------- -------- --------


Construction expenditures (66,285) (58,341) (61,189) Allowance for equity funds used during construction 2,085 1,835 1,987 Changes in other temporary investments - net (606) 14,859 (14,859) -------- -------- -------- Net cash flow used in investing activities (64,806) (41,647) (74,061) -------- -------- --------


Proceeds from the issuance of long-term debt - 24,332 29,761 Retirement of long-term debt - (25,000) -

Dividends paid: Common stock (3,001) (800) (800) Preferred stock (965) (965) (724) -------- -------- -------- Net cash flow provided by (used in) financing activites (3,966) (2,433) 28,237 -------- -------- --------





Interest - net of amount capitalized $17,427 $19,961 $18,230 Income taxes ($13,530) ($37,929) $47,380


ENTERGY NEW ORLEANS, INC. BALANCE SHEETS

ASSETS


CURRENT ASSETS

Cash and cash equivalents: Cash $28 $11,175

Temporary cash investments - at cost, which approxiates market 4,641 55,072 -------- -------- Total cash and cash equivalents 4,669 66,247 -------- -------- Other temporary investments 606 -

Accounts receivable: Customer 44,663 24,901 Allowance for doubtful accounts (3,104) (4,774) Associated companies 24,697 4,901 Other 10,057 10,133 Accrued unbilled revenues 21,113 20,957

-------- -------- Total accounts receivable 97,426 56,118 -------- -------- Accumulated deferred income taxes 460 1,230 Fuel inventory - at average cost 5,580 3,284 Materials and supplies - at average cost 8,660 7,785 Prepayments and other 8,050 4,689 -------- -------- TOTAL 125,451 139,353 -------- --------


Investment in affiliates - at equity 3,259 3,259 -------- --------

UTILITY PLANT

Electric 666,122 627,249 Natural gas 167,011 149,102 Construction work in progress 45,061 48,345 -------- -------- TOTAL UTILITY PLANT 878,194 824,696 Less - accumulated depreciation and amortization 420,745 401,918 -------- -------- UTILITY PLANT - NET 457,449 422,778 -------- --------


Regulatory assets: Other regulatory assets 27,222 14,460 Other 6,438 4,855 -------- -------- TOTAL 33,660 19,315 -------- --------

TOTAL ASSETS $619,819 $584,705 ======== ========


ENTERGY NEW ORLEANS, INC. BALANCE SHEETS



CURRENT LIABILITIES

Accounts payable: Associated companies $35,008 $23,228 Other 42,718 36,681 Customer deposits 15,575 17,634 Taxes accrued - 1,999 Interest accrued 6,212 6,488 Deferred fuel costs 2,720 14,882 Energy Efficiency Program provision 6,356 6,115 Other 2,088 3,587 -------- -------- TOTAL 110,677 110,614 -------- --------


Accumulated deferred income taxes and taxes accrued 39,486 22,245 Accumulated deferred investment tax credits 4,441 4,893 SFAS 109 regulatory liability - net 40,543 31,318 Other regulatory liabilities 954 1,311 Retirement cost liability - 1,461 Accumulated provisions 820 2,454 Long-term debt 229,217 229,191 Other 41,346 32,776 -------- -------- TOTAL 356,807 325,649 -------- --------

SHAREHOLDERS' EQUITY Preferred stock without sinking fund 19,780 19,780

Common stock, $4 par value, authorized 10,000,000 shares; issued and outstanding 8,435,900 shares in 2003

and 2002 33,744 33,744 Paid-in capital 36,294 36,294 Retained earnings 62,517 58,624 -------- -------- TOTAL 152,335 148,442 -------- --------


TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $619,819 $584,705 ======== ========


ENTERGY NEW ORLEANS, INC. STATEMENTS OF RETAINED EARNINGS


(In Thousands)


Add: Net income (loss) 7,859 (230) (2,195)

Deduct:

Dividends declared: Preferred stock 965 965 965 Common stock 3,001 800 800 ------- ------- ------- Total 3,966 1,765 1,765 ------- ------- -------

Retained Earnings, December 31 $62,517 $58,624 $60,619 ======= ======= =======




2003 2002 2001 2000 1999 (In Thousands) Operating revenues $654,016 $507,874 $630,850 $640,290 $507,788Net income (loss) $7,859 ($230) ($2,195) $16,518 $18,961Total assets $619,819 $584,705 $566,037 $559,231 $485,746Long-term obligations (1) $229,217 $229,191 $299,097 $199,031 $169,083

(1) Includes long-term debt (excluding currently maturing debt).

SYSTEM ENERGY RESOURCES, INC.


System Energy's principal asset consists of a 90% ownership and leasehold interest in Grand Gulf 1. The capacity and energy from its 90% interest is soldunder the Unit Power Sales Agreement to its only four customers, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans.System Energy's operating revenues are derived from the allocation of the capacity, energy, and related costs associated with its 90% interest in Grand Gulf1 pursuant to the Unit Power Sales Agreement. Payments under the Unit Power Sales Agreement are System Energy's only source of operating revenues.


Net Income


Net income increased by $2.7 million in 2003 primarily due to decreased interest charges primarily resulting from decreased interest expense associated withthe Grand Gulf 1 sale-leaseback. This increase was partially offset by a decrease in rate base in 2003 resulting in lower operating income. The decrease inrate base was due to the normal depreciation of Grand Gulf 1.


Net income decreased by $13.0 million in 2002 primarily due to:

the effect of the final resolution of System Energy's 1995 rate proceeding increasing net income in 2001, as discussed below;

a decrease of $13.1 million in interest earned on System Energy's investments in the money pool due to lower advances to the money pool in2002 compared to 2001. The money pool is discussed in Note 4 to the domestic utility companies and System Energy financial statements; and

increased interest on long-term debt of $5.1 million primarily due to an increase in interest expense of $13.8 million associated with the sale-leaseback of Grand Gulf 1, partially offset by a decrease in interest expense of $8.0 million due to the retirement of $135 million of first

mortgage bonds in August 2001.

As a result of the issuance of the final resolution related to System Energy's 1995 rate proceeding, decommissioning expenses, depreciation expenses, andincome tax expenses decreased. Also, interest income increased due to interest recognized on decommissioning trust funds. Partially offsetting the increasein net income was a decrease in operating revenues as a result of an increase in the provision for rate refund and an increase in interest charges due tointerest recorded on System Energy's reserve for rate refund.

Income Taxes



Cash Flow


2003 2002 2001(In Thousands)


Cash flow provided by (used in):Operating activities 100,817 225,639 165,895 Investing activities (45,065) (28,873) (47,634)Financing activities (116,375) (133,186) (270,900)Net increase (decrease) in cash and cashequivalents

(60,623) 63,580 (152,639)



Cash flow from operations decreased by $124.8 million in 2003 primarily due to the following:

an increase in federal income taxes paid of $74.0 million in 2003 compared to 2002;

the cessation of the Entergy Mississippi GGART. System Energy collected $21.7 million in 2003 and $40.8 million in 2002 from EntergyMississippi in conjunction with the GGART, which provided for the acceleration of Entergy Mississippi's Grand Gulf purchased power

obligation. The MPSC authorized cessation of the GGART effective July 1, 2003. See Note 2 to the domestic utility companies and SystemEnergy financial statements for further discussion of the GGART; and

money pool activity, as discussed below.

Cash flow from operations increased by $59.7 million in 2002 primarily due to the effects in 2001 of the final resolution of the System Energy rateproceeding.

System Energy's receivables from the money pool were as follows as of December 31 for each of the following years:

2003 2002 2001 2000(In Thousands)

$19,064 $7,046 $13,853 $155,301

Money pool activity used $12.0 million of System Energy's operating cash flows in 2003, provided $6.8 million in 2002, and provided $141.4 million in2001. See Note 4 to the domestic utility companies and System Energy financial statements for a description of the money pool.


The increase of $16.2 million in net cash used in investing activities in 2003 was primarily due to the following:

the maturity in 2002 of $22.4 million of other temporary investments that had been made in 2001, which provided cash in 2002;

an increase in decommissioning trust contributions and realized change in trust assets of $8.2 million in 2003 compared to 2002; and

other temporary investments of $6.5 million made in 2003.

Partially offsetting the increases in net cash used in investing activities was a decrease in construction expenditures of $22.1 million in 2003 compared to2002 primarily due to the power uprate project in 2002.

The decrease of $18.8 million in net cash used in investing activities in 2002 was primarily due to the maturity of $22.4 million of other temporaryinvestments that had been made in 2001.


The decrease of $16.8 million in net cash used in financing activities in 2003 was primarily due to a decrease of $19.5 million in the January 2003 principalpayment made on the Grand Gulf 1 sale-leaseback compared to the January 2002 principal payment.

The decrease of $137.7 million in net cash used in financing activities in 2002 was primarily due to the retirement of $135.0 million of first mortgage bondsin 2001. There was no net reduction of first mortgage bonds in 2002.

See Note 5 to the domestic utility companies and System Energy financial statements for details of long-term debt.

Uses of Capital

System Energy requires capital resources for:


debt maturities;

working capital purposes, including the financing of fuel costs; and


Following are the amounts of System Energy's planned construction and other capital investments, existing debt and lease obligations, and other purchaseobligations:

2004 2005-2006 2007-2008 After 2008 Total (In Millions)Planned construction and capital investment (1) $17 $37 N/A N/A $54Long-term debt $6 $53 $129 $701 $889Nuclear fuel lease obligations (2) $31 $16 N/A N/A $47

(1) Includes $13 million each year for maintenance capital, which is planned spending on routinecapital projects that are necessary to support reliability of service, equipment or systems.


The planned capital investment estimate for System Energy reflects capital required to support the existing business of System Energy. Managementprovides more information on construction expenditures and long-term debt and preferred stock maturities in Notes 5, 7, and 9 to the domestic utilitycompanies and System Energy financial statements.

As a wholly-owned subsidiary, System Energy dividends its earnings to Entergy Corporation at a percentage determined monthly. Currently, all of SystemEnergy's retained earnings are available for distribution.

Sources of Capital

System Energy's sources to meet its capital requirements include:


cash on hand;

debt issuances; and


System Energy had three-year letters of credit in place that were scheduled to expire in March 2003 securing certain of its obligations related to the sale-leaseback of a portion of Grand Gulf 1. System Energy replaced the letters of credit before their expiration with new three-year letters of credit totalingapproximately $198 million that were backed by cash collateral. In December 2003, System Energy replaced the cash-backed letters of credit withsyndicated bank letters of credit that expire in May 2007.

Short-term borrowings by System Energy, including borrowings under the money pool, are limited to an amount authorized by the SEC, $140 million.Under the SEC order authorizing the short-term borrowing limits, System Energy cannot incur new short-term indebtedness if its common equity wouldcomprise less than 30% of its capital. In addition this order restricts System Energy from publicly issuing new long-term debt unless that debt will be ratedas investment grade. See Note 4 to the domestic utility companies and System Energy financial statements for further discussion of System Energy's short-term borrowing limits.


Market Risks


System Energy's nuclear decommissioning trust funds expose it to fluctuations in equity prices and interest rates. The NRC requires System Energy tomaintain trusts to fund the costs of decommissioning Grand Gulf 1. The funds are invested primarily in equity securities; fixed-rate, fixed-income securities;and cash and cash equivalents. Management believes that its exposure to market fluctuations will not affect results of operations for the Grand Gulf 1 trustfunds because of the application of regulatory accounting principles. The decommissioning trust funds are discussed more thoroughly in Notes 1 and 9 to thedomestic utility companies and System Energy financial statements.

Nuclear Matters

System Energy owns and operates, through an affiliate, Grand Gulf 1. System Energy is, therefore, subject to the risks related to owning and operating anuclear plant. These include risks from the use, storage, handling and disposal of high-level and low-level radioactive materials, limitations on the amountsand types of insurance commercially available for losses in connection with nuclear operations, and technological and financial uncertainties related todecommissioning nuclear plants at the end of their licensed lives, including the sufficiency of funds in decommissioning trusts. In the event of anunanticipated early shutdown of Grand Gulf 1, System Energy may be required to provide additional funds or credit support to satisfy regulatoryrequirements for decommissioning.

Litigation Risks

The states in which System Energy's customers operate have proven to be unusually litigious environments. Judges and juries in these states havedemonstrated a willingness to grant large verdicts, including punitive damages, to plaintiffs in personal injury, property damage, and business tort cases.System Energy uses legal and appropriate means to contest litigation threatened or filed against it, but the litigation environment poses a significant businessrisk.

Environmental Risks

System Energy's facilities and operations are subject to regulation by various governmental authorities having jurisdiction over air quality, water quality,control of toxic substances and hazardous and solid wastes, and other environmental matters. Management believes that System Energy is in substantialcompliance with environmental regulations currently applicable to its facilities and operations. Because environmental regulations are subject to change,future compliance costs cannot be precisely estimated.


The preparation of System Energy's financial statements in conformity with generally accepted accounting principles requires management to makeestimates and judgments that can have a significant effect on reported financial position, results of operations, and cash flows. Management has identifiedthe following estimates as critical accounting estimates because they are based on assumptions and measurements that involve an unusual degree ofuncertainty, and there is the potential that different assumptions and measurements could produce estimates that are significantly different than thoserecorded in System Energy's financial statements.


Regulations require that Grand Gulf 1 be decommissioned after the facility is taken out of service, and funds are collected and deposited in trust fundsduring the facility's operating life in order to provide for this obligation. System Energy conducts periodic decommissioning cost studies (typically updatedevery three to five years) to estimate the costs that will be incurred to decommission the facility. See Note 9 to the domestic utility companies and SystemEnergy financial statements for details regarding System Energy's most recent study and the obligations recorded by System Energy related todecommissioning. The following key assumptions have a significant effect on these estimates:

Cost Escalation Factors - System Energy's decommissioning studies include an assumption that decommissioning costs will escalate overpresent cost levels by an annual factor averaging approximately 5.5%. A 50 basis point change in this assumption could change the ultimate cost

of decommissioning a facility by as much as 11%.

Timing - The date of the plant's retirement must be estimated and an assumption must be made whether decommissioning will beginimmediately upon plant retirement, or whether the plant will be held in "safestore" status for later decommissioning, as permitted by applicableregulations. System Energy's decommissioning studies for Grand Gulf 1 assume immediate decommissioning upon expiration of the original



available, nuclear plant operators must provide for interim spent fuel storage on the nuclear plant site, which can require the construction andmaintenance of dry cask storage sites or other facilities. The costs of developing and maintaining these facilities can have a significant impact

(as much as 16% of estimated decommissioning costs). System Energy's decommissioning studies include cost estimates for spent fuel storage.However, these estimates could change in the future based on the timing of the opening of the Yucca Mountain facility, the schedule for

shipments to that facility when it is opened, or other factors.


were to change, this could have a potentially significant impact on cost estimates. The impact of these potential changes is not presentlydeterminable. System Energy's decommissioning cost studies assume current technologies and regulations.

System Energy collects the projected costs of decommissioning Grand Gulf 1 through rates charged to its customers. The amounts collected through rates,which are based upon decommissioning cost studies, are deposited in decommissioning trust funds. These collections plus earnings on the trust fundinvestments are estimated to be sufficient to fund the future decommissioning costs.

The obligation recorded by System Energy for decommissioning costs is reported in the line item entitled "Decommissioning." Prior to the implementationof SFAS 143, the amount recorded for this obligation was comprised of collections from customers and earnings on the trust funds.

SFAS 143

System Energy implemented SFAS 143, "Accounting for Asset Retirement Obligations," effective January 1, 2003. Nuclear decommissioning costs areSystem Energy's only asset retirement obligations, and the measurement and recording of System Energy's decommissioning obligations outlined abovechanged significantly with the implementation of SFAS 143. The most significant differences in the measurement of these obligations are outlined below:

Recording of full obligation - SFAS 143 requires that the fair value of an asset retirement obligation be recorded when it is incurred. Thiscaused the recorded decommissioning obligation of System Energy to increase significantly, as System Energy had previously only recorded

this obligation as the related costs were collected from customers, and as earnings were recorded on the related trust funds.

Fair value approach - SFAS 143 requires that these obligations be measured using a fair value approach. Among other things, this entails theassumption that the costs will be incurred by a third party and will therefore include appropriate profit margins and risk premiums. System

Energy's decommissioning studies to date have been based on System Energy performing the work, and have not included any such margins orpremiums. Inclusion of these items increases cost estimates.


The net effect of implementing this standard for System Energy was recorded as a regulatory asset, with no resulting impact on System Energy's net income.System Energy recorded this regulatory asset because its existing rate mechanism is based on a cost standard that allows System Energy to recover allultimate costs of decommissioning from its customers. Upon implementation, assets and liabilities increased by approximately $138 million in 2003 as aresult of recording the asset retirement obligation at its fair value of $292 million as determined under SFAS 143, reversing the previously recordeddecommissioning liability of $154 million, increasing utility plant by $82 million, increasing accumulated depreciation by $36 million, and recording therelated regulatory asset of $92 million.



Assumptions









Cost Sensitivity






0.25% $158 $1,337



Change in

Assumption

Impact on 2003



Obligation Increase/(Decrease) Health care cost trend 0.25% $172 $788

Discount rate (0.25%) $127 $889





Costs and Funding

Total pension cost for System Energy in 2003 was $5.8 million, including a $2.7 million charge related to the Voluntary Severance Program. System Energyis projecting 2004 pension cost to $4.4 million due to a decrease in the discount rate from 6.75% to 6.25% and the phased-in effect of poor assetperformance. System Energy was not required to make contributions to its pension plan in 2003, however, System Energy anticipates making $5.4 million incontributions in 2004.

Due to negative pension plan asset returns from 2000 to 2002, System Energy's accumulated benefit obligation at December 31, 2003 and 2002 exceededplan assets. As a result, System Energy was required to recognize an additional minimum liability as prescribed by SFAS 87. At December 31, 2003 SystemEnergy increased its additional minimum liability to $7.4 million from $0.4 million at December 31, 2002. System Energy did not adjust its intangible assetfor the unrecognized prior service cost of $0.4 million. System Energy recorded a regulatory asset of $7 million at December 31, 2003. Net income for 2003and 2002 were not impacted.

Total postretirement health care and life insurance benefit costs for System Energy in 2003 were $5 million, including a $2.8 million charge related to theVoluntary Severance Program. In December 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 became law. The Actintroduces a prescription drug benefit under Medicare (Part D) as well as a federal subsidy to employers who provide a retiree prescription drug benefit thatis at least actuarially equivalent to Medicare Part D. Currently, specific authoritative guidance on the accounting for the federal subsidy is pending. SystemEnergy expects 2004 postretirement health care and life insurance benefit costs to approximate $2 million.


To the Board of Directors and Shareholder ofSystem Energy Resources, Inc.:

We have audited the accompanying balance sheets of System Energy Resources, Inc. as of December 31, 2003 and 2002, and the related statements ofincome, retained earnings, and cash flows (pages 263 through 268 and applicable items in pages 270 through 331) for each of the three years in the periodended December 31, 2003. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion onthese financial statements based on our audits.


In our opinion, such financial statements present fairly, in all material respects, the financial position of System Energy Resources, Inc. as of December 31,2003 and 2002, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2003 in conformity withaccounting principles generally accepted in the United States of America.

As discussed in Note 1 and Note 9 to the notes to respective financial statements, System Energy Resources, Inc. adopted the provisions of Statement ofFinancial Accounting Standards No. 143, Accounting for Asset Retirement Obligations, and Financial Accounting Standards Board Interpretation No. 46,Consolidation of Variable Interest Entities, in 2003.



SYSTEM ENERGY RESOURCES,INC. INCOME STATEMENTS


(In Thousands)

OPERATING REVENUES Domestic electric $583,820 $602,486 $535,027 -------- -------- --------

OPERATING EXPENSES


gas purchased for resale 43,132 36,456 37,010 Nuclear refueling outage expenses 12,695 10,723 13,275 Other operation and maintenance 105,333 98,264 85,491 Decommissioning 21,799 16,055 (13,493) Taxes other than income taxes 25,521 25,992 26,134 Depreciation and amortization 109,528 112,093 53,414 Other regulatory charges - net 27,400 53,769 62,742 -------- -------- -------- TOTAL 345,408 353,352 264,573 -------- -------- --------

OPERATING INCOME 238,412 249,134 270,454 -------- -------- --------

OTHER INCOME

Allowance for equity funds used during construction 1,140 2,449 1,769 Interest and dividend income 7,556 2,857 26,271 Miscellaneous - net (1,194) 826 (1,190) -------- -------- -------- TOTAL 7,502 6,132 26,850 -------- -------- --------


Interest on long-term debt 62,802 73,891 68,833 Other interest - net 1,818 2,748 69,185 Allowance for borrowed funds used during construction (554) (902) (830) -------- -------- -------- TOTAL 64,066 75,737 137,188 -------- -------- --------


Income taxes 75,845 76,177 43,761 -------- -------- --------

NET INCOME $106,003 $103,352 $116,355 ======== ======== ========



SYSTEM ENERGY RESOURCES, INC. STATEMENTS OF CASH FLOWS


(In Thousands)


Noncash items included in net income: Reserve for regulatory adjustments - - (322,368) Other regulatory charges - net 27,400 53,769 62,742 Depreciation, amortization, and decommissioning 131,327 128,148 39,921 Deferred income taxes and investment tax credits (35,207) (38,246) 106,764 Allowance for equity funds used during construction (1,140) (2,449) (1,769)

Changes in working capital: Receivables (8,025) 5,719 142,797 Accounts payable (1,232) 14,767 (9,587) Taxes accrued (12,815) (44,122) 43,992 Interest accrued (12,904) (4,568) 3,088 Other working capital accounts 1,463 (6,108) (664) Provision for estimated losses and reserves 2,914 163 16 Changes in other regulatory assets 26,307 52,448 38,732 Other (123,274) (37,234) (54,124) -------- -------- -------- Net cash flow provided by operating activities 100,817 225,639 165,895 -------- -------- --------


Construction expenditures (18,195) (40,306) (40,144) Allowance for equity funds used during construction 1,140 2,449 1,769 Nuclear fuel purchases - (43,140) (37,639) Proceeds from sale/leaseback of nuclear fuel - 43,140 37,639

Decommissioning trust contributions and realized change in trust assets (21,528) (13,370) (16,147) Changes in other temporary investments - net (6,482) 22,354 (22,354) Other - - 29,242 -------- -------- -------- Net cash flow used in investing activities (45,065) (28,873) (47,634) -------- -------- --------


Proceeds from the issuance of long-term debt - 69,505 - Retirement of long-term debt (11,375) (100,891) (151,800)

Dividends paid: Common stock (105,000) (101,800) (119,100) -------- -------- -------- Net cash flow used in financing activities (116,375) (133,186) (270,900) -------- -------- --------

Net increase (decrease) in cash and cash equivalents (60,623) 63,580 (152,639)




Interest - net of amount capitalized $73,636 $77,190 $130,596 Income taxes $230,919 $156,957 ($107,831)


SYSTEM ENERGY RESOURCES, INC. BALANCE SHEETS ASSETS


CURRENT ASSETS


Temporary cash investments - at cost, which approximates market 49,618 110,877 ---------- ---------- Total cash and cash equivalents 52,536 113,159 ---------- ---------- Other temporary investments 6,482 -

Accounts receivable: Associated companies 72,477 64,852 Other 1,777 1,377 ---------- ---------- Total accounts receivable 74,254 66,229 ---------- ---------- Materials and supplies - at average cost 63,047 51,492 Deferred nuclear refueling outage costs 2,979 15,666 Prepayments and other 1,031 1,319 ---------- ---------- TOTAL 200,329 247,865 ---------- ----------


Decommissioning trust funds 172,916 138,985 ---------- ----------

UTILITY PLANT

Electric 3,205,895 3,131,945 Property under capital lease 466,521 455,229 Construction work in progress 31,344 28,128 Nuclear fuel under capital lease 47,242 78,991 ---------- ---------- TOTAL UTILITY PLANT 3,751,002 3,694,293 Less - accumulated depreciation and amortization 1,672,658 1,530,751 ---------- ---------- UTILITY PLANT - NET 2,078,344 2,163,542 ---------- ----------



TOTAL ASSETS $2,880,724 $2,915,898 ========== ==========


SYSTEM ENERGY RESOURCES, INC. BALANCE SHEETS

LIABILITIES AND SHAREHOLDER'S EQUITY


CURRENT LIABILITIES


Associated companies - 4,851 Other 30,255 26,636 Taxes accrued 55,585 68,400 Accumulated deferred income taxes 942 5,322

Interest accrued 29,623 42,527 Obligations under capital leases 31,266 24,954 Other 1,971 1,928 ---------- ---------- TOTAL 155,990 185,993 ---------- ----------


Accumulated deferred income taxes and taxes accrued 290,964 439,540 Accumulated deferred investment tax credits 79,088 82,564 Obligations under capital leases 15,976 54,036 Other regulatory liabilities 213,093 186,599 Decommissioning 312,459 153,473 Accumulated provisions 3,782 868 Long-term debt 882,401 888,665 Other 33,735 31,927 ---------- ---------- TOTAL 1,831,498 1,837,672 ---------- ----------

SHAREHOLDER'S EQUITY Common stock, no par value, authorized 1,000,000 shares;

issued and outstanding 789,350 shares in 2003 and 2002 789,350 789,350 Retained earnings 103,886 102,883 ---------- ---------- TOTAL 893,236 892,233 ---------- ----------


TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $2,880,724 $2,915,898 ========== ==========


SYSTEM ENERGY RESOURCES, INC. STATEMENTS OF RETAINED EARNINGS


(In Thousands)


Add: Net income 106,003 103,352 116,355

Deduct:

Dividends declared 105,000 101,800 119,100 -------- -------- -------- Retained Earnings, December 31 $103,886 $102,883 $101,331 ======== ======== ========




2003 2002 2001 2000 1999 (In Thousands) Operating revenues $583,820 $602,486 $535,027 $656,749 $620,032Net income $106,003 $103,352 $116,355 $93,745 $82,372Total assets $2,880,724 $2,915,898 $2,964,041 $3,274,550 $3,369,048Long-term obligations (1) $898,377 $942,701 $865,439 $947,991 $1,122,178Electric energy sales (GWh) 9,812 9,053 8,921 9,621 7,567

(1) Includes long-term debt (excluding currently maturing), and noncurrent capital lease obligations.

ENTERGY ARKANSAS, ENTERGY GULF STATES, ENTERGY LOUISIANA, ENTERGY MISSISSIPPI, ENTERGY NEW ORLEANS, ANDSYSTEM ENERGY RESOURCES

NOTES TO RESPECTIVE FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, EntergyMississippi, Entergy New Orleans, and System Energy)

The accompanying separate financial statements of Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans,and System Energy are included in this document and result from these companies having registered securities with the SEC. These companies maintainaccounts in accordance with FERC and other regulatory guidelines. Certain previously reported amounts have been reclassified to conform to currentclassifications, with no effect on net income or shareholders' equity.

Use of Estimates in the Preparation of Financial Statements

The preparation of the domestic utility companies' and System Energy's financial statements, in conformity with generally accepted accounting principles,requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets andliabilities and the reported amounts of revenues and expenses. Adjustments to the reported amounts of assets and liabilities may be necessary in the future tothe extent that future estimates or actual results are different from the estimates used.

Revenues and Fuel Costs

Entergy Arkansas, Entergy Louisiana, and Entergy Mississippi generate, transmit, and distribute electric power primarily to retail customers in Arkansas,Louisiana, and Mississippi, respectively. Entergy Gulf States generates, transmits, and distributes electric power primarily to retail customers in Texas andLouisiana. Entergy Gulf States also distributes gas to retail customers in and around Baton Rouge, Louisiana. Entergy New Orleans sells both electric powerand gas to retail customers in the City of New Orleans, except for Algiers, where Entergy Louisiana is the electric power supplier.

Entergy recognizes revenue from electric power and gas sales when it delivers power or gas to its customers. To the extent that deliveries have occurred buta bill has not been issued, the domestic utility companies accrue an estimate of the revenues for energy delivered since the latest billings. Entergy calculatesthe estimate based upon several factors including billings through the last billing cycle in a month, actual generation in the month, historical line loss factors,and prices in effect in the domestic utility companies' various jurisdictions. Each month the estimated unbilled revenue amounts are recorded as revenue anda receivable, and the prior month's estimate is reversed. Therefore, changes in price and volume differences resulting from factors such as weather affect thecalculation of unbilled revenues from one period to the next, and may result in variability in reported revenues from one period to the next as prior estimatesare so recorded and reversed.

The domestic utility companies' rate schedules include either fuel adjustment clauses or fixed fuel factors, both of which allow either current recovery inbillings to customers or deferral of fuel costs until the costs are billed to customers. Because the fuel adjustment clause mechanism allows monthlyadjustments to recover fuel costs, Entergy Louisiana, Entergy New Orleans, and the Louisiana portion of Entergy Gulf States include a component of fuelcost recovery in their unbilled revenue calculations. Where the fuel component of revenues is billed based on a pre-determined fuel cost (fixed fuel factor),the fuel factor remains in effect until changed as part of a general rate case, fuel reconciliation, or fixed fuel factor filing. Entergy Mississippi's fuel factorincludes an energy cost rider that is adjusted quarterly. Entergy Mississippi has deferred until 2004 the collection of fuel under-recoveries for the first andsecond quarters of 20 03 that would have been collected in the third and fourth quarters of 2003, respectively. The deferred amount plus carrying chargeswill be collected over twelve months beginning January 2004. In the case of Entergy Arkansas and the Texas portion of Entergy Gulf States, their fuelunder-recoveries are treated as regulatory investments in the cash flow statements because those companies are allowed by their regulatory jurisdictions torecover the fuel cost regulatory asset over longer than a twelve-month period, and the companies earn a carrying charge on the under-recovered balances.

System Energy's operating revenues are intended to recover from Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleansoperating expenses and capital costs attributable to Grand Gulf 1. The capital costs are computed by allowing a return on System Energy's common equityfunds allocable to its net investment in Grand Gulf 1, plus System Energy's effective interest cost for its debt allocable to its investment in Grand Gulf 1.

Property, Plant, and Equipment

Property, plant, and equipment is stated at original cost. The original cost of plant retired or removed, less salvage, is charged to accumulated depreciation.Normal maintenance, repairs, and minor replacement costs are charged to operating expenses. Substantially all of the domestic utility companies' andSystem Energy's plant is subject to mortgage liens.

Electric plant includes the portions of Grand Gulf and Waterford 3 that have been sold and leased back. For financial reporting purposes, these sale andleaseback arrangements are reflected as financing transactions.

Net property, plant, and equipment by company and functional category, as of December 31, 2003 and 2002, is shown below:

(1) This is reflected in electric property, plant, and equipment and accumulated depreciation andamortization on the balance sheet.

Depreciation is computed on the straight-line basis at rates based on the estimated service lives of the various classes of property. Depreciation rates onaverage depreciable property are shown below:

Entergy Entergy Entergy Entergy Entergy System Arkansas Gulf States Louisiana Mississippi New Orleans Energy (1) 2003 3.2% 2.2% 3.0% 2.5% 3.1% 2.8%2002 3.2% 2.4% 3.0% 2.5% 3.1% 2.8%2001 3.1% 2.5% 2.9% 2.4% 3.0% 2.8%

(1) Per a FERC order in 2001, the depreciation rate for System Energy was changed from 3.3% to2.8%, retroactive to December 1995. The retroactive effect of the change is reflected in the 2001financial statements.

Jointly-Owned Generating Stations

Certain Entergy subsidiaries jointly own electric generating facilities with third parties. The investments and expenses associated with these generatingstations are recorded by the Entergy subsidiaries to the extent of their respective undivided ownership interests. As of December 31, 2003, the subsidiaries'investment and accumulated depreciation in each of these generating stations were as follows:

Generating Stations

Fuel-Type

TotalMegawatt

Capability (1)

Ownership

Investment

AccumulatedDepreciation

(In Millions)

Entergy Arkansas - Independence Unit 1 Coal 815 31.50% $117 $71

CommonFacilities

Coal 15.75% 31 17

White Bluff Units 1 and 2 Coal 1,635 57.00% 423 256

Entergy Gulf States - Roy S. Nelson Unit 6 Coal 550 70.00% 404 234

Big Cajun 2 Unit 3 Coal 575 42.00% 233 123

Entergy Mississippi - Independence Units 1 and 2 and

CommonFacilities

Coal 1,630 25.00% 230 111

System Energy - Grand Gulf Unit 1 Nuclear 1,207 90.00%(2) 3,672 1,673

(1) "Total Megawatt Capability" is the dependable load carrying capability as demonstrated underactual operating conditions based on the primary fuel (assuming no curtailments) that each stationwas designed to utilize.

(2) Includes an 11.5% leasehold interest held by System Energy. System Energy's Grand Gulf 1 leaseobligations are discussed in Note 10 to the domestic utility companies and System Energy financialstatements.

Nuclear Refueling Outage Costs

The domestic utility companies record nuclear refueling outage costs in accordance with regulatory treatment and the matching principle. These refuelingoutage expenses are incurred to prepare the units to operate for the next operating cycle without having to be taken off line. Except for the River Bend plant,the costs are deferred during the outage and amortized over the period to the next outage. In accordance with the regulatory treatment of the River Bendplant, the costs are accrued in advance and included in the cost of service used to establish retail rates. Entergy Gulf States relieves the accrued liabilitywhen it incurs costs during the next River Bend outage.

Allowance for Funds Used During Construction

AFUDC represents the approximate net composite interest cost of borrowed funds and a reasonable return on the equity funds used for construction.Although AFUDC increases both the plant balance and earnings, it is realized in cash through depreciation provisions included in rates.

Income Taxes

Entergy Corporation and its subsidiaries file a U.S. consolidated federal income tax return. Income taxes are allocated to the subsidiaries in proportion totheir contribution to consolidated taxable income. SEC regulations require that no Entergy subsidiary pay more taxes than it would have paid if a separateincome tax return had been filed. In accordance with SFAS 109, "Accounting for Income Taxes," deferred income taxes are recorded for all temporarydifferences between the book and tax basis of assets and liabilities, and for certain credits available for carryforward.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of the deferred taxassets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates in the period in which the law or ratewas enacted.

Investment tax credits are deferred and amortized based upon the average useful life of the related property, in accordance with ratemaking treatment.


The domestic utility companies and System Energy currently account for the effects of regulation pursuant to SFAS 71, "Accounting for the Effects ofCertain Types of Regulation." This statement applies to the financial statements of a rate-regulated enterprise that meet three criteria. The enterprise musthave rates that (i) are approved by a body empowered to set rates that bind customers (its regulator); (ii) are cost-based; and (iii) can be charged to andcollected from customers. These criteria may also be applied to separable portions of a utility's business, such as the generation or transmission functions, or

to specific classes of customers. If an enterprise meets these criteria, it capitalizes costs that would otherwise be charged to expense if the rate actions of itsregulator make it probable that those costs will be recovered in future revenue. Such capitalized costs are reflected as regulatory assets in the accompanyingfinancial statements. A significant majority of Entergy's regulatory assets, net of related regulatory and deferred tax liabilities, earn a return on investmentduring their recovery periods. SFAS 71 requires that rate-regulated enterprises assess the probability of recovering their regulatory assets at each balancesheet date. When an enterprise concludes that recovery of a regulatory asset is no longer probable, the regulatory asset must be removed from the entity'sbalance sheet.

SFAS 101, "Accounting for the Discontinuation of Application of FASB Statement No. 71," specifies how an enterprise that ceases to meet the criteria forapplication of SFAS 71 for all or part of its operations should report that event in its financial statements. In general, SFAS 101 requires that the enterprisereport the discontinuation of the application of SFAS 71 by eliminating from its balance sheet all regulatory assets and liabilities related to the applicablesegment. Additionally, if it is determined that a regulated enterprise is no longer recovering all of its costs and therefore no longer qualifies for SFAS 71accounting, it is possible that an impairment may exist that could require further write-offs of plant assets.

EITF 97-4: "Deregulation of the Pricing of Electricity - Issues Related to the Application of FASB Statements No. 71 and 101" specifies that SFAS 71should be discontinued at a date no later than when the effects of a transition to competition plan for all or a portion of the entity subject to such plan arereasonably determinable. Additionally, EITF 97-4 promulgates that regulatory assets to be recovered through cash flows derived from another portion of theentity that continues to apply SFAS 71 should not be written off; rather, they should be considered regulatory assets of the segment that will continue toapply SFAS 71.

See Note 2 to the domestic utility companies and System Energy financial statements for discussion of transition to competition activity in the retailregulatory jurisdictions served by the domestic utility companies. Only Texas currently has an enacted retail open access law, but Entergy believes thatsignificant issues remain to be addressed by regulators, and the enacted law does not provide sufficient detail to reasonably determine the impact on EntergyGulf States' regulated operations.

Cash and Cash Equivalents

Entergy considers all unrestricted highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.Investments with original maturities of more than three months are classified as other temporary investments on the balance sheet.

Investments

Entergy applies the provisions of SFAS 115, "Accounting for Investments for Certain Debt and Equity Securities," in accounting for investments indecommissioning trust funds. As a result, Entergy records the decommissioning trust funds at their fair value on the consolidated balance sheet. As ofDecember 31, 2003 and 2002, the fair value of the securities held in such funds differs from the amounts deposited plus the earnings on the deposits by thefollowing:

2003 2002 (In Millions) Entergy Arkansas $52.9 $35.3 Entergy Gulf States $17.2 $1.4 Entergy Louisiana $9.2 ($0.3)System Energy ($2.1) ($14.5)

Because of the ability of the domestic utility companies and System Energy to recover decommissioning costs in rates and in accordance with the regulatorytreatment for decommissioning trust funds, Entergy Arkansas, Entergy Gulf States (for the regulated portion of River Bend), Entergy Louisiana, and SystemEnergy have recorded an offsetting amount of unrealized gains/(losses) on investment securities in other regulatory liabilities/assets. For the nonregulatedportion of River Bend, Entergy Gulf States has recorded an offsetting amount of unrealized gains/(losses) in other deferred credits. Prior to theimplementation of SFAS 143, the offsetting amount of unrealized gains/(losses) on investment securities was recorded in accumulated depreciation forEntergy Arkansas, Entergy Gulf States (for the regulated portion of River Bend), and for Entergy Louisiana.

Derivatives and Hedging

Entergy implemented SFAS 133, "Accounting for Derivative Instruments and Hedging Activities" on January 1, 2001. The statement requires that allderivatives be recognized in the balance sheet, either as assets or liabilities, at fair value, unless they meet the normal purchase, normal sales criteria. Thechanges in the fair value of recognized derivatives are recorded each period in current earnings or other comprehensive income, depending on whether aderivative is designated as part of a hedge transaction and the type of hedge transaction.

Contracts for commodities that will be delivered in quantities expected to be used or sold in the ordinary course of business, including certain purchases andsales of power and fuel, are not classified as derivatives. These contracts are exempted under the normal purchase, normal sales criteria. Revenues andexpenses from these contracts are reported on a gross basis in the appropriate revenue and expense categories as the commodities are received or delivered.

Other contracts for commodities in which Entergy is hedging the variability of cash flows related to a variable-rate asset, liability, or forecasted transactionqualify as cash flow hedges. The changes in the fair value of such derivative instruments are reported in other comprehensive income. To qualify for hedgeaccounting, the relationship between the hedging instrument and the hedged item must be documented to include the risk management objective andstrategy, and at inception and on a ongoing basis the effectiveness of the hedge in offsetting the changes in the cash flows of the item being hedged. Gains orlosses accumulated in other comprehensive income are reclassified as earnings in the periods in which earnings are affected by the variability of the cashflows of the hedged item. The ineffective portions of all hedges are recognized in current-period earnings.

Fair Values

The estimated fair values of the domestic utility companies' and System Energy's financial instruments and derivatives are determined using bid prices andmarket quotes. Considerable judgment is required in developing the estimates of fair value. Therefore, estimates are not necessarily indicative of theamounts that the domestic utility companies and System Energy could realize in a current market exchange. Gains or losses realized on financial instrumentsheld by regulated businesses may be reflected in future rates and therefore do not accrue to the benefit or detriment of stockholders.

The domestic utility companies and System Energy consider the carrying amounts of most of their financial instruments classified as current assets andliabilities to be a reasonable estimate of their fair value because of the short maturity of these instruments. Additional information regarding financialinstruments and their fair values is included in Notes 5 and 7 to the domestic utility companies and System Energy financial statements.

Impairment of Long-Lived Assets

The domestic utility companies and System Energy periodically review their long-lived assets whenever events or changes in circumstances indicate thatrecoverability of these assets is uncertain. Generally, the determination of recoverability is based on the net cash flows expected to result from suchoperations and assets. Projected net cash flows depend on the future operating costs associated with the assets, the efficiency and availability of the assetsand generating units, and the future market and price for energy over the remaining life of the assets.

River Bend AFUDC

The River Bend AFUDC gross-up is a regulatory asset that represents the incremental difference imputed by the LPSC between the AFUDC actuallyrecorded by Gulf States Utilities on a net-of-tax basis during the construction of River Bend and what the AFUDC would have been on a pre-tax basis. Theimputed amount was only calculated on that portion of River Bend that the LPSC allowed in rate base and is being amortized over the estimated remainingeconomic life of River Bend.

Transition to Competition Liabilities

In conjunction with electric utility industry restructuring activity in Texas, regulatory mechanisms were established to mitigate potential stranded costs.Texas restructuring legislation allowed depreciation on transmission and distribution assets to be directed toward generation assets. The liability recorded asa result of this mechanism is classified as "transition to competition" deferred credits.

Reacquired Debt

The premiums and costs associated with reacquired debt of the domestic utility companies and System Energy (except that portion allocable to thederegulated operations of Entergy Gulf States) are being amortized over the life of the related new issuances, in accordance with ratemaking treatment.

Entergy Gulf States' Deregulated Operations

Entergy Gulf States does not apply regulatory accounting principles to its wholesale jurisdiction, Louisiana retail deregulated portion of River Bend, and the30% interest in River Bend formerly owned by Cajun. The Louisiana retail deregulated portion of River Bend is operated under a deregulated asset planrepresenting a portion (approximately 16%) of River Bend plant costs, generation, revenues, and expenses established under a 1992 LPSC order. The planallows Entergy Gulf States to sell the electricity from the deregulated assets to Louisiana retail customers at 4.6 cents per kWh or off-system at higher prices,with certain provisions for sharing such incremental revenue above 4.6 cents per kWh between ratepayers and shareholders.

The results of these deregulated operations before interest charges for the years ended December 31, 2003, 2002, and 2001 are as follows:

The net investment associated with these deregulated operations as of December 31, 2003 and 2002 was approximately $798 million and $805 million,respectively.

New Accounting Pronouncements

During 2003, Entergy adopted the provisions of the following accounting standards: SFAS 143, "Accounting for Asset Retirement Obligations," which isdiscussed further in Note 9; FIN 46, Consolidation of Variable Interest Entities," which is discussed further in Note 6; and SFAS 150, "Accounting forCertain Financial Instruments with Characteristics of both Liabilities and Equity." SFAS 150, which became effective July 1, 2003, requires mandatorilyredeemable financial instruments to be classified and treated as liabilities in the presentation of financial position and results of operations. The only effectof implementing SFAS 150 for Entergy is the inclusion of long-term debt and preferred stock with sinking fund under the liabilities caption in Entergy'sbalance sheet. Entergy's results of operations and cash flows were not affected by this standard.

During 2003, Entergy also adopted the provisions of the following accounting standards: SFAS 149, "Amendment of Statement 133 on DerivativeInstruments and Hedging Activities" and related interpretations by the Derivatives Implementation Group, and FIN 45, "Guarantor's Accounting andDisclosure Requirements for Guarantees Including Indirect Guarantees of Indebtedness of Others". The adoption of these standards did not have a materialeffect on Entergy's financial statements.

NOTE 2. RATE AND REGULATORY MATTERS

Electric Industry Restructuring and the Continued Application of SFAS 71

Although Arkansas and Texas enacted retail open access laws, the retail open access law in Arkansas has now been repealed. Retail open access in EntergyGulf States' service territory in Texas has been delayed. Entergy believes that significant issues remain to be addressed by Texas regulators, and the enactedlaw does not provide sufficient detail to allow Entergy Gulf States to reasonably determine the impact on Entergy Gulf States' regulated operations. Entergytherefore continues to apply regulatory accounting principles to the retail operations of all of the domestic utility companies. Following is a summary of thestatus of retail open access in the domestic utility companies' retail service territories.

Arkansas

(Entergy Arkansas)

In April 1999, the Arkansas legislature enacted Act 1556, the Arkansas Electric Consumer Choice Act, providing for competition in the electric utilityindustry through retail open access. In December 2001, the APSC recommended to the Arkansas General Assembly that legislation be enacted during the2003 legislative session to either repeal Act 1556 or further delay retail open access until at least 2010. In February 2003, the Arkansas legislature voted torepeal Act 1556 and the repeal was signed into law by the governor.

Texas

(Entergy Gulf States)

Retail open access commenced in portions of Texas on January 1, 2002. The staff of the PUCT filed a petition to delay retail open access in Entergy GulfStates' service area, and Entergy Gulf States reached a settlement agreement with the PUCT to delay retail open access until at least September 15, 2002. InSeptember 2002, the PUCT ordered Entergy Gulf States to file on January 24, 2003 a proposal for an interim solution (retail open access without a FERC-approved RTO) if it appeared by January 15, 2003 that a FERC-approved RTO would not be functional by January 1, 2004. On January 24, 2003, EntergyGulf States filed its proposal, which among other elements, included:

the recommendation that retail open access in Entergy Gulf States' Texas service territory, including corporate unbundling, occur by January 1, 2004,or else be delayed until at least January 1, 2007. If retail open access is delayed past January 1, 2004, Entergy Gulf States seeks authorization to

separate into two bundled utilities, one subject to the retail jurisdiction of the PUCT and one subject to the retail jurisdiction of the LPSC.

the recommendation that Entergy's transmission organization, possibly with the oversight of another entity, will continue to serve as the transmissionauthority for purposes of retail open access in Entergy Gulf States' service territory.

the recommendation that the decision points be identified that would require prior to January 1, 2004, the PUCT's determination, based upon objectivecriteria, whether to proceed with further efforts toward retail open access in Entergy Gulf States' Texas service territory.

The PUCT considered the proposal at a March 2003 hearing, and issued an order in April 2003. The order set forth a sequence of proceedings and activitiesdesigned to initiate an interim solution. These proceedings and activities include ruling on market protocols; initiating a proceeding to certify an independentorganization to administer the market protocols and ensure nondiscriminatory access to transmission and distribution systems; resuming business separationproceedings; re-invigorating the pilot project; and initiating a market-readiness proceeding. The PUCT issued an order on rehearing in late-July 2003 inwhich it identified December 2004 as the target date for the beginning of the interim solution. Consistent with the order, and after negotiations with otherparties and following a series of contested hearings and the PUCT approval of a settlement agreement on the market protocols, Entergy Services made afiling at the FERC and has received approval on an expedited basis of the market protocols subject to FERC jurisdiction. This ruling, when final andappealable, will allow for the reinvigorated pilot to begin upon the PUCT approval of Entergy Gulf States' independent organization request. The PUCT iscurrently scheduled to conduct a hearing on this request in June 2004.

In September 2003, the PUCT issued a written order that approved the Price to Beat (PTB) fuel factor for Entergy Gulf States, which is to be implementedupon the commencement of retail open access in its Texas service territory. This PTB fuel factor is subject to revision based on PUCT rules. The PUCTdeclined consideration of a request for rehearing sought by certain cities in Texas served by Entergy Gulf States and the Office of Public Utility Counsel.The Office of Public Utility Counsel has appealed this decision to the Texas courts. Management cannot predict the ultimate outcome of the proceeding atthis time.

Louisiana

(Entergy Gulf States and Entergy Louisiana)

In March 1999, the LPSC deferred making a decision on whether competition in the electric utility industry is in the public interest. However, the LPSCdirected the LPSC staff, outside consultants, and counsel to work together to analyze and resolve issues related to competition and to recommend a plan forconsideration by the LPSC. In July 2001, the LPSC staff submitted a final response to the LPSC. In its report the LPSC staff concluded that retailcompetition is not in the public interest at this time for any customer class. Nevertheless, the LPSC staff recommended that retail open access be madeavailable for certain large industrial customers as early as January 2003. An eligible customer choosing to go to competition would be required to provide itsutility with a minimum of six months notice prior to the date of retail open access. The LPSC staff report also recommended that all customers who do notcurrently co- or self-generate, or have co- or self-generation under c onstruction as of a date to be specified by the LPSC, remain liable for their share ofstranded costs. During its October 2001 meeting, the LPSC adopted dates by which a total of 800 MW of co- or self-generation could be developed inLouisiana without being affected by stranded costs. During its November 2001 meeting, the LPSC decided not to adopt a plan for retail open access for anycustomers at this time, but to have collaborative group meetings concerning open access from time to time, and to have the LPSC staff monitordevelopments in neighboring states and to report to the LPSC regarding the progress of retail access developments in those states. No further action has beentaken by the LPSC at this time.

Mississippi

(Entergy Mississippi)

In May 2000, after two years of studies and hearings, the MPSC announced that it was suspending its docket studying the opening of the state's retailelectricity markets to competition. The MPSC based its decision on its finding that competition could raise the electric rates paid by residential and smallcommercial customers. The final decision regarding the introduction of retail competition ultimately lies with the Mississippi Legislature. Managementcannot predict when, or if, Mississippi will deregulate its retail electricity market.

New Orleans

(Entergy New Orleans)

Entergy New Orleans filed an electric transition to competition plan in September 1997. No procedural schedule has been established for consideration ofthat plan by the City Council.

Regulatory Assets

Other Regulatory Assets

The domestic utility companies and System Energy are subject to the provisions of SFAS 71, "Accounting for the Effects of Certain Types of Regulation."Regulatory assets represent probable future revenues associated with certain costs that are expected to be recovered from customers through the ratemakingprocess. In addition to the regulatory assets that are specifically disclosed on the face of the balance sheets, the tables below provide detail of "Otherregulatory assets" included on the balance sheets of the domestic utility companies and System Energy as of December 31, 2003 and 2002 (in millions).

Entergy Entergy Entergy Entergy Entergy System2003 Arkansas Gulf States Louisiana Mississippi New Orleans Energy

DOE Decom. and DecontaminationFees - recovered through fuel ratesuntil December 2006 (Note 9)

$17.1 $3.0 $6.5 $- $- $6.4

Asset Retirement Obligation -recovery dependent upon timing ofdecommissioning (Note 9)

203.7 36.2 132.3 - - 92.7

Removal costs - recovered throughdepreciation rates (Note 9)

26.6 4.2 - 24.4 2.1 15.1

Provisions for storm damages -recovered through cost of service

25.3 57.4 40.9 3.5 - -

Postretirement benefits - recoveredthrough 2013 (Note 11)

21.5 - - - - -

Pension costs (Note 11) 41.7 - - 6.4 10.4 7.1Incremental ice storm costs -recovered until 2032

14.7 - - - - -

Depreciation re-direct - recoverybegins at start of retail open access(Note 1)

- 79.1 - - - -

River Bend AFUDC - recoveredthrough August 2025 (Note 1)

- 39.4 - - - -

Spindletop gas storage lease -recovered through 2032

- 38.0 - - - -

1994 FERC Settlement - recoveredthrough June 2004 (Note 2)

- - - - - 4.0

Sale-leaseback deferral - recoveredthrough June 2014 (Note 10)

- - - - - 131.7

Resource planning - recovery timingwill be determined by the LPSC in abase rate proceeding (Note 2)

- - 5.8 - - -

Low-level radwaste - recoverytiming dependent upon pendinglawsuit

16.2 3.1 - - - -

Deferred fuel - non-current -recovered through rate riders whenrates are redetermined annually

17.1 - - 11.1 - -

Unamortized loss on reaquired debt- recovered over term of debt

38.3 46.6 24.0 11.8 1.7 41.9

Other - various 15.3 13.4 8.2 1.1 13.0 2.3Total $437.5 $320.4 $217.7 $58.3 $27.2 $301.2


DOE Decommissioning andDecontamination Fees (Note 9)

$20.9 $3.7 $8.0 $- $- $7.8

Removal costs (Note 9) 35.2 - - 28.6 - 15.8Provisions for storm damages 13.8 45.3 39.0 2.9 - -Postretirement benefits (Note 11) 23.9 - - - - -Pension costs (Note 11) 19.1 - 38.8 9.8 3.0 -Incremental ice storm costs 15.3 - - - - -Imputed capacity charges - 5.5 11.8 - - -Depreciation re-direct (Note 1) - 79.1 - - - -River Bend AFUDC (Note 1) - 41.3 - - - -Spindletop gas storage lease - 35.0 - - - -1994 FERC Settlement (Note 2) - - - - - 12.1Sale-leaseback deferral (Note 10) - - - - - 123.9SFAS 115 decommissioning (Note 1) - - - - - 14.5Low-level radwaste 16.2 3.1 - - - -Deferred fuel - non-current - - 13.2 - - -Unamortized loss on reaquired debt 39.8 31.2 25.8 12.7 0.6 45.0Other 21.5 13.5 8.6 11.1 10.9 0.3Total $205.7 $257.7 $145.2 $65.1 $14.5 $219.4

Deferred fuel costs

The domestic utility companies are allowed to recover certain fuel and purchased power costs through fuel mechanisms included in electric rates that arerecorded as fuel cost recovery revenues. The difference between revenues collected and the current fuel and purchased power costs is recorded as "Deferredfuel costs" on the domestic utility companies' financial statements. The table below shows the amount of deferred fuel costs as of December 31, 2003 and2002 that has been or will be recovered or (refunded) through the fuel mechanisms of the domestic utility companies.

2003 2002 (In Millions) Entergy Arkansas $10.6 $(42.6)

Entergy Gulf States $118.4 $100.6

Entergy Louisiana $30.6 $(25.6)

Entergy Mississippi $89.1 $38.2

Entergy New Orleans $(2.7) $(14.9)

Entergy Arkansas

Entergy Arkansas' rate schedules include an energy cost recovery rider to recover fuel and purchased energy costs in monthly bills. The rider utilizes priorcalendar year energy costs and projected energy sales for the twelve-month period commencing on April 1 of each year to develop an annual energy costrate. The energy cost rate includes a true-up adjustment reflecting the over-recovery or under-recovery, including carrying charges, of the energy cost for theprior calendar year.

In March 2003, Entergy Arkansas filed with the APSC its energy cost recovery rider for the period April 2003 through March 2004. The energy cost ratefiled was approximately the same as the interim energy cost rate that was in effect since October 2002. The current energy cost rate is designed to eliminatethe over-recovery during the annual rider period.

Entergy Gulf States

In the Texas jurisdiction, Entergy Gulf States' rate schedules include a fixed fuel factor to recover fuel and purchased power costs, including carryingcharges, not recovered in base rates. Under current methodology, semi-annual revisions of the fixed fuel factor may be made in March and September basedon the market price of natural gas. Entergy Gulf States will likely continue to use this methodology until the start of retail open access. The amountscollected under Entergy Gulf States' fixed fuel factor and any interim surcharge implemented until the date retail open access commences are subject to fuelreconciliation proceedings before the PUCT. In the Texas jurisdiction, Entergy Gulf States' deferred electric fuel costs are $116.6 million as of December 31,2003, which includes the following:

Interim surcharge $ 87.0 millionItems to be addressed as part of unbundling $ 29.0 millionImputed capacity charges $ 9.3 millionOther (includes over-recovery for the period 9/03 -12/03)

$ (8.7) million

The PUCT has ordered that the imputed capacity charges be excluded from fuel rates and therefore recovered through base rates. It is uncertain, however, asto when and if Entergy Gulf States will initiate a base rate proceeding before the PUCT. The current PUCT-approved settlement agreement delaying retailopen access in Texas requires a rate freeze during the delay period. If Entergy Gulf States goes to retail open access without a Texas base rate proceeding, itis possible that Entergy Gulf States will not be allowed to recover imputed capacity charges in Texas retail rates in the future.

In January 2001, Entergy Gulf States filed a fuel reconciliation case covering the period from March 1999 through August 2000. Entergy Gulf States wasreconciling approximately $583 million of fuel and purchased power costs. As part of this filing, Entergy Gulf States requested authority to collect $28million, plus interest, of under-recovered fuel and purchased power costs. The PUCT decided in August 2002 to reduce Entergy Gulf States' request toapproximately $6.3 million, including interest through July 31, 2002. Approximately $4.7 million of the total reduction to the requested surcharge relates tonuclear fuel costs that the PUCT deferred ruling on at this time. In October 2002, Entergy Gulf States appealed the PUCT's final order in Texas DistrictCourt. In its appeal, Entergy Gulf States is challenging the PUCT's disallowance of approximately $4.2 million related to imputed capacity costs and itsdisallowance related to costs for energy delivered from the 30% non-regulated sha re of River Bend. The case was argued before the Travis County TexasDistrict Court in August 2003 and the Travis County District Court judge affirmed the PUCT's order. In October 2003, Entergy Gulf States appealed thisdecision to the Court of Appeals.

In September 2003, Entergy Gulf States filed an application with the PUCT to implement an $87.3 million interim fuel surcharge, including interest, tocollect under-recovered fuel and purchased power expenses incurred from September 2002 through August 2003. Hearings were held in October 2003 andthe PUCT issued an order in December 2003 allowing for the recovery of $87 million. The surcharge will be collected over a twelve-month period thatbegan in January 2004.

In March 2004, Entergy Gulf States filed with the PUCT a fuel reconciliation case covering the period September 2000 through August 2003. Entergy GulfStates is reconciling $1.43 billion of fuel and purchased power costs on a Texas retail basis. The reconciliation includes $8.6 million of under-recoveredcosts that Entergy Gulf States is asking to roll into its fuel over/under-recovery balance to be addressed in the next appropriate fuel proceeding. Hearings areexpected to occur in the third quarter 2004 with a final PUCT decision expected in early 2005.

Entergy Gulf States (Louisiana) and Entergy Louisiana

The Louisiana jurisdiction of Entergy Gulf States and Entergy Louisiana recover electric fuel and purchased power costs for the upcoming month basedupon the level of such costs from the prior month. The Louisiana jurisdiction of Entergy Gulf States' gas rate schedules include estimates for the billingmonth adjusted by a surcharge or credit for deferred fuel expense arising from monthly reconciliations.

In August 2000, the LPSC authorized its staff to initiate a proceeding to audit the fuel adjustment clause filings of Entergy Louisiana pursuant to aNovember 1997 LPSC general order. The time period that is the subject of the audit is January 1, 2000 through December 31, 2001. In September 2003, theLPSC staff issued its audit report and recommended a disallowance with regard to one item. The issue relates to the alleged failure to uprate Waterford 3 in atimely manner. The LPSC staff has quantified the possible disallowance as between $7.6 and $14 million. Entergy Louisiana notified the LPSC that it willcontest the recommendation. A procedural schedule has been adopted and hearings, which also will address issues relating to the reasonableness of

transmission planning and purchases of power from affiliates, the potential value of which issues cannot yet be quantified, are scheduled to begin inSeptember 2004, but the LPSC staff has requested a delay until April 2005.

In January 2003, the LPSC authorized its staff to initiate a proceeding to audit the fuel adjustment clause filings of Entergy Gulf States and its affiliatespursuant to a November 1997 LPSC general order. The audit will include a review of the reasonableness of charges flowed by Entergy Gulf States throughits fuel adjustment clause in Louisiana for the period January 1, 1995 through December 1, 2002. Discovery is underway, but a detailed procedural scheduleextending beyond the discovery stage has not yet been established and the LPSC staff has not yet issued its audit report.

Entergy Mississippi

Entergy Mississippi's rate schedules include an energy cost recovery rider which is adjusted quarterly to reflect accumulated over- or under-recoveries fromthe second prior quarter. In May 2003, Entergy Mississippi filed and the MPSC approved a change in Entergy Mississippi's energy cost recovery rider.Under the MPSC's order, Entergy Mississippi has deferred until 2004 the collection of fuel under-recoveries for the first and second quarters of 2003 thatwould have been collected in the third and fourth quarters of 2003, respectively. The deferred amount of $77.6 million plus carrying charges will becollected through the energy cost recovery rider over a twelve-month period beginning January 2004.

Entergy New Orleans

Effective June 2003, Entergy New Orleans electric rate schedules include a fuel adjustment tariff designed to reflect no more than targeted fuel andpurchased power costs adjusted by a surcharge or credit for deferred fuel expense arising from monthly reconciliations, including carrying charges. EntergyNew Orleans' gas rate schedules include estimates for the billing month adjusted by a surcharge or credit for deferred fuel expense arising from monthlyreconciliations, including carrying charges.


Filings with the APSC (Entergy Arkansas)

Retail Rates

No significant retail rate proceedings are pending in Arkansas at this time.

Filings with the PUCT and Texas Cities (Entergy Gulf States)

Retail Rates

Entergy Gulf States is operating in Texas under the terms of a June 1999 settlement agreement approved by the PUCT. The settlement provided for a baserate freeze that has remained in effect during the delay in implementation of retail open access in Entergy Gulf States' Texas service territory.

Recovery of River Bend Costs

In March 1998, the PUCT disallowed recovery of $1.4 billion of company-wide abeyed River Bend plant costs, which have been held in abeyance since1988. Entergy Gulf States appealed the PUCT's decision on this matter to the Travis County District Court in Texas. A 1999 settlement agreement limitspotential recovery of the remaining plant asset to $115 million as of January 1, 2002, less depreciation after that date. Entergy Gulf States accordinglyreduced the value of the plant asset in 1999. Entergy Gulf States has also agreed that it will not seek recovery of the abeyed plant costs through anyadditional charge to Texas ratepayers. In an interim order approving this agreement, however, the PUCT recognized that any additional River Bendinvestment found prudent, subject to the $115 million cap, could be used as an offset against stranded benefits, should legislation be passed requiringEntergy Gulf States to return stranded benefits to retail customers.

In April 2002, the Travis County District Court issued an order affirming the PUCT's order on remand disallowing recovery of the abeyed plant costs.Entergy Gulf States appealed this ruling to the Third District Court of Appeals. The Court of Appeals heard oral argument in November 2002. In July 2003,the Third District Court of Appeals unanimously affirmed the judgment of the Travis County District Court. After considering the progress of the proceedingin light of the decision of the Court of Appeals, management has concluded that it is prudent to accrue for the loss that would be associated with a final, non-appealable decision disallowing the abeyed plant costs. The net carrying value of the abeyed plant costs was $107.7 million as of June 30, 2003, and afterthis accrual Entergy Gulf States provided for all potential loss related to current or past contested costs of construction of the River Bend plant. Accrual ofthe loss was re corded in the second quarter 2003 and reduced net income by $65.6 million. In January 2004, the Texas Supreme Court asked for fullbriefing on the merits of the case in response to Entergy Gulf States' petition for review.

Filings with the LPSC

Annual Earnings Reviews (Entergy Gulf States)

In December 2002, the LPSC approved a settlement between Entergy Gulf States and the LPSC staff pursuant to which Entergy Gulf States agreed to makea base rate refund of $16.3 million, including interest, and to implement a $22.1 million prospective base rate reduction effective January 2003. Thesettlement discharged any potential liability for claims that relate to Entergy Gulf States' fourth, fifth, sixth, seventh, and eighth post-merger earningsreviews. Entergy Gulf States made the refund in February 2003. In addition to resolving and discharging all liability associated with the fourth througheighth earnings reviews, the settlement provides that Entergy Gulf States shall be authorized to continue to reflect in rates a ROE of 11.1% until a differentROE is authorized by a final resolution disposing of all issues in the proceeding that was commenced with Entergy Gulf States' May 2002 filing.

In May 2002, Entergy Gulf States filed its ninth and last required post-merger analysis with the LPSC. The filing includes an earnings review filing for the2001 test year that resulted in a rate decrease of $11.5 million, which was implemented effective June 2002. In April 2003, the LPSC staff filed testimony inwhich it recommended that the LPSC require a rate refund of $30.3 million and a prospective rate reduction of $75.9 million, before taking into account the$11.5 million rate reduction that Entergy Gulf States implemented effective June 2002. In July 2003, Entergy Gulf States filed testimony rebutting the LPSCstaff's testimony and supporting the filing. During discovery, the LPSC staff requested that Entergy Gulf States provide updated cost of service data to reflectchanges in costs, revenues, and rate base through December 31, 2002. In September 2003, Entergy Gulf States supplied the updated data. In December 2003,the LPSC staff filed testimony modifying its previous recommendation. In the LPSC staff's December 2003 testimony, the staff recommended a rate refundof $30.6 million and a prospective rate reduction of approximately $50 million. Hearings are scheduled to begin in April 2004.

Retail Rates (Entergy Louisiana)

In January 2004, Entergy Louisiana made a rate filing with the LPSC requesting a base rate increase of approximately $167 million. In that filing, EntergyLouisiana noted that approximately $73 million of the base rate increase was attributable to the acquisition of a generating station and certain powerpurchase agreements that, based on current natural gas prices, would produce fuel and purchased power savings for customers that substantially mitigate the

impact of the requested base rate increase. The filing also requested an allowed ROE of 11.4%. Entergy Louisiana's previously authorized ROE midpointcurrently in effect is 10.5%. Hearings are currently set for September 2004.

Filings with the MPSC (Entergy Mississippi)

Formula Rate Plan Filings

In December 2002, the MPSC issued a final order approving a joint stipulation entered into by Entergy Mississippi and the Mississippi Public Utilities Staffin October 2002. The final order results in a $48.2 million rate increase, or about a 5.3% increase in overall retail revenues, which is based on an ROE of11.75%. The rate increase began in January 2003. The order endorsed a new power management rider schedule designed to more efficiently collect capacityportions of purchased power costs. Also, the order provides for improvements in the return on equity formula and more robust performance measures forEntergy Mississippi's formula rate plan. Under the provisions of Entergy Mississippi's formula rate plan, a bandwidth is placed around the benchmark ROE,and if Entergy Mississippi earns outside of the bandwidth (as well as outside of a range-of-no-change at each edge of the bandwidth), then EntergyMississippi's rates wi ll be adjusted, though on a prospective basis only. Under the provisions of the order, Entergy Mississippi will make its next formularate plan filing during March 2004. The "benchmark ROE" set out in Entergy Mississippi's March 2004 annual formula rate plan filing likely will differfrom the last approved ROE. Under Mississippi law and Entergy Mississippi's formula rate plan, however, if Entergy Mississippi's earned ROE is above thetop of the range-of-no-change at the top of the formula rate plan bandwidth, then Entergy Mississippi's "Allowed ROE" for the next twelve-month period isthe point halfway between such earned ROE and the top of the bandwidth; and Entergy Mississippi's retail rates are set at that halfway-point ROE level. Inthe situation where Entergy Mississippi's earned ROE is not above the top of the range-of-no-change at the top of the bandwidth, then Entergy Mississippi's"Allowed ROE" for the next twelve-month period is the top of t he range-of-no-change at the top of the bandwidth.

Grand Gulf Accelerated Recovery Tariff (GGART)

In September 1998, FERC approved the GGART for Entergy Mississippi's allocable portion of Grand Gulf, which was filed with FERC in August 1998. TheGGART provided for the acceleration of Entergy Mississippi's Grand Gulf purchased power over the period October 1, 1998 through June 30, 2004. In May2003, the MPSC authorized the cessation of the GGART effective July 1, 2003. Entergy Mississippi filed notice of the change with FERC and the FERCapproved the filing on July 30, 2003. Entergy Mississippi accelerated a total of $168.4 million of Grand Gulf purchased power obligation under the GGARTover the period October 1, 1998 through June 30, 2003.

Filings with the City Council (Entergy New Orleans)

Rate Proceedings

In May 2002, Entergy New Orleans filed a cost of service study and revenue requirement filing with the City Council for the 2001 test year. The filingindicated that a revenue deficiency existed and that a $28.9 million electric rate increase and a $15.3 million gas rate increase were appropriate.Additionally, Entergy New Orleans proposed a $6 million public benefit fund. In March 2003, Entergy New Orleans and the Advisors to the City Councilpresented to the City Council an agreement in principle and the City Council approved that agreement in May 2003 allowing for a total increase of $30.2million in electric and gas base rates effective June 1, 2003. Certain intervenors have appealed the City Council's approval to Civil District Court for theParish of Orleans. Entergy New Orleans and the City Council will oppose the appeal, but the outcome cannot be predicted.

Fuel Adjustment Clause Litigation

In April 1999, a group of ratepayers filed a complaint against Entergy New Orleans, Entergy Corporation, Entergy Services, and Entergy Power in statecourt in Orleans Parish purportedly on behalf of all Entergy New Orleans ratepayers. The plaintiffs seek treble damages for alleged injuries arising from thedefendants' alleged violations of Louisiana's antitrust laws in connection with certain costs passed on to ratepayers in Entergy New Orleans' fuel adjustmentfilings with the City Council. In particular, plaintiffs allege that Entergy New Orleans improperly included certain costs in the calculation of fuel charges andthat Entergy New Orleans imprudently purchased high-cost fuel from other Entergy affiliates. Plaintiffs allege that Entergy New Orleans and the otherdefendant Entergy companies conspired to make these purchases to the detriment of Entergy New Orleans' ratepayers and to the benefit of Entergy'sshareholders, in violation of Louisiana's antitrust laws. Plaintiffs also seek to recover interest and attorneys' fees. Entergy filed exceptions to the plaintiffs'allegations, asserting, among other things, that jurisdiction over these issues rests with the City Council and FERC. If necessary, at the appropriate time,Entergy will also raise its defenses to the antitrust claims. The suit in state court has been stayed by stipulation of the parties pending a decision by the CityCouncil in the proceeding discussed in the next paragraph.

Plaintiffs also filed this complaint with the City Council in order to initiate a review by the City Council of the plaintiffs' allegations and to force restitutionto ratepayers of all costs they allege were improperly and imprudently included in the fuel adjustment filings. Testimony was filed on behalf of the plaintiffsin this proceeding asserting, among other things, that Entergy New Orleans and other defendants have engaged in fuel procurement and power purchasingpractices and included costs in Entergy New Orleans' fuel adjustment that could have resulted in New Orleans customers being overcharged by more than$100 million over a period of years. Hearings were held in February and March 2002. In February 2004, the City Council approved a resolution that resultsin a refund to customers of $11.3 million, including interest, during the months of June through September 2004. The resolution concludes, among otherthings, that the record does not support an allegation that Entergy New Orleans' actions or inactions, either alone or in concert with Entergy or any of itsaffiliates, constituted a misrepresentation or a suppression of the truth made in order to obtain an unjust advantage of Entergy New Orleans, or to cause loss,inconvenience or harm to its ratepayers. Management believes that it has adequately provided for the liability associated with this proceeding as ofDecember 31, 2003. The plaintiffs have appealed the City Council resolution to the state court in Orleans Parish.

Purchased Power for Summer 2001, 2002 and 2003 (Entergy Gulf States and Entergy Louisiana)

In March 2001, Entergy Louisiana and Entergy Gulf States filed applications for authorization to participate in contracts that would be executed by theEntergy System to meet the summer peak load requirements for the summer of 2001. In May 2001, the LPSC determined that 24% of Entergy Louisiana'sand Entergy Gulf States' costs relating to summer 2001 purchases should be categorized as capacity charges. Subsequently, the LPSC raised certain prudenceissues related to the 2001 purchases. The administrative law judge (ALJ) presiding over the case recently issued a Preliminary Recommendation regardingprudence issues primarily associated with the power uprates at the Waterford 3 and Grand Gulf nuclear units. In the event that such decision becomes final,additional calculations would be required to determine the potential refund obligation for the periods 2001, 2002 and 2003. The ALJ also concluded thatEntergy should be permitted the opportunity to recover the expenses of the uprates th rough appropriate rate proceedings.

In March 2002 and 2003, Entergy Louisiana and Entergy Gulf States filed an application with the LPSC for the approval of capacity and energy purchasesfor the summers of 2002 and 2003, respectively, similar to the applications filed for the summers of 2000 and 2001. The LPSC ordered that 14% of EntergyLouisiana's and Entergy Gulf States' costs relating to summer 2002 purchases be categorized as capacity charges, and that 11% of Entergy Louisiana's andEntergy Gulf States' costs relating to summer 2003 power purchases the price of which was stated on the basis of $/MWh be categorized as capacity charges.The LPSC did not allow the capacity charges to be set up as a regulatory asset, but authorized Entergy Louisiana and Entergy Gulf States to include thesecosts in any base rate case for their respective test years. Prudence issues relating to summer 2002 and 2003 purchases were resolved in subsequentsettlements approved by the LPSC. In the event that the LPSC adopts the ALJ's recommendation relating to potential uprates at nuclear facilities in thesummer 2001 case, and such decision becomes final following an appeal or the expiration of appeal delays, these settlements reserve the LPSC's right to

propose in a future case disallowances relating to the effect that such uprates would have had on the summer 2002 and summer 2003 firm energy contracts,while Entergy Gulf States and Entergy Louisiana reserve their right to oppose any such proposal.

No refunds were ordered in the summer 2002 settlement, although with respect to the capacity costs to be incurred pursuant to a particular purchased powercontract, Entergy Louisiana agreed in the settlement to forgo recovery of approximately $0.8 million in 2002, $1.3 million in 2003, and $1.0 million in 2004,and Entergy Gulf States agreed to forgo recovery of approximately $0.5 million in 2002, $0.9 million in 2003, and $0.7 million in 2004. All other purchasesfor the summers of 2002 and 2003 were found to be prudent. Issues relating to the reasonableness of the long-term planning process were moved from thesummer 2002 case into a separate sub-docket. In the summer 2003 settlement, the LPSC also reserved its right to investigate any alleged imprudenceregarding the System's decision to spin off the ISES and Ritchie generating units to an unregulated affiliate, Entergy Power, Inc.

System Energy's 1995 Rate Proceeding (Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)

System Energy applied to FERC in May 1995 for a rate increase, and implemented the increase in December 1995. The request sought changes to SystemEnergy's rate schedule, including increases in the revenue requirement associated with decommissioning costs, the depreciation rate, and the rate of return oncommon equity. The request proposed a 13% return on common equity. In July 2000, FERC approved a rate of return of 10.58% for the period December1995 to the date of FERC's decision, and prospectively adjusted the rate of return to 10.94% from the date of FERC's decision. FERC's decision alsochanged other aspects of System Energy's proposed rate schedule, including the depreciation rate and decommissioning costs and their methodology. FERCaccepted System Energy's compliance tariff in November 2001. System Energy made refunds to the domestic utility companies in December 2001.

In accordance with regulatory accounting principles, during the pendency of the case, System Energy recorded reserves for potential refunds against itsrevenues. Upon the order becoming final, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy recordedentries to spread the impacts of FERC's order to the various revenue, expense, asset, and liability accounts affected, as if the order had been in place sincecommencement of the case in 1995. System Energy also recorded an additional reserve amount against its revenue, to adjust its estimate of the impact of theorder, and recorded additional interest expense on that reserve. System Energy also recorded reductions in its depreciation and its decommissioning expensesto reflect the lower levels in FERC's order, and reduced tax expense affected by the order.

FERC Settlement (Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)

In November 1994, FERC approved an agreement settling a long-standing dispute involving income tax allocation procedures of System Energy. Inaccordance with the agreement, System Energy has been refunding a total of approximately $62 million, plus interest, to Entergy Arkansas, EntergyLouisiana, Entergy Mississippi, and Entergy New Orleans through June 2004. System Energy also reclassified from utility plant to other deferred debitsapproximately $81 million of other Grand Gulf 1 costs. Although such costs are excluded from rate base, System Energy is amortizing and recovering thesecosts over a 10-year period. Interest on the $62 million refund and the loss of the return on the $81 million of other Grand Gulf 1 costs is reducing Entergy'sand System Energy's net income by approximately $10 million annually.

NOTE 3. INCOME TAXES

Income tax expenses for 2003, 2002, and 2001 consist of the following:


(In Thousands)Current: Federal (a) $40,632 ($11,535) ($745,724) ($2,969) ($7,655) $95,670 State (a) 16,306 (1,503) (16,243) 2,565 (1,871) 15,382 Total (a) 56,938 (13,038) (761,967) (404) (9,526) 111,052 Deferred -- net 53,309 36,652 864,656 36,240 15,853 (31,731)Investment tax credit adjustments -- net (4,951) (12,078) (5,281) (1,405) (452) (3,476) Recorded income tax expense $105,296 $11,536 $97,408 $34,431 $5,875 $75,845


(In Thousands)Current: Federal (a) $13,206 $66,227 $43,048 $21,817 ($7,103) $99,429 State (a) 3,243 11,345 1,867 3,969 (47) 14,994 Total (a) 16,449 77,572 44,915 25,786 (7,150) 114,423 Deferred -- net 59,963 (4,210) 45,253 (6,529) 7,196 (34,770)Investment tax credit adjustments -- net (5,008) (7,365) (5,403) (1,411) (468) (3,476) Recorded income tax expense $71,404 $65,997 $84,765 $17,846 ($422) $76,177


(In Thousands)Current: Federal (a) $83,314 $60,333 $97,265 $77,074 $16,844 ($56,166) State (a) 16,230 17,385 16,404 11,523 2,958 (6,837) Total (a) 99,544 77,718 113,669 88,597 19,802 (63,003)Deferred -- net 11,414 11,554 (21,931) (66,633) (23,691) 110,240

Investment tax credit adjustments -- net (5,025) (7,234) (5,451) (1,500) (507) (3,476)

Recorded income tax expense $105,933 $82,038 $86,287 $20,464 ($4,396) $43,761

(a) Entergy Louisiana's actual cash taxes paid/(refunded) were $35,128 in 2003, ($781,540) in 2002,and $111,507 in 2001. Entergy Louisiana's mark-to-market tax accounting election significantlyreduced taxes paid in 2002. In 2001, Entergy Louisiana changed its method of accounting for taxpurposes related to the contract to purchase power from the Vidalia project (the contract isdiscussed in Note 9 to the domestic utility companies and System Energy financial statements).The new tax accounting method has provided a cumulative cash flow benefit of approximately$805 million through 2003, which is expected to reverse in the years 2005 through 2031. Theelection did not reduce book income tax expense. The timing of the reversal of this benefit dependson several variables, including the price of power. Approximately half of the consolidated cashflow benefit of the election occurred in 2001 and the remainder occurred in 2002. In accordancewith Entergy's i ntercompany tax allocation agreement, the cash flow benefit for Entergy Louisianaoccurred in the fourth quarter of 2002.

Total income taxes differ from the amounts computed by applying the statutory income tax rate to income before taxes. The reasons for the differences forthe years 2003, 2002, and 2001 are:

Significant components of net deferred and long-term accrued tax liabilities as of December 31, 2003 and 2002 are as follows:


(In Thousands)

Deferred and Long-term Accrued TaxLiabilities:

Net regulatory assets/(liabilities) ($157,147) ($478,254) ($195,074) ($34,738) $38,834 ($246,519)

Plant-related basis differences,net (798,641) (1,095,206) (806,955) (284,550) (74,041) (332,197)

Power Purchase Agreements - - (945,495) - - -

Deferred Fuel (4,154) (45,762) - (40,091) (1,109) -

Long term taxes accrued (26,611) (55,155) - (52,646) (17,491) (57,239)

Other (85,528) (26,012) (67,272) (21,806) (1,728) (11,497)

Total (1,072,081) (1,700,389) (2,014,796) (433,831) (55,535) (647,452)

Deferred Tax Assets:

Accumulated deferred investment

tax credit 28,836 36,192 38,962 5,773 1,709 30,251

Sale and leaseback - - 83,539 - - 139,595

NOL Carryforward - - 104,489 - - -

Unbilled/Deferred revenues - 11,959 - 7,357 - -

Pension-related items 5,453 11,474 12,562 - 9,324 7,354

Reserve for regulatory adjustments - 138,933 - - - -

Rate refund 2,351 23,184 789 379 3,977 170,222

Customer Deposits 37,778 35,840 16,804 18,085 84 -

Nuclear Decommissioning 13,171 - 2,833 - - -

Other 6,399 26,147 26,096 9,722 1,415 8,124

Total 93,988 283,729 286,074 41,316 16,509 355,546

Net deferred tax liability ($978,093) ($1,416,660) ($1,728,722) ($392,515) ($39,026) ($291,906)


(In Thousands)

Deferred and Long-term Accrued TaxLiabilities:

Net regulatory assets/(liabilities) ($142,438) ($493,358) ($198,637) ($24,560) $29,435 ($255,729)

Plant-related basis differences, net (649,312) (962,100) (683,590) (251,026) (65,357) (352,611)

Power purchase agreements - - (866,976) - - -

Deferred fuel - (40,267) (4,556) (22,023) (1,255) -

Other (89,851) (43,537) (107,098) (19,090) (5,398) (20,285)

Total (881,601) (1,539,262) (1,860,857) (316,699) (42,575) (628,625)

Deferred Tax Assets:

Accumulated deferred investment

t dit 30 690 40 471 40 995 6 310 1 883 31 581

tax credit 30,690 40,471 40,995 6,310 1,883 31,581

Sale and leaseback - - 96,684 - - 135,544

Unbilled/Deferred revenues 3,360 11,959 - 6,307 - -

Pension-related items - 5,339 6,282 - 7,803 4,085

Rate refund - 18,084 66 - 4,502 -

Reserve for regulatory adjustments - 103,843 - - - -

Customer deposits 11,623 22,029 10,076 14,324 113 -

Nuclear decommissioning 12,070 1,073 2,833 - - 5,622

Other 7,090 28,117 12,751 4,771 7,259 6,931

Total 64,833 230,915 169,687 31,712 21,560 183,763

Net deferred tax liability ($816,768) ($1,308,347) ($1,691,170) ($284,987) ($21,015) ($444,862)

At December 31, 2003, Entergy Louisiana had a state net operating loss carryforward of $1.7 billion, primarily resulting from its mark-to-market taxelection. If the state net operating loss is not utilized against income from Entergy Louisiana, it will expire in 2016.

NOTE 4. LINES OF CREDIT AND RELATED SHORT-TERM BORROWINGS (Entergy Arkansas, Entergy Gulf States, Entergy Louisiana,Entergy Mississippi, Entergy New Orleans, and System Energy)

The short-term borrowings of the domestic utility companies and System Energy are limited to amounts authorized by the SEC. The current limitsauthorized are effective through November 30, 2004. Also, under the SEC order authorizing the short-term borrowing limits, the domestic utility companiesand System Energy cannot incur new short-term indebtedness if the issuer's common equity would comprise less than 30% of its capital. In addition toborrowing from commercial banks, the domestic utility companies and System Energy are authorized to borrow from the Entergy System Money Pool(money pool). The money pool is an inter-company borrowing arrangement designed to reduce the domestic utility companies' dependence on externalshort-term borrowings. Borrowings from the money pool and external borrowings combined may not exceed the SEC authorized limits. The following arethe outstanding short-term borrowings from the money pool and the SEC-auth orized limits for short-term borrowings for the domestic utility companies andSystem Energy as of December 31, 2003:

Authorized Borrowings (In Millions)Entergy Arkansas $235 $69.2Entergy Gulf States $340 -Entergy Louisiana $225 $41.3Entergy Mississippi $160 -Entergy New Orleans $100 -System Energy $140 -

Because of restrictions contained in its articles of incorporation, Entergy New Orleans could only incur approximately $38 million of new unsecured debt asof December 31, 2003.

Entergy Arkansas, Entergy Louisiana, and Entergy Mississippi each have 364-day credit facilities available as follows:

Company


Facility Amount Drawn as of

Dec. 31, 2003 Entergy Arkansas April 2004 $63 million -Entergy Louisiana May 2004 $15 million -Entergy Mississippi May 2004 $25 million -

The facilities have variable interest rates and the average commitment fee is 0.14%.

NOTE 5. LONG - TERM DEBT (Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, andSystem Energy)

Long-term debt as of December 31, 2003 and 2002 consisted of:


Entergy ArkansasMortgage Bonds:

7.72% Series due March 2003 $- $100,000 6.0% Series due October 2003 - 155,000 6.125% Series due July 2005 100,000 100,000 6.65% Series due August 2005 - 115,000 7.5% Series due August 2007 - 100,000 5.4% Series due May 2018 150,000 - 5.0% Series due July 2018 115,000 -

0% S i d O b 2023 1 000 1 000

7.0% Series due October 2023 175,000 175,000

6.7% Series due April 2032 100,000 100,000 6.0% Series due November 2032 100,000 100,000 5.9% Series due June 2033 100,000 - Total mortgage bonds 840,000 945,000

Governmental Bonds (a):6.3% Series due 2016, Pope County 19,500 19,500 5.6% Series due 2017, Jefferson County 45,500 45,500 6.3% Series due 2018, Jefferson County 9,200 9,200 6.3% Series due 2020, Pope County 120,000 120,000 6.25% Series due 2021, Independence County 45,000 45,000 5.05% Series due 2028, Pope County (b) 47,000 47,000 Total governmental bonds 286,200 286,200

Other Long-Term Debt:Long-term DOE Obligation (c) 154,409 152,804 8.5% Junior Subordinated Deferrable InterestDebentures 61,856 61,856 Unamortized Premium and Discount - Net (4,708) (4,625)Other 621 621

Total Long-TermDebt 1,338,378 1,441,856

Less Amount Due Within One Year - 255,000


Fair Value of Long-Term Debt (d) $1,234,657 $1,326,961


Entergy Gulf StatesMortgage Bonds:

6.75% Series due March 2003 $- 33,000 Libor + 1.2% Series due June 2003 - 260,000 8.25% Series due April 2004 292,000 292,000 Libor + 1.3% Series due September 2004 - 300,000 6.77% Series due August 2005 98,000 98,000 Libor + 0.9% Series due June 2007 275,000 - 5.2% Series due December 2007 200,000 200,000 3.6% Series due June 2008 325,000 - 6.0% Series due December 2012 140,000 140,000 5.25% Series due August 2015 200,000 - 8.94% Series due January 2022 - 150,000 8.7% Series due April 2024 - 294,950 6.2% Series due July 2033 240,000 - Total mortgage bonds 1,770,000 1,767,950

Governmental Bonds (a): 5.45% Series due 2010, Calcasieu Parish 22,095 22,095 6.75% Series due 2012, Calcasieu Parish 48,285 48,285 6.7% Series due 2013, Pointe Coupee Parish 17,450 17,450 5.7% Series due 2014, Iberville Parish 21,600 21,600 7.7% Series due 2014, West Feliciana Parish 94,000 94,000 5.8% Series due 2015, West Feliciana Parish 28,400 28,400 7.0% Series due 2015, West Feliciana Parish 39,000 39,000 7.5% Series due 2015, West Feliciana Parish 41,600 41,600 9.0% Series due 2015, West Feliciana Parish 45,000 45,000 5.8% Series due 2016, West Feliciana Parish 20,000 20,000 5.65% Series due 2028, West Feliciana Parish (e) 62,000 62,000 6.6% Series due 2028, West Feliciana Parish 40,000 40,000 Total governmental bonds 479,430 479,430

Other Long-Term Debt:8.75% Junior Subordinated Deferrable Interest Debentures 87,629 87,629 Unamortized Premium and Discount - Net (2,596) (4,463)O h 9 150 9 371

Other 9,150 9,371

Total Long-TermDebt 2,343,613 2,339,917 Less Amount Due Within One Year 354,000 293,000


Fair Value of Long-Term Debt (d) $2,429,847 $2,407,427


Entergy LouisianaMortgage Bonds:

8.5% Series due June 2003 $- $150,000 6.5% Series due March 2008 115,000 115,000 7.6% Series due April 2032 150,000 150,000 Total mortgage bonds 265,000 415,000

Governmental Bonds (a):7.5% Series due 2021, St. Charles Parish 50,000 50,000 7.0% Series due 2022, St. Charles Parish 24,000 24,000 7.05% Series due 2022, St. Charles Parish 20,000 20,000 5.95% Series due 2023, St. Charles Parish 25,000 25,000

6.2% Series due 2023, St. Charles Parish 33,000 33,000 6.875% Series due 2024, St. Charles Parish 20,400 20,400 6.375% Series due 2025, St. Charles Parish 16,770 16,770 5.35% Series due 2029, St. Charles Parish(f) - 110,950 Auction Rate due 2030, St. Charles Parish 60,000 60,000 4.9% Series due 2030, St. Charles Parish (g) (h) 55,000 55,000 Total governmental bonds 304,170 415,120

Other Long-Term Debt:Waterford 3 Lease Obligation 7.45% (Note 10) 262,534 297,950 9.0% Junior Subordinated Deferrable Interest Debentures 72,165 72,165 Unamortized Premium and Discount - Net (1,373) (1,516)

Total Long-Term Debt 902,496 1,198,719 Less Amount Due Within One Year 14,809 296,366

Long-Term Debt Excluding Amount Due Within One Year $887,687 $902,353

Fair Value of Long-Term Debt (d) $668,700 $917,404


Entergy MississippiMortgage Bonds:

6.25% Series due February 2003 $- 70,000 7.75% Series due February 2003 - 120,000 6.625% Series due November 2003 - 65,000 6.2% Series due May 2004 75,000 75,000 Libor + 0.65% Series due May 2004 - 50,000 8.25% Series due July 2004 - 25,000 6.45% Series due April2008 80,000 80,000 4.35% Series due April2008 100,000 - 5.15% Series due February 2013 100,000 - 4.95% Series due June 2018 95,000 - 7.7% Series due July 2023 60,000 60,000 6.0% Series due November 2032 75,000 75,000

, ,

7.25% Series due December 2032 100,000 100,000 Total mortgage bonds 685,000 720,000

Governmental Bonds (a):7.0% Series due 2022, Warren County 8,095 8,095 7.0% Series due 2022, WashingtonCounty 7,935 7,935 Auction Rate due 2022, IndependenceCity 30,000 30,000 Total governmental bonds 46,030 46,030

Other Long-Term Debt:Unamortized Premium and Discount - Net (1,074) (926)

Total Long-TermDebt 729,956 765,104 Less Amount Due Within OneYear 75,000 255,000




Entergy New OrleansMortgage Bonds:

6.65% Series due March 2004 $- 30,000 8.125% Series due July 2005 30,000 30,000 8.0% Series due March 2006 - 40,000 7.0% Series due July 2008 - 30,000 3.875% Series due August 2008 30,000 - 5.25% Series due August 2013 70,000 - 6.75% Series due October 2017 25,000 25,000 8.0% Series due March 2023 45,000 45,000 7.55% Series due September 2023 30,000 30,000 Total mortgage bonds 230,000 230,000

Other Long-Term Debt:Unamortized Premium and Discount - Net (783) (809)

Total Long-TermDebt $229,217 $229,191

Fair Value of Long-Term Debt (c) $239,816 $239,311


System EnergyMortgage Bonds:

4.875% Series due October 2007 $70,000 $70,000

Total mortgage bonds 70,000 70,000

Governmental Bonds (a):5.875% Series due 2022, Mississippi Business Finance Corp. 216,000 216,0005.9% Series due 2022, Mississippi Business Finance Corp. 102,975 102,9757.3% Series due 2025, Claiborne County 7,625 7,6256.2% Series due 2026, Claiborne County 90,000 90,000

Total governmental bonds 416,600 416,600

Other Long-Term Debt:Grand Gulf Lease Obligation 7.02% (Note10) 403,468 414,843Unamortized Premium and Discount - Net (1,319) (1,403)

Total Long-TermDebt 888,749 900,040Less Amount Due Within OneYear 6,348 11,375



(a) Consists of pollution control revenue bonds and environmental revenue bonds, certain series ofwhich are secured by non-interest bearing first mortgage bonds.

(b) The bonds are subject to mandatory tender for purchase from the holders at 100% of the principalamount outstanding on September 1, 2005 and can then be remarketed.

(c) Pursuant to the Nuclear Waste Policy Act of 1982, Entergy's nuclear owner/licensee subsidiarieshave contracts with the DOE for spent nuclear fuel disposal service. The contracts include a one-time fee for generation prior to April 7, 1983. Entergy Arkansas is the only Entergy company thatgenerated electric power with nuclear fuel prior to that date and includes the one-time fee, plusaccrued interest, in long-term debt.

(d) The fair value excludes lease obligations, long-term DOE obligations, and other long-term debt andincludes debt due within one year. It is determined using bid prices reported by dealer markets andby nationally recognized investment banking firms.

(e) The bonds are subject to mandatory tender for purchase from the holders at 100% of the principalamount outstanding on September 1, 2004 and can then be remarketed.

(f) The bonds had a mandatory tender date of October 1, 2003. Entergy Louisiana purchased the bondsfrom the holders, pursuant to the mandatory tender provision, and has not remarketed the bonds atthis time. A combination of cash on hand and short-term borrowing was used to buy-in the bonds.

(g) On June 1, 2002, Entergy Louisiana remarketed $55 million St. Charles Parish Pollution ControlRevenue Refunding Bonds due 2030, resetting the interest rate to 4.9% through May 2005.

(h) The bonds are subject to mandatory tender for purchase from the holders at 100% of the principalamount outstanding on June 1, 2005 and can then be remarketed.

The annual long-term debt maturities (excluding lease obligations) for debt outstanding as of December 31, 2003, for the next five years are as follows:


Arkansas Gulf States Louisiana Mississippi New Orleans Energy

(In Thousands)

2004 - $354,000 - $75,000 - -

2005 $147,000 $98,000 $55,000 - $30,000 -

2006 - - - - - -

2007 - $475,000 - - - $70,000

2008 - $325,000 $115,000 $180,000 $30,000 -

NOTE 6. COMPANY-OBLIGATED REDEEMABLE PREFERRED SECURITIES (Entergy Arkansas, Entergy Gulf States, and EntergyLouisiana)

Entergy implemented FASB Interpretation No. 46, "Consolidation of Variable Interest Entities" effective December 31, 2003. FIN 46 requires existingunconsolidated variable interest entities to be consolidated by their primary beneficiaries if the entities do not effectively disperse risks among theirinvestors. Variable interest entities (VIEs), generally, are entities that do not have sufficient equity to permit the entity to finance its operations withoutadditional financial support from its equity interest holders and/or the group of equity interest holders are collectively not able to exercise control over theentity. The primary beneficiary is the party that absorbs a majority of the entity's expected losses, receives a majority of its expected residual returns, or bothas a result of holding the variable interest. A company may have an interest in a VIE through ownership or other contractual rights or obligations.

Entergy Louisiana Capital I, Entergy Arkansas Capital I, and Entergy Gulf States Capital I (Trusts) were established as financing subsidiaries of EntergyLouisiana, Entergy Arkansas, and Entergy Gulf States, respectively, (the parent company or companies, collectively) for the purposes of issuing commonand preferred securities. The Trusts issued Cumulative Quarterly Income Preferred Securities (Preferred Securities) to the public and issued commonsecurities to their parent companies. Proceeds from such issues were used to purchase junior subordinated deferrable interest debentures (Debentures) fromthe parent company. The Debentures held by each Trust are its only assets. Each Trust uses interest payments received on the Debentures owned by it tomake cash distributions on the Preferred Securities and common securities. The parent companies fully and unconditionally guaranteed payment ofdistributions on the Preferred Securities issued by the respective Trusts. Prior to the applica tion of FIN 46, each parent company consolidated its interest inits Trust. Because each parent company's share of expected losses of its Trust is limited to its investment in its Trust, the parent companies are notconsidered the primary beneficiaries and therefore de-consolidated their interest in the Trusts upon application of FIN 46 with no significant impacts to thefinancial statements. The parent companies' investment in the Trusts and the Debentures issued by each parent company are included in Other Property andInvestments and Long-Term Debt, respectively. The financial statements as of December 31, 2002 have been reclassified to reflect the application of FIN 46as of that date.

NOTE 7. PREFERRED STOCK (Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans)

The number of shares authorized and outstanding, and dollar value of preferred stock for Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, EntergyMississippi, and Entergy New Orleans as of December 31, 2003 and 2002 are presented below. Only the two Entergy Gulf States series "with sinking fund"contain mandatory redemption requirements. All other series are redeemable at Entergy's option at the call prices presented. Dividends paid on all ofEntergy's preferred stock series are eligible for the dividends received deduction. The dividends received deduction is limited by Internal Revenue Codesection 244 for the following preferred stock series: Entergy Arkansas 4.72%, Entergy Gulf States 4.40%, Entergy Louisiana 4.96%, Entergy Mississippi4.56%, and Entergy New Orleans 4.75%.

Shares Call Price PerAuthorized Share as of

and Outstanding December 31,2003 2002 2003 2002 2003

(Dollars in Thousands)Entergy Arkansas PreferredStock

Without sinking fund:Cumulative, $100 par value:

4.32% Series 70,000 70,000 $7,000 $7,000 $103.654.72% Series 93,500 93,500 9,350 9,350 107.004.56% Series 75,000 75,000 7,500 7,500 102.834.56% 1965 Series 75,000 75,000 7,500 7,500 102.506.08% Series 100,000 100,000 10,000 10,000 102.837.32% Series 100,000 100,000 10,000 10,000 103.177.80% Series 150,000 150,000 15,000 15,000 103.257.40% Series 200,000 200,000 20,000 20,000 102.807.88% Series 150,000 150,000 15,000 15,000 103.00

Cumulative, $0.01 par value: $1.96 Series (a) 600,000 600,000 15,000 15,000 25.00




Entergy Gulf States Preferred Stock (Dollars in Thousands)Preferred Stock

Authorized 6,000,000 shares,

$100 par value, cumulative

Without sinking fund:

4.40% Series 51,173 51,173 $5,117 $5,117 $108.004.50% Series 5,830 5,830 583 583 105.004.40% 1949 Series 1,655 1,655 166 166 103.004.20% Series 9,745 9,745 975 975 102.824.44% Series 14,804 14,804 1,480 1,480 103.755.00% Series 10,993 10,993 1,099 1,099 104.255.08% Series 26,845 26,845 2,685 2,685 104.634.52% Series 10,564 10,564 1,056 1,056 103.576.08% Series 32,829 32,829 3,283 3,283 103.347.56% Series 308,830 308,830 30,883 30,883 101.80

Total without sinking fund 473,268 473,268 $47,327 $47,327With sinking fund:

Adjustable Rate - A, 7.0% (b) 96,020 108,120 $9,602 $10,812 $100.00Adjustable Rate - B, 7.0% (b) 112,499 135,149 11,250 13,515 100.00

Total with sinking fund 208,519 243,269 $20,852 $24,327

Fair Value of Preferred Stockwith sinking fund (c) $15,354 $20,792



Entergy Louisiana Preferred Stock (Dollars in Thousands)Without sinkingfund:

Cumulative, $100 par value:4.96% Series 60,000 60,000 $6,000 $6,000 $104.25

4.16% Series 70,000 70,000 7,000 7,000 104.214.44% Series 70,000 70,000 7,000 7,000 104.065.16% Series 75,000 75,000 7,500 7,500 104.185.40% Series 80,000 80,000 8,000 8,000 103.006.44% Series 80,000 80,000 8,000 8,000 102.927.84% Series 100,000 100,000 10,000 10,000 103.787.36% Series 100,000 100,000 10,000 10,000 103.36

Cumulative, $25 par value: 8.00% Series 1,480,000 1,480,000 37,000 37,000 25.00




Entergy Mississippi Preferred Stock (Dollars in Thousands)Without sinkingfund:

Cumulative, $100 par value:4.36% Series 59,920 59,920 $5,992 $5,992 $103.864.56% Series 43,887 43,887 4,389 4,389 107.004.92% Series 100,000 100,000 10,000 10,000 102.887.44% Series 100,000 100,000 10,000 10,000 102.818.36% Series 200,000 200,000 20,000 20,000 100.00

Total without sinking fund 503,807 503,807 $50,381 $50,381



Entergy New Orleans PreferredStock (Dollars in Thousands)

Without sinking fund:Cumulative, $100 par value:

4.75% Series 77,798 77,798 $7,780 $7,780 $105.004.36% Series 60,000 60,000 6,000 6,000 104.575.56% Series 60,000 60,000 6,000 6,000 102.59

Total without sinking fund 197,798 197,798 $19,780 $19,780

(a) The total dollar value represents the liquidation value of $25 per share.

(b) Represents weighted-average annualized rates for 2003.

(c) Fair values were determined using bid prices reported by dealer markets and by nationallyrecognized investment banking firms. There is an additional disclosure of fair value of financialinstruments in Note 12 to the domestic utility companies and System Energy financial statements.

Changes in the preferred stock of Entergy Gulf States and Entergy Louisiana during the last three years were:

Number of Shares 2003 2002 2001Preferred stock retirements Entergy Gulf States $100 par value (34,500) (18,579) (49,237)Entergy Louisiana $100 par value - - (350,000)

Entergy Gulf States has annual sinking fund requirements of $3.45 million through 2008 for its preferred stock outstanding. Entergy Gulf States has theannual non-cumulative option to redeem, at par, additional amounts of certain series of its outstanding preferred stock.

NOTE 8. COMMON EQUITY (Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans)

Common Stock

In December 2002, Entergy Louisiana repurchased 18,202,573 shares of its no par value common stock from Entergy Corporation for $120 million.

Dividend Restrictions

Provisions within the Articles of Incorporation or pertinent indentures and various other agreements relating to the long-term debt and preferred stock of thedomestic utility companies and System Energy restrict the payment of cash dividends or other distributions on their common and preferred stock.Additionally, PUHCA prohibits Entergy Corporation's subsidiaries from making loans or advances to Entergy Corporation. As of December 31, 2003,Entergy Arkansas and Entergy Mississippi had restricted retained earnings unavailable for distribution to Entergy Corporation of $309.4 million and $41.9million, respectively.

NOTE 9. COMMITMENTS AND CONTINGENCIES

The domestic utility companies and System Energy are involved in a number of legal, tax, and regulatory proceedings before various courts, regulatorycommissions, and governmental agencies in the ordinary course of their business. While management is unable to predict the outcome of such proceedings,it is not expected that the ultimate resolution of these matters will have a material adverse effect on Entergy Arkansas', Entergy Gulf States', EntergyLouisiana's, Entergy Mississippi's, Entergy New Orleans', or System Energy's results of operations, cash flows, or financial condition.

Fuel Supply Agreements

(Entergy Arkansas and Entergy Mississippi)

Entergy Arkansas has a long-term contract for the supply of low-sulfur coal for Independence (which is also 25% owned by Entergy Mississippi). Thiscontract, which expires in 2011, provides for approximately 90% of Independence's expected annual coal requirements. Additional requirements are satisfiedby spot market purchases. Entergy Arkansas has entered into three medium-term (one one-year, one two-year, and one three-year) contracts forapproximately 52% of White Bluff's coal supply needs. As each contract expires, it is scheduled to be renewed at the same quantity for a three-year term.Entergy Arkansas has an additional 20% of its 2004 coal requirement committed in a number of one- to two-year contracts. Additional coal requirements forboth Independence and White Bluff are satisfied by spot market or over the counter purchases. Additionally, Entergy Arkansas has a long-term railroadtransportation contract for the delivery of coal to both White Bluff and Independence that expires in 2011.

(Entergy Gulf States)

Effective April 1, 2000, Louisiana Generating LLC assumed ownership of Cajun's interest in the Big Cajun generating facilities, in which Entergy GulfStates owns a 42% interest. The management of Louisiana Generating LLC has advised Entergy Gulf States that it has executed coal supply andtransportation contracts that should provide an adequate supply of coal for the operation of Big Cajun 2, Unit 3 for the foreseeable future.

(Entergy Louisiana)

Entergy Louisiana has a long-term natural gas supply contract, which expires in 2012, in which Entergy Louisiana agreed to purchase natural gas in annualamounts equal to approximately one-third of its projected annual fuel requirements for certain generating units. Annual demand charges associated with thiscontract are estimated to be $7.2 million. Such charges aggregate $65 million for the years 2004 through 2012.

Purchased Power Agreements

(Entergy Louisiana)

Entergy Louisiana has an agreement extending through the year 2031 to purchase energy generated by a hydroelectric facility known as the Vidalia project.Entergy Louisiana made payments under the contract of approximately $112.6 million in 2003, $104.2 million in 2002, and $86.0 million in 2001. If themaximum percentage (94%) of the energy is made available to Entergy Louisiana, current production projections would require estimated payments ofapproximately $116.5 million in 2004, and a total of $3.6 billion for the years 2005 through 2031. Entergy Louisiana currently recovers the costs of thepurchased energy through its fuel adjustment clause. In an LPSC-approved settlement related to tax benefits from the tax treatment of the Vidalia contract,Entergy Louisiana agreed to credit rates by $11 million each year for up to ten years, beginning in October 2002.

System Fuels (Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)

The domestic utility companies that are owners of System Fuels have made loans to System Fuels to finance its fuel procurement, delivery, and storageactivities. The following loans outstanding to System Fuels as of December 31, 2003 mature in 2008:

Owner Ownership

Percentage Loan Outstanding

at December 31, 2003 Entergy Arkansas 35% $11.0 millionEntergy Louisiana 33% $14.2 millionEntergy Mississippi 19% $5.5 millionEntergy New Orleans 13% $3.3 million

Nuclear Insurance (Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)

Third Party Liability Insurance

The Price-Anderson Act provides insurance for the public in the event of a nuclear power plant accident. The costs of this insurance are borne by the nuclearpower industry. Originally passed by Congress in 1957 and most recently amended in 1988, the Price-Anderson Act requires nuclear power plants to showevidence of financial protection in the event of a nuclear accident. This protection must consist of two levels:

1. The primary level is private insurance underwritten by American Nuclear Insurers and providesliability insurance coverage of $300 million. If this amount is not sufficient to cover claimsarising from the accident, the second level, Secondary Financial Protection, applies. An industry-wide aggregate limitation of $300 million exists for domestically-sponsored terrorist acts. Thereis no limitation for foreign-sponsored terrorist acts.

2. Within the Secondary Financial Protection level, each nuclear plant must pay a retrospective

premium, equal to its proportionate share of the loss in excess of the primary level, up to a

maximum of $100.6 million per reactor per incident. This consists of a $95.8 million maximumretrospective premium plus a five percent surcharge that may be applied, if needed, at a rate thatis presently set at $10 million per year per nuclear power reactor. There are no domestically- orforeign-sponsored terrorism limitations.

Currently, 105 nuclear reactors are participating in the Secondary Financial Protection program - 103 operating reactors and two closed units that still storeused nuclear fuel on site. The product of the maximum retrospective premium assessment to the nuclear power industry and the number of nuclear powerreactors provides over $10 billion in insurance coverage to compensate the public in the event of a nuclear power reactor accident.

Entergy Arkansas has two licensed reactors and Entergy Gulf States, Entergy Louisiana, and System Energy each have one licensed reactor (10% of GrandGulf 1 is owned by a non-affiliated company (SMEPA), which would share on a pro-rata basis in any retrospective premium assessment under the Act).

An additional but temporary contingent liability exists for all nuclear power reactor owners because of a previous Nuclear Worker Tort (long-term bodilyinjury caused by exposure to nuclear radiation while employed at a nuclear power plant) insurance program that was in place from 1988 to 1998. Themaximum premium assessment exposure to each reactor is $3 million and will only be applied if such claims exceed the program's accumulated reservefunds. This contingent premium assessment feature will expire with the Nuclear Worker Tort program's expiration, which is scheduled for 2008.

Property Insurance

Entergy's nuclear owner/licensee subsidiaries are members of certain mutual insurance companies that provide property damage coverage, includingdecontamination and premature decommissioning expense, to the members' nuclear generating plants. These programs are underwritten by Nuclear ElectricInsurance Limited (NEIL). As of December 31, 2003, the domestic utility companies and System Energy were insured against such losses per the followingstructures:

ANO 1 and 2, Grand Gulf 1, River Bend, and Waterford 3

Primary Layer (per plant) - $500 million per occurrenceExcess Layer (per plant) - $100 million per occurrence

Blanket Layer (shared among all plants) - $1.0 billion per occurrenceTotal limit - $1.6 billion per occurrence

Deductibles:

$1.0 million per occurrence - Equipment breakdown/failure$2.5 million per occurrence - Other than equipment breakdown/failure

Note: ANO 1 and 2 share in the Primary Layer with one policy in common.

In addition, Waterford 3 and Grand Gulf 1 are also covered under NEIL's Accidental Outage Coverage program. This coverage provides certain fixedindemnities in the event of an unplanned outage that results from a covered NEIL property damage loss, subject to a deductible. The following summarizesthis coverage as of December 31, 2003:

Waterford 3



Grand Gulf 1

$100,000 weekly indemnity$14 million maximum indemnity


Under the property damage and accidental outage insurance programs, Entergy nuclear plants could be subject to assessments should losses exceed theaccumulated funds available from NEIL. As of December 31, 2003, the maximum amount of such possible assessments per occurrence were $22.0 millionfor Entergy Arkansas, $18.8 million for Entergy Gulf States, $20.7 million for Entergy Louisiana, $0.06 million for Entergy Mississippi, $0.06 million forEntergy New Orleans, and $17.7 million for System Energy.

Entergy maintains property insurance for its nuclear units in excess of the NRC's minimum requirement of $1.06 billion per site for nuclear power plantlicensees. NRC regulations provide that the proceeds of this insurance must be used, first, to render the reactor safe and stable, and second, to completedecontamination operations. Only after proceeds are dedicated for such use and regulatory approval is secured would any remaining proceeds be madeavailable for the benefit of plant owners or their creditors.

In the event that one or more acts of domestically-sponsored terrorism causes property damage under one or more or all nuclear insurance policies issued byNEIL (including, but not limited to, those described above) within 12 months from the date the first property damage occurs, the maximum recovery underall such nuclear insurance policies shall be an aggregate of $3.24 billion plus the additional amounts recovered for such losses from reinsurance, indemnity,and any other sources applicable to such losses. There is no aggregate limit involving one or more acts of foreign-sponsored terrorism.

Nuclear Decommissioning and Other Retirement Costs (Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, System Energy)

SFAS 143, "Accounting for Asset Retirement Obligations," which was implemented effective January 1, 2003, requires the recording of liabilities for alllegal obligations associated with the retirement of long-lived assets that result from the normal operation of those assets.

These liabilities are recorded at their fair values (which is the present values of the estimated future cash outflows) in the period in which they are incurred,with an accompanying addition to the recorded cost of the long-lived asset. The asset retirement obligation is accreted each year through a charge toexpense, to reflect the time value of money for this present value obligation. The amounts added to the carrying amounts of the long-lived assets aredepreciated over the useful lives of the assets. The net effect of implementing this standard for the rate-regulated business of the domestic utility companiesand System Energy was recorded as a regulatory asset, with no resulting impact on Entergy's net income. Entergy recorded these regulatory assets becauseexisting rate mechanisms in each jurisdiction are based on the principle that Entergy will recover all ultimate costs of decommissioning from customers. Asa result of this treatment, SFAS 143 is expected to be earnings neut ral to the rate-regulated business of the domestic utility companies and System Energy.

Assets and liabilities increased approximately $1.1 billion for the domestic utility companies and System Energy as a result of recording the asset retirementobligations at their fair values of $1.1 billion as determined under SFAS 143, increasing utility plant by $287 million, reducing accumulated depreciation by$361 million and recording the related regulatory assets of $422 million. The implementation of SFAS 143 for the portion of River Bend not subject to cost-based ratemaking decreased earnings in the first quarter of 2003 by approximately $21 million net-of-tax ($0.09 per share) as a result of a one-timecumulative effect of accounting change. In accordance with ratemaking treatment and as required by SFAS 71, the depreciation provisions for the domesticutility companies and System Energy include a component for removal costs that are not asset retirement obligations under SFAS 143. In accordance withregulatory accounting principles, Entergy has recorded a regulatory asset (liability) in the following amounts to reflect its estimate of the difference betweenestimated incurred removal costs and estimated removal costs recovered in rates previously recorded as a component of accumulated depreciation:

December 31, 2003 2002 (In Millions) Entergy Arkansas $26.6 $35.2 Entergy Gulf States 4.2 (0.8)Entergy Louisiana (26.8) (23.2)Entergy Mississippi 24.4 28.6 Entergy New Orleans 2.1 (1.5)System Energy 15.1 15.8

The cumulative liabilities and decommissioning expenses recorded in 2003 by Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and SystemEnergy were as follows:

Liabilities as of SFAS 143 Liabilities as of

December 31, 2002 Adoption Accretion December 31, 2003

(In Millions)

ANO 1 and ANO 2 $310.7 $221.0 $35.8 $567.5

River Bend 237.0 41.2 20.6 298.8

Waterford 3 125.3 179.4 20.6 325.3

Grand Gulf 1 153.5 137.2 21.8 312.5

Entergy periodically reviews and updates estimated decommissioning costs. The actual decommissioning costs may vary from the estimates because ofregulatory requirements, changes in technology, and increased costs of labor, materials, and equipment.

If SFAS 143 had been applied by Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy during prior periods, the following impactswould have resulted:


2002


2001 Entergy Arkansas Pro forma asset retirement obligations $531,659 $498,041 Pro forma effect of SFAS 143 $220,971 $205,324 Asset retirement obligations actually recorded $310,688 $292,717 Entergy Louisiana Pro forma asset retirement obligations $304,728 $285,640 Pro forma effect of SFAS 143 $179,403 $174,169 Asset retirement obligations actually recorded $125,325 $111,471 System Energy Pro forma asset retirement obligations $290,659 $270,381 Pro forma effect of SFAS 143 $137,186 $130,278 Asset retirement obligations actually recorded $153,473 $140,103 Entergy Gulf States Pro forma asset retirement obligations $278,245 $259,120 Pro forma effect of SFAS 143 $41,258 $32,977 Asset retirement obligations actually recorded $236,987 $226,143 Earnings applicable to common stock - as reported $169,190 $174,419 Pro forma effect of SFAS 143 $(2,227) $(2,428)Earnings applicable to common stock - pro forma $166,963 $171,991

Entergy maintains decommissioning trust funds that are committed to meeting the costs of decommissioning the nuclear power plants. The fair values of thedecommissioning trust funds and asset retirement obligation-related regulatory assets of Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, andSystem Energy as of December 31, 2003 are as follows:

DecommissioningTrust Fair Values

Regulatory Assets

(In Millions) ANO 1 & ANO 2 $360.5 $203.7River Bend 267.9 36.2Waterford 3 152.0 132.3Grand Gulf 1 172.9 92.7

The Energy Policy Act of 1992 contains a provision that assesses domestic nuclear utilities with fees for the decontamination and decommissioning (D&D)of the DOE's past uranium enrichment operations. Annual assessments (in 2003 dollars), which will be adjusted annually for inflation, are for 15 years andwere $4.3 million for Entergy Arkansas, $1.1 million for Entergy Gulf States, $1.6 million for Entergy Louisiana, and $1.8 million for System Energy in2003. The Energy Policy Act calls for cessation of annual D&D assessments not later than October 24, 2007. At December 31, 2003, three years ofassessments were remaining. D&D fees are included in other current liabilities and other non-current liabilities and, as of December 31, 2003, recordedliabilities were $12.8 million for Entergy Arkansas, $3.0 million for Entergy Gulf States, $4.9 million for Entergy Louisiana, and $4.8 million for SystemEnergy. Regulatory assets in the financial statements offset these liabil ities, with the exception of Entergy Gulf States' 30% non-regulated portion. Theseassessments are recovered through rates in the same manner as fuel costs.

Environmental Issues (Entergy Gulf States)

Entergy Gulf States has been designated as a PRP for the cleanup of certain hazardous waste disposal sites. Entergy Gulf States is currently negotiating withthe EPA and state authorities regarding the cleanup of these sites. As of December 31, 2003, Entergy Gulf States does not expect the remaining clean-upcosts to exceed its recorded liability of $11.6 million for the remaining sites at which the EPA has designated Entergy Gulf States as a PRP.

City Franchise Ordinances (Entergy New Orleans)

Entergy New Orleans provides electric and gas service in the City of New Orleans pursuant to franchise ordinances. These ordinances contain a continuingoption for the city to purchase Entergy New Orleans' electric and gas utility properties.

Waterford 3 Lease Obligations (Entergy Louisiana)

On September 28, 1989, Entergy Louisiana entered into three identical transactions for the sale and leaseback of undivided interests (aggregatingapproximately 9.3%) in Waterford 3. In July 1997, Entergy Louisiana caused the lessors to issue $307.6 million aggregate principal amount of Waterford 3Secured Lease Obligation Bonds, 8.09% Series due 2017, to refinance the outstanding bonds originally issued to finance the purchase of the undividedinterests by the lessors. The lease payments were reduced to reflect the lower interest costs. Upon the occurrence of certain events, Entergy Louisiana maybe obligated to pay amounts sufficient to permit the termination of the lease transactions and may be required to assume the outstanding bonds issued tofinance, in part, the lessors' acquisition of the undivided interests in Waterford 3.

Employment Litigation (Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and SystemEnergy)

Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy New Orleans, System Energy, or their affiliates, are defendants in numerous lawsuitsfiled by former employees asserting that they were wrongfully terminated and/or discriminated against on the basis of age, race, and/or sex. EntergyArkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, System Energy, and their affiliates are vigorously defendingthese suits and deny any liability to the plaintiffs. Nevertheless, no assurance can be given as to the outcome of these cases.

Asbestos and Hazardous Material Litigation (Entergy Gulf States, Entergy Louisiana, Entergy New Orleans)

Numerous lawsuits have been filed in federal and state courts in Texas, Louisiana, and Mississippi primarily by contractor employees in the 1950-1980timeframe against Entergy Gulf States, Entergy Louisiana, and Entergy New Orleans, and Entergy Mississippi as premises owners of power plants, fordamages caused by alleged exposure to asbestos or other hazardous material. Many other defendants are named in these lawsuits as well. Presently, there areapproximately 400 lawsuits involving just over 7,000 claims. Management believes that adequate provisions have been established to cover any exposure.Additionally, negotiations continue with insurers to recover more reimbursement, while new coverage is being secured to minimize anticipated futurepotential exposures. Management believes that loss exposure has been and will continue to be handled successfully so that the ultimate resolution of thesematters will not be material, in the aggregate, to its financial position or results of operation.

Grand Gulf 1-Related Agreements

Capital Funds Agreement (System Energy)

System Energy has entered into agreements with Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans whereby they areobligated to purchase their respective entitlements of capacity and energy from System Energy's 90% interest in Grand Gulf 1, and to make payments that,together with other available funds, are adequate to cover System Energy's operating expenses. System Energy would have to secure funds from othersources, including Entergy Corporation's obligations under the Capital Funds Agreement, to cover any shortfalls from payments received from EntergyArkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans under these agreements.

Unit Power Sales Agreement (Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)

System Energy has agreed to sell all of its 90% share of capacity and energy from Grand Gulf 1 to Entergy Arkansas, Entergy Louisiana, EntergyMississippi, and Entergy New Orleans in accordance with specified percentages (Entergy Arkansas-36%, Entergy Louisiana-14%, Entergy Mississippi-33%,and Entergy New Orleans-17%) as ordered by FERC. Charges under this agreement are paid in consideration for the purchasing companies' respectiveentitlement to receive capacity and energy and are payable irrespective of the quantity of energy delivered so long as the unit remains in commercialoperation. The agreement will remain in effect until terminated by the parties and the termination is approved by FERC, most likely upon Grand Gulf 1'sretirement from service. Monthly obligations are based on actual capacity and energy costs. The average monthly payments for 2003 under the agreementare approximately $17.2 million for Entergy Arkansas, $6.7 million for Entergy Louisiana, $15.9 millio n for Entergy Mississippi, and $8.1 million forEntergy New Orleans.

Availability Agreement (Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)

Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans are individually obligated to make payments or subordinated advancesto System Energy in accordance with stated percentages (Entergy Arkansas-17.1%, Entergy Louisiana-26.9%, Entergy Mississippi-31.3%, and Entergy NewOrleans-24.7%) in amounts that, when added to amounts received under the Unit Power Sales Agreement or otherwise, are adequate to cover all of SystemEnergy's operating expenses as defined, including an amount sufficient to amortize the cost of Grand Gulf 2 over 27 years. (See Reallocation Agreementterms below.) System Energy has assigned its rights to payments and advances to certain creditors as security for certain obligations. Since commercialoperation of Grand Gulf 1, payments under the Unit Power Sales Agreement have exceeded the amounts payable under the Availability Agreement.Accordingly, no payments under the Availability Agreement have ever been required. If Entergy Arkansas or Entergy Mississippi fails to make its UnitPower Sales Agreement payments, and System Energy is unable to obtain funds from other sources, Entergy Louisiana and Entergy New Orleans couldbecome subject to claims or demands by System Energy or its creditors for payments or advances under the Availability Agreement (or the assignmentsthereof) equal to the difference between their required Unit Power Sales Agreement payments and their required Availability Agreement payments.

Reallocation Agreement (Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)

System Energy, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans entered into the Reallocation Agreement relating tothe sale of capacity and energy from Grand Gulf and the related costs, in which Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans agreed toassume all of Entergy Arkansas' responsibilities and obligations with respect to Grand Gulf under the Availability Agreement. FERC's decision allocating aportion of Grand Gulf 1 capacity and energy to Entergy Arkansas supersedes the Reallocation Agreement as it relates to Grand Gulf 1. Responsibility forany Grand Gulf 2 amortization amounts has been individually allocated (Entergy Louisiana-26.23%, Entergy Mississippi-43.97%, and Entergy NewOrleans-29.80%) under the terms of the Reallocation Agreement. However, the Reallocation Agreement does not affect Entergy Arkansas' obligation toSystem Energy's lenders under the assignments referred to in the preceding paragraph. Entergy Arka nsas would be liable for its share of such amounts ifEntergy Louisiana, Entergy Mississippi, and Entergy New Orleans were unable to meet their contractual obligations. No payments of any amortizationamounts will be required so long as amounts paid to System Energy under the Unit Power Sales Agreement, including other funds available to SystemEnergy, exceed amounts required under the Availability Agreement, which is expected to be the case for the foreseeable future.

Reimbursement Agreement (System Energy)

In December 1988, System Energy entered into two separate, but identical, arrangements for the sale and leaseback of an approximate aggregate 11.5%ownership interest in Grand Gulf 1. In connection with the equity funding of the sale and leaseback arrangements, letters of credit are required to bemaintained to secure certain amounts payable for the benefit of the equity investors by System Energy under the leases. The current letters of credit areeffective until May 30, 2007.

Under the provisions of the reimbursement agreement relating to the letters of credit, System Energy has agreed to a number of covenants regarding themaintenance of certain capitalization and fixed charge coverage ratios. System Energy agreed, during the term of the reimbursement agreement, to maintaina ratio of debt to total liabilities and equity less than or equal to 70%. In addition, System Energy must maintain, with respect to each fiscal quarter duringthe term of the reimbursement agreement, a ratio of adjusted net income to interest expense of at least 1.50 times earnings. As of December 31, 2003,System Energy's debt ratio was approximately 49.0%, and its fixed charge coverage ratio for 2003 was approximately 3.86, calculated, in each case, asprescribed in the reimbursement agreement.

NOTE 10. LEASES (Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)

General

As of December 31, 2003, the domestic utility companies had capital leases and non-cancelable operating leases for equipment, buildings, vehicles, and fuelstorage facilities (excluding nuclear fuel leases and the sale and leaseback transactions) with minimum lease payments as follows:

Capital Leases

Entergy Entergy EntergyYear Arkansas Gulf States Mississippi

(In Thousands)

2004 $9,646 $9,000 $492005 9,611 - 492006 5,683 - 412007 3,428 - 112008 1,753 - -Years thereafter 2,844 - -Minimum lease payments 32,965 9,000 150Less: Amountrepresenting interest 8,428 705 16Present value of netminimum lease payments $24,537 $8,295 $134

Operating Leases

Entergy Entergy Entergy Entergy EntergyYear Arkansas Gulf States Louisiana Mississippi New Orleans

(In Thousands)

2004 $21,072 $27,507 $12,271 $7,491 $1012005 18,569 25,158 8,218 5,807 412006 15,056 23,330 3,985 4,134 -2007 12,667 17,029 2,881 1,182 -2008 10,197 9,785 1,430 673 -

Years thereafter 62,573 130,357 2,128 533 -

Minimum lease payments $140,134 $233,166 $30,913 $19,820 $142

Rental expense amounted to $19.4 million, $20.8 million, and $21.1 million for Entergy Arkansas; $18.2 million, $17.6 million, and $22.0 million forEntergy Gulf States; and $11.4 million, $11.2 million, and $11.7 million for Entergy Louisiana in 2003, 2002, and 2001, respectively. In addition to theabove rental expense, railcar operating lease payments, which are recorded in fuel expense, were $6.8 million in 2003, $8.3 million in 2002, and $12.2million in 2001 for Entergy Arkansas and $1.8 million in 2003, $2.0 million in 2002, and $2.8 million in 2001 for Entergy Gulf States. The railcar leasepayments are recorded as fuel expense in accordance with regulatory treatment.

Nuclear Fuel Leases

As of December 31, 2003, arrangements to lease nuclear fuel existed in an aggregate amount up to $150 million for Entergy Arkansas, $80 million for eachof System Energy and Entergy Louisiana, and $105 million for Entergy Gulf States. As of December 31, 2003, the unrecovered cost base of nuclear fuelleases amounted to approximately $102.7 million for Entergy Arkansas, $63.7 million for Entergy Gulf States, $65.0 million for Entergy Louisiana, and$47.2 million for System Energy. The lessors finance the acquisition and ownership of nuclear fuel through loans made under revolving credit agreements,the issuance of commercial paper, and the issuance of intermediate-term notes. The credit agreements for Entergy Arkansas, Entergy Gulf States, EntergyLouisiana, and System Energy each have a termination date of October 30, 2006. The termination dates may be extended from time to time with the consentof the lenders. The intermediate-term notes issued pursuant to these fuel lease arrang ements have varying maturities through December 15, 2008. It isexpected that additional financing under the leases will be arranged as needed to acquire additional fuel, to pay interest, and to pay maturing debt. However,if such additional financing cannot be arranged, the lessee in each case must repurchase sufficient nuclear fuel to allow the lessor to meet its obligations inaccordance with the fuel lease.

Lease payments are based on nuclear fuel use. The table below represents the total nuclear fuel lease payments (principal and interest) as well as the separateinterest component charged to operations in 2003, 2002, and 2001:

2003 2002 2001Lease Lease Lease

Payments Interest Payments Interest Payments Interest(In Millions)

Entergy Arkansas $49.9 $3.3 $49.6 $3.2 $54.1 $5.7Entergy Gulf States 27.8 3.0 29.2 3.0 31.5 4.1Entergy Louisiana 32.3 2.4 32.9 2.6 37.2 3.8System Energy 32.0 3.1 26.1 2.5 26.5 3.6Total $142.0 $11.8 $137.8 $11.3 $149.3 $17.2

Sale and Leaseback Transactions

Waterford 3 Lease Obligations (Entergy Louisiana)

In 1989, Entergy Louisiana sold and leased back 9.3% of its interest in Waterford 3 for the aggregate sum of $353.6 million. The lease has an approximateterm of 28 years. The lessors financed the sale-leaseback through the issuance of Waterford 3 Secured Lease Obligation Bonds. The lease payments made byEntergy Louisiana are sufficient to service the debt.

In 1994, Entergy Louisiana did not exercise its option to repurchase the 9.3% interest in Waterford 3. As a result, Entergy Louisiana issued $208.2 million ofnon-interest bearing first mortgage bonds as collateral for the equity portion of certain amounts payable under the lease.

In 1997, the lessors refinanced the outstanding bonds used to finance the purchase of Waterford 3 at lower interest rates, which reduced the annual leasepayments.

Upon the occurrence of certain events, Entergy Louisiana may be obligated to assume the outstanding bonds used to finance the purchase of the unit and topay an amount sufficient to withdraw from the lease transaction. Such events include lease events of default, events of loss, deemed loss events, or certainadverse "Financial Events." "Financial Events" include, among other things, failure by Entergy Louisiana, following the expiration of any applicable graceor cure period, to maintain (i) total equity capital (including preferred stock) at least equal to 30% of adjusted capitalization, or (ii) a fixed charge coverageratio of at least 1.50 computed on a rolling 12 month basis.

As of December 31, 2003, Entergy Louisiana's total equity capital (including preferred stock) was 49.82% of adjusted capitalization and its fixed chargecoverage ratio for 2003 was 4.06.

As of December 31, 2003, Entergy Louisiana had future minimum lease payments (reflecting an overall implicit rate of 7.45%) in connection with theWaterford 3 sale and leaseback transactions, which are recorded as long-term debt, as follows:

(InThousands)

2004 $31,7392005 14,5542006 18,2622007 18,7542008 22,606Years thereafter 366,514Total 472,429L A i i 209 895

Less: Amount representing interest 209,895

Present value of net minimum lease payments $262,534

Grand Gulf 1 Lease Obligations (System Energy)

In December 1988, System Energy sold 11.5% of its undivided ownership interest in Grand Gulf 1 for the aggregate sum of $500 million. Subsequently,System Energy leased back its interest in the unit for a term of 26 1/2 years. System Energy has the option of terminating the lease and repurchasing the11.5% interest in the unit at certain intervals during the lease. Furthermore, at the end of the lease term, System Energy has the option of renewing the leaseor repurchasing the 11.5% interest in Grand Gulf 1.

System Energy is required to report the sale-leaseback as a financing transaction in its financial statements. For financial reporting purposes, System Energyexpenses the interest portion of the lease obligation and the plant depreciation. However, operating revenues include the recovery of the lease paymentsbecause the transactions are accounted for as a sale and leaseback for ratemaking purposes. Consistent with a recommendation contained in a FERC auditreport, System Energy recorded as a net regulatory asset the difference between the recovery of the lease payments and the amounts expensed for interestand depreciation and is recording this difference as a regulatory asset or liability on an ongoing basis, resulting in a zero net balance at the end of the leaseterm. The amount of this net regulatory asset was $83.2 million and $79.5 million as of December 31, 2003 and 2002, respectively.

As of December 31, 2003, System Energy had future minimum lease payments (reflecting an implicit rate of 7.02%), which are recorded as long-term debtas follows:

(InThousands)

2004 $36,1332005 52,2532006 52,2532007 52,2532008 52,253Years thereafter 365,176Total 610,321Less: Amount representing interest 206,853Present value of net minimum lease payments $403,468

NOTE 11. RETIREMENT AND OTHER POSTRETIREMENT BENEFITS (Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, EntergyMississippi, Entergy New Orleans, and System Energy)

Pension Plans

The domestic utility companies and System Energy have two pension plans, "Entergy Corporation Retirement Plan for Non-Bargaining Employees," and"Entergy Corporation Retirement Plan for Bargaining Employees," covering substantially all of their employees. The pension plans are noncontributory andprovide pension benefits that are based on employees' credited service and compensation during the final years before retirement. The domestic utilitycompanies and System Energy fund pension costs in accordance with contribution guidelines established by the Employee Retirement Income Security Actof 1974, as amended, and the Internal Revenue Code of 1986, as amended. The assets of the plans include common and preferred stocks, fixed-incomesecurities, interest in a money market fund, and insurance contracts. As of December 31, 2003 and December 31, 2002, Entergy recognized an additionalminimum pension liability for the excess of the accumulated benefit o bligation over the fair market value of plan assets. In accordance with FASB 87, anoffsetting intangible asset, up to the amount of any unrecognized prior service cost, was also recorded, with the remaining offset to the liability recorded as aregulatory asset reflective of the recovery mechanism for pension costs in Entergy's jurisdictions. Entergy's pension costs are recovered from customers as acomponent of cost of service in each of its jurisdictions. Entergy uses a December 31 measurement date for its pension plans.

Components of Net Pension Cost

Total 2003, 2002, and 2001 pension cost of the domestic utility companies and System Energy, including amounts capitalized, included the followingcomponents:


(In Thousands)Service cost - benefits earned during the period $11,156 $8,788 $6,369 $3,411 $1,539 $3,142 Interest cost on projected benefit obligation 33,009 27,708 20,028 11,339 3,958 4,200 Expected return on assets (38,712) (41,784) (28,919) (15,434) (2,616) (3,944)Amortization of transition asset - - - - - (319)Amortization of prior service cost 1,737 1,931 789 584 236 73 Recognized net loss 256 150 - 83 - 27 Curtailment loss 5,305 2,133 2,748 1,065 129 944 Special termination benefits 5,543 2,857 2,619 811 367 1,720 Net pension cost $18,294 $1,783 $3,634 $1,859 $3,613 $5,843


2002 Arkansas Gulf States Louisiana Mississippi New Orleans Energy(In Thousands)

Service cost - benefits earned during the period $9,787 $7,391 $5,901 $2,971 $1,414 $2,616 Interest cost on projected benefit obligation 31,058 27,737 19,747 11,013 4,126 3,735 Expected return on assets (40,514) (43,827) (30,300) (16,197) (2,763) (3,775)Amortization of transition asset - - - - - (319)Amortization of prior service cost 1,743 1,923 744 705 269 72 Net pension cost (income) $2,074 ($6,776) ($3,908) ($1,508) $3,046 $2,329


(In Thousands)Service cost - benefits earned during the period $9,207 $6,645 $5,358 $2,659 $1,280 $2,423 Interest cost on projected benefit obligation 30,746 26,292 19,114 10,602 3,643 3,366 Expected return on assets (41,308) (44,511) (31,089) (16,547) (2,712) (3,865)Amortization of transition asset (2,336) - (2,792) (1,250) - (319)Amortization of prior service cost 1,697 1,896 759 694 262 59 Recognized net (gain)/loss (2,228) (7,266) (2,398) (1,406) 172 (52)Net pension cost (income) ($4,222) ($16,944) ($11,048) ($5,248) $2,645 $1,612

Pension Obligations, Plan Assets, Funded Status, and Amounts Not Yet Recognized and Recognized in the Balance Sheet as of December 31, 2003and 2002:


(In Thousands)Change in Projected BenefitObligation (PBO)Balance at 12/31/02 $476,276 $420,644 $297,144 $167,175 $57,085 $59,418 Service cost 11,156 8,788 6,369 3,411 1,539 3,142 Interest cost 33,009 27,708 20,028 11,339 3,958 4,200 Amendment 121 96 - 5 - 5 Actuarial (gain)/loss 62,444 31,342 30,844 17,133 7,417 9,984 Benefits paid (28,445) (25,611) (19,332) (10,634) (2,559) (366)Curtailment loss 4,900 1,883 2,540 944 59 930 Special termination benefits 5,543 2,857 2,619 811 367 1,720 Balance at 12/31/03 $565,004 $467,707 $340,212 $190,184 $67,866 $79,033

Change in Plan AssetsFair value of assets at 12/31/02 $367,080 $380,999 $261,785 $144,947 $32,384 $34,041 Actual return on plan assets 84,579 93,102 74,216 35,645 (260) 11,700 Employer contributions (28,445) (25,611) (19,332) (10,634) (2,559) (366)Fair value of assets at 12/31/03 $423,214 $448,490 $316,669 $169,958 $29,565 $45,375 Funded status ($141,790) ($19,217) ($23,543) ($20,226) ($38,301) ($33,658)

Amounts not yet recognizedin the balance sheet:Unrecognized transition asset - - - - - (596)Unrecognized prior service cost 9,839 7,449 4,412 3,206 1,489 353 Unrecognized net (gain)/loss 93,535 24,044 48,533 25,970 19,367 16,021 Accrued pension cost recognizedin the balance sheet

($38,416) $12,276 $29,402 $8,950 ($17,445) ($17,880)

Amounts recognized inthe balance sheet:Prepaid/(accrued) pension liability ($38,416) $12,276 $29,402 $8,950 ($17,445) ($17,880)Additional minimum pensionliability

(54,948) - - (7,301) (13,140) (7,426)

Intangible asset 13,291 - - 937 2,774 365 Regulatory asset 41,657 - - 6,364 10,366 7,061

Net amount recognized ($38,416) $12,276 $29,402 $8,950 ($17,445) ($17,880)


(In Thousands)Change in Projected BenefitObligation (PBO)Balance at 12/31/01 $437,553 $370,907 $272,452 $149,808 $52,394 $50,564 Service cost 9,787 7,391 5,901 2,971 1,414 2,616 Interest cost 31,058 27,737 19,747 11,013 4,126 3,735 Actuarial (gain)/loss 24,452 40,309 17,740 13,638 1,341 2,661 Benefits paid (26,574) (25,700) (18,696) (10,255) (2,190) (158)Balance at 12/31/02 $476,276 $420,644 $297,144 $167,175 $57,085 $59,418

Change in Plan AssetsFair value of assets at 12/31/01 $443,867 $468,458 $323,565 $174,616 $31,810 $40,549 Actual return on plan assets (50,213) (61,759) (43,084) (19,414) 2,764 (6,350)Benefits paid (26,574) (25,700) (18,696) (10,255) (2,190) (158)Fair value of assets at 12/31/02 $367,080 $380,999 $261,785 $144,947 $32,384 $34,041 Funded status ($109,196) ($39,645) ($35,359) ($22,228) ($24,701) ($25,377)

Amounts not yet recognizedin the balance sheet:Unrecognized transition asset - - - - - (914)Unrecognized prior service cost 11,859 9,534 5,408 3,905 1,796 434 Unrecognized net (gain)/loss 77,214 44,170 62,987 29,132 9,073 13,820 Accrued pension cost recognizedin the balance sheet

($20,123) $14,059 $33,036 $10,809 ($13,832) ($12,037)

Amounts recognized inthe balance sheet:Prepaid/(accrued) pension liability ($20,123) $14,059 $33,036 $10,809 ($13,832) ($12,037)Additional minimum pensionliability

(29,622) (7,140) (44,163) (13,001) (4,767) (386)

Intangible asset 10,566 7,140 5,408 3,191 1,796 386 Regulatory asset 19,056 - 38,755 9,810 2,971 - Net amount recognized ($20,123) $14,059 $33,036 $10,809 ($13,832) ($12,037)

Other Postretirement Benefits

The domestic utility companies and System Energy also provide health care and life insurance benefits for retired employees. Substantially all employeesmay become eligible for these benefits if they reach retirement age while still working for Entergy. Entergy uses a December 31 measurement date for itspostretirement benefit plans.

Effective January 1, 1993, Entergy adopted SFAS 106, which required a change from a cash method to an accrual method of accounting for postretirementbenefits other than pensions. At January 1, 1993, the actuarially determined accumulated postretirement benefit obligation (APBO) earned by retirees andactive employees was estimated to be approximately $241.4 million for Entergy (other than Entergy Gulf States) and $128 million for Entergy Gulf States.Such obligations are being amortized over a 20-year period that began in 1993.

Entergy Arkansas, the portion of Entergy Gulf States regulated by the PUCT, Entergy Mississippi, and Entergy New Orleans have received regulatoryapproval to recover SFAS 106 costs through rates. Entergy Arkansas began recovery in 1998, pursuant to an APSC order. This order also allowed EntergyArkansas to amortize a regulatory asset (representing the difference between SFAS 106 costs and cash expenditures for other postretirement benefitsincurred for a five-year period that began January 1, 1993) over a 15-year period that began in January 1998.

The LPSC ordered the portion of Entergy Gulf States regulated by the LPSC and Entergy Louisiana to continue the use of the pay-as-you-go method forratemaking purposes for postretirement benefits other than pensions. However, the LPSC retains the flexibility to examine individual companies' accountingfor postretirement benefits to determine if special exceptions to this order are warranted.

Pursuant to regulatory directives, Entergy Arkansas, Entergy Mississippi, Entergy New Orleans, the portion of Entergy Gulf States regulated by the PUCT,and System Energy fund postretirement benefit obligations collected in rates. System Energy is funding on behalf of Entergy Operations postretirementbenefits associated with Grand Gulf 1. Entergy Louisiana and Entergy Gulf States continue to recover a portion of these benefits regulated by the LPSC andFERC on a pay-as-you-go basis. The assets of the various postretirement benefit plans other than pensions include common stocks, fixed-income securities,and a money market fund.

Components of Net Other Postretirement Benefit Cost

Total 2003, 2002, and 2001 other postretirement benefit costs of the domestic utility companies and System Energy, including amounts capitalized anddeferred, included the following components:


(In Thousands)

(In Thousands)

Service cost - benefits earned during the period $6,560 $5,701 $3,322 $1,866 $948 $1,553 Interest cost on APBO 10,637 11,314 6,780 3,459 3,436 1,352 Expected return on assets (4,859) (4,349) - (2,186) (2,010) (1,088)Amortization of transitionobligation

3,327 5,307 2,238 1,301 2,449 135

Amortization of prior service cost 143 163 82 51 52 (140)Recognized net (gain)/loss 3,497 1,575 1,496 1,160 475 350 Curtailment loss 9,276 6,301 5,041 1,259 996 2,524 Special termination benefits 794 512 452 73 28 284 Net other postretirement benefit cost $29,375 $26,524 $19,411 $6,983 $6,374 $4,970


(In Thousands)Service cost - benefits earned during the period $5,429 $4,153 $3,137 $1,513 $889 $1,300 Interest cost on APBO 9,448 9,734 6,242 3,099 3,264 1,150 Expected return on assets (3,889) (4,232) - (2,088) (1,959) (1,023)Amortization of transitionobligation

3,954 5,803 2,971 1,502 2,678 220

Amortization of prior service cost 245 278 141 87 89 24 Recognized net (gain)/loss 873 135 75 335 (55) 11 Net other postretirement benefit cost $16,060 $15,871 $12,566 $4,448 $4,906 $1,682


(In Thousands)Service cost - benefits earned during the period $4,969 $3,606 $2,707 $1,302 $739 $1,094 Interest cost on APBO 8,551 8,911 5,527 2,816 3,158 907 Expected return on assets (3,218) (4,104) - (1,933) (1,832) (959)Amortization of transitionobligation

3,954 5,803 2,971 1,502 2,678 220

Amortization of prior service cost 245 278 141 87 89 24 Recognized net (gain)/loss 173 (1,028) 45 - (180) - Net postretirement benefit cost $14,674 $13,466 $11,391 $3,774 $4,652 $1,286

Other Postretirement Benefit Obligations, Plan Assets, Funded Status, and Amounts Not Yet Recognized and Recognized in the Balance Sheet as ofDecember 31, 2003 and 2002:


(In Thousands)Change in APBOBalance at 12/31/02 $164,258 $167,678 $107,398 $53,398 $54,646 $21,410 Service cost 6,560 5,701 3,322 1,866 948 1,553 Interest cost 10,637 11,314 6,780 3,459 3,436 1,352 Actuarial loss 20,340 24,731 13,445 6,004 4,536 3,104 Benefits paid (11,523) (11,411) (7,816) (4,040) (4,761) (616)Plan amendments (14,561) (11,479) (16,862) (4,659) (5,146) (4,260)Plan participant contributions 1,905 1,663 1,126 604 750 78 Curtailment loss 8,849 5,496 4,830 1,081 625 2,561 Special termination benefits 794 512 452 73 28 284 Balance at 12/31/03 $187,259 $194,205 $112,675 $57,786 $55,062 $25,466

Change in Plan AssetsFair value of assets at 12/31/02 $49,076 $50,001 $ - $23,420 $28,490 $13,569 Actual return on plan assets 6,290 6,587 - 2,979 2,614 1,475 Employer contributions (11,523) (11,411) (7,816) (4,040) (4,761) (616)Benefits paid 23,128 12,671 6,690 5,969 6,065 2,315

Plan participant contributions 1,905 1,663 1,126 604 750 78 Fair value of assets at 12/31/03 $68,876 $59,511 $ - $28,932 $33,158 $16,821 Funded status ($118,383) ($134,694) ($112,675) ($28,854) ($21,904) ($8,645)

Amounts not yet recognizedin the balance sheet:Unrecognized transition obligation 21,928 41,305 10,822 9,136 19,088 134

Unrecognized prior service cost - - - - - (2,040)Unrecognized net (gain)/loss 71,855 49,401 38,551 22,745 12,595 8,748 Prepaid/(accrued) postretirementbenefit cost recognized in thebalance sheet

($24,600) ($43,988) ($63,302) $3,027 $9,779 ($1,803)

(a) Reflects plan design changes, including a change in the participation assumption for non-bargaining employeeseffective August 1, 2003.


(In Thousands)Change in APBOBalance at 12/31/01 $127,935 $131,251 $81,699 $41,796 $45,984 $15,003 Service cost 5,429 4,153 3,137 1,513 889 1,300 Interest cost 9,448 9,734 6,242 3,099 3,264 1,150 Actuarial loss 29,801 31,486 23,007 9,521 8,088 4,538 Benefits paid (8,355) (8,946) (6,687) (2,531) (3,579) (581)Balance at 12/31/02 $164,258 $167,678 $107,398 $53,398 $54,646 $21,410

Change in Plan AssetsFair value of assets at 12/31/01 $40,333 $48,443 $ - $22,855 $27,760 $12,551 Actual return on plan assets (4,235) (3,098) - (1,633) (1,286) (191)Employer contributions 21,333 13,602 6,687 4,729 5,595 1,790 Benefits paid (8,355) (8,946) (6,687) (2,531) (3,579) (581)Fair value of assets at 12/31/02 $49,076 $50,001 $ - $23,420 $28,490 $13,569 Funded status ($115,182) ($117,677) ($107,398) ($29,978) ($26,156) ($7,841)

Amounts not yet recognizedin the balance sheet:Unrecognized transitionobligation

39,528 58,035 29,720 15,019 26,793 2,233

Unrecognized prior service cost 858 1,024 495 306 313 79 Unrecognized net (gain)/loss 56,443 28,483 26,602 18,694 9,138 6,381 Prepaid/(accrued)postretirement benefit costrecognized in the balance sheet

($18,353) ($30,135) ($50,581) $4,041 $10,088 $852

Pension and Other Postretirement Plans' Assets

Entergy's pension and postretirement plans weighted-average asset allocations by asset category at December 31, 2003 and 2002 are as follows:

Pension Postretirement 2003 2002 2003 2002 Domestic Equity Securities 56% 50% 37% 34%International Equity Securities 14% 10% 0% 1%Fixed Income Securities 28% 37% 60% 64%Other 2% 3% 3% 3%

Entergy's trust asset investment strategy is to invest the assets in a manner whereby long term earnings on the assets (plus cash contributions) provideadequate funding for retiree benefit payments. Adequate funding is described as a 90% confidence that assets equal or exceed liabilities due five years in thefuture, and a corresponding 75% confidence level ten years out. The mix of assets is based on an optimization study that identifies asset allocation targets inorder to achieve the maximum return for an acceptable level of risk while minimizing the expected contributions and pension and postretirement expense.

To perform such an optimization study, Entergy first makes assumptions about certain market characteristics, such as expected asset class investmentreturns, volatility (risk) and correlation coefficients among the various asset classes. Entergy does so by examining (or hiring a consultant to provide suchanalysis) historical market characteristics of the various asset classes over all of the different economic conditions that have existed. Entergy then examines

and projects the economic conditions expected to prevail over the study period. Finally, the historical characteristics to reflect the expected future conditionsare adjusted to produce the market characteristics that will be assumed in the study.

The optimization analysis utilized in Entergy's latest study produced the following approved asset class target allocations. A new study has been recentlycompleted and will be implemented during 2004.

Pension Postretirement Domestic Equity Securities 54% 37%International Equity Securities 12% 8%Fixed Income Securities 30% 55%Other (Cash and GACs) 4% 0%

These allocation percentages combined with each asset class' expected investment return produced an aggregate return expectation of 9.59% for pensionassets, 5.45% for taxable postretirement assets, and 7.19% for non-taxable postretirement assets. These returns are consistent with Entergy's disclosedexpected return on assets of 8.75% (non-taxable assets) and 5.5% (taxable assets).

Since precise allocation targets are inefficient to manage security investments, the following ranges were established to produce an acceptable economicallyefficient plan to manage to targets:

Pension Postretirement Domestic Equity Securities 49 % to 59% 32 % to 42%International Equity Securities 7% to 17% 3% to 12%Fixed Income Securities 25% to 35% 50% to 60%Other 0% to 10% 0% to 5%

Accumulated Pension Benefit Obligation

The accumulated benefit obligation for the domestic utility companies and System Entergy as December 31, 2003 and 2002 was:

The accumulated benefit obligation for the domestic utility companies and System Entergy as December 31, 2003 and 2002 was:

December 31, 2003 2002 (In Thousands)Entergy Arkansas $509,382 $304,274Entergy Gulf States $426,320 $308,609Entergy Louisiana $309,066 $273,734Entergy Mississippi $174,245 $108,762Entergy New Orleans $59,610 $51,046System Energy $64,661 $35,271

Estimated Future Benefit Payments

Based upon the assumptions used to measure the company's pension and postretirement benefit obligation at December 31, 2003, and including pension andpostretirement benefits attributable to estimated future employee service, Entergy expects that pension benefits to be paid over the next ten years is asfollows:

Estimated FuturePension Benefits

Payments

Entergy

Arkansas

Entergy

Gulf States

Entergy

Louisiana

Entergy

Mississippi

Entergy

New Orleans

System Energy

(In Thousands)Year(s) 2004 $28,375 $25,495 $19,227 $10,601 $2,545 $3672005 $28,885 $25,767 $19,369 $10,768 $2,564 $3802006 $29,560 $26,136 $19,565 $10,990 $2,590 $3962007 $30,530 $26,691 $19,876 $11,312 $2,631 $4192008 $31,726 $27,454 $20,345 $11,719 $2,693 $4452009 - 2013 $189,162 $157,145 $114,128 $69,046 $15,110 $2,868

Estimated FutureOther

PostretirementBenefits Payments

EntergyArkansas

Entergy Gulf States

Entergy Louisiana

Entergy Mississippi

EntergyNew Orleans

System Energy

(In Thousands)Year(s) 2004 $11,890 $12,024 $7,696 $3,184 $4,249 $1,2402005 $12,508 $12,763 $8,081 $3,488 $4,418 $1,3502006 $12,616 $12,858 $8,066 $3,562 $4,235 $1,4392007 $13,093 $13,446 $8,284 $3,814 $4,326 $1,499

$ $ $ $ $ $

2008 $13,390 $13,873 $8,430 $4,046 $4,387 $1,547

2009 - 2013 $73,544 $75,064 $44,186 $23,206 $22,642 $9,617

Contributions

The domestic utility companies and System Energy expect to contribute the following to the pension and other postretirement plans in 2004:

EntergyArkansas

EntergyGulf States

EntergyLouisiana

EntergyMississippi

EntergyNew Orleans

SystemEnergy

(In Thousands)PensionContributions

$5,342 $37 $8,630 $2,989 $4,678 $5,369

Other PostretirementContributions

$20,573

$13,997

$7,696

$5,213

$4,604

$4,859

Additional Information

The change in the minimum pension liability had no effect on other comprehensive income at the domestic utility companies and System Energy in 2003 or2002. The change in the minimum pension liability included in regulatory assets at each of the domestic utility companies and System Energy was asfollows for 2003 and 2002:

EntergyArkansas

EntergyGulf States

EntergyLouisiana

EntergyMississippi

EntergyNew Orleans

SystemEnergy

Increase (Decrease) (In Thousands)Increase (decrease) inregulatory assets:

2003 $22,600 - ($38,755) ($3.446) $7,395 $7,0612002 $19,056 - $38,755 $9,810 $2,971 -

Actuarial Assumptions

The assumed health care cost trend rate used in measuring the APBO of the domestic utility companies and System Energy was 10% for 2004, graduallydecreasing each successive year until it reaches 4.5% in 2010 and beyond. The assumed health care cost trend rate used in measuring the Net OtherPostretirement Benefit Cost of the domestic utility companies and System Energy was 10% for 2004, gradually decreasing each successive year until itreaches 4.5% in 2009 and beyond. A one percentage point change in the assumed health care cost trend rate for 2003 would have the following effects:

1 Percentage Point Increase 1 Percentage Point Decrease

2003

Increase in theAPBO

Increasein the sum of

service cost andinterest cost

Decrease in theAPBO

Decreasein the sum of

service cost andinterest cost

(In Thousands)

Entergy Arkansas $19,657 $2,474 ($16,458) ($2,010)

Entergy Gulf States $21,091 $2,511 ($17,665) ($2,038)

Entergy Louisiana $11,274 $1,370 ($9,471) ($1,118)

Entergy Mississippi $5,945 $733 ($4,984) ($598)

Entergy New Orleans $4,606 $491 ($3,939) ($406)

System Energy $3,254 $504 ($2,678) ($401)

The significant actuarial assumptions used in determining the pension PBO and the SFAS 106 APBO for 2003, 2002, and 2001 for the domestic utilitycompanies and System Energy were as follows:

2003 2002 2001 Weighted-average discount rate 6.25% 6.75% 7.50%Weighted average rate ofincrease


The significant actuarial assumptions used in determining the net periodic pension and other postretirement benefit costs for the domestic utility companiesand System Energy 2003, 2002, and 2001 were as follows:

2003 2002 2001

Weighted-average discount rate: Pension 6.75% 7.50% 7.50% Other postretirement 6.71% 7.50% 7.50%Weighted average rate ofincrease


The domestic utility companies' and System Energy's remaining pension transition assets are being amortized over the greater of the remaining serviceperiod of active participants or 15 years and its SFAS 106 transition obligations are being amortized over 20 years.

Voluntary Severance Program

During 2003, the domestic utility companies and System Energy offered a voluntary severance program to certain groups of employees. As a result of thisprogram, the domestic utility companies and System Energy recorded additional pension and postretirement costs (including amounts capitalized) of $53.9million for special termination benefits and plan curtailment charges. These amounts are included in the net pension cost and net postretirement benefit costfor the year ended December 31, 2003.

Medicare Prescription Drug, Improvement and Modernization Act of 2003

In December 2003, the President signed the Medicare Prescription Drug, Improvement and Modernization Act of 2003 into law. The Act introduces aprescription drug benefit under Medicare (Part D) as well as federal subsidy to employers who provide a retiree prescription drug benefit that is at leastactuarially equivalent to Medicare Part D.

Currently, specific authoritative guidance on the accounting for the federal subsidy is pending. As allowed by Financial Accounting Standards Board StaffPosition No. FAS 106-1, Entergy has elected to record an estimate of the effects of the Act in accounting for its postretirement benefit plans under SFAS 106and in providing disclosures required by SFAS No. 132 (revised 2003), Employers' Disclosures about Pensions and Other Postretirement Benefits.

Based on actuarial analysis of prescription drug benefits, estimated future Medicare subsidies are expected to reduce the December 31, 2003 AccumulatedPostretirement Benefit Obligation by $56 million. For the year ended December 31, 2003 the impact of the Act on Net Postretirement Cost was immaterial,as it reflected only one month's impact of the Act. When specific guidance on accounting for federal subsidy is issued, these estimates could change.

NOTE 12. RISK MANAGEMENT AND DERIVATIVES

Market and Commodity Risks

In the normal course of business, the domestic utility companies and System Energy are exposed to a number of market and commodity risks includingpower price risk, fuel price risk, foreign currency exchange rate risk, and equity price and interest rate risks. Market risk is the potential loss that thedomestic utility companies and System Energy may incur as a result of changes in the market or fair value of a particular instrument or commodity. Allfinancial and commodity-related instruments, including derivatives, are subject to market risk.

The domestic utility companies and System Energy manage these risks through both contractual arrangements and derivatives. Contractual risk managementtools include long-term power and fuel purchase agreements. The domestic utility companies and System Energy also use a variety of commodity andfinancial derivatives, including natural gas and electricity futures, forwards and options, and foreign currency forwards to manage the following risks:

power price risk resulting from Entergy's short position during the summer months;

fuel price risk for spot market gas purchases; and

foreign currency exchange rate risk resulting from Euro-denominated nuclear fuel acquisition contracts.

Gains and losses realized from derivative transactions used to manage power and fuel price risk are included in fuel costs recovered through rates.Accordingly, these gains and losses are accounted for as regulatory assets and liabilities prior to transaction maturity. Power price risk is managed primarilythrough the purchase of short-term forward contracts that are accounted for as normal purchases. Any option premiums paid to manage power price risk arebooked with an offsetting regulatory asset or liability. The volume of these purchases is based on Entergy's demand forecast.

Entergy manages fuel price risk for its Louisiana jurisdictions (Entergy Louisiana, Entergy New Orleans, and the Louisiana portion of Entergy Gulf States)and Entergy Mississippi primarily through the purchase of short-term swaps. These swaps are marked-to-market with offsetting regulatory assets orliabilities. The notional volumes of these swaps are based on a portion of projected purchases of gas for the summer (electric generation) and winter (gasdistribution at Entergy Gulf States and Entergy New Orleans) peak seasons.

Entergy Gulf States manages foreign currency exchange rate risk associated with the acquisition of nuclear fuel through the purchase of forwards that areaccounted for as cash flow hedges. The notional volumes of these forwards are based on forecasted purchases and the realized gain or loss from theseforwards is included in the capitalized cost of the applicable batches of nuclear fuel. Cash flow hedges with unrealized gains of approximately $6.5 millionat December 31, 2003 are scheduled to mature during 2004. Gains totaling approximately $3.3 million were realized during 2003 on the maturity of cashflow hedges. These unrealized and realized gains resulted from foreign currency hedges related to Euro-denominated nuclear fuel acquisition contracts, andrelated gains or losses, when realized, are included in the capitalized cost of nuclear fuel. The maximum length of time over which Entergy Gulf States iscurrently hedging the variability in future cash flows for forecasted tran sactions (excluding interest rate swaps) at December 31, 2003 is approximatelyseven months. The ineffective portion of the change in the value of Entergy Gulf States' cash flow hedges during 2003 was insignificant.

NOTE 13. TRANSACTIONS WITH AFFILIATES (Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy NewOrleans, and System Energy)

Each domestic utility company purchases electricity from and sells electricity to the other domestic utility companies, and System Energy under rateschedules filed with FERC. Additionally, Entergy Power sells electricity to Entergy Arkansas, Entergy Louisiana, and Entergy New Orleans. The domesticutility companies and System Energy purchase fuel from System Fuels; receive management, technical, advisory, operating, and administrative servicesfrom Entergy Services; and receive management, technical, and operating services from Entergy Operations. Pursuant to SEC rules under PUHCA, thesetransactions are on an "at cost" basis, and are eliminated in the consolidated financial statements of Entergy. Furthermore, Entergy Louisiana and EntergyNew Orleans purchase electricity from RS Cogen LLC.

As described in Note 1 to the domestic utility companies and System Energy financial statements, all of System Energy's operating revenues consist ofbillings to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans.

Additionally, as described in Note 4 to the domestic utility companies and System Energy financial statements, the domestic utility companies and SystemEnergy participate in the Entergy System Money Pool and earn interest income from the Money Pool. Entergy Arkansas, Entergy Louisiana, EntergyMississippi, and Entergy New Orleans also receive interest income from System Fuels, Inc.

The tables below contain the various affiliate transactions of the domestic utility companies, System Energy, and other Entergy affiliates.

Intercompany Revenues

Entergy Entergy Entergy Entergy Entergy System Arkansas Gulf States Louisiana Mississippi New Orleans Energy (In Millions) 2003 $242.3 $42.8 $102.4 $27.6 $85.5 $583.82002 $172.6 $28.8 $8.8 $70.6 $7.1 $602.52001 $250.2 $75.2 $26.1 $118.3 $10.0 $535.0

Intercompany Operating Expenses

Entergy Entergy Entergy Entergy Entergy System Arkansas Gulf States Louisiana Mississippi New Orleans Energy (In Millions) (1) (2) (3) 2003 $289.2 $319.8 $323.0 $458.6 $211.2 $11.62002 $284.6 $211.1 $277.3 $298.6 $166.7 $11.72001 $262.9 $274.8 $298.1 $535.2 $231.7 $9.5

(1) Includes $0.1 million in 2003, $0.7 million in 2002, and $3.5 million in 2001 for powerpurchased from Entergy Power.

(2) Includes power purchased from Entergy Power and RS Cogen LLC in 2003 of $5.9 million and$19.1 million, respectively.

(3) Includes power purchased from Entergy Power and RS Cogen LLC in 2003 of $5.7 million and$6.9 million, respectively.

Operating Expenses Paid or Reimbursed to Entergy Operations

Entergy Entergy Entergy System Arkansas Gulf States Louisiana Energy (In Millions) 2003 $171.4 $118.8 $121.6 $106.42002 $172.1 $110.1 $112.4 $97.32001 $141.4 $102.7 $104.6 $75.8

Intercompany Interest Income

Entergy Entergy Entergy Entergy Entergy System Arkansas Gulf States Louisiana Mississippi New Orleans Energy (In Millions) 2003 $0.6 $0.4 $1.2 $0.3 $0.2 $0.12002 $1.0 $0.3 $0.7 $0.4 $0.2 $0.92001 $0.8 $0.5 $2.2 $0.5 $0.3 $6.3

NOTE 14. QUARTERLY FINANCIAL DATA (UNAUDITED) (Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi,Entergy New Orleans, and System Energy)

The business of the domestic utility companies and System Energy is subject to seasonal fluctuations with the peak periods occurring during the thirdquarter. Operating results for the four quarters of 2003 and 2002 were:

Operating Revenue

EntergyArkansas

EntergyGulf States

EntergyLouisiana

EntergyMississippi

EntergyNew Orleans

SystemEnergy

(In Thousands)

2003: First Quarter $362,749 $584,354 $462,361 $227,369 $140,907 $141,985

Second Quarter 394,884 700,635 569,580 261,899 154,065 144,764

Third Quarter 469,925 777,182 646,503 309,739 203,751 141,239

Fourth Quarter 362,112 577,566 487,126 236,353 155,293 155,832

2002: First Quarter $377,823 $463,904 $369,963 $191,690 $102,947 $142,330

Second Quarter 367,926 567,563 483,389 261,743 121,422 142,892

Third Quarter 474,873 648,849 528,052 316,745 157,417 156,930

Fourth Quarter 340,488 503,563 433,948 220,917 126,088 160,334

Operating Income (Loss)

EntergyArkansas

EntergyGulf States

EntergyLouisiana

EntergyMississippi

EntergyNew Orleans

SystemEnergy

(In Thousands)

2003: First Quarter $67,130 $75,693 $89,362 $30,096 $(1,887) $55,739

Second Quarter 92,939 99,150 91,304 44,625 17,311 54,029

Third Quarter 135,790 146,063 108,232 53,173 28,230 65,791

Fourth Quarter 1,330 (13,136) 13,325 13,753 (15,736) 62,853

2002: First Quarter $55,731 $74,486 $75,888 $16,928 $(1,675) $59,940

Second Quarter 69,394 133,741 134,481 29,253 13,151 59,122

Third Quarter 138,887 125,543 108,837 50,451 19,283 65,014

Fourth Quarter 38,197 17,960 (2,564) 10,134 (13,409) 65,058

Net Income (Loss)

EntergyArkansas

EntergyGulf States

EntergyLouisiana

EntergyMississippi

EntergyNew Orleans

SystemEnergy

(In Thousands)

2003: First Quarter $27,145 $11,792(a) $43,807 $12,316 $(4,327) $23,735

Second Quarter 47,537 (20,124) 45,713 22,350 9,580 22,820

Third Quarter 69,319 82,283 57,863 25,804 14,118 28,515

Fourth Quarter (17,992) (31,389) (1,229) 6,588 (11,512) 30,933

2002: First Quarter $22,838 $28,038 $29,494 $5,829 $(3,940) $26,727

Second Quarter 19,247 65,236 75,845 12,752 3,199 25,250

Third Quarter 74,664 64,489 50,063 26,213 9,307 25,640

Fourth Quarter 18,894 16,315 (10,693) 7,614 (8,796) 25,735

(a) Entergy Gulf States' net income before the cumulative effect of accounting change for the firstquarter of 2003 was $33,125.

Item 2. Properties

Information regarding the registrant's properties is included in Part I. Item 1. - Business under the sections titled "Property" in this report.

Item 3. Legal Proceedings

Details of the registrant's material environmental regulation and proceedings and other regulatory proceedings and litigation that are pending or thoseterminated in the fourth quarter of 2003 are discussed in Part I. Item 1. - Business under the sections titled "Rate Matters", "Environmental Regulation",and "Litigation" in this report.

Item 4. Submission of Matters to a Vote of Security Holders

During the fourth quarter of 2003, no matters were submitted to a vote of the security holders of Entergy Corporation.

DIRECTORS AND EXECUTIVE OFFICERS OF ENTERGY CORPORATION

Directors

Information required by this item concerning directors of Entergy Corporation is set forth under the heading "Proposal 1--Election of Directors" contained inthe Proxy Statement of Entergy Corporation, (the "Proxy Statement"), to be filed in connection with its Annual Meeting of Stockholders to be held May 14,2004, ("Annual Meeting"), and is incorporated herein by reference. Information required by this item concerning officers and directors of the remainingregistrants is reported in Part III of this document.

Executive Officers

Name Age Position Period

J. Wayne Leonard (a) 53 Chief Executive Officer and Director of EntergyCorporation

1999-Present

Director of Entergy Arkansas, Entergy Gulf States,Entergy Louisiana, Entergy Mississippi, Entergy NewOrleans, and System Energy

1998-1999

Donald C. Hintz (a) 61 President of Entergy Corporation 1999-Present(b) Director of Entergy Gulf States and Entergy

Mississippi1993-Present

Director of Entergy Arkansas, Entergy Louisiana, andSystem Energy

1992-Present

Director of Entergy New Orleans 1999-Present

Richard J. Smith (a) 52 Group President, Utility Operations of EntergyCorporation, Entergy Arkansas, Entergy Gulf States,Entergy Louisiana, Entergy Mississippi, and EntergyNew Orleans

2001-Present

Director of Entergy Arkansas, Entergy Gulf States,Entergy Louisiana, Entergy Mississippi and EntergyNew Orleans

2001-Present

Senior Vice President, Transition Management ofEntergy Corporation

2000-2001

President of Cinergy Resources, Inc. 1999Vice President Energy Services 1999Vice President of Finance Services Business Unit 1996-1999

Curtis L. Hebert, Jr. (a) 41 Executive Vice President, External Affairs of EntergyCorporation

2001-Present

Chairman and Commissioner of the Federal EnergyRegulatory Commission

1997-2001

C. John Wilder (a) (c) 45 Executive Vice President and Chief Financial Officerof Entergy Corporation and System Energy

1998-2004

Executive Vice President and Chief Financial Officerof Entergy Arkansas, Entergy Gulf States, EntergyLouisiana, Entergy Mississippi, and Entergy NewOrleans

1998-2002

Director of Entergy Arkansas, Entergy Gulf States,Entergy Louisiana, Entergy Mississippi, Entergy NewOrleans, and System Energy

1999-2004

Joseph T. Henderson(a)

46 Senior Vice President and General Tax Counsel ofEntergy Corporation, Entergy Arkansas, Entergy GulfStates, Entergy Louisiana, Entergy Mississippi, andEntergy New Orleans

2001-Present

Senior Vice President and General Tax Counsel ofSystem Energy

2001-2003

Vice President and General Tax Counsel of EntergyCorporation, Entergy Arkansas, Entergy Gulf States,Entergy Louisiana, Entergy Mississippi, Entergy NewOrleans, and System Energy

1999-2001

Associate General Tax Counsel of Shell Oil Company 1998-1999

Nathan E. Langston (a) 55 Senior Vice President and Chief Accounting Officerof Entergy Corporation, Entergy Arkansas, EntergyGulf States, Entergy Louisiana, Entergy Mississippi,Entergy New Orleans, and System Energy

2001-Present

Vice President and Chief Accounting Officer ofEntergy Corporation, Entergy Arkansas, Entergy GulfStates, Entergy Louisiana, Entergy Mississippi,Entergy New Orleans, and System Energy

1998-2001

William E. Madison (a) 57 Senior Vice President - Human Resources andAdministration of Entergy Corporation

2002-Present

Senior Vice President - Human Resources andAdministration of Entergy Arkansas, Entergy GulfStates, Entergy Louisiana, Entergy Mississippi, andEntergy New Orleans

2001-Present

Senior Vice President & Chief Human ResourcesOfficer, Avis Group Holdings, Inc. - Garden City,New York

2000-2001

President, US Region and Vice President, GlobalHuman Resource Strategy, E.I. DuPont de Nemours,Wilmington, Delaware

1997-2000

Robert D. Sloan (a) 56 Senior Vice President, General Counsel and Secretaryof Entergy Corporation, Entergy Arkansas, EntergyGulf States, Entergy Louisiana, Entergy Mississippi,and Entergy New Orleans

2003-Present

Vice President, General Counsel of GE IndustrialSystems, Plainville, CT

1998-2003

Steven C. McNeal (a) 47 Vice President and Treasurer of Entergy Corporation,Entergy Arkansas, Entergy Gulf States, EntergyLouisiana, Entergy Mississippi, Entergy New Orleans,and System Energy

1998-Present

(a) In addition, this officer is an executive officer and/or director of various other wholly ownedsubsidiaries of Entergy Corporation and its operating companies.

(b) Mr. Hintz will retire effective April 2004.

(c) Mr. Wilder resigned effective February 2004. Leo Denault has been named Executive VicePresident and Chief Financial Officer.

Each officer of Entergy Corporation is elected yearly by the Board of Directors.

PART II

Item 5. Market for Registrants' Common Equity and Related Stockholder Matters

Entergy Corporation

The shares of Entergy Corporation's common stock are listed on the New York Stock, Chicago Stock, and Pacific Exchanges under the ticker symbol ETR.

Entergy Corporation's stock price as of February 27, 2004 was $59.29. The high and low prices of Entergy Corporation's common stock for each quarterlyperiod in 2003 and 2002 were as follows:

2003 2002 High Low High Low (In Dollars) First 49.55 42.26 43.88 38.25Second 54.38 45.90 46.85 41.05Third 54.99 47.75 44.95 32.12Fourth 57.24 51.06 46.42 36.80

Consecutive quarterly cash dividends on common stock were paid to stockholders of Entergy Corporation in 2003 and 2002. In 2003, dividends of $0.35 pershare were paid in the first and second quarters, and dividends of $0.45 per share was paid in the third and fourth quarters. In 2002, dividends of $0.33 pershare were paid in the first three quarters, and a dividend of $0.35 per share was paid in the fourth quarter.

As of February 27, 2004, there were 54,304 stockholders of record of Entergy Corporation.

Entergy Corporation's future ability to pay dividends is discussed in Note 8 to the consolidated financial statements. In addition to the restrictions describedin Note 8, PUHCA provides that, without approval of the SEC, the unrestricted, undistributed retained earnings of any Entergy Corporation subsidiary arenot available for distribution to Entergy Corporation's common stockholders until such earnings are made available to Entergy Corporation through thedeclaration of dividends by such subsidiaries.

Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy

There is no market for the common stock of Entergy Corporation's wholly owned subsidiaries. Cash dividends on common stock paid by the domestic utilitycompanies and System Energy to Entergy Corporation during 2003 and 2002, were as follows:

2003 2002 (In Millions) Entergy Arkansas $69.6 $125.9Entergy Gulf States $68.1 $91.2Entergy Louisiana $145.5 $271.4Entergy Mississippi $31.7 $27.3Entergy New Orleans $3.0 $0.8System Energy $105.0 $101.8

Information with respect to restrictions that limit the ability of the domestic utility companies and System Energy to pay dividends is presented in Note 8 tothe domestic utility companies and System Energy financial statements.

Item 6. Selected Financial Data

Refer to "SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON OF ENTERGY CORPORATION AND SUBSIDIARIES, ENTERGYARKANSAS, INC., ENTERGY GULF STATES, INC., ENTERGY LOUISIANA, INC., ENTERGY MISSISSIPPI, INC., ENTERGY NEWORLEANS, INC., and SYSTEM ENERGY RESOURCES, INC." which follow each company's financial statements in this report, for information withrespect to selected financial data and certain operating statistics.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

Refer to "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS OF ENTERGY CORPORATION AND SUBSIDIARIES, ENTERGYARKANSAS, INC., ENTERGY GULF STATES, INC., ENTERGY LOUISIANA, INC., ENTERGY MISSISSIPPI, INC., ENTERGY NEWORLEANS, INC., and SYSTEM ENERGY RESOURCE, INC."

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Refer to "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Significant Factors and Known Trends - Market and Credit Risks OFENTERGY CORPORATION AND SUBSIDIARIES, ENTERGY ARKANSAS, INC., ENTERGY GULF STATES, INC., ENTERGY LOUISIANA,INC., ENTERGY MISSISSIPPI, INC., ENTERGY NEW ORLEANS, INC., and SYSTEM ENERGY RESOURCES, INC."

Item 8. Financial Statements and Supplementary Data

Refer to "TABLE OF CONTENTS - Entergy Corporation, Entergy Arkansas, Inc., Entergy Gulf States, Inc., Entergy Louisiana, Inc., EntergyMississippi, Inc., Entergy New Orleans, Inc., and System Energy Resources, Inc."

Item 9. Changes In and Disagreements With Accountants On Accounting and Financial Disclosure.

No event that would be described in response to this item has occurred with respect to Entergy, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana,Entergy Mississippi, Entergy New Orleans, or System Energy.

Item 9A. Controls and Procedures

As of December 31, 2003, evaluations were performed under the supervision and with the participation of Entergy, Entergy Arkansas, Entergy Gulf States,Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy (individually "Registrant" and collectively the "Registrants")management, including their respective Chief Executive Officers (CEO) and Chief Financial Officers (CFO). The evaluations assessed the effectiveness ofthe Registrants' disclosure controls and procedures. Based on the evaluations, each CEO and CFO has concluded that, as to the Registrant or Registrants forwhich they serve as CEO or CFO, the Registrants' disclosure controls and procedures are effective to ensure that information required to be disclosed byeach Registrant in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the timeperiods specified in Securities and Exchange Commission rules and forms.

PART III

Item 10. Directors and Executive Officers of the Registrants (Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi,Entergy New Orleans, and System Energy)

All officers and directors listed below held the specified positions with their respective companies as of the date of filing this report, unless otherwise noted.

Name Age Position Period


Directors

Hugh T. McDonald 45 President and Chief Executive Officer of Entergy Arkansas 2000-Present

Director of Entergy Arkansas 2000-Present

Senior Vice President, Retail of Entergy Services, Inc. 1999-2000

Director, Regulatory Affairs - TX of Entergy Gulf States 1995-1999

Donald C. Hintz See information under the Entergy Corporation Officers Section in Part I.

Richard J. Smith See information under the Entergy Corporation Officers Section in Part I.

C. John Wilder (d) See information under the Entergy Corporation Officers Section in Part I.

Officers

Theodore Bunting (a) 45 Vice President and Chief Financial Officer of Entergy Arkansas, Entergy Gulf States,Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans

2002 - 2003

Vice President and Chief Financial Officer - Operations of Entergy Services 2000 - 2002

Director, Utility Operations of Entergy Services 1999 - 2000

Partner with Public Energy Services, Inc. 1997 - 1999

John Thomas Kennedy 44 Vice President - State Governmental Affairs of Entergy Arkansas 2000-Present

Attorney at Law, Russellville, Arkansas 1985-2000

Steve K. Strickland 47 Vice President - Regulatory Affairs of Entergy Arkansas 2002 - Present

Director, Regulatory Affairs of Entergy Arkansas 1995 - 2002

Joseph T. Henderson See information under the Entergy Corporation Officers Section in Part I.

Nathan E. Langston See information under the Entergy Corporation Officers Section in Part I.

William E. Madison See information under the Entergy Corporation Officers Section in Part I.

Hugh T. McDonald See information under the Entergy Arkansas Directors Section above.

Steven C. McNeal See information under the Entergy Corporation Officers Section in Part I.

Robert D. Sloan See information under the Entergy Corporation Officers Section in Part I.



Directors

E. Renae Conley 46 Director of Entergy Gulf States and Entergy Louisiana 2000-PresentPresident and Chief Executive Officer - LA of Entergy Gulf States and Entergy Louisiana 2000-Present

Vice President, Investor Relations of Entergy Services 1999-2000

President of Cincinnati Gas & Electric, (a subsidiary of Cinergy Corp.) 1998-1999

Joseph F. Domino 55 Director of Entergy Gulf States 1999-Present

President and Chief Executive Officer - TX of Entergy Gulf States 1998-Present




Officers

Jack Blakley 49 Vice President - Regulatory Affairs, TX of Entergy Gulf States 2002 - Present

Director - Regulatory Affairs, TX of Entergy Gulf States 1999 - 2002

Director - System Regulatory Strategy of Entergy Services 1996 - 1999

Murphy A. Dreher 51 Vice President - State Governmental Affairs - LA of Entergy Gulf States and EntergyLouisiana

1999-Present

Randall W. Helmick (b) 49 Vice President - Operations - LA of Entergy Gulf States and Entergy Louisiana 1998-2003

J. Parker McCollough 52 Vice President - State Governmental Affairs - TX of Entergy Gulf States 1996-Present

Eduardo Melendreras 46 Vice President, Customer Service and Commercial and Industrial Accounts of Entergy GulfStates and Entergy Louisiana

2001-Present

Director - Jurisdictional Accounts of Entergy Services 2000-2001

Director - Large Industrial Sales & Service of Entergy Gulf States 1996-2000

Wade H. Stewart (c) 58 Vice President, Regulatory Affairs - LA of Entergy Gulf States and Entergy Louisiana 2000-2003

Director, Regulatory Affairs - LA of Entergy Gulf States and Entergy Louisiana 1995-2000

T. Michael Twomey 38 Vice President, Regulatory Affairs - LA of Entergy Gulf States and Entergy Louisiana 2003-Present

Assistant General Counsel - Regulatory of Entergy Services, Inc. 2002-2003

Senior Regulatory Counsel, BellSouth Telecommunications, Inc.Atlanta, GA

2000-2002

Partner of Jones, Walker, Waechter, Poitevent, Carrere & Denegre, LLPNew Orleans, LA

1999-2000

Theodore Bunting See information under the Entergy Arkansas Officers Section above.

E. Renae Conley See information under the Entergy Gulf States Directors Section above.

Joseph F. Domino See information under the Entergy Gulf States Directors Section above.








Directors





Officers



Murphy A. Dreher See information under the Entergy Gulf States Officers Section above.

Randall W. Helmick See information under the Entergy Gulf States Officers Section above.





Eduardo Melendreras See information under the Entergy Gulf States Officers Section above.



Wade H. Stewart See information under the Entergy Gulf States Officers Section above.

T. Michael Twomey See information under the Entergy Gulf States Officers Section above.


Directors

Carolyn C. Shanks 42 President and Chief Executive Officer of Entergy Mississippi 1999-Present

Director of Entergy Mississippi 1999-Present

Vice President of Finance and Administration of Entergy Mississippi 1997-1999




Officers

Haley R. Fisackerly 38 Vice President - Customer Service of Entergy Mississippi 2002 - Present

Director - System Regulatory Strategy of Entergy Services 1999 - 2002

Governmental Affairs Executive of Entergy Services 1995 - 1999

Robert C. Grenfell 50 Vice President - Regulatory Affairs, MS of Entergy Mississippi 2002 - Present

Director, Regulatory Affairs of Entergy Mississippi 1994 - 2002

Will L. Mayo 56 Vice President - State Governmental Affairs of Entergy Mississippi 2002 - Present

Director - Economic Development of Entergy Mississippi 1997 - 2002






Carolyn C. Shanks See information under the Entergy Mississippi Directors Section above.




Directors

Daniel F. Packer 56 Chief Executive Officer Entergy New Orleans 1998-Present

President of Entergy New Orleans 1997-Present

Director of Entergy New Orleans 1996-Present




Officers

Elaine Coleman (e) 54 Vice President, External Affairs of Entergy New Orleans 1998-Present






Daniel F. Packer See information under the Entergy New Orleans Directors Section above.




Directors

Gary J. Taylor 50 Director, President and Chief Executive Officer of System Energy 2003-Present

In addition, Mr. Taylor is an executive officer and/or director of various other wholly ownedsubsidiaries of Entergy Corporation and its operating companies.


C. John Wilder (e) See information under the Entergy Corporation Officers Section in Part I.

Officers

William A. Eaton 54 Vice President, Engineering of System Energy 2003 - Present

Vice President, Operations, Grand Gulf Nuclear Station of Entergy Operations, Inc. 1998 - 2003

Jeffrey S. Forbes 47 Vice President, Operations, Grand Gulf Nuclear Station of System Energy 2003 - Present

Senior Vice President Monticello and Duane Arnold nuclear power plants, of NuclearManagement Company

2001 - 2003

Manager of Oconee Nuclear Station, Duke Energy Company 1998 - 2001



Gary J. Taylor See information under the System Energy Directors Section above.

C. John Wilder (e) See information under the Entergy Corporation Officers Section in Part I.

(a) Effective January 2004, Theodore Bunting was named Vice President and Chief Financial Officer- Nuclear Operations. Effective January 2004, Jay A. Lewis was named Vice President and ChiefFinancial Officer of Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, EntergyMississippi, and Entergy New Orleans.

(b) Effective January 2004, Randall Helmick was named Vice President, Customer Service Supportfor Entergy Services, Inc.

(c) Effective January 2004, Wade Stewart resigned from his position of Vice President, RegulatoryAffairs.

(d) C. John Wilder resigned effective February 2004. Leo Denault was named Executive VicePresident and Chief Financial Officer of Entergy Corporation, and has replaced Mr. Wilder as adirector for each registrant listed above. Theodore Bunting was named Vice President and ChiefFinancial Officer of System Energy Resources.

(e) Elaine Coleman will retire from her position of Vice President, External Affairs in April 2004.

Each director and officer of the applicable Entergy company is elected yearly to serve by the unanimous consent of the sole stockholder, EntergyCorporation, at its annual meeting.

Corporate Governance Guidelines and Committee Charters

Each of the Audit, Corporate Governance and Personnel Committees of Entergy Corporation's Board of Directors operates under a written charter. Inaddition, the full Board has adopted Corporate Governance Guidelines. Each charter and the guidelines are available through Entergy's website(www.entergy.com) or upon written request.

Audit Committee of the Entergy Corporation Board

The following directors are members of the Audit Committee of Entergy Corporation's Board of Directors:

Kathleen A. Murphy (Chairman)George W. Davis

Maureen S. BatemanDennis H. Reilley

Bismark A. SteinhagenClaiborne P. DemingSteven V. Wilkinson

All Audit Committee members are independent. For purposes of independence of members of the Audit Committee, an independent director also may notaccept directly or indirectly any consulting, advisory or other compensatory fee from Entergy or be affiliated with Entergy as defined in SEC rules. All AuditCommittee members possess the level of financial literacy and accounting or related financial management expertise required by the NYSE rules. Steven V.Wilkinson qualifies as an "audit committee financial expert," as that term is defined in the SEC rules.

Code of Ethics

The Board of Directors has adopted a Code of Business Conduct and Ethics for Members of the Board of Directors. The code is available through Entergy'swebsite (www.entergy.com) or upon written request. Entergy has adopted a Code of Ethics for Principal Executive Officer and Senior Financial Officers.Entergy also operates under an omnibus code of ethics and business conduct called the Code of Entegrity. All employees are required to abide by the Code.Non-bargaining employees are required to acknowledge annually that they understand and abide by the Code. The Code of Entegrity is available throughEntergy's website (www.entergy.com) or upon written request.

Source of Nominations to the Board of Directors; Nominating Procedure

The Corporate Governance Committee has adopted a policy on consideration of potential director nominees. The Committee will consider nominees from avariety of sources, including nominees suggested by shareholders, executive officers, fellow board members, or a third party firm retained for that purpose.It applies the same procedures to all nominees regardless of the source of the nomination.

Any party wishing to make a nomination should provide a written resume of the proposed candidate, detailing relevant experience and qualifications, as wellas a list of references. The Committee will review the resume and may contact references. It will decide based on the resume and references whether toproceed to a more detailed investigation. If the Committee determines that a more detailed investigation of the candidate is warranted, it will invite thecandidate for a personal interview, conduct a background check on the candidate, and assess the ability of the candidate to provide any special skills orcharacteristics identified by the Committee or the Board.

Section 16(a) Beneficial Ownership Reporting Compliance

Information called for by this item concerning the directors and officers of Entergy Corporation is set forth in the Proxy Statement of Entergy Corporation tobe filed in connection with its Annual Meeting of Stockholders to be held on May 14, 2004, under the heading "Section 16(a) Beneficial OwnershipReporting Compliance", which information is incorporated herein by reference.

Item 11. Executive Compensation

ENTERGY CORPORATION

Information called for by this item concerning the directors and officers of Entergy Corporation is set forth in the Proxy Statement under the headings"Executive Compensation Tables", "General Information About Nominees", "Director Compensation", and "Comparison of Five Year Cumulative TotalReturn", all of which information is incorporated herein by reference.

ENTERGY ARKANSAS, ENTERGY GULF STATES, ENTERGY LOUISIANA, ENTERGY MISSISSIPPI, ENTERGY NEW ORLEANS, ANDSYSTEM ENERGY

Summary Compensation Table

The following table includes the Chief Executive Officer, the four other most highly compensated executive officers in office as of December 31, 2003, andan additional executive officer who would have been included in the table but he retired during the year at Entergy Arkansas, Entergy Gulf States, EntergyLouisiana, Entergy Mississippi, Entergy New Orleans, and System Energy (collectively, the "Named Executive Officers"). This determination was based ontotal annual base salary and bonuses from all Entergy sources earned by each officer for the year 2003. See Item 10, "Directors and Executive Officers of theRegistrants," for information on the principal positions of the Named Executive Officers in the table below.

Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy

As shown in Item 10, most Named Executive Officers are employed by several Entergy companies. Because it would be impracticable to allocate suchofficers' salaries among the various companies, the table below includes the aggregate compensation paid by all Entergy companies.

Long-Term Compensation Annual Compensation Awards Payouts

Name

Year

Salary

Bonus

OtherAnnualComp.

RestrictedStock

Awards

SecuritiesUnderlying

Options

(a)LTIP

Payouts

(b) AllOtherComp.

E. Renae Conley 2003 $334,453 $200,000 $31,087 (c) 33,092 shares $460,088 $15,413

CEO-Entergy Louisiana 2002 321,500 320,000 88,946 (c) 40,000 331,114 15,211

CEO-LA-Entergy Gulf States 2001 308,769 486,186 46,240 (c) 34,600 - 10,742

Joseph F. Domino 2003 $265,626 $200,765 $46,480 (c) 10,500 shares $190,170 $11,912

CEO-TX-Entergy Gulf States 2002 255,295 210,070 63,361 (c) 22,000 153,202 13,568

2001 245,384 292,583 48,254 (c) 14,800 - 7,150

Donald C. Hintz 2003 $660,793 $605,115 $80,295 (c) 140,000 shares $1,748,333 $33,797

2002 629,423 754,800 206,963 (c) 160,000 1,408,470 34,318

2001 599,423 779,000 198,321 (c) 160,000 - 21,605

Jerry D. Jackson (e) 2003 $173,362 $96,608 $171,278 (c) 10,000 shares $582,778 $6,444,103

2002 491,281 513,150 19,261 (c) 75,898 627,634 17,600

2001 475,345 576,382 19,646 (c) 80,000 - 17,378

J. Wayne Leonard 2003 $1,038,461 $1,197,800 $26,152 (c) 195,000 shares $2,944,5600 $73,639

2002 962,500 1,450,400 5,257 (c) 330,600 2,372,1600 20,517

2001 897,500 1,684,800 3,709 $7,400,000(c)(d) 330,600 - -

Hugh T. McDonald 2003 $264,201 $195,000 $32,276 (c) 21,199 shares $190,170 $12,134

CEO-Entergy Arkansas 2002 247,373 185,000 56,295 (c) 22,000 182,854 14,867

2001 231,335 333,078 118,502 (c) 14,800 - 18,664

Daniel F. Packer 2003 $253,628 $190,000 $58,519 (c) 8,000 shares $190,170 $3,204

CEO-Entergy New Orleans 2002 244,776 95,000 17,705 (c) 20,000 153,202 13,469

2001 228,209 262,881 15,410 (c) 14,800 - 7,055

Carolyn C. Shanks 2003 $263,758 $195,000 $92,825 $152,160 (c)(d) 14,000 shares $190,170 $12,132

CEO-Entergy Mississippi 2002 252,478 200,000 77,460 (c) 20,000 153,202 14,138

2001 241,085 287,672 17,140 (c) 14,800 - 7,206

Richard J. Smith 2003 $473,019 $380,867 $64,371 (c) 72,777 shares $674,795 $23,128

2002 443,269 466,200 28,862 (c) 95,000 454,664 20,699

2001 368,269 510,000 33,604 (c) 50,000 - 12,654

Gary J. Taylor 2003 $394,615 $316,400 $78,575 (c) 26,900 shares $539,836 $7,240

CEO-System Energy 2002 342,788 277,925 48,892 (c) 34,600 336,056 16,156

2001 319,231 389,513 46,979 (c) 40,000 - 11,857

C. John Wilder 2003 $568,731 $461,153 $153,373 (c) 80,000 shares $779,082 $51,614

2002 521,923 549,080 156,683 (c) 131,366 627,634 24,459

2001 493,128 600,000 158,059 (c) 87,700 - 16,284

Jerry W. Yelverton (e) 2003 $166,849 $91,718 $170,607 (c) 10,000 shares $582,778 $6,323,392

CEO-System Energy 2002 464,798 658,350 180,186 (c) 85,000 627,634 28,455

2001 443,269 540,000 145,389 (c) 65,000 - 14,697

(a) Amounts include the value of restricted units that vested in 2003 and 2002 (see note (c) below)under Entergy's Equity Ownership Plan.

(b) Includes the following:

(1) 2003 benefit accruals under the Defined Contribution Restoration Plan as follows: Ms.Conley $6,504; Mr. Domino $2,912; Mr. Hintz $24,797; Mr. Jackson $1,847; Mr.Leonard $64,639; Mr. McDonald $3,134; Mr. Packer $3,204; Ms. Shanks $3,132; Mr.Smith $14,128; Mr. Taylor $3,731; Mr. Wilder $42,614; and Mr. Yelverton $1,318.

(2) 2003 employer contributions to the System Savings Plan as follows: Ms. Conley $8,909;Mr. Domino $9,000; Mr. Hintz $9,000; Mr. Leonard $9,000; Mr. McDonald $9,000; Ms.Shanks $9,000; Mr. Smith $9,000; Mr. Taylor $3,509; Mr. Wilder $9,000; and Mr.Yelverton $5,697.

(3) 2003 lump sum distributions under the System Executive Retirement Plan as follows:Mr. Jackson $6,442,256 and Mr. Yelverton $6,316,377.

(c) Performance unit (equivalent to shares of Entergy common stock) awards in 2003 are reportedunder the "Long-Term Incentive Plan Awards" table, and reference is made to this table forinformation on the aggregate number of performance units awarded during 2003 and the vestingschedule for such units. At December 31, 2003, the number and value of the aggregateperformance unit holdings were as follows: Ms. Conley 21,600 units, $1,234,008; Mr. Domino10,200 units, $582,726; Mr. Hintz 87,400 units, $4,993,162; Mr. Jackson 9,000 units, $514,170;Mr. Leonard 194,400 units, $11,106,072; Mr. McDonald 10,200 units, $582,726; Mr. Packer10,200 units, $582,726; Ms. Shanks 13,200 units, $754,116; Mr. Smith 42,000 units,$2,399,460; Mr. Taylor 37,800 units, $2,159,514; Mr. Wilder 42,000 units, $2,399,460; and Mr.Yelverton 9,000 units, $514,170. Accumulated dividends are paid on performance units whenvested. The value of performance unit holdings as of December 31, 2003 is determined by

multiplying the total number of units held by the closing market price of Entergy common stockon the New York Stock Exchange Composite Transactions on December 31, 2003 ($57.13 pershare). The value of units for which restrictions were lifted in 2003 and 2002, and the applicableportion of accumulated cash dividends, are reported in the LTIP payouts column in the abovetable.

(d) In addition to the performance units granted under the Equity Ownership Plan, in January 2001,Mr. Leonard was granted 200,000 restricted units. 50,000 of the restricted units vest on each ofDecember 31, 2001, December 31, 2002, December 31, 2003 and December 31, 2004, based oncontinued service with Entergy. Accumulated dividends will not be paid on Mr. Leonard'srestricted units when vested. Ms. Shanks was granted 3,000 restricted units in 2003. Restrictionswill be lifted on 1,200 units in 2006 and the remaining 1,800 units in 2011, based on continuedservice with Entergy. Accumulated dividends will not be paid. The value these individuals mayrealize is dependent upon both the number of units that vest and the future market price ofEntergy common stock.

(e) Mr. Jackson and Mr. Yelverton retired in 2003.

Option Grants in 2003

The following table summarizes option grants during 2003 to the Named Executive Officers. The absence, in the table below, of any Named ExecutiveOfficer indicates that no options were granted to such officer.


Potential Realizable

Individual Grants Value

Number of % of Total at Assumed Annual

Securities Options Rates of Stock

Underlying Granted to Exercise Price Appreciation

Options Employees Price (per Expiration for Option Term(b)

Name Granted (a) in 2003 share) (a) Date 5% 10%

E. Renae Conley 24,000 0.8% $44.45 1/30/13 $670,905 $1,700,204

9,092 (c) 0.3% 51.50 1/27/10 174,011 399,833

Joseph F. Domino 10,500 0.4% 44.45 1/30/13 293,521 743,839

Donald C. Hintz 80,000 2.7% 44.45 1/30/13 2,236,349 5,667,348

20,000 (c) 0.7% 48.74 1/27/10 377,905 873,916

20,000 (c) 0.7% 48.65 1/27/10 377,027 871,821

20,000 (c) 0.7% 48.65 1/27/10 376,125 869,414

Jerry D. Jackson 10,000 0.3% 44.45 1/30/13 279,544 708,419

J. Wayne Leonard 195,000 6.6% 44.45 1/30/13 5,451,101 13,814,161

Hugh T. McDonald 12,000 0.4% 44.45 1/30/13 335,452 850,102

9,199 (c) 0.3% 45.50 1/27/10 168,037 390,725

Daniel F. Packer 8,000 0.3% 44.45 1/30/13 223,635 566,735

Carolyn C. Shanks 14,000 0.5% 44.45 1/30/13 391,361 991,786

Richard J. Smith 50,000 1.7% 44.45 1/30/13 1,397,718 3,542,093

7,560 (c) 0.3% 51.50 8/30/09 133,390 302,926

7,577 (c) 0.3% 51.50 1/27/10 144,801 332,642

7,640 (c) 0.3% 51.50 1/25/11 172,297 406,413

Gary J. Taylor 26,900 0.9% 44.45 1/30/13 751,972 1,905,646

C. John Wilder 60,000 2.0% 44.45 1/30/13 1,677,262 4,250,511

1,689 (c) 0.1% 52.45 1/28/09 26,950 60,249

13,056 (c) 0.4% 52.45 1/27/10 252,857 580,444

5,255 (c) 0.2% 52.45 1/25/11 120,538 284,260

Jerry W. Yelverton 10,000 0.3% 44.45 1/30/13 279,544 708,419

(a) Options were granted on January 30, 2003, pursuant to the Equity Ownership Plan. All optionsgranted on this date have an exercise price equal to the closing price of Entergy common stockon the New York Stock Exchange Composite Transactions on January 30, 2003. These optionswill vest in equal increments, annually, over a three-year period beginning in 2004.

(b) Calculation based on the market price of the underlying securities assuming the market priceincreases over the option period and assuming annual compounding. The column presentsestimates of potential values based on simple mathematical assumptions. The actual value, ifany, a Named Executive Officer may realize is dependent upon the market price on the date ofoption exercise.

(c) During 2003, Ms. Conley, Mr. Hintz, Mr. McDonald, Mr. Smith and Mr. Wilder convertedpresently exercisable stock options into an equivalent total of phantom stock units and reload

stock options. They accomplished this by exercising stock options, paying the exercise price forthese options by surrendering shares of Entergy stock, and deferring the taxable gain intophantom stock units. Additional options, as indicated above, were granted pursuant to the reloadfeature of this "stock for stock" exercise method. Under the reload mechanism, eligibleparticipants are granted an additional number of options equal to the number of sharessurrendered to pay the exercise price. The reloaded stock options vest immediately and have anexercise price equal to the price of Entergy common stock on the New York Stock ExchangeComposite Transactions on the date of exercise of the original options. The reloaded optionsretain the original grant's expiration date. The reload feature was removed from the EquityOwnership Plan as approved by the Stockholders in May 2003. Reloads are no longer availablefor options granted after February 13, 2003.

Aggregated Option Exercises in 2003 and December 31, 2003 Option Values

The following table summarizes the number and value of all unexercised options held by the Named Executive Officers. The absence, in the table below, ofany Named Executive Officer indicates that no options are held by such officer.

Number of Securities Underlying Value of Unexercised

Unexercised Options In-the-Money Options

Shares Acquired Value as of December 31, 2003 as of December 31, 2003 (b)

Name on Exercise Realized (a) Exercisable Unexercisable Exercisable Unexercisable

E. Renae Conley 20,000 $570,000 52,991 62,201 $939,374 $948,238

Joseph F. Domino 21,500 614,000 30,686 30,101 678,569 458,920

Donald C. Hintz 171,912 4,206,564 477,587 280,001 10,514,314 4,802,652

Jerry D. Jackson 219,296 2,754,258 28,031 - 324,371 -

J. Wayne Leonard - - 916,200 525,600 24,355,606 8,093,902

Hugh T. McDonald 31,101 715,185 26,398 31,601 418,808 477,940

Daniel F. Packer 6,667 146,807 16,532 26,268 301,526 406,638

Carolyn C. Shanks - - 23,199 32,268 529,070 482,718

Richard J. Smith 40,108 905,791 93,871 113,334 1,238,675 1,690,045

Gary J. Taylor 34,600 1,017,886 38,199 63,301 714,856 965,660

C. John Wilder 39,561 1,041,151 143,963 147,701 2,128,329 2,252,011

Jerry W. Yelverton 147,968 1,691,998 10,000 - 126,800 -

(a) Based on the difference between the closing price of Entergy's common stock on the New YorkStock Exchange Composite Transactions on the exercise date and the option exercise price.

(b) Based on the difference between the closing price of Entergy's common stock on the New YorkStock Exchange Composite Transactions on December 31, 2003, and the option exercise price.

Long-Term Incentive Plan Awards in 2003

The following table summarizes the awards of performance units (equivalent to shares of Entergy common stock) granted under the Equity Ownership Planin 2003 to the Named Executive Officers.

Estimated Future Payouts UnderNon-Stock Price-Based Plans (# of units) (a) (b)

NameNumber of

UnitsPerformance Period Until

Maturation or Payout Threshold Target Maximum

E. Renae Conley 11,600 1/1/03-12/31/05 1,500 5,800 11,600

Joseph F. Domino 6,000 1/1/03-12/31/05 800 3,000 6,000

Donald C. Hintz 49,400 1/1/03-12/31/05 6,200 24,700 49,400

Jerry D. Jackson 2,000 1/1/03-12/31/05 300 1,042 2,000

J. Wayne Leonard 80,400 1/1/03-12/31/05 10,100 40,200 80,400

Hugh T. McDonald 6,000 1/1/03-12/31/05 800 3,000 6,000

Daniel F. Packer 6,000 1/1/03-12/31/05 800 3,000 6,000

Carolyn C. Shanks 6,000 1/1/03-12/31/05 800 3,000 6,000

Richard J. Smith 25,000 1/1/03-12/31/05 3,200 12,500 25,000

Gary J. Taylor 23,800 1/1/03-12/31/05 3,000 11,942 23,800

C. John Wilder 25,000 1/1/03-12/31/05 3,200 12,500 25,000

Jerry W. Yelverton 2,000 1/1/03-12/31/05 300 1,042 2,000

(a) Performance units awarded will vest at the end of a three-year period, subject to the attainmentof approved performance goals for Entergy. Restrictions are lifted based upon the achievementof the cumulative result of these goals for the performance period. The value any NamedExecutive Officer may realize is dependent upon the number of units that vest, the future marketprice of Entergy common stock, and the dividends paid during the performance period.

(b)

The threshold, target, and maximum levels correspond to the achievement of 25%, 100%, and200%, respectively, of Equity Ownership Plan goals. Achievement of a threshold, target, ormaximum level would result in the award of the number of units indicated in the respectivecolumn. Achievement of a level between these three specified levels would result in the awardof a number of units calculated by means of interpolation.

Pension Plan Tables


Retirement Income Plan Table

Annual Covered Years of Service

Compensation 15 20 25 30 35$100,000 $22,500 $30,000 $37,500 $45,000 $52,500

200,000 45,000 60,000 75,000 90,000 105,000300,000 67,500 90,000 112,500 135,000 157,500400,000 90,000 120,000 150,000 180,000 210,000500,000 112,500 150,000 187,500 225,000 262,500750,000 168,750 225,000 281,250 337,500 393,750

1,000,000 225,000 300,000 375,000 450,000 525,0001,250,000 281,250 375,000 468,750 562,500 656,250

All of the Named Executive Officers participate in a Retirement Income Plan, a defined benefit plan, that provides a benefit for employees at retirementfrom Entergy based upon (1) generally all years of service beginning at age 21 through termination, with a forty-year maximum, multiplied by (2) 1.5%,multiplied by (3) the final average compensation. Final average compensation is based on the highest consecutive 60 months of covered compensation in thelast 120 months of service. The normal form of benefit for a single employee is a lifetime annuity and for a married employee is a 50% joint and survivorannuity. Other actuarially equivalent options are available to each retiree. Retirement benefits are not subject to any deduction for Social Security or otheroffset amounts. The amount of the Named Executive Officers' annual compensation covered by the plan as of December 31, 2003, is represented by thesalary column in the Summary Compensation Table above.

The credited years of service under the Retirement Income Plan, as of December 31, 2003, for the following Named Executive Officers is as follows: Mr.Domino 30; Mr. Leonard 5; Mr. McDonald 20; Mr. Packer 21; and Ms. Shanks 18. The credited years of service under the Retirement Income Plan, as ofDecember 31, 2003 for the following Named Executive Officers, as a result of entering into supplemental retirement agreements, is as follows: Ms. Conley21; Mr. Hintz 32; Mr. Smith 27; Mr. Taylor 22; and Mr. Wilder 20. Mr. Jackson and Mr. Yelverton retired in 2003 with 23 years of service.

The maximum benefit under the Retirement Income Plan is limited by Sections 401 and 415 of the Internal Revenue Code of 1986, as amended; however,Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy have elected to participate in thePension Equalization Plan sponsored by Entergy Corporation. Under this plan, certain executives, including the Named Executive Officers, would receive anadditional amount equal to the benefit that would have been payable under the Retirement Income Plan, except for the Sections 401 and 415 limitationsdiscussed above.

In addition to the Retirement Income Plan discussed above, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy NewOrleans, and System Energy participate in the Supplemental Retirement Plan of Entergy Corporation and Subsidiaries and the Post-Retirement Plan ofEntergy Corporation and Subsidiaries. Participation is limited to one of these two plans and is at the invitation of Entergy Arkansas, Entergy Gulf States,Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy. The participant may receive from the appropriate Entergy company amonthly benefit payment not in excess of .025 (under the Supplemental Retirement Plan) or .0333 (under the Post-Retirement Plan) times the participant'saverage base annual salary (as defined in the plans) for a maximum of 120 months. Mr. Hintz, Mr. Packer and Mr. Yelverton have entered into aSupplemental Retirement Plan participation contract, and Mr. Jackson has entered into a Post-Re tirement Plan participation contract. Current estimatesindicate that the annual payments to each Named Executive Officer under the above plans would be less than the payments to that officer under the SystemExecutive Retirement Plan discussed below.

System Executive Retirement Plan Table (1)

Annual Covered Years of Service

Compensation 10 15 20 25 30+$250,000 $75,000 $112,500 $125,000 $137,500 $150,000

500,000 150,000 225,000 250,000 275,000 300,000750,000 225,000 337,500 375,000 412,500 450,000

1,000,000 300,000 450,000 500,000 550,000 600,0001,250,000 375,000 562,500 625,000 687,500 750,0001,500,000 450,000 675,000 750,000 825,000 900,0002,000,000 600,000 900,000 1,000,000 1,100,000 1,200,000

(1) Covered pay includes the average of the highest three years of annual base pay and incentiveawards earned by the executive during the ten years immediately preceding his retirement.Benefits shown are based on a target replacement ratio of 50% based on the years of service andcovered compensation shown. The benefits for 10, 15, and 20 or more years of service at the45% and 55% replacement levels would decrease (in the case of 45%) or increase (in the case of55%) by the following percentages: 3.0%, 4.5%, and 5.0%, respectively.

In 1993, Entergy Corporation adopted the System Executive Retirement Plan (SERP). This plan was amended in 1998. Entergy Arkansas, Entergy GulfStates, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy are participating employers in the SERP. The SERP is anunfunded defined benefit plan offered at retirement to certain senior executives, which would currently include all the Named Executive Officers (except forMr. Leonard). Participating executives choose, at retirement, between the retirement benefits paid under provisions of the SERP or those payable under theSupplemental Retirement Plan or the Post-Retirement Plan discussed above. The plan was amended in 1998 to provide that covered pay is the average of thehighest three years annual base pay and incentive awards earned by the executive during the ten years immediately preceding his retirement. Benefits paidunder the SERP are calculated by multiplying the covered pay times target pay replac ement ratios (45%, 50%, or 55%, dependent on job rating atretirement) that are attained, according to plan design, at 20 years of credited service. The target ratios are increased by 1% for each year of service over 20years, up to a maximum of 30 years of service. In accordance with the SERP formula, the target ratios are reduced for each year of service below 20 years.The credited years of service under this plan are identical to the years of service for Named Executive Officers (other than Ms. Conley, Mr. Smith, Mr.Taylor, and Mr. Wilder) disclosed above in the section entitled "Pension Plan Tables-Retirement Income Plan Table". Ms. Conley, Mr. Smith, Mr. Taylor, andMr. Wilder have 4 years, 4 years, 13 years, and 5 years, respectively, of credited service under this plan. Mr. Jackson and Mr. Yelverton retired in 2003 with30 years of credited service under the plan.

The amended plan provides that a single employee receives a lifetime annuity and a married employee receives the reduced benefit with a 50% survivingspouse annuity. Other actuarially equivalent options are available to each retiree. SERP benefits are offset by any and all defined benefit plan payments fromEntergy. SERP benefits are not subject to Social Security offsets.

Eligibility for and receipt of benefits under any of the executive plans described above are contingent upon several factors. The participant must agree,without the specific consent of the Entergy company for which such participant was last employed, not to take employment after retirement with any entitythat is in competition with, or similar in nature to, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans,and System Energy or any affiliate thereof. Eligibility for benefits is forfeitable for various reasons, including violation of an agreement with EntergyArkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy, certain resignations of employment, orcertain terminations of employment without Company permission.

Compensation of Directors

For information regarding compensation of the directors of Entergy Corporation, see the Proxy Statement under the heading "Director Compensation",which information is incorporated herein by reference. Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy NewOrleans, and System Energy currently have no non-employee directors, and none of the current directors of these companies are compensated for theirresponsibilities as director.

Retired non-employee directors of Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans with a minimum of five years ofservice on the respective Boards of Directors are paid $200 a month for a term of years corresponding to the number of years of active service as directors.Retired non-employee directors with over ten years of service receive a lifetime benefit of $200 a month. Years of service as an advisory director areincluded in calculating this benefit. System Energy has no retired non-employee directors.

Retired non-employee directors of Entergy Gulf States receive retirement benefits under a plan in which all directors who served continuously for a periodof years will receive a percentage of their retainer fee in effect at the time of their retirement for life. The retirement benefit is 30 percent of the retainer feefor service of not less than five nor more than nine years, 40 percent for service of not less than ten nor more than fourteen years, and 50 percent for fifteenor more years of service. For those directors who retired prior to the retirement age, their benefits are reduced. The plan also provides disability retirementand optional hospital and medical coverage if the director has served at least five years prior to the disability. The retired director pays one-third of thepremium for such optional hospital and medical coverage and Entergy Gulf States pays the remaining two-thirds. Years of service as an advisory director areincluded in calculating this benefit.

Executive Retention and Employment Agreements and Change-in-Control Arrangements


Upon completion of a transaction resulting in a change-in-control of Entergy (a "Merger"), benefits already accrued under Entergy's System ExecutiveRetirement Plan, Post-Retirement Plan, Supplemental Retirement Plan and Pension Equalization Plan will become fully vested if the participant isinvoluntarily terminated without "cause" or terminates employment for "good reason" (as such terms are defined in such plans).

Retention Agreement with Mr. Leonard - The retention agreement with Mr. Leonard provides that upon a termination of employment while a Merger ispending (a) by Entergy without "cause" or by Mr. Leonard for "good reason", as such terms are defined in the agreement, other than a termination ofemployment described in the next paragraph, or (b) by reason of Mr. Leonard's death or disability:

Entergy will pay to him a lump sum cash severance payment equal to three times (in limited circumstances, five times) the sum of Mr. Leonard's basesalary and target annual incentive award;

Entergy will pay to him a pro rata annual incentive award, based on an assumed maximum annual achievement of applicable performance goals;

his supplemental retirement benefit will fully vest, will be determined as if he had remained employed with Entergy until the attainment of age 55, andwill commence upon his attainment of age 55;

he will be entitled to immediate payment of performance awards, based upon an assumed target achievement of applicable performance goals;

all of his stock options will become fully vested and will remain outstanding for their full ten-year term; and

Entergy will pay to him a "gross-up" payment in respect of any excise taxes he might incur.

If Mr. Leonard's employment is terminated by Entergy for "cause" at any time, or by Mr. Leonard without "good reason" and without Entergy's permissionprior to his attainment of age 55, Mr. Leonard will forfeit his supplemental retirement benefit. If Mr. Leonard's employment is terminated by Mr. Leonardwithout "good reason" with Entergy's permission prior to his attainment of age 55, Mr. Leonard will be entitled to a supplemental retirement benefit, reducedby 6.5% for each year that the termination date precedes his attainment of age 55, payable commencing upon Mr. Leonard's attainment of age 62. If Mr.Leonard's employment is terminated by Mr. Leonard without "good reason" following his attainment of age 55, Mr. Leonard will be entitled to his fullsupplemental retirement benefit. The amounts payable under the agreement will be funded in a rabbi trust.

Retention agreement with Mr. Hintz - The retention agreement with Mr. Hintz provides that Mr. Hintz will be paid an initial retention payment ofapproximately $2.8 million on the date on which a Merger is completed and an additional retention payment of approximately $2.3 million on the secondanniversary of the completion of a Merger if he remains employed on each of those dates. The agreement also provides that upon termination of

employment while a Merger is pending and for two years after completion (a) by Mr. Hintz for "good reason" or by Entergy without "cause", as such termsare defined in the agreement or (b) by reason of Mr. Hintz's death or disability:

Entergy will pay to him a lump sum cash severance payment equal to $2.8 million if such termination occurs prior to completion of a Merger or equalto $2.3 million if such termination occurs following completion of a Merger;

Entergy will pay to him a pro rata annual incentive award, based on an assumed maximum achievement of applicable performance goals, if suchtermination occurs following completion of a Merger;

he will be entitled to immediate payment of performance awards based upon an assumed target achievement of applicable performance goals, if suchtermination occurs prior to completion of a Merger, or based upon an assumed maximum achievement of applicable performance goals, if such

termination occurs following completion of a Merger;

all of his stock options will become fully vested and will remain outstanding for their full ten-year term;

he will be entitled to receive a supplemental retirement benefit that, when combined with Mr. Hintz's SERP benefit, equals the benefit he would haveearned under the terms of the SERP as in effect immediately prior to March 25, 1998; and


Retention Agreement with Mr. Jackson - Mr. Jackson retired from full-time active employment on March 31, 2003. The retention agreement with Mr.Jackson provides that upon retirement in accordance with the agreement, Mr. Jackson: (a) will be entitled to a subsidized retirement benefit equal to theapplicable nonqualified retirement benefit payable to Mr. Jackson without reduction for early retirement ("Subsidized Retirement Benefit"); and (b) mayenter into a consulting arrangement with Entergy through March 31, 2005, under terms and conditions set forth in the agreement. Mr. Jackson is entitled tocertain benefits, as described in the agreement, in the event of a change in control (as defined in the System Executive Continuity Plan) after which Entergyor its successor company fails to honor Mr. Jackson's consulting arrangement.

Employment Agreement with Ms. Shanks - The employment agreement with Ms. Shanks provides for her continued employment until 2011. During thisperiod, Ms. Shanks will continue to participate in all executive plans, programs, and arrangements for which she is eligible. In October of 2011, Ms. Shankswill become a special project coordinator of Entergy Mississippi or another Entergy System company until 2016. During her tenure as special projectcoordinator, Ms. Shanks will continue to receive her same rate of annual base salary in effect immediately prior to her assumption of this post, but willforfeit an amount sufficient to fund this salary from amounts that would otherwise be credited to her non-qualified deferral accounts. Commencing inOctober of 2016, Ms. Shanks will be eligible to retire with all of the post-retirement compensation and benefits for which she is eligible.

During the term of the agreement, Ms. Shanks may resign, or Entergy may terminate her for "cause," as defined in the agreement. In either of those events,Ms. Shanks is due no additional compensation or benefits under the agreement. If there is a "change in control" before October of 2011, she remains eligiblefor benefits under the System Executive Continuity Plan. If the change in control occurs while Ms. Shanks is a special project coordinator, and Entergy'sobligations under this agreement are breached, she receives:

a cash payment equal to her remaining unpaid base salary;

all other benefits to which she would be entitled had she remained employed until the conclusion of the term of the agreement; and

all legal fees and expenses incurred in disputing in good faith any term of the agreement.

Retention agreement with Mr. Smith - The retention agreement with Mr. Smith provides that Mr. Smith will be paid a retention payment of approximately$525,000 on the each of the first three anniversaries of the date on which a Merger is completed, if he remains employed on each of those dates. Theagreement also provides that upon termination of employment while a Merger is pending and for three years after completion (a) by Mr. Smith for "goodreason" or by Entergy without "cause", as such terms are defined in the agreement or (b) by reason of Mr. Smith's death or disability:

Entergy will pay to him a lump sum cash severance payment equal to the unpaid installments, if any, of the retention payments described above;

he will be entitled to immediate payment of performance awards based upon an assumed target achievement of applicable performance goals;

all of his stock options will become fully vested and will remain outstanding for their full ten-year term;


Retention Agreement with Mr. Wilder - Mr. Wilder voluntarily resigned from Entergy employment effective February 20, 2004. The retention agreementMr. Wilder previously entered into with Entergy provides, among other things, for payments to be made to him upon termination of employment in certaincircumstances in connection with a Merger or otherwise, subject to the terms and conditions of the agreement. In certain circumstances, Mr. Wilder wouldbe entitled to a lump sum cash severance payment equal to three times the sum of his base salary and target annual incentive award and a "gross-up"payment in respect of any excise taxes he might incur. In other circumstances, as a substitute for the above payment, Mr. Wilder (or his beneficiaries) wouldbe entitled to a lump sum cash severance payment equal to four times (in limited circumstances, three times) the sum of his base salary and maximumannual incentive award (in limited circumstances, his target annual incentive award), a pro rata annual incentive award, additional years of credited serviceunder Entergy's supplemental retirement plan, immediate vesting of equity awards, the opportunity to continue to be employed in a special projec tcoordinator position, and a "gross-up" payment in respect of any excise taxes he might incur.

Retention Agreement with Mr. Yelverton - The retention agreement with Mr. Yelverton provides that he will be paid cash retention payments of $680,000 oneach of the first three anniversaries of the completion of a Merger if he remains employed on each of those dates. The agreement also provides that upontermination of employment while a Merger is pending and for three years after completion (a) by Mr. Yelverton for "good reason" or by Entergy without"cause", as such terms are defined in the agreement or (b) by reason of Mr. Yelverton's death or disability:

Entergy will pay him a lump sum cash severance payment equal to the remaining unpaid portion of the cash retention payments;

he will be entitled to immediate payment of performance awards, based upon an assumed target achievement of applicable performance goals;

all of his stock options will become fully vested and will remain outstanding for their full ten-year term; and


System Executive Continuity Plan - Ms. Conley, Mr. Domino, Mr. McDonald, Mr. Packer, Ms. Shanks, and Mr. Taylor are participants in Entergy's SystemExecutive Continuity Plan, which provides severance pay and benefits under specified circumstances following a change in control. In the event a

participant's employment is involuntarily terminated without cause or if a participant terminates for good reason during the change in control period, theparticipant will be entitled to:

a cash severance payment equal to 1-3 times (depending on the participant's System Management Level) base annual salary and target award payableover a continuation period of 1-3 years (depending on the participant's System Management Level);

continued medical and dental insurance coverage for the continuation period (subject to offset for any similar coverage provided by the participant'snew employer);

immediate vesting of performance awards, based upon an assumed achievement of applicable performance targets; and

payment of a "gross-up" payment in respect of any excise taxes the participant might incur.

Participants in the Continuity Plan are subject to post-employment restrictive covenants, including noncompetition provisions, which run for two years forexecutive officers, but extend to three years if permissible under applicable law.

Personnel Committee Interlocks and Insider Participation

The compensation of Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy executiveofficers was set by the Personnel Committee of Entergy Corporation's Board of Directors, composed solely of Directors of Entergy Corporation.

Item 12. Security Ownership of Certain Beneficial Owners and Management

Entergy Corporation owns 100% of the outstanding common stock of registrants Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, EntergyMississippi, Entergy New Orleans, and System Energy. The information with respect to persons known by Entergy Corporation to be beneficial owners ofmore than 5% of Entergy Corporation's outstanding common stock is included under the heading "Stockholders Who Own at Least Five Percent" in theProxy Statement, which information is incorporated herein by reference. The registrants know of no contractual arrangements that may, at a subsequent date,result in a change in control of any of the registrants.

As of December 31, 2003, the directors, the Named Executive Officers, and the directors and officers as a group for Entergy Corporation, Entergy Arkansas,Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy, respectively, beneficially owned directly orindirectly common stock of Entergy Corporation as indicated:

Entergy CorporationCommon Stock

Amount of Nature ofBeneficial Ownership (a)

Name

Sole Votingand

InvestmentPower

Other

BeneficialOwnership(b)

Entergy CorporationStock Equivalent Units

(c) Entergy Corporation Maureen S. Bateman* 2,100 - 2,400W. Frank Blount* 8,784 - 12,800George W. Davis* 3,300 - 4,000Simon D. deBree* 1,008 - 1,600Claiborne P. Deming* 1,100 - 800Frank F. Gallaher** 8,952 - 12,078Alexis Herman* 300 - -Donald C. Hintz** 4,381 650,920 171,580Jerry D. Jackson** - 28,031 -J. Wayne Leonard*** 13,268 1,201,600 50,588Robert v.d. Luft* 23,872 312,666 8,800Kathleen A. Murphy* (e) 2,100 1,000 2,400Paul W. Murrill* (d) 2,826 - 13,600James R. Nichols* 11,616 - 13,600William A. Percy, II* 2,350 - 2,400Dennis H. Reilley* (d) 600 - 3,200Richard J. Smith** 786 150,538 48,675Wm. Clifford Smith* 12,248 - 16,000Bismark A. Steinhagen* (e) 8,824 2,623 23,200Gary J. Taylor** 1,161 72,032 11,720C. John Wilder** 1,021 222,430 172,368Steven V. Wilkinson* 50 - -All directors and executive officers 128,471 2,985,683 671,007



Name

Sole Votingand

InvestmentPower

Other

BeneficialOwnership(b)

Entergy CorporationStock Equivalent Units

(c) Entergy Arkansas Donald C Hintz*** 4,381 650,920 171,580Jerry D. Jackson** - 28,031 -J. Wayne Leonard** 13,268 1,201,600 50,588Hugh T. McDonald*** 4,436 42,665 25,110Richard J. Smith*** 786 150,538 48,675C. John Wilder*** 1,021 222,430 172,368All directors and executive officers 46,952 2,602,814 545,262

Entergy Gulf States E. Renae Conley*** 1,659 85,858 37,730Joseph F. Domino*** 12,373 46,453 21,316Donald C. Hintz*** 4,381 650,920 171,580Jerry D. Jackson** - 28,031 -J. Wayne Leonard** 13,268 1,201,600 50,588Richard J. Smith*** 786 150,538 48,675C. John Wilder*** 1,021 222,430 172,368All directors and executive officers 71,489 2,782,341 581,360

Entergy Louisiana E. Renae Conley*** 1,659 85,858 37,730Donald C. Hintz*** 4,381 650,920 171,580Jerry D. Jackson** - 28,031 -J. Wayne Leonard** 13,268 1,201,600 50,588Richard J. Smith*** 786 150,538 48,675C. John Wilder*** 1,021 222,430 172,368All directors and executive officers 54,663 2,709,622 559,761

Entergy Mississippi Donald C. Hintz*** 4,381 650,920 171,580Jerry D. Jackson** - 28,031 -J. Wayne Leonard** 13,268 1,201,600 50,588Carolyn C. Shanks*** 4,694 39,466 11,025Richard J. Smith*** 786 150,538 48,675C. John Wilder*** 1,021 222,430 172,368All directors and executive officers 52,198 2,606,215 531,172



Sole Votingand

Other

Entergy Corporation

NameInvestment

PowerBeneficial

Ownership(b)Stock Equivalent Units

(c) Entergy New Orleans Donald C. Hintz*** 4,381 650,920 171,580Jerry D. Jackson** - 28,031 -J. Wayne Leonard** 13,268 1,201,600 50,588Daniel F. Packer*** 4,178 30,799 4,727Richard J. Smith*** 786 150,538 48,675C. John Wilder*** 1,021 222,430 172,368All directors and executive officers 44,530 2,563,615 524,874 System Energy Donald C. Hintz*** 4,381 650,920 171,580Jerry D. Jackson** - 28,031 -J. Wayne Leonard** 13,268 1,201,600 50,588Richard J. Smith** 786 150,538 48,675Gary J. Taylor*** 1,161 72,032 11,720C. John Wilder*** 1,021 222,430 172,368Jerry W. Yelverton** - 10,000 -All directors and executive officers 42,085 2,500,333 492,417

* Director of the respective Company

** Named Executive Officer of the respective Company

*** Director and Named Executive Officer of the respective Company

(a) Based on information furnished by the respective individuals. Except as noted, each individualhas sole voting and investment power. The number of shares of Entergy Corporation commonstock owned by each individual and by all directors and executive officers as a group does notexceed one percent of the outstanding Entergy Corporation common stock.

(b) Other Beneficial Ownership includes, for the Named Executive Officers, shares of EntergyCorporation common stock that may be acquired within 60 days after December 31, 2003, in theform of unexercised stock options awarded pursuant to the Equity Ownership Plan.

(c) Represents the balances of stock equivalent units each executive holds under the ExecutiveAnnual Incentive Plan Deferral Program, Defined Contribution Restoration Plan, and theExecutive Deferred Compensation Plan. These units will be paid out in a combination ofEntergy Corporation Common Stock and cash based on the value of Entergy CorporationCommon Stock on the date of payout. The deferral period is determined by the individual and isat least two years from the award of the bonus. For directors of Entergy Corporation the stockequivalent units are part of the Service Award for Directors. All non-employee directors arecredited with 800 units for each year of service on the Board.

(d) Dr. Murrill and Mr. Reilley have deferred receipt of an additional 5,100 shares and 2,100 shares,respectively.

(e) Includes 1,000 shares in which Ms. Murphy has joint ownership and 2,623 shares for Mr.Steinhagen that are in his wife's name.

Equity Compensation Plan Information

Entergy has two plans that grant stock options, equity awards, and incentive awards to key employees of the Entergy subsidiaries. The Equity OwnershipPlan is a shareholder-approved stock-based compensation plan. The Equity Awards Plan is a Board-approved stock-based compensation plan. The followingtable summarizes information about Entergy's stock options awarded under these plans as of December 31, 2003.

Plan

Number of Securitiesto be Issued Upon

Exercise ofOutstanding Options

WeightedAverageExercise

Price

Number of SecuritiesRemaining Available

for Future Issuance (a) Equity compensation plansapproved by security holders

4,003,462

$38.41

7,786,150

Equity compensation plansnotapproved by security holders

11,425,921

38.72

- -

Total 15,429,383 $38.64 7,786,150

(a) Effective upon the May 9, 2003 stockholder re-approval of the Equity Ownership Plan, theBoard directed that no further awards be issued under the Equity Awards Plan. As of May 9,2003, 4,076,628 shares were available for issuance under the Equity Awards Plan.

Entergy shareholders have also approved the "Stock Plan for Outside Directors." This plan grants non-employee members of the Board 600 shares ofEntergy common stock in each year of service on the Board, paid in quarterly installments.

Item 13. Certain Relationships and Related Transactions

During 2003, T. Baker Smith & Son, Inc. performed land-surveying services for, and received payments of approximately $390,689 from Entergycompanies. Mr. Wm. Clifford Smith, a director of Entergy Corporation, is Chairman of the Board of T. Baker Smith & Son, Inc. Mr. Smith's children own100% of the voting stock of T. Baker Smith & Son, Inc.

See Item 10, "Directors and Executive Officers of the Registrants," for information on certain relationships and transactions required to be reported underthis item.

Other than as provided under applicable corporate laws, Entergy does not have policies whereby transactions involving executive officers and directors areapproved by a majority of disinterested directors. However, pursuant to the Entergy Corporation Code of Conduct, transactions involving an Entergycompany and its executive officers must have prior approval by the next higher reporting level of that individual, and transactions involving an Entergycompany and its directors must be reported to the secretary of the appropriate Entergy company. Also, Entergy's Corporate Governance Guidelines requiredirectors to obtain the approval of the Corporate Governance Committee to participate in a transaction to which Entergy is a party where the director has adirect or indirect financial or personal interest.

Item 14. Principal Accountant Fees and Services (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, EntergyMississippi, Entergy New Orleans, and System Energy)

Aggregate fees billed to Entergy Corporation (consolidated), Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy NewOrleans, and System Energy for the years ended December 31, 2003 and 2002 by Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu,and their respective affiliates (collectively, "Deloitte & Touche"), which includes Deloitte Consulting were as follows:

2003 2002Entergy Corporation (consolidated) Audit Fees $3,244,750 $3,043,100Audit-Related Fees (a) 690,665 392,021 Total audit and audit-related fees 3,935,415 3,435,121Tax Fees (b) 119,802 128,029All Other Fees (c) 5,000 35,751 Total Fees (d) $4,060,217 $3,598,901 Entergy Arkansas Audit Fees $402,200 $270,450Audit-Related Fees (a) 68,963 - Total audit and audit-related fees 471,163 270,450Tax Fees - -All Other Fees (c) - 5,691 Total Fees (d) $471,163 $276,141 Entergy Gulf States Audit Fees $432,050 $255,000Audit-Related Fees (a) 79,026 - Total audit and audit-related fees 511,076 255,000Tax Fees - -All Other Fees - - Total Fees (d) $511,076 $255,000 Entergy Louisiana Audit Fees $355,800 $270,000Audit-Related Fees (a) 69,617 - Total audit and audit-related fees 425,417 270,000Tax Fees - -All Other Fees - -

Total Fees (d) $425,417 $270,000

2003 2002Entergy Mississippi Audit Fees $413,300 $267,650Audit-Related Fees (a) 53,204 - Total audit and audit-related fees 466,504 267,650Tax Fees - -All Other Fees - - Total Fees (d) $466,504 $267,650 Entergy New Orleans Audit Fees $365,800 $256,500Audit-Related Fees (a) 147,855 85,114 Total audit and audit-related fees 513,655 341,614Tax Fees - -All Other Fees (c) - 30,060 Total Fees (d) $513,655 $371,674System Energy Audit Fees $350,200 $225,350Audit-Related Fees (a) 8,800 - Total audit and audit-related fees 359,000 225,350Tax Fees - -All Other Fees - - Total Fees (d) $359,000 $225,350

(a) Includes fees for employee benefit plan audits, consultation on financial accounting andreporting, and other attestation services.

(b) Includes fees for tax return review and tax compliance assistance.

(c) Includes fees for assistance on regulatory matters. During 2003 the fees for other services wereapproved under the de minimus provision.

(d) 100% of fees paid in 2003 and approximately 90% of fees paid in 2002 were pre-approved bythe Entergy Corporation Audit Committee.

Entergy Audit Committee Guidelines for Pre-approval of Independent Auditor Services

The Audit Committee has adopted the following guidelines regarding the engagement of Entergy's independent auditor to perform services for Entergy:

1. The independent auditor will provide the Audit Committee, for approval, an annual engagementletter outlining the scope of services proposed to be performed during the fiscal year, includingaudit services and other permissible non-audit services (e.g. audit related services, tax services,and all other services).

2. For other permissible services not included in the engagement letter, Entergy management willsubmit a description of the proposed service, including a budget estimate, to the AuditCommittee for pre-approval. Management and the independent auditor must agree that therequested service is consistent with the SEC's rules on auditor independence prior to submissionto the Audit Committee. The Audit Committee, at its discretion, will pre-approve permissibleservices and has established the following additional guidelines for permissible non-auditservices provided by the independent auditor:

Aggregate non-audit service fees are targeted at fifty percent or less of the approvedaudit service fee.

All other services should only be provided by the independent auditor if it is theonly qualified provider of that service or if the Audit Committee specificallyrequests the service.

3.

The Audit Committee will be informed quarterly as to the status of pre-approved servicesactually provided by the independent auditor.

4. To ensure prompt handling of unexpected matters, the Audit Committee delegates to the AuditCommittee Chair or its designee the authority to approve permissible services and fees. TheAudit Committee Chair or designee will report action taken to the Audit Committee at the nextscheduled Audit Committee meeting.

5. The Vice President, Risk Management and General Auditor will be responsible for tracking allindependent auditor fees and will report quarterly to the Audit Committee.

PART IV

Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a)1. Financial Statements and Independent Auditors' Reports for Entergy, Entergy Arkansas,Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, andSystem Energy are listed in the Table of Contents.

(a)2. Financial Statement Schedules

Independent Auditor's Report on Financial Statement Schedules (see page 368)

Financial Statement Schedules are listed in the Index to Financial Statement Schedules (seepage S-1)

(a)3. Exhibits

Exhibits for Entergy, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, EntergyMississippi, Entergy New Orleans, and System Energy are listed in the Exhibit Index (see pageE-1). Each management contract or compensatory plan or arrangement required to be filed asan exhibit hereto is identified as such by footnote in the Exhibit Index.

(b) Reports on Form 8-K

Entergy Corporation

A Current Report on Form 8-K, dated January 20, 2004, was filed with the SEC on January 20,2004, reporting information under Item 7. "Financial Statements, Pro Forma FinancialStatements and Exhibits," Item 9. "Regulation FD Disclosure," and Item 12. "Results ofOperations and Financial Condition."

Entergy Corporation

A Current Report on Form 8-K, dated February 2, 2004, was filed with the SEC on February 2,2004, reporting information under Item 7. "Financial Statements, Pro Forma FinancialStatements and Exhibits" and Item 9. "Regulation FD Disclosure."

Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana , EntergyMississippi, and Entergy New Orleans

A Current Report on Form 8-K, dated February 12, 2004, was filed with the SEC on February12, 2004, reporting information under Item 7. "Financial Statements, Pro Forma FinancialStatements and Exhibits" and Item 9. "Regulation FD Disclosure."

Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana , EntergyMississippi, and Entergy New Orleans

A Current Report on Form 8-K, dated February 16, 2004, was filed with the SEC on February17, 2004, reporting information under Item 7. "Financial Statements, Pro Forma FinancialStatements and Exhibits," Item 9. "Regulation FD Disclosure," and Item 12. "Results ofOperations and Financial Condition."

Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana , EntergyMississippi, Entergy New Orleans, and System Energy

A Current Report on Form 8-K, dated February 20, 2004, was filed with the SEC on February23, 2004, reporting information under Item 5. "Other Events" and Item 7. "FinancialStatements, Pro Forma Financial Statements and Exhibits."

ENTERGY CORPORATION

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having referenceto such company and any subsidiaries thereof.

ENTERGY CORPORATION

By /s/ Nathan E. Langston Nathan E. Langston, Senior Vice Presidentand Chief Accounting Officer

Date: March 9, 2004

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrantand in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to theabove-named company and any subsidiaries thereof.

Signature Title Date

/s/ Nathan E. LangstonNathan E. Langston

Senior Vice President andChief Accounting Officer(Principal AccountingOfficer)

March 9, 2004

J. Wayne Leonard (Chief Executive Officer and Director; Principal Executive Officer); Robert v.d. Luft (Chairman of the Board and Director);Leo P. Denault (Executive Vice President and Chief Financial Officer; Principal Financial Officer); Maureen S. Bateman, W. Frank Blount,George W. Davis, Simon deBee, Claiborne P. Deming, Alexis M. Herman, Kathleen A. Murphy, Paul W. Murrill, James R. Nichols, William A.Percy, II, Dennis H. Reilley, Wm. Clifford Smith, Bismark A. Steinhagen, and Steven V. Wilkinson (Directors).

By: /s/ Nathan E. Langston(Nathan E. Langston, Attorney-in-fact)

March 9, 2004


SIGNATURES




Date: March 9, 2004




Senior Vice President and ChiefAccounting Officer(Principal Accounting Officer)

March 9, 2004

Hugh T. McDonald (Chairman of the Board, President, Chief Executive Officer, and Director; Principal Executive Officer); Jay A. Lewis (VicePresident, Chief Financial Officer - Operations; Principal Financial Officer); Donald C. Hintz, Richard J. Smith, and Leo P. Denault (Directors).


March 9, 2004


SIGNATURES




Date: March 9, 2004





March 9, 2004

Joseph F. Domino (Chairman of the Board, President, Chief Executive Officer-Texas, and Director; Principal Executive Officer); E. RenaeConley (President, Chief Executive Officer-Louisiana, and Director; Principal Executive Officer); Jay A. Lewis (Vice President, Chief Financial

Officer - Operations; Principal Financial Officer); Donald C. Hintz, Richard J. Smith, and Leo P. Denault (Directors).


March 9, 2004


SIGNATURES




Date: March 9, 2004





March 9, 2004

E. Renae Conley (Chairman of the Board, President, Chief Executive Officer, and Director; Principal Executive Officer); Jay A. Lewis (VicePresident, Chief Financial Officer - Operations; Principal Financial Officer); Donald C. Hintz, Richard J. Smith, and Leo P. Denault (Directors).


March 9, 2004


SIGNATURES




Date: March 9, 2004



/s/ Nathan E Langston Senior Vice President and Chief March 9 2004



March 9, 2004

Carolyn C. Shanks (Chairman of the Board, President, Chief Executive Officer, and Director; Principal Executive Officer); Jay A. Lewis (VicePresident, Chief Financial Officer - Operations; Principal Financial Officer); Donald C. Hintz, Richard J. Smith, and Leo P. Denault (Directors).


March 9, 2004


SIGNATURES




Date: March 9, 2004





March 9, 2004

Daniel F. Packer (Chairman of the Board, President, Chief Executive Officer, and Director; Principal Executive Officer); Jay A. Lewis (VicePresident, Chief Financial Officer - Operations; Principal Financial Officer); Donald C. Hintz, Richard J. Smith, and Leo P. Denault (Directors).


March 9, 2004


SIGNATURES



By /s/ Nathan E. Langston Nathan E. Langston, Senior Vice President

and Chief Accounting Officer

Date: March 9, 2004





March 9, 2004

Gary J. Taylor (Chairman of the Board, President, Chief Executive Officer, and Director; Principal Executive Officer); Theodore H. Bunting, Jr.(Vice President, Chief Financial Officer - Nuclear Operations; Principal Financial Officer); Donald C. Hintz and Leo P. Denault (Directors).


March 9, 2004

EXHIBIT 23(a)

INDEPENDENT AUDITORS' CONSENTS

We consent to the incorporation by reference in Post-Effective Amendments No. 3 and 5A on Form S-8 and their related prospectuses to RegistrationStatement No. 33-54298 of Entergy Corporation on Form S-4, Registration Statements No. 333-02503 and 333-22007 of Entergy Corporation("Corporation") on Form S-3 and Registration Statements No. 333-98179, 333-90914, 333-75097, 333-55692, and 333-68950 of the Corporation on Form S-8 of our reports dated March 9, 2004, which reports include an explanatory paragraph regarding the Corporation's change in 2003 in the method ofaccounting for asset retirement obligations and for consolidation of variable interest entities, the change in 2002 in the method of accounting for goodwilland intangible assets, and the change in 2001 in the method of accounting for derivative instruments; appearing in this Annual Report on Form 10-K of theCorporation for the year ended December 31, 2003.

We consent to the incorporation by reference in Registration Statements No. 33-50289, 333-00103, 333-05045, and 333-109453 of Entergy Arkansas, Inc.on Form S-3 of our report dated March 9, 2004, which report includes an explanatory paragraph regarding Entergy Arkansas, Inc.'s change in 2003 in themethod of accounting for asset retirement obligations and for consolidation of variable interest entities, appearing in this Annual Report on Form 10-K ofEntergy Arkansas, Inc. for the year ended December 31, 2003.

We consent to the incorporation by reference in Registration Statements No. 33-49739, 33-51181, 333-60957 and 333-109923 of Entergy Gulf States, Inc.on Form S-3 and Registration Statement No. 333-17911 of Entergy Gulf States, Inc. on Form S-2 of our report dated March 9, 2004, which report includesan explanatory paragraph regarding Entergy Gulf States, Inc.'s change in 2003 in the method of accounting for asset retirement obligations and forconsolidation of variable interest entities, appearing in this Annual Report on Form 10-K of Entergy Gulf States, Inc. for the year ended December 31, 2003.

We consent to the incorporation by reference in Registration Statements No. 33-46085, 33-39221, 33-50937, 333-00105, 333-01329, 333-03567 and 333-93683 of Entergy Louisiana, Inc. on Form S-3 of our report dated March 9, 2004, which report includes an explanatory paragraph regarding EntergyLouisiana, Inc.'s change in 2003 in the method of accounting for asset retirement obligations and for consolidation of variable interest entities, appearing inthis Annual Report on Form 10-K of Entergy Louisiana, Inc. for the year ended December 31, 2003.

We consent to the incorporation by reference in Registration Statements No. 33-53004, 33-55826, and 333-110675 of Entergy Mississippi, Inc. on Form S-3of our report dated March 9, 2004, appearing in this Annual Report on Form 10-K of Entergy Mississippi, Inc. for the year ended December 31, 2003.

We consent to the incorporation by reference in Registration Statements No. 33-57926, 333-00255 and 333-95599 of Entergy New Orleans, Inc. on Form S-3 of our report dated March 9, 2004, appearing in this Annual Report on Form 10-K of Entergy New Orleans, Inc. for the year ended December 31, 2003.

We consent to the incorporation by reference in Registration Statements No. 33-47662, 33-61189, and 333-06717 of System Energy Resources, Inc. on FormS-3 of our report dated March 9, 2004, which report includes an explanatory paragraph regarding System Energy Resources, Inc.'s change in 2003 in themethod of accounting for asset retirement obligations and for consolidation of variable interest entities, appearing in this Annual Report on Form 10-K ofSystem Energy Resources, Inc. for the year ended December 31, 2003.




To the Board of Directors and Shareholders ofEntergy Corporation:

We have audited the consolidated financial statements of Entergy Corporation and we have also audited the financial statements of Entergy Arkansas, Inc.,Entergy Gulf States, Inc., Entergy Louisiana, Inc., Entergy Mississippi, Inc., and Entergy New Orleans, Inc. (the Companies), as of December 31, 2003 and2002, and for each of the three years in the period ended December 31, 2003, and have issued our reports thereon dated March 5, 2004. Our report on theconsolidated financial statements of the Corporation includes an explanatory paragraph regarding its change in 2003 in the method of accounting for assetretirement obligations and for consolidation of variable interest entities, its change in 2002 in the method of accounting for goodwill and intangible assets,and its change in 2001 in the method of accounting for derivative instruments. Our reports on the financial statements of Entergy Arkansas, Inc., EntergyGulf States, Inc., and Entergy Louisiana, Inc.'s each include an explanatory paragraph regarding their change in 2003 in the method of accounting for assetretirement obligations and for consolidation of variable interest entities. The financial statements described above, and our respective reports thereon areincluded elsewhere in this 2003 Annual Report to Shareholders. Our audits also included the consolidated financial statement schedules of EntergyCorporation and the financial statement schedules of Entergy Arka nsas, Inc., Entergy Gulf States, Inc., Entergy Louisiana, Inc., Entergy Mississippi, Inc.,and Entergy New Orleans, Inc., listed in Item 15. These financial statements and financial statement schedules are the responsibility of the Corporation's andthe respective Companies' managements. Our responsibility is to express our opinions on the financial statements and financial statement schedules based onour audits. (We did not audit the financial statements of Entergy-Koch, LP for the year ended December 31, 2003, the Corporation's investment in which isaccounted for by the use of the equity method. The Corporation's equity in earnings of unconsolidated equity affiliates for the year ended December 31,2003 includes $180,110,000 for Entergy Koch, LP, which earnings were audited by other auditors whose report has been furnished to us, and our opinion,insofar as it relates to the amount audited by other auditors included for such company, is based solely on the report of such other auditors.) In our opinion,such financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects theinformation set forth therein.



INDEX TO FINANCIAL STATEMENT SCHEDULES

Schedule Page

I Financial Statements of Entergy Corporation:

Statements of Income - For the Years Ended December 31, 2003, 2002, and2001

S-2

Statements of Cash Flows - For the Years Ended December 31, 2003, 2002, and2001

S-3

Balance Sheets, December 31, 2003 and 2002 S-4

Statements of Retained Earnings, Comprehensive Income, and Paid-InCapital for the Years Ended December 31, 2003, 2002, and 2001

S-5

II Valuation and Qualifying Accounts 2003, 2002 and 2001:

Entergy Corporation and Subsidiaries S-6

Entergy Arkansas, Inc. S-7

Entergy Gulf States, Inc. S-8

Entergy Louisiana, Inc. S-9

Entergy Mississippi, Inc. S-10

Entergy New Orleans, Inc. S-11

Schedules other than those listed above are omitted because they are not required, not applicable, or the required information is shown in the financialstatements or notes thereto.

Columns have been omitted from schedules filed because the information is not applicable.

ENTERGY CORPORATION

SCHEDULE I - FINANCIAL STATEMENTS OF ENTERGY CORPORATION

STATEMENTS OF INCOME


(In Thousands)

Income: Equity in income of subsidiaries $948,856 $629,367 $801,155 Interest on temporary investments 36,400 46,964 18,889 -------- -------- -------- Total 985,256 676,331 820,044 -------- -------- --------

Expenses and Other Deductions:

Administrative and general expenses 2,425 41,126 45,525 Income taxes (credit) (4,574) 6,948 9,787 Taxes other than income 753 588 825 Interest 59,709 28,309 37,711 -------- -------- -------- Total 58,313 76,971 93,848 -------- -------- --------

Net Income $926,943 $599,360 $726,196 ======== ======== ========

See Entergy Corporation and Subsidiaries Notes to Financial Statements in Part II, Item 8.

ENTERGY CORPORATION

SCHEDULE I - FINANCIAL STATEMENTS OF ENTERGY CORPORATION STATEMENTS OF CASH FLOWS

Year to Date December 31, 2003 2002 2001

(In Thousands) Operating Activities:

Net income $926,943 $599,360 $726,196 Noncash items included in net income:

Equity in earnings of subsidiaries (943,059) (629,367) (801,155) Deferred income taxes (2,811) (4,803) 11,005 Depreciation 591 912 1,391

Changes in working capital: Receivables (878) 1,430 (1,804) Payables (9,258) 4,898 1,140 Other working capital accounts 145,014 (480,711) 489,997 Common stock dividends received from subsidiaries 424,993 618,400 440,300 Other 92,933 68,981 (19,418) -------- -------- -------- Net cash flow provided by operating activities 634,468 179,100 847,652 -------- -------- --------

Investing Activities:

Investment in subsidiaries (254,894) (256,212) (239,180) Capital expenditures 874 (768) (103) Changes in other temporary investments (10,328) 4,782 (4,782) Other (59,719) 103 897 -------- -------- -------- Net cash flow used in investing activities (324,067) (252,095) (243,168) -------- -------- --------

Financing Activities:

Changes in credit line borrowings (499,975) 245,000 (36,999) Advances to subsidiaries (7,254) (6,460) 27,067 Common stock dividends paid (362,814) (298,991) (269,122) Repurchase of common stock (8,135) (118,499) (36,895) Notes receivable to/from associated companies (111,595) (146,380) (368,992) Issuance of common stock 217,521 130,061 64,345 Issuance of long-term debt 534,362 265,330 - -------- -------- -------- Net cash flow provided by (used in) financing activities (237,890) 70,061 (620,596) -------- -------- --------

Net increase (decrease) in cash and cash equivalents 72,511 (2,934) (16,112)




ENTERGY CORPORATION

SCHEDULE I - FINANCIAL STATEMENTS OF ENTERGY CORPORATION BALANCE SHEETS

December 31,

2003 2002 ASSETS (In Thousands)

Current Assets: Cash and cash equivalents:

Temporary cash investments - at cost, which approximates market $80,398 $7,887 ---------- ---------- Total cash and cash equivalents 80,398 7,887 ---------- ---------- Other temporary investments 10,328 - Notes receivable - associated companies 626,968 515,373 Accounts receivable - associated companies 44,639 9,989 Other 53,549 46,383 ---------- ---------- Total 815,882 579,632 ---------- ----------

Investment in Wholly-owned Subsidiaries 8,607,556 7,819,408

Deferred Debits and Other Assets 540,924 475,797 ---------- ----------

Total $9,964,362 $8,874,837 ========== ==========

LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable:

Associated companies $2,433 $2,937 Other 745 10,003 Other current liabilities 188,779 8,725 ---------- ---------- Total 191,957 21,665 ---------- ----------

Deferred Credits and Noncurrent Liabilities 234,558 152,935 ---------- ----------

Long-term debt 900,025 862,000

Shareholders' Equity:

Common stock, $.01 par value, authorized 500,000,000 shares; issued 248,174,087 shares

in 2003 and in 2002 2,482 2,482 Paid-in capital 4,702,932 4,666,753 Retained earnings 4,502,508 3,938,693 Accumulated other comprehensive loss (8,948) (22,360)

Less cost of treasury stock (19,276,445 shares in 2003 and 25,752,410 shares in 2002) 561,152 747,331 ---------- ---------- Total common shareholders' equity 8,637,822 7,838,237 ---------- ----------

Total $9,964,362 $8,874,837 ========== ==========


ENTERGY CORPORATION CONSOLIDATED STATEMENTS OF RETAINED EARNINGS, COMPREHENSIVE INCOME,

AND PAID-IN CAPITAL


(In Thousands)

RETAINED EARNINGS Retained Earnings - Beginning of period $3,938,693 $3,638,448 $3,190,639

Add: Earnings applicable to common stock 926,943 $926,943 599,360 $599,360 726,196 $726,196

Deduct:

Dividends declared on common stock 362,941 299,031 278,342 Capital stock and other expenses 187 84 45 ---------- ---------- ---------- Total 363,128 299,115 278,387 ---------- ---------- ----------

Retained Earnings - End of period $4,502,508 $3,938,693 $3,638,448 ========== ========== ==========

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Net of taxes):

Balance at beginning of period: Accumulated derivative instrument fair value changes $17,313 ($17,973) $- Other accumulated comprehensive (loss) items (39,673) (70,821) (75,033) ---------- ---------- ---------- Total (22,360) (88,794) (75,033) ---------- ---------- ----------

Cumulative effect to January 1, 2001 of accounting

change regarding fair value of derivative instruments - - (18,021)

Net derivative instrument fair value changes arising during the period (43,124) (43,124) 35,286 35,286 48 48

Foreign currency translation adjustments 4,169 4,169 65,948 (15,487) 4,615 4,615

Minimum pension liability adjustment - - (10,489) (10,489) - -

Net unrealized investment gains (losses) 52,367 52,367 (24,311) (24,311) (403) (403) ---------- ---------- ----------

Balance at end of period:

Accumulated derivative instrument fair value changes (25,811) 17,313 (17,973) Other accumulated comprehensive (loss) items 16,863 (39,673) (70,821) ---------- ---------- ----------

Total ($8,948)-------- ($22,360)-------- ($88,794) -------- Comprehensive Income ========== $940,355 ========== $584,359 ========== $730,456 ======== ======== ========

PAID-IN CAPITAL Paid-in Capital - Beginning of period $4,666,753 $4,662,704 $4,660,483

Add:

Common stock issuances related to stock plans 36,179 4,049 2,221 ---------- ---------- ----------

Paid-in Capital - End of period $4,702,932 $4,666,753 $4,662,704 ========== ========== ==========


ENTERGY CORPORATION

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS Years Ended December 31, 2003, 2002, and 2001

(In Thousands)

Column A Column B Column C Column D Column E Other Additions Changes Deductions

Balance at from Balance Beginning Charged to Provisions at End

Description of Period Income (Note 1) of Period Year ended December 31, 2003

Accumulated Provisions Deducted from Assets--

Doubtful Accounts $27,285 $12,598 $13,907 $25,976 ========= ======== ======== =========

Accumulated Provisions Not Deducted from Assets:

Property insurance $(93,941) $108,221 $137,593 $(123,313) Injuries and damages (Note 2) 30,629 29,255 25,695 34,189 Environmental 26,488 11,621 11,595 26,514 --------- -------- -------- --------- Total $(36,824) $149,097 $174,883 $(62,610) ========= ======== ======== =========

Year ended December 31, 2002










___________ Notes:

(1) Deductions from provisions represent losses or expenses for which the respective provisions were created. In the case of the provision for

doubtful accounts, such deductions are reduced by recoveries of amounts previously written off.

(2) Injuries and damages provision is provided to absorb all current

expenses as appropriate and for the estimated cost of settling claims for injuries and damages.



(In Thousands)










Doubtful Accounts $5,837 $2,194 $- $8,031 ========= ======== ======== =========





Doubtful Accounts $4,196 $1,758 $117 $5,837 ========= ======== ======== =========



___________ Notes:







(In Thousands)






Accumulated Provisions Not Deducted from Assets--

Property insurance $(45,287) $26,988 $39,054 $(57,353) Injuries and damages (Note 2) 8,284 8,805 5,535 11,554 Environmental 15,417 3,319 4,025 14,711 --------- -------- -------- --------- Total ($21,586) $39,112 $48,614 ($31,088) ========= ======== ======== =========


Accumulated Provisions

Deducted from Assets-- Doubtful Accounts $3,696 $3,961 $1,764 $5,893 ========= ======== ======== =========


Property insurance $(8,721) $4,486 $41,052 $(45,287) Injuries and damages (Note 2) 6,773 7,684 6,173 8,284 Environmental 18,716 34,296 37,595 15,417 --------- -------- -------- --------- Total $16,768 $46,466 $84,820 ($21,586) ========= ======== ======== =========



Doubtful Accounts $4,810 $940 $2,054 $3,696 ========= ======== ======== =========


Property insurance $(5,698) $4,485 $7,508 $(8,721) Injuries and damages (Note 2) 9,406 5,266 7,899 6,773 Environmental 20,671 2,306 4,261 18,716 --------- -------- -------- --------- Total $24,379 $12,057 $19,668 $16,768 ========= ======== ======== =========

___________ Notes:







(In Thousands)










Doubtful Accounts $2,909 $1,181 $- $4,090 ========= ======== ======== =========





Doubtful Accounts $2,552 $385 $28 $2,909 ========= ======== ======== =========



___________

Notes: (1) Deductions from provisions represent losses or expenses for which the respective provisions were created. In the case of the provision for


(2) Injuries and damages provision is provided to absorb all current expenses as appropriate and for the estimated cost of settling

claims for injuries and damages.



(In Thousands)







Property insurance $(2,937) $12,323 $12,867 $(3,481) Injuries and damages (Note 2) 7,928 7,410 9,924 5,414 Environmental 667 1,482 1,654 495 --------- -------- -------- --------- Total $5,658 $21,215 $24,445 $2,428 ========= ======== ======== =========



Doubtful Accounts $1,232 $1,063 $662 $1,633 ========= ======== ======== =========


Property insurance $1,279 $8,882 $13,098 $(2,937) Injuries and damages (Note 2) 6,306 5,526 3,904 7,928 Environmental 487 886 706 667 --------- -------- -------- --------- Total $8,072 $15,294 $17,708 $5,658 ========= ======== ======== =========





Property insurance $(4,765) $13,124 $7,080 $1,279 Injuries and damages (Note 2) 6,694 8,196 8,584 6,306 Environmental 511 581 605 487 --------- -------- -------- --------- Total $2,440 $21,901 $16,269 $8,072 ========= ======== ======== =========

___________



(2) Injuries and damages provision is provided to absorb all current expenses

as appropriate and for the estimated cost of settling claims for injuries and damages.



(In Thousands)







Property insurance $7,120 $767 $4,205 $3,682

Injuries and damages (Note 2) 2,603 2,514 1,040 4,077 Environmental 623 428 388 663 --------- -------- -------- --------- Total $10,346 $3,709 $5,633 $8,422 ========= ======== ======== =========



Doubtful Accounts $4,273 $501 $- $4,774 ========= ======== ======== =========


Property insurance $9,195 $340 $2,415 $7,120 Injuries and damages (Note 2) 3,587 5,578 6,562 2,603 Environmental 562 344 283 623 --------- -------- -------- --------- Total $13,344 $6,262 $9,260 $10,346 ========= ======== ======== =========





Property insurance $9,449 $50 $304 $9,195 Injuries and damages (Note 2) 4,300 831 1,544 3,587 Environmental 1,072 323 833 562 --------- -------- -------- --------- Total $14,821 $1,204 $2,681 $13,344 ========= ======== ======== =========

___________





EXHIBIT INDEX

The following exhibits indicated by an asterisk preceding the exhibit number are filed herewith. The balance of the exhibits have heretofore been filed withthe SEC, respectively, as the exhibits and in the file numbers indicated and are incorporated herein by reference. The exhibits marked with a (+) aremanagement contracts or compensatory plans or arrangements required to be filed herewith and required to be identified as such by Item 14 of Form 10-K.Reference is made to a duplicate list of exhibits being filed as a part of this Form 10-K, which list, prepared in accordance with Item 102 of Regulation S-Tof the SEC, immediately precedes the exhibits being physically filed with this Form 10-K.

(3) (i) Articles of Incorporation

Entergy Corporation

(a) -- Certificate of Incorporation of Entergy Corporation dated December 31, 1993 (A-1(a) toRule 24 Certificate in 70-8059).

System Energy

(b) -- Amended and Restated Articles of Incorporation of System Energy and amendmentsthereto through April 28, 1989 (A-1(a) to Form U-1 in 70-5399).

Entergy Arkansas

(c) -- Amended and Restated Articles of Incorporation of Entergy Arkansas effectiveNovember 12, 1999 (3(i)(c)1 to Form 10-K for the year ended December 31, 1999 in1-10764).

Entergy Gulf States

(d) -- Restated Articles of Incorporation of Entergy Gulf States effective November 17, 1999(3(i)(d)1 to Form 10-K for the year ended December 31, 1999 in 1-27031).

Entergy Louisiana

(e) -- Amended and Restated Articles of Incorporation of Entergy Louisiana effectiveNovember 15, 1999 (3(a) to Form S-3 in 333-93683).

Entergy Mississippi

(f) -- Amended and Restated Articles of Incorporation of Entergy Mississippi effectiveNovember 12, 1999 (3(i)(f)1 to Form 10-K for the year ended December 31, 1999 in0-320).

Entergy New Orleans

(g) -- Amended and Restated Articles of Incorporation of Entergy New Orleans effectiveNovember 15, 1999 (3(a) to Form S-3 in 333-95599).

(3) (ii) By-Laws

(a) -- By-Laws of Entergy Corporation as amended January 29, 1999, and as presently ineffect (4.2 to Form S-8 in File No. 333-75097).

(b) -- By-Laws of System Energy effective July 6, 1998, and as presently in effect (3(f) to

Form 10-Q for the quarter ended June 30, 1998 in 1-9067). (c) -- By-Laws of Entergy Arkansas effective November 26, 1999, and as presently in effect

(3(ii)(c) to Form 10-K for the year ended December 31, 1999 in 1-10764). (d) -- By-Laws of Entergy Gulf States effective November 26, 1999, and as presently in

effect (3(ii)(d) to Form 10-K for the year ended December 31, 19991-27031). (e) -- By-Laws of Entergy Louisiana effective November 26, 1999, and as presently in effect

(3(b) to Form S-3 in File No. 333-93683). (f) -- By-Laws of Entergy Mississippi effective November 26, 1999, and as presently in

effect (3(ii)(f) to Form 10-K for the year ended December 31, 1999 in 0-320). (g) -- By-Laws of Entergy New Orleans effective November 30, 1999, and as presently in

effect (3(b) to Form S-3 in File No. 333-95599).

(4) Instruments Defining Rights of Security Holders, Including Indentures

Entergy Corporation

(a) 1 -- See (4)(b) through (4)(g) below for instruments defining the rights of holders of long-term debt of System Energy, Entergy Arkansas, Entergy Gulf States, EntergyLouisiana, Entergy Mississippi and Entergy New Orleans.

(a) 2 -- Credit Agreement, dated as of May 15, 2003, among Entergy Corporation, the Banks

(ABN AMRO Bank N.V., Bank One, N.A., Barclays Bank PLC, Bayerische Hypo-und Vereinsbank AG (New York Branch), BNP Paribas, Citibank, N.A., CoBank,ACB, Credit Lyonnais (New York Branch), Credit Suisse First Boston (CaymanIslands Branch), Deutsche Bank AG New York Branch, J. P. Morgan Chase Bank,KBC Bank N.V., KeyBank National Association, Lehman Brothers Bank, FSB,Mellon Bank, N.A., Mizuho Corporate Bank Limited, Morgan Stanley Bank, RegionsBank, Societe Generale, The Bank of New York, The Bank of Nova Scotia, The RoyalBank of Scotland plc, Union Bank of California, N.A., Wachovia Bank (NationalAssociation), and West LB AG, New York Branch, formerly know as WestdeutscheLandesbank Girozentrale, New York Branch), and Citibank, N.A., as AdministrativeAgent (4(c) to Form 10-Q for the quarter ended June 30, 2003 in 1-11299).

(a) 3 -- Assumption Agreement, dated July 15, 2002, among Entergy Corporation, CO Bank,

ACB, (as Additional Lender), and Citibank N.A., (as Administrative Agent) (4(b) toForm 10-Q for the quarter ended June 30, 2002 in 1-11299).

(a) 4 -- Indenture, dated as of December 1, 2002, between Entergy Corporation and Deutsche

Bank Trust Company Americas, as Trustee (10(a)4 to Form 10-K for the year endedDecember 31, 2002 in 1-11299).

(a) 5 -- Officer' Certificate for Entergy Corporation (4(c) to Form 10-Q for the quarter ended

March 31, 2003). (a) 6 -- Officer' Certificate for Entergy Corporation (4(d) to Form 10-Q for the quarter ended

March 31, 2003). (a) 7 -- Officer' Certificate for Entergy Corporation (4(d) to Form 10-Q for the quarter ended

June 30, 2003). (a) 8 -- Officer' Certificate for Entergy Corporation (4(a) to Form 10-Q for the quarter ended

September 30, 2003). *(a) 9 -- Officer' Certificate for Entergy Corporation. *(a) 10-- Officer' Certificate for Entergy Corporation. *(a) 11-- Credit Agreement, dated as of November 24, 2003, among Entergy Corporation,

Bayerische Hypo-und Vereinsbank AG, New York Branch, the Bank, and BayerischeHypo-und Vereinsbank AG, New York Branch, as Administrative Agent.

System Energy

(b) 1 -- Mortgage and Deed of Trust, dated as of June 15, 1977, as amended by twenty-twoSupplemental Indentures (A-1 in 70-5890 (Mortgage); B and C to Rule 24 Certificatein 70-5890 (First); B to Rule 24 Certificate in 70-6259 (Second); 20(a)-5 to Form 10-Q for the quarter ended June 30, 1981 in 1-3517 (Third); A-1(e)-1 to Rule 24Certificate in 70-6985 (Fourth); B to Rule 24 Certificate in 70-7021 (Fifth); B toRule 24 Certificate in 70-7021 (Sixth); A-3(b) to Rule 24 Certificate in 70-7026(Seventh); A-3(b) to Rule 24 Certificate in 70-7158 (Eighth); B to Rule 24 Certificatein 70-7123 (Ninth); B-1 to Rule 24 Certificate in 70-7272 (Tenth); B-2 to Rule 24Certificate in 70-7272 (Eleventh); B-3 to Rule 24 Certificate in 70-7272 (Twelfth); B-1to Rule 24 Certificate in 70-7382 (Thirteenth); B-2 to Rule 24 Certificate in 70-7382(Fourteenth); A-2(c) to Rule 24 Certificate in 70-7946 (Fifteenth); A-2(c) to Rule 24Certificate in 70-7946 (Sixteenth); A-2(d) to Rule 24 Certificate in 70-7946(Seventeenth); A-2(e) to Rule 24 Certificate dated May 4, 1993 in 70-7946(Eighteenth); A-2(g) to Rule 24 Certificate dated May 6, 1994 in 70-7946(Nineteenth); A-2(a)(1) to Rule 24 Certificate dated August 8, 1996 in 70-8511(Twentieth); A-2(a)(2) to Rule 24 Certificate dated August 8, 1996 in 70-8511(Twenty-first); and A-2(a) to Rule 24 Certificate dated October 4, 2002 in 70-9753(Twenty-second)).

(b) 2 -- Facility Lease No. 1, dated as of December 1, 1988, between Meridian Trust Company

and Stephen M. Carta (Steven Kaba, successor), as Owner Trustees, and SystemEnergy (B-2(c)(1) to Rule 24 Certificate dated January 9, 1989 in 70-7561), assupplemented by Lease Supplement No. 1 dated as of April 1, 1989 (B-22(b) (1) toRule 24 Certificate dated April 21, 1989 in 70-7561) and Lease Supplement No. 2dated as of January 1, 1994 (B-3(d) to Rule 24 Certificate dated January 31, 1994 in70-8215).

(b) 3 --

Facility Lease No. 2, dated as of December 1, 1988 between Meridian Trust Companyand Stephen M. Carta (Steven Kaba, successor), as Owner Trustees, and SystemEnergy (B-2(c)(2) to Rule 24 Certificate dated January 9, 1989 in 70-7561), assupplemented by Lease Supplement No. 1 dated as of April 1, 1989 (B-22(b) (2) toRule 24 Certificate dated April 21, 1989 in 70-7561) and Lease Supplement No. 2dated as of January 1, 1994 (B-4(d) Rule 24 Certificate dated January 31, 1994 in 70-8215).

Entergy Arkansas

(c) 1 -- Mortgage and Deed of Trust, dated as of October 1, 1944, as amended by sixty-oneSupplemental Indentures (7(d) in 2-5463 (Mortgage); 7(b) in 2-7121 (First); 7(c) in 2-7605 (Second); 7(d) in 2-8100 (Third); 7(a)-4 in 2-8482 (Fourth); 7(a)-5 in 2-9149(Fifth); 4(a)-6 in 2-9789 (Sixth); 4(a)-7 in 2-10261 (Seventh); 4(a)-8 in 2-11043(Eighth); 2(b)-9 in 2-11468 (Ninth); 2(b)-10 in 2-15767 (Tenth); D in 70-3952(Eleventh); D in 70-4099 (Twelfth); 4(d) in 2-23185 (Thirteenth); 2(c) in 2-24414(Fourteenth); 2(c) in 2-25913 (Fifteenth); 2(c) in 2-28869 (Sixteenth); 2(d) in 2-28869(Seventeenth); 2(c) in 2-35107 (Eighteenth); 2(d) in 2-36646 (Nineteenth); 2(c) in 2-39253 (Twentieth); 2(c) in 2-41080 (Twenty-first); C-1 to Rule 24 Certificate in 70-5151 (Twenty-second); C-1 to Rule 24 Certificate in 70-5257 (Twenty-third); C toRule 24 Certificate in 70-5343 (Twenty-fourth); C-1 to Rule 24 Certificate in 70-5404(Twenty-fifth); C to Rule 24 Certificate in 70-5502 (Twenty-sixth); C-1 to Rule 24Certificate in 70-5556 (Twenty-seventh); C-1 to Rule 24 Certificate in 70-5693(Twenty-eighth); C-1 to Rule 24 Certificate in 70-6078 (Twenty-ninth); C-1 to Rule 24Certificate in 70-6174 (Thirtieth); C-1 to Rule 24 Certificate in 70-6246 (Thirty-first);C-1 to Rule 24 Certificate in 70-6498 (Thirty-second); A-4b-2 to Rule 24 Certificate in70-6326 (Thirty-third); C-1 to Rule 24 Certificate in 70-6607 (Thirty-fourth); C-1 toRule 24 Certificate in 70-6650 (Thirty-fifth); C-1 to Rule 24 Certificate datedDecember 1, 1982 in 70-6774 (Thirty-sixth); C-1 to Rule 24 Certificate datedFebruary 17, 1983 in 70-6774 (Thirty-seventh); A-2(a) to Rule 24 Certificate datedDecember 5, 1984 in 70-6858 (Thirty-eighth); A-3(a) to Rule 24 Certificate in 70-7127 (Thirty-ninth); A-7 to Rule 24 Certificate in 70-7068 (Fortieth); A-8(b) toRule 24 Certificate dated July 6, 1989 in 70-7346 (Forty-first); A-8(c) to Rule 24Certificate dated February 1, 1990 in 70-7346 (Forty-second); 4 to Form 10-Q for thequarter ended September 30, 1990 in 1-10764 (Forty-third); A-2(a) to Rule 24Certificate dated November 30, 1990 in 70-7802 (Forty-fourth); A-2(b) to Rule 24Certificate dated January 24, 1991 in 70-7802 (Forty-fifth); 4(d)(2) in 33-54298(Forty-sixth); 4(c)(2) to Form 10-K for the year ended December 31, 1992 in 1-10764(Forty-seventh); 4(b) to Form 10-Q for the quarter ended June 30, 1993 in 1-10764(Forty-eighth); 4(c) to Form 10-Q for the quarter ended June 30, 1993 in 1-10764(Forty-ninth); 4(b) to Form 10-Q for the quarter ended September 30, 1993 in 1-10764(Fiftieth); 4(c) to Form 10-Q for the quarter ended September 30, 1993 in 1-10764(Fifty-first); 4(a) to Form 10-Q for the quarter ended June 30, 1994 in 1-10764 (Fifty-second); C-2 to Form U5S for the year ended December 31, 1995 (Fifty-third); C-2(a)to Form U5S for the year ended December 31, 1996 (Fifty-fourth); 4(a) to Form 10-Qfor the quarter ended March 31, 2000 in 1-10764 (Fifty-fifth); 4(a) to Form 10-Q forthe quarter ended September 30, 2001 in 1-10764 (Fifty-sixth); C-2(a) to Form U5Sfor the year ended December 31, 2001 (Fifty-seventh); 4(c)1 to Form 10-K for the yearDecember 31, 2002 in 1-10764 (Fifty-eighth); 4(a) to Form 10-Q for the quarter endedJune 30, 2003 in 1-10764 (Fifty-ninth); 4(f) to Form 10-Q for the quarter ended June30, 2003 in 1-10764 (Sixtieth); and 4(h) to Form 10-Q for the quarter ended June 30,2003 in 1-10764 (Sixty-first)).

(c) 2 -- Indenture for Unsecured Subordinated Debt Securities relating to Trust Securities

between Entergy Arkansas and Bank of New York (as Trustee), dated as of August 1,1996 (A-1(a) to Rule 24 Certificate dated August 26, 1996 in 70-8723).

(c) 3 -- Amended and Restated Trust Agreement of Entergy Arkansas Capital I, dated as of

August 14, 1996 (A-3(a) to Rule 24 Certificate dated August 26, 1996 in 70-8723). (c) 4 -- Guarantee Agreement between Entergy Arkansas (as Guarantor) and The Bank of

New York (as Trustee), dated as of August 14, 1996, with respect to Entergy ArkansasCapital I's obligations on its 8 1/2% Cumulative Quarterly Income PreferredSecurities, Series A (A-4(a) to Rule 24 Certificate dated August 26, 1996 in 70-8723).

Entergy Gulf States

(d) 1 -- Indenture of Mortgage, dated September 1, 1926, as amended by certain SupplementalIndentures (B-a-I-1 in Registration No. 2-2449 (Mortgage); 7-A-9 in Registration No.2-6893 (Seventh); B to Form 8-K dated September 1, 1959 (Eighteenth); B to Form 8-K dated February 1, 1966 (Twenty-second); B to Form 8-K dated March 1, 1967(Twenty-third); C to Form 8-K dated March 1, 1968 (Twenty-fourth); B to Form 8-K

dated November 1, 1968 (Twenty-fifth); B to Form 8-K dated April 1, 1969 (Twenty-sixth); 2-A-8 in Registration No. 2-66612 (Thirty-eighth); 4-2 to Form 10-K for theyear ended December 31, 1984 in 1-27031 (Forty-eighth); 4-2 to Form 10-K for theyear ended December 31, 1988 in 1-27031 (Fifty-second); 4 to Form 10-K for the yearended December 31, 1991 in 1-27031 (Fifty-third); 4 to Form 8-K dated July 29, 1992in 1-27031 (Fifth-fourth); 4 to Form 10-K dated December 31, 1992 in 1-27031 (Fifty-fifth); 4 to Form 10-Q for the quarter ended March 31, 1993 in 1-27031 (Fifty-sixth);4-2 to Amendment No. 9 to Registration No. 2-76551 (Fifty-seventh); 4(b) to Form10-Q for the quarter ended March 31,1999 in 1-27031 (Fifty-eighth); A-2(a) to Rule24 Certificate dated June 23, 2000 in 70-8721 (Fifty-ninth); A-2(a) to Rule 24Certificate dated September 10, 2001 in 70-9751 (Sixtieth); A-2(b) to Rule 24Certificate dated November 18, 2002 in 70-9751 (Sixty-first); A-2(c) to Rule 24Certificate dated December 6, 2002 in 70-9751 (Sixty-second); A-2(d) to Rule 24Certificate dated June 16, 2003 in 70-9751 (Sixty-third); A-2(e) to Rule 24 Certificatedated June 27, 2003 in 70-9751 (Sixty-fourth); A-2(f) to Rule 24 Certificate dated July11, 2003 in 70-9751 (Sixty-fifth); and A-2(g) to Rule 24 Certificate dated July 28,2003 in 70-9751 (Sixty-sixth)).

(d) 2 -- Indenture, dated March 21, 1939, accepting resignation of The Chase National Bank of

the City of New York as trustee and appointing Central Hanover Bank and TrustCompany as successor trustee (B-a-1-6 in Registration No. 2-4076).

(d) 3 -- Indenture for Unsecured Subordinated Debt Securities relating to Trust Securities,

dated as of January 15, 1997 (A-11(a) to Rule 24 Certificate dated February 6, 1997 in70-8721).

(d) 4 -- Amended and Restated Trust Agreement of Entergy Gulf States Capital I dated

January 28, 1997 of Series A Preferred Securities (A-13(a) to Rule 24 Certificate datedFebruary 6, 1997 in 70-8721).

(d) 5 -- Guarantee Agreement between Entergy Gulf States, Inc. (as Guarantor) and The Bank

of New York (as Trustee) dated as of January 28, 1997 with respect to Entergy GulfStates Capital I's obligation on its 8.75% Cumulative Quarterly Income PreferredSecurities, Series A (A-14(a) to Rule 24 Certificate dated February 6, 1997 in 70-8721).

Entergy Louisiana

(e) 1 -- Mortgage and Deed of Trust, dated as of April 1, 1944, as amended by fifty-sixSupplemental Indentures (7(d) in 2-5317 (Mortgage); 7(b) in 2-7408 (First); 7(c) in 2-8636 (Second); 4(b)-3 in 2-10412 (Third); 4(b)-4 in 2-12264 (Fourth); 2(b)-5 in 2-12936 (Fifth); D in 70-3862 (Sixth); 2(b)-7 in 2-22340 (Seventh); 2(c) in 2-24429(Eighth); 4(c)-9 in 2-25801 (Ninth); 4(c)-10 in 2-26911 (Tenth); 2(c) in 2-28123(Eleventh); 2(c) in 2-34659 (Twelfth); C to Rule 24 Certificate in 70-4793(Thirteenth); 2(b)-2 in 2-38378 (Fourteenth); 2(b)-2 in 2-39437 (Fifteenth); 2(b)-2 in2-42523 (Sixteenth); C to Rule 24 Certificate in 70-5242 (Seventeenth); C to Rule 24Certificate in 70-5330 (Eighteenth); C-1 to Rule 24 Certificate in 70-5449(Nineteenth); C-1 to Rule 24 Certificate in 70-5550 (Twentieth); A-6(a) to Rule 24Certificate in 70-5598 (Twenty-first); C-1 to Rule 24 Certificate in 70-5711 (Twenty-second); C-1 to Rule 24 Certificate in 70-5919 (Twenty-third); C-1 to Rule 24Certificate in 70-6102 (Twenty-fourth); C-1 to Rule 24 Certificate in 70-6169(Twenty-fifth); C-1 to Rule 24 Certificate in 70-6278 (Twenty-sixth); C-1 to Rule 24Certificate in 70-6355 (Twenty-seventh); C-1 to Rule 24 Certificate in 70-6508(Twenty-eighth); C-1 to Rule 24 Certificate in 70-6556 (Twenty-ninth); C-1 to Rule 24Certificate in 70-6635 (Thirtieth); C-1 to Rule 24 Certificate in 70-6834 (Thirty-first);C-1 to Rule 24 Certificate in 70-6886 (Thirty-second); C-1 to Rule 24 Certificate in70-6993 (Thirty-third); C-2 to Rule 24 Certificate in 70-6993 (Thirty-fourth); C-3 toRule 24 Certificate in 70-6993 (Thirty-fifth); A-2(a) to Rule 24 Certificate in 70-7166(Thirty-sixth); A-2(a) in 70-7226 (Thirty-seventh); C-1 to Rule 24 Certificate in 70-7270 (Thirty-eighth); 4(a) to Quarterly Report on Form 10-Q for the quarter endedJune 30, 1988 in 1-8474 (Thirty-ninth); A-2(b) to Rule 24 Certificate in 70-7553(Fortieth); A-2(d) to Rule 24 Certificate in 70-7553 (Forty-first); A-3(a) to Rule 24Certificate in 70-7822 (Forty-second); A-3(b) to Rule 24 Certificate in 70-7822 (Forty-third); A-2(b) to Rule 24 Certificate in 70-7822 (Forty-fourth); A-3(c) to Rule 24Certificate in 70-7822 (Forty-fifth); A-2(c) to Rule 24 Certificate dated April 7, 1993in 70-7822 (Forty-sixth); A-3(d) to Rule 24 Certificate dated June 4, 1993 in 70-7822(Forth-seventh); A-3(e) to Rule 24 Certificate dated December 21, 1993 in 70-7822(Forty-eighth); A-3(f) to Rule 24 Certificate dated August 1, 1994 in 70-7822 (Forty-ninth); A-4(c) to Rule 24 Certificate dated September 28, 1994 in 70-7653 (Fiftieth);A-2(a) to Rule 24 Certificate dated April 4, 1996 in 70-8487 (Fifty-first); A-2(a) toRule 24 Certificate dated April 3, 1998 in 70-9141 (Fifty-second); A-2(b) to Rule 24Certificate dated April 9, 1999 in 70-9141 (Fifty-third); A-3(a) to Rule 24 Certificatedated July 6, 1999 in 70-9141 (Fifty-fourth); A-2(c) to Rule 24 Certificate dated June2, 2000 in 70-9141 (Fifty-fifth); and A-2(d) to Rule 24 Certificate dated April 4, 2002in 70-9141 (Fifty-sixth)).

(e) 2 -- Facility Lease No. 1, dated as of September 1, 1989, between First National Bank of

Commerce, as Owner Trustee, and Entergy Louisiana (4(c)-1 in Registration No. 33-30660).





(e) 5 -- Indenture for Unsecured Subordinated Debt Securities relating to Trust Securities,

dated as of July 1, 1996 (A-14(a) to Rule 24 Certificate dated July 25, 1996 in 70-8487).

(e) 6 -- Amended and Restated Trust Agreement of Entergy Louisiana Capital I dated July 16,

1996 of Series A Preferred Securities (A-16(a) to Rule 24 Certificate dated July 25,1996 in 70-8487).

(e) 7 -- Guarantee Agreement between Entergy Louisiana, Inc. (as Guarantor) and The Bank

of New York (as Trustee) dated as of July 16, 1996 with respect to Entergy LouisianaCapital I's obligation on its 9% Cumulative Quarterly Income Preferred Securities,Series A (A-19(a) to Rule 24 Certificate dated July 25, 1996 in 70-8487).

Entergy Mississippi

(f) 1 -- Mortgage and Deed of Trust, dated as of February 1, 1988, as amended by twenty-oneSupplemental Indentures (A-2(a)-2 to Rule 24 Certificate in 70-7461 (Mortgage); A-2(b)-2 in 70-7461 (First); A-5(b) to Rule 24 Certificate in 70-7419 (Second); A-4(b) toRule 24 Certificate in 70-7554 (Third); A-1(b)-1 to Rule 24 Certificate in 70-7737(Fourth); A-2(b) to Rule 24 Certificate dated November 24, 1992 in 70-7914 (Fifth);A-2(e) to Rule 24 Certificate dated January 22, 1993 in 70-7914 (Sixth); A-2(g) toForm U-1 in 70-7914 (Seventh); A-2(i) to Rule 24 Certificate dated November 10,1993 in 70-7914 (Eighth); A-2(j) to Rule 24 Certificate dated July 22, 1994 in 70-7914(Ninth); (A-2(l) to Rule 24 Certificate dated April 21, 1995 in 70-7914 (Tenth); A-2(a)to Rule 24 Certificate dated June 27, 1997 in 70-8719 (Eleventh); A-2(b) to Rule 24Certificate dated April 16, 1998 in 70-8719 (Twelfth); A-2(c) to Rule 24 Certificatedated May 12, 1999 in 70-8719 (Thirteenth); A-3(a) to Rule 24 Certificate dated June8, 1999 in 70-8719 (Fourteenth); A-2(d) to Rule 24 Certificate dated February 24,2000 in 70-8719 (Fifteenth); A-2(a) to Rule 24 Certificate dated February 9, 2001 in70-9757 (Sixteenth); A-2(b) to Rule 24 Certificate dated October 31, 2002 in 70-9757(Seventeenth); A-2(c) to Rule 24 Certificate dated December 2, 2002 in 70-9757(Eighteenth); A-2(d) to Rule 24 Certificate dated February 6, 2003 in 70-9757(Nineteenth); A-2(e) to Rule 24 Certificate dated April 4, 2003 in 70-9757(Twentieth); and A-2(f) to Rule 24 Certificate dated June 6, 2003 in 70-9757 (Twenty-first)).

Entergy New Orleans

(g) 1 -- Mortgage and Deed of Trust, dated as of May 1, 1987, as amended by elevenSupplemental Indentures (A-2(c) to Rule 24 Certificate in 70-7350 (Mortgage); A-5(b)to Rule 24 Certificate in 70-7350 (First); A-4(b) to Rule 24 Certificate in 70-7448(Second); 4(f)4 to Form 10-K for the year ended December 31, 1992 in 0-5807(Third); 4(a) to Form 10-Q for the quarter ended September 30, 1993 in 0-5807(Fourth); 4(a) to Form 8-K dated April 26, 1995 in 0-5807 (Fifth); 4(a) to Form 8-Kdated March 22, 1996 in 0-5807 (Sixth); 4(b) to Form 10-Q for the quarter ended June30, 1998 in 0-5807 (Seventh); 4(d) to Form 10-Q for the quarter ended June 30, 2000in 0-5807 (Eighth); C-5(a) to Form U5S for the year ended December 31, 2000(Ninth); 4(b) to Form 10-Q for the quarter ended September 30, 2002 in 0-5807(Tenth); and 4(k) to Form 10-Q for the quarter ended June 30, 2003 in 0-5807(Eleventh)).

(10) Material Contracts

Entergy Corporation

(a) 1 -- Agreement, dated April 23, 1982, among certain System companies, relating to SystemPlanning and Development and Intra-System Transactions (10(a)1 to Form 10-K forthe year ended December 31, 1982 in 1-3517).

(a) 2 -- Middle South Utilities (now Entergy Corporation) System Agency Agreement, dated

December 11, 1970 (5(a)2 in 2-41080). (a) 3 -- Amendment, dated February 10, 1971, to Middle South Utilities System Agency

Agreement, dated December 11, 1970 (5(a)4 in 2-41080). (a) 4 -- Amendment, dated May 12, 1988, to Middle South Utilities System Agency

Agreement, dated December 11, 1970 (5(a)4 in 2-41080). (a) 5 -- Middle South Utilities System Agency Coordination Agreement, dated December 11,

1970 (5(a)3 in 2-41080). (a) 6 -- Service Agreement with Entergy Services, dated as of April 1, 1963 (5(a)5 in 2-41080). (a) 7 -- Amendment, dated April 27, 1984, to Service Agreement with Entergy Services

(10(a)7 to Form 10-K for the year ended December 31, 1984 in 1-3517). (a) 8 -- Amendment, dated January 1, 2000, to Service Agreement with Entergy Services

(10(a)12 for the year ended December 31, 2001 in 1-11299). *(a) 9 -- Amendment, dated August 1, 2003, to Service Agreement with Entergy Services. (a) 10 -- Availability Agreement, dated June 21, 1974, among System Energy and certain other

System companies (B to Rule 24 Certificate dated June 24, 1974 in 70-5399). (a) 11 -- First Amendment to Availability Agreement, dated as of June 30, 1977 (B to Rule 24

Certificate dated June 24, 1977 in 70-5399). (a) 12 -- Second Amendment to Availability Agreement, dated as of June 15, 1981 (E to Rule 24

Certificate dated July 1, 1981 in 70-6592). (a) 13 -- Third Amendment to Availability Agreement, dated as of June 28, 1984 (B-13(a) to

Rule 24 Certificate dated July 6, 1984 in 70-6985). (a) 14 -- Fourth Amendment to Availability Agreement, dated as of June 1, 1989 (A to Rule 24

Certificate dated June 8, 1989 in 70-5399). (a) 15 -- Eighteenth Assignment of Availability Agreement, Consent and Agreement, dated as of

September 1, 1986, with United States Trust Company of New York and Gerard F.Ganey, as Trustees (C-2 to Rule 24 Certificate dated October 1, 1986 in 70-7272).

(a) 16 -- Nineteenth Assignment of Availability Agreement, Consent and Agreement, dated as of

September 1, 1986, with United States Trust Company of New York and Gerard F.Ganey, as Trustees (C-3 to Rule 24 Certificate dated October 1, 1986 in 70-7272).

(a) 17 -- Twenty-sixth Assignment of Availability Agreement, Consent and Agreement, dated as

of October 1, 1992, with United States Trust Company of New York and Gerard F.Ganey, as Trustees (B-2(c) to Rule 24 Certificate dated November 2, 1992 in 70-7946).

(a) 18 -- Twenty-seventh Assignment of Availability Agreement, Consent and Agreement, dated

as of April 1, 1993, with United States Trust Company of New York and Gerard F.Ganey as Trustees (B-2(d) to Rule 24 Certificate dated May 4, 1993 in 70-7946).

(a) 19 -- Twenty-ninth Assignment of Availability Agreement, Consent and Agreement, dated as

of April 1, 1994, with United States Trust Company of New York and Gerard F. Ganeyas Trustees (B-2(f) to Rule 24 Certificate dated May 6, 1994 in 70-7946).

(a) 20 -- Thirtieth Assignment of Availability Agreement, Consent and Agreement, dated as of

August 1, 1996, among System Energy, Entergy Arkansas, Entergy Louisiana, EntergyMississippi and Entergy New Orleans, and United States Trust Company of New Yorkand Gerard F. Ganey, as Trustees (B-2(a) to Rule 24 Certificate dated August 8, 1996 in70-8511).

(a) 21 -- Thirty-first Assignment of Availability Agreement, Consent and Agreement, dated as

of August 1, 1996, among System Energy, Entergy Arkansas, Entergy Louisiana,Entergy Mississippi, and Entergy New Orleans, and United States Trust Company of

New York and Gerard F. Ganey, as Trustees (B-2(b) to Rule 24 Certificate datedAugust 8, 1996 in 70-8511).

(a) 22 -- Thirty-second Assignment of Availability Agreement, Consent and Agreement, dated

as of December 27, 1996, among System Energy, Entergy Arkansas, EntergyLouisiana, Entergy Mississippi, and Entergy New Orleans, and The Chase ManhattanBank (B-2(a) to Rule 24 Certificate dated January 13, 1997 in 70-7561).

(a) 23 -- Thirty-third Assignment of Availability Agreement, Consent and Agreement, dated as

of December 20, 1999, among System Energy, Entergy Arkansas, Entergy Louisiana,Entergy Mississippi, and Entergy New Orleans, and The Chase Manhattan Bank (B-2(b) to Rule 24 Certificate dated March 3, 2000 in 70-7561).

(a) 24 -- Thirty-fourth Assignment of Availability Agreement, Consent and Agreement, dated as

of September 1, 2002, among System Energy, Entergy Arkansas, Entergy Louisiana,Entergy Mississippi, and Entergy New Orleans, The Bank of New York and Douglas J.MacInnes (B-2(a)(1) to Rule 24 Certificate dated October 4, 2001 in 70-9753).

*(a) 25 -- Thirty-fifth Assignment of Availability Agreement, Consent and Agreement, dated as

of December 22, 2003, among System Energy, Entergy Arkansas, Entergy Louisiana,Entergy Mississippi, and Entergy New Orleans, and Union Bank of California, N.A.

(a) 26 -- Capital Funds Agreement, dated June 21, 1974, between Entergy Corporation and

System Energy (C to Rule 24 Certificate dated June 24, 1974 in 70-5399). (a) 27 -- First Amendment to Capital Funds Agreement, dated as of June 1, 1989 (B to Rule 24

Certificate dated June 8, 1989 in 70-5399). (a) 28 -- Eighteenth Supplementary Capital Funds Agreement and Assignment, dated as of

September 1, 1986, with United States Trust Company of New York and Gerard F.Ganey, as Trustees (D-2 to Rule 24 Certificate dated October 1, 1986 in 70-7272).

(a) 29 -- Nineteenth Supplementary Capital Funds Agreement and Assignment, dated as of

September 1, 1986, with United States Trust Company of New York and Gerard F.Ganey, as Trustees (D-3 to Rule 24 Certificate dated October 1, 1986 in 70-7272).

(a) 30 -- Twenty-sixth Supplementary Capital Funds Agreement and Assignment, dated as of

October 1, 1992, with United States Trust Company of New York and Gerard F. Ganey,as Trustees (B-3(c) to Rule 24 Certificate dated November 2, 1992 in 70-7946).

(a) 31 -- Twenty-seventh Supplementary Capital Funds Agreement and Assignment, dated as of

April 1, 1993, with United States Trust Company of New York and Gerard F. Ganey, asTrustees (B-3(d) to Rule 24 Certificate dated May 4, 1993 in 70-7946).

(a) 32 -- Twenty-ninth Supplementary Capital Funds Agreement and Assignment, dated as of

April 1, 1994, with United States Trust Company of New York and Gerard F. Ganey, asTrustees (B-3(f) to Rule 24 Certificate dated May 6, 1994 in 70-7946).

(a) 33 -- Thirtieth Supplementary Capital Funds Agreement and Assignment, dated as of

August 1, 1996, among Entergy Corporation, System Energy and United States TrustCompany of New York and Gerard F. Ganey, as Trustees (B-3(a) to Rule 24 Certificatedated August 8, 1996 in 70-8511).

(a) 34 -- Thirty-first Supplementary Capital Funds Agreement and Assignment, dated as of

August 1, 1996, among Entergy Corporation, System Energy and United States TrustCompany of New York and Gerard F. Ganey, as Trustees (B-3(b) to Rule 24 Certificatedated August 8, 1996 in 70-8511).

(a) 35 -- Thirty-second Supplementary Capital Funds Agreement and Assignment, dated as of

December 27, 1996, among Entergy Corporation, System Energy and The ChaseManhattan Bank (B-1(a) to Rule 24 Certificate dated January 13, 1997 in 70-7561).

(a) 36 -- Thirty-third Supplementary Capital Funds Agreement and Assignment, dated as of

December 20, 1999, among Entergy Corporation, System Energy and The ChaseManhattan Bank (B-3(b) to Rule 24 Certificate dated March 3, 2000 in 70-7561).

(a) 37 -- Thirty-fourth Supplementary Capital Funds Agreement and Assignment, dated as of

September 1, 2002, among Entergy Corporation, System Energy, The Bank of NewYork and Douglas J. MacInnes (B-3(a)(1) to Rule 24 Certificate dated October 4, 2002in 70-9753).

*(a) 38 -- Thirty-fifth Supplementary Capital Funds Agreement and Assignment, dated as of

December 22, 2003, among Entergy Corporation, System Energy, and Union Bank of

California, N.A. (a) 39 -- First Amendment to Supplementary Capital Funds Agreements and Assignments, dated

as of June 1, 1989, by and between Entergy Corporation, System Energy, DepositGuaranty National Bank, United States Trust Company of New York and Gerard F.Ganey (C to Rule 24 Certificate dated June 8, 1989 in 70-7026).

(a) 40 -- First Amendment to Supplementary Capital Funds Agreements and Assignments, dated

as of June 1, 1989, by and between Entergy Corporation, System Energy, United StatesTrust Company of New York and Gerard F. Ganey (C to Rule 24 Certificate dated June8, 1989 in 70-7123).

(a) 41 -- First Amendment to Supplementary Capital Funds Agreement and Assignment, dated

as of June 1, 1989, by and between Entergy Corporation, System Energy and ChemicalBank (C to Rule 24 Certificate dated June 8, 1989 in 70-7561).

(a) 42 -- Reallocation Agreement, dated as of July 28, 1981, among System Energy and certain

other System companies (B-1(a) in 70-6624). (a) 43 -- Joint Construction, Acquisition and Ownership Agreement, dated as of May 1, 1980,

between System Energy and SMEPA (B-1(a) in 70-6337), as amended by AmendmentNo. 1, dated as of May 1, 1980 (B-1(c) in 70-6337) and Amendment No. 2, dated as ofOctober 31, 1980 (1 to Rule 24 Certificate dated October 30, 1981 in 70-6337).

(a) 44 -- Operating Agreement dated as of May 1, 1980, between System Energy and SMEPA

(B(2)(a) in 70-6337). (a) 45 -- Assignment, Assumption and Further Agreement No. 1, dated as of December 1, 1988,

among System Energy, Meridian Trust Company and Stephen M. Carta, and SMEPA(B-7(c)(1) to Rule 24 Certificate dated January 9, 1989 in 70-7561).

(a) 46 -- Assignment, Assumption and Further Agreement No. 2, dated as of December 1, 1988,


(a) 47 -- Substitute Power Agreement, dated as of May 1, 1980, among Entergy Mississippi,

System Energy and SMEPA (B(3)(a) in 70-6337). (a) 48 -- Grand Gulf Unit No. 2 Supplementary Agreement, dated as of February 7, 1986,

between System Energy and SMEPA (10(aaa) in 33-4033). (a) 49 -- Compromise and Settlement Agreement, dated June 4, 1982, between Texaco, Inc. and

Entergy Louisiana (28(a) to Form 8-K dated June 4, 1982 in 1-3517). (a) 50 -- Unit Power Sales Agreement, dated as of June 10, 1982, between System Energy and

Entergy Arkansas, Entergy Louisiana, Entergy Mississippi and Entergy New Orleans(10(a)39 to Form 10-K for the year ended December 31, 1982 in 1-3517).

(a) 51 -- First Amendment to Unit Power Sales Agreement, dated as of June 28, 1984, between

System Energy and Entergy Arkansas, Entergy Louisiana, Entergy Mississippi andEntergy New Orleans (19 to Form 10-Q for the quarter ended September 30, 1984 in 1-3517).

(a) 52 -- Revised Unit Power Sales Agreement (10(ss) in 33-4033). (a) 53 -- Middle South Utilities Inc. and Subsidiary Companies Intercompany Income Tax

Allocation Agreement, dated April 28, 1988 (D-1 to Form U5S for the year endedDecember 31, 1987).

(a) 54 -- First Amendment, dated January 1, 1990, to the Middle South Utilities Inc. and

Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-2 toForm U5S for the year ended December 31, 1989).

(a) 55 -- Second Amendment dated January 1, 1992, to the Entergy Corporation and Subsidiary

Companies Intercompany Income Tax Allocation Agreement (D-3 to Form U5S for theyear ended December 31, 1992).

(a) 56 -- Third Amendment dated January 1, 1994 to Entergy Corporation and Subsidiary

Companies Intercompany Income Tax Allocation Agreement (D-3(a) to Form U5S forthe year ended December 31, 1993).

(a) 57 --

Fourth Amendment dated April 1, 1997 to Entergy Corporation and SubsidiaryCompanies Intercompany Income Tax Allocation Agreement (D-5 to Form U5S for theyear ended December 31, 1996).

(a) 58 -- Guaranty Agreement between Entergy Corporation and Entergy Arkansas, dated as of

September 20, 1990 (B-1(a) to Rule 24 Certificate dated September 27, 1990 in 70-7757).

(a) 59 -- Guarantee Agreement between Entergy Corporation and Entergy Louisiana, dated as of


(a) 60 -- Guarantee Agreement between Entergy Corporation and System Energy, dated as of


(a) 61 -- Loan Agreement between Entergy Operations and Entergy Corporation, dated as of

September 20, 1990 (B-12(b) to Rule 24 Certificate dated June 15, 1990 in 70-7679). (a) 62 -- Loan Agreement between Entergy Power and Entergy Corporation, dated as of

August 28, 1990 (A-4(b) to Rule 24 Certificate dated September 6, 1990 in 70-7684). (a) 63 -- Loan Agreement between Entergy Corporation and Entergy Systems and Service, Inc.,

dated as of December 29, 1992 (A-4(b) to Rule 24 Certificate in 70-7947). +(a) 64 -- Executive Financial Counseling Program of Entergy Corporation and Subsidiaries

(10(a)64 to Form 10-K for the year ended December 31, 2001 in 1-11299). +(a) 65 -- Amended and Restated Executive Annual Incentive Plan of Entergy Corporation and

Subsidiaries, effective January 1, 2003 (10(b) to Form 10-Q for the quarter endedMarch 31, 2003 in 1-11299).

+(a) 66 -- Equity Ownership Plan of Entergy Corporation and Subsidiaries (A-4(a) to Rule 24

Certificate dated May 24, 1991 in 70-7831). +(a) 67 -- Amendment No. 1 to the Equity Ownership Plan of Entergy Corporation and

Subsidiaries (10(a)71 to Form 10-K for the year ended December 31, 1992 in 1-3517). +(a) 68 -- Amended and Restated 1998 Equity Ownership Plan of Entergy Corporation and

Subsidiaries (10(a) to Form 10-Q for the quarter ended March 31, 2003 in 1-11299). +(a) 69 -- Supplemental Retirement Plan of Entergy Corporation and Subsidiaries, as amended

effective January 1, 2000 (10(a)70 to Form 10-K for the year ended December 31,2001 in 1-11299).

+(a) 70 -- Amendment, effective December 28, 2001, to the Supplemental Retirement Plan of

Entergy Corporation and Subsidiaries (10(a)71 to Form 10-K for the year endedDecember 31, 2001 in 1-11299).

+(a) 71 -- Defined Contribution Restoration Plan of Entergy Corporation and Subsidiaries, as

amended effective January 1, 2000 (10(a)72 to Form 10-K for the year endedDecember 31, 2001 in 1-11299).

+(a) 72 -- Amendment, effective December 28, 2001, to the Defined Contribution Restoration

Plan of Entergy Corporation and Subsidiaries (10(a)73 to Form 10-K for the year endedDecember 31, 2001 in 1-11299).

+(a) 73 -- Executive Disability Plan of Entergy Corporation and Subsidiaries (10(a)74 to Form

10-K for the year ended December 31, 2001 in 1-11299). +(a) 74 -- Amended and Restated Executive Deferred Compensation Plan of Entergy Corporation

and Subsidiaries, dated June 10, 2003 (10(d) to Form 10-Q for the quarter ended June30, 2003 in 1-11299).

+(a) 75 -- Equity Awards Plan of Entergy Corporation and Subsidiaries, effective as of August

31, 2000 (10(a)77 to Form 10-K for the year ended December 31, 2001 in 1-11299). +(a) 76 -- Amendment, effective December 7, 2001, to the Equity Awards Plan of Entergy

Corporation and Subsidiaries (10(a)78 to Form 10-K for the year ended December 31,2001 in 1-11299).

+(a) 77 --

Amendment, effective December 10, 2001, to the Equity Awards Plan of EntergyCorporation and Subsidiaries (10(b) to Form 10-Q for the quarter ended March 31,2002 in 1-11299).

+(a) 78 -- System Executive Continuity Plan of Entergy Corporation and Subsidiaries, effective

as of March 1, 2000 (10(a)79 to Form 10-K for the year ended December 31, 2001 in1-11299).

+(a) 79 -- Post-Retirement Plan of Entergy Corporation and Subsidiaries, as amended effective

January 1, 2000 (10(a)80 to Form 10-K for the year ended December 31, 2001 in 1-11299).

+(a) 80 -- Amendment, effective December 28, 2001, to the Post-Retirement Plan of Entergy


+(a) 81 -- Pension Equalization Plan of Entergy Corporation and Subsidiaries, as amended

effective January 1, 2000 (10(a)82 to Form 10-K for the year ended December 31,2001 in 1-11299).

+(a) 82 -- Amendment, effective December 28, 2001, to the Pension Equalization Plan of Entergy


+(a) 83 -- Service Recognition Program for Non-Employee Outside Directors of Entergy

Corporation and Subsidiaries, effective January 1, 2000 (10(a)84 to Form 10-K for theyear ended December 31, 2001 in 1-11299).

+(a) 84 -- Stock Plan for Outside Directors of Entergy Corporation and Subsidiaries, as amended

(10(a)74 to Form 10-K for the year ended December 31, 1992 in 1-3517). +(a) 85 -- Executive Income Security Plan of Gulf States Utilities Company, as amended

effective March 1, 1991 (10(a)86 to Form 10-K for the year ended December 31, 2001in 1-11299).

+(a) 86 -- System Executive Retirement Plan of Entergy Corporation and Subsidiaries, effective

January 1, 2000 (10(a)87 to Form 10-K for the year ended December 31, 2001 in 1-11299).

+(a) 87 -- Amendment, effective December 28, 2001, to the System Executive Retirement Plan of

Entergy Corporation and Subsidiaries (10(a)88 to Form 10-K for the year endedDecember 31, 2001 in 1-11299).

+(a) 88 -- Retention Agreement effective October 27, 2000 between J. Wayne Leonard and

Entergy Corporation (10(a)81 to Form 10-K for the year ended December 31, 2000 in1-11299).

+(a) 89 -- Retention Agreement effective July 29, 2000 between Frank F. Gallaher and Entergy

Corporation (10(a)82 to Form 10-K for the year ended December 31, 2000 in 1-11299). +(a) 90 -- Letter Agreement effective July 25, 2001 between Jerry D. Jackson and Entergy

Corporation (10(a)91 to Form 10-K for the year ended December 31, 2001 in 1-11299). +(a) 91 -- Retention Agreement effective July 29, 2000 between Donald C. Hintz and Entergy

Corporation (10(a)85 to Form 10-K for the year ended December 31, 2000 in 1-11299). +(a) 92 -- Retention Agreement effective July 29, 2000 between Michael G. Thompson and

Entergy Corporation (10(a)86 to Form 10-K for the year ended December 31, 2000 in1-11299).

+(a) 93 -- Retention Agreement effective January 22, 2001 between Richard J. Smith and Entergy

Services, Inc (10(a)87 to Form 10-K for the year ended December 31, 2000 in 1-11299).

+(a) 94 -- Retention Agreement effective July 29, 2000 between Jerry W. Yelverton and Entergy

Corporation (10(a)89 to Form 10-K for the year ended December 31, 2000 in 1-11299). +(a) 95 -- Retention Agreement effective July 29, 2000 between C. John Wilder and Entergy

Corporation (10(a)90 to Form 10-K for the year ended December 31, 2000 in 1-11299). +(a) 96 -- Employment Agreement effective August 7, 2001 between Curt L. Hebert and Entergy

Corporation (10(a)97 to Form 10-K for the year ended December 31, 2001 in 1-11299).

+(a) 97 -- Agreement of Limited Partnership of Entergy-Koch, LP among EKLP, LLC, EK

Holding I, LLC, EK Holding II, LLC and Koch Energy, Inc. dated January 31, 2001(10(a)94 to Form 10-K/A for the year ended December 31, 2000 in 1-11299).

+(a) 98 -- Employment Agreement effective April 15, 2003 between Robert D. Sloan and Entergy

Services (10(c) to Form 10-Q for the quarter ended June 30, 2003 in 1-11299). *+(a) 99 -- Employment Agreement effective November 24, 2003 between Mark T. Savoff and

Entergy Services.

System Energy

(b) 1 through(b) 16 -- See 10(a)10 through 10(a)25 above. (b) 17 through(b) 32 -- See 10(a)26 through 10(a)41 above. (b) 33 -- Reallocation Agreement, dated as of July 28, 1981, among System Energy and certain

other System companies (B-1(a) in 70-6624). (b) 34 -- Joint Construction, Acquisition and Ownership Agreement, dated as of May 1, 1980,

between System Energy and SMEPA (B-1(a) in 70-6337), as amended by AmendmentNo. 1, dated as of May 1, 1980 (B-1(c) in 70-6337) and Amendment No. 2, dated as ofOctober 31, 1980 (1 to Rule 24 Certificate dated October 30, 1981 in 70-6337).

(b) 35 -- Operating Agreement, dated as of May 1, 1980, between System Energy and SMEPA

(B(2)(a) in 70-6337). (b) 36 -- Amended and Restated Installment Sale Agreement, dated as of February 15, 1996,

between System Energy and Claiborne County, Mississippi (B-6(a) to Rule 24Certificate dated March 4, 1996 in 70-8511).

(b) 37 -- Loan Agreement, dated as of October 15, 1998, between System Energy and

Mississippi Business Finance Corporation (B-6(b) to Rule 24 Certificate datedNovember 12, 1998 in 70-8511).

(b) 38 -- Loan Agreement, dated as of May 15, 1999, between System Energy and Mississippi

Business Finance Corporation (B-6(c) to Rule 24 Certificate dated June 8, 1999 in 70-8511).

(b) 39 -- Facility Lease No. 1, dated as of December 1, 1988, between Meridian Trust Company

and Stephen M. Carta (Stephen J. Kaba, successor), as Owner Trustees, and SystemEnergy (B-2(c)(1) to Rule 24 Certificate dated January 9, 1989 in 70-7561), assupplemented by Lease Supplement No. 1 dated as of April 1, 1989 (B-22(b) (1) toRule 24 Certificate dated April 21, 1989 in 70-7561) and Lease Supplement No. 2dated as of January 1, 1994 (B-3(d) to Rule 24 Certificate dated January 31, 1994 in70-8215).

(b) 40 -- Facility Lease No. 2, dated as of December 1, 1988 between Meridian Trust Company

and Stephen M. Carta (Stephen J. Kaba, successor), as Owner Trustees, and SystemEnergy (B-2(c)(2) to Rule 24 Certificate dated January 9, 1989 in 70-7561), assupplemented by Lease Supplement No. 1 dated as of April 1, 1989 (B-22(b) (2) toRule 24 Certificate dated April 21, 1989 in 70-7561) and Lease Supplement No. 2dated as of January 1, 1994 (B-4(d) Rule 24 Certificate dated January 31, 1994 in 70-8215).

(b) 41 -- Assignment, Assumption and Further Agreement No. 1, dated as of December 1, 1988,


(b) 42 -- Assignment, Assumption and Further Agreement No. 2, dated as of December 1, 1988,


(b) 43 -- Collateral Trust Indenture, dated as of January 1, 1994, among System Energy, GG1B

Funding Corporation and Bankers Trust Company, as Trustee (A-3(e) to Rule 24Certificate dated January 31, 1994 in 70-8215), as supplemented by SupplementalIndenture No. 1 dated January 1, 1994, (A-3(f) to Rule 24 Certificate dated January 31,1994 in 70-8215).

(b) 44 -- Substitute Power Agreement, dated as of May 1, 1980, among Entergy Mississippi,System Energy and SMEPA (B(3)(a) in 70-6337).

(b) 45 -- Grand Gulf Unit No. 2 Supplementary Agreement, dated as of February 7, 1986,

between System Energy and SMEPA (10(aaa) in 33-4033). (b) 46 -- Unit Power Sales Agreement, dated as of June 10, 1982, between System Energy and


(b) 47 -- First Amendment to the Unit Power Sales Agreement, dated as of June 28, 1984,

between System Energy and Entergy Arkansas, Entergy Louisiana, Entergy Mississippiand Entergy New Orleans (19 to Form 10-Q for the quarter ended September 30, 1984in 1-3517).

(b) 48 -- Revised Unit Power Sales Agreement (10(ss) in 33-4033). (b) 49 -- Fuel Lease, dated as of February 24, 1989, between River Fuel Funding Company #3,

Inc. and System Energy (B-1(b) to Rule 24 Certificate dated March 3, 1989 in 70-7604).

(b) 50 -- System Energy's Consent, dated January 31, 1995, pursuant to Fuel Lease, dated as of

February 24, 1989, between River Fuel Funding Company #3, Inc. and System Energy(B-1(c) to Rule 24 Certificate dated February 13, 1995 in 70-7604).

(b) 51 -- Sales Agreement, dated as of June 21, 1974, between System Energy and Entergy

Mississippi (D to Rule 24 Certificate dated June 26, 1974 in 70-5399). (b) 52 -- Service Agreement, dated as of June 21, 1974, between System Energy and Entergy

Mississippi (E to Rule 24 Certificate dated June 26, 1974 in 70-5399). (b) 53 -- Partial Termination Agreement, dated as of December 1, 1986, between System Energy

and Entergy Mississippi (A-2 to Rule 24 Certificate dated January 8, 1987 in 70-5399). (b) 54 -- Middle South Utilities, Inc. and Subsidiary Companies Intercompany Income Tax


(b) 55 -- First Amendment, dated January 1, 1990 to the Middle South Utilities Inc. and


(b) 56 -- Second Amendment dated January 1, 1992, to the Entergy Corporation and Subsidiary


(b) 57 -- Third Amendment dated January 1, 1994 to Entergy Corporation and Subsidiary


(b) 58 -- Fourth Amendment dated April 1, 1997 to Entergy Corporation and Subsidiary


(b) 59 -- Service Agreement with Entergy Services, dated as of July 16, 1974, as amended

(10(b)43 to Form 10-K for the year ended December 31, 1988 in 1-9067). (b) 60 -- Amendment, dated January 1, 1992, to Service Agreement with Entergy Services

(10(a)11 to Form 10-K for the year ended December 31, 1994 in 1-3517). (b) 61 -- Operating Agreement between Entergy Operations and System Energy, dated as of

June 6, 1990 (B-3(b) to Rule 24 Certificate dated June 15, 1990 in 70-7679). (b) 62 -- Guarantee Agreement between Entergy Corporation and System Energy, dated as of


*(b) 63 -- Letter of Credit and Reimbursement Agreement, dated as of December 22, 2003,

among System Energy Resources, Inc., Union Bank of California, N.A., asadministrating bank and funding bank, Keybank National Association, as syndicationagent, Banc One Capital Markets, Inc., as documentation agent, and the Banks namedtherein, as Participating Banks.

Entergy Arkansas

(c) 1 -- Agreement, dated April 23, 1982, among Entergy Arkansas and certain other Systemcompanies, relating to System Planning and Development and Intra-SystemTransactions (10(a) 1 to Form 10-K for the year ended December 31, 1982 in 1-3517).

(c) 2 -- Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a)2 in

2-41080). (c) 3 -- Amendment, dated February 10, 1971, to Middle South Utilities System Agency

Agreement, dated December 11, 1970 (5(a)4 in 2-41080). (c) 4 -- Amendment, dated May 12, 1988, to Middle South Utilities System Agency

Agreement, dated December 11, 1970 (5(a)4 in 2-41080). (c) 5 -- Middle South Utilities System Agency Coordination Agreement, dated December 11,

1970 (5(a)3 in 2-41080). (c) 6 -- Service Agreement with Entergy Services, dated as of April 1, 1963 (5(a)5 in 2-41080). (c) 7 -- Amendment, dated April 27, 1984, to Service Agreement, with Entergy Services

(10(a)7 to Form 10-K for the year ended December 31, 1984 in 1-3517). (c) 8 -- Amendment, dated January 1, 2000, to Service Agreement with Entergy Services

(10(a)12 to Form 10-K for the year ended December 31, 2002 in 1-10764). *(c) 9 -- Amendment, dated August 1, 2003, to Service Agreement with Entergy Services. (c) 10 through(c) 25 -- See 10(a)10 through 10(a)25 above. (c) 26 -- Agreement, dated August 20, 1954, between Entergy Arkansas and the United States of

America (SPA)(13(h) in 2-11467). (c) 27 -- Amendment, dated April 19, 1955, to the United States of America (SPA) Contract,

dated August 20, 1954 (5(d)2 in 2-41080). (c) 28 -- Amendment, dated January 3, 1964, to the United States of America (SPA) Contract,

dated August 20, 1954 (5(d)3 in 2-41080). (c) 29 -- Amendment, dated September 5, 1968, to the United States of America (SPA) Contract,

dated August 20, 1954 (5(d)4 in 2-41080). (c) 30 -- Amendment, dated November 19, 1970, to the United States of America (SPA)

Contract, dated August 20, 1954 (5(d)5 in 2-41080). (c) 31 -- Amendment, dated July 18, 1961, to the United States of America (SPA) Contract,

dated August 20, 1954 (5(d)6 in 2-41080). (c) 32 -- Amendment, dated December 27, 1961, to the United States of America (SPA)

Contract, dated August 20, 1954 (5(d)7 in 2-41080). (c) 33 -- Amendment, dated January 25, 1968, to the United States of America (SPA) Contract,

dated August 20, 1954 (5(d)8 in 2-41080). (c) 34 -- Amendment, dated October 14, 1971, to the United States of America (SPA) Contract,

dated August 20, 1954 (5(d)9 in 2-43175). (c) 35 -- Amendment, dated January 10, 1977, to the United States of America (SPA) Contract,

dated August 20, 1954 (5(d)10 in 2-60233). (c) 36 -- Agreement, dated May 14, 1971, between Entergy Arkansas and the United States of

America (SPA) (5(e) in 2-41080). (c) 37 -- Amendment, dated January 10, 1977, to the United States of America (SPA) Contract,

dated May 14, 1971 (5(e)1 in 2-60233). ( ) 38 C t t d t d M 28 1943 A d t t C t t d t d J l 21 1949 d

(c) 38 -- Contract, dated May 28, 1943, Amendment to Contract, dated July 21, 1949, andSupplement to Amendment to Contract, dated December 30, 1949, between EntergyArkansas and McKamie Gas Cleaning Company; Agreements, dated as of September30, 1965, between Entergy Arkansas and former stockholders of McKamie GasCleaning Company; and Letter Agreement, dated June 22, 1966, by Humble Oil &Refining Company accepted by Entergy Arkansas on June 24, 1966 (5(k)7 in 2-41080).

(c) 39 -- Agreement, dated April 3, 1972, between Entergy Services and Gulf United Nuclear

Fuels Corporation (5(l)3 in 2-46152). (c) 40 -- Fuel Lease, dated as of December 22, 1988, between River Fuel Trust #1 and Entergy

Arkansas (B-1(b) to Rule 24 Certificate in 70-7571). (c) 41 -- White Bluff Operating Agreement, dated June 27, 1977, among Entergy Arkansas and

Arkansas Electric Cooperative Corporation and City Water and Light Plant of the Cityof Jonesboro, Arkansas (B-2(a) to Rule 24 Certificate dated June 30, 1977 in 70-6009).

(c) 42 -- White Bluff Ownership Agreement, dated June 27, 1977, among Entergy Arkansas and

Arkansas Electric Cooperative Corporation and City Water and Light Plant of the Cityof Jonesboro, Arkansas (B-1(a) to Rule 24 Certificate dated June 30, 1977 in 70-6009).

(c) 43 -- Agreement, dated June 29, 1979, between Entergy Arkansas and City of Conway,

Arkansas (5(r)3 in 2-66235). (c) 44 -- Transmission Agreement, dated August 2, 1977, between Entergy Arkansas and City

Water and Light Plant of the City of Jonesboro, Arkansas (5(r)3 in 2-60233). (c) 45 -- Power Coordination, Interchange and Transmission Service Agreement, dated as of

June 27, 1977, between Arkansas Electric Cooperative Corporation and EntergyArkansas (5(r)4 in 2-60233).

(c) 46 -- Independence Steam Electric Station Operating Agreement, dated July 31, 1979,

among Entergy Arkansas and Arkansas Electric Cooperative Corporation and CityWater and Light Plant of the City of Jonesboro, Arkansas and City of Conway,Arkansas (5(r)6 in 2-66235).

(c) 47 -- Amendment, dated December 4, 1984, to the Independence Steam Electric Station

Operating Agreement (10(c)51 to Form 10-K for the year ended December 31, 1984 in1-10764).

(c) 48 -- Independence Steam Electric Station Ownership Agreement, dated July 31, 1979,

among Entergy Arkansas and Arkansas Electric Cooperative Corporation and CityWater and Light Plant of the City of Jonesboro, Arkansas and City of Conway,Arkansas (5(r)7 in 2-66235).

(c) 49 -- Amendment, dated December 28, 1979, to the Independence Steam Electric Station

Ownership Agreement (5(r)7(a) in 2-66235). (c) 50 -- Amendment, dated December 4, 1984, to the Independence Steam Electric Station

Ownership Agreement (10(c)54 to Form 10-K for the year ended December 31, 1984in 1-10764).

(c) 51 -- Owner's Agreement, dated November 28, 1984, among Entergy Arkansas, Entergy

Mississippi, other co-owners of the Independence Station (10(c)55 to Form 10-K forthe year ended December 31, 1984 in 1-10764).

(c) 52 -- Consent, Agreement and Assumption, dated December 4, 1984, among Entergy

Arkansas, Entergy Mississippi, other co-owners of the Independence Station andUnited States Trust Company of New York, as Trustee (10(c)56 to Form 10-K for theyear ended December 31, 1984 in 1-10764).

(c) 53 -- Power Coordination, Interchange and Transmission Service Agreement, dated as of

July 31, 1979, between Entergy Arkansas and City Water and Light Plant of the City ofJonesboro, Arkansas (5(r)8 in 2-66235).

(c) 54 -- Power Coordination, Interchange and Transmission Agreement, dated as of June 29,

1979, between City of Conway, Arkansas and Entergy Arkansas (5(r)9 in 2-66235). (c) 55 -- Agreement, dated June 21, 1979, between Entergy Arkansas and Reeves E. Ritchie

(10(b)90 to Form 10-K for the year ended December 31, 1980 in 1-10764). (c) 56 --

Reallocation Agreement, dated as of July 28, 1981, among System Energy and certainother System companies (B-1(a) in 70-6624).

(c) 57 -- Unit Power Sales Agreement, dated as of June 10, 1982, between System Energy and

Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans(10(a)39 to Form 10-K for the year ended December 31, 1982 in 1-3517).

(c) 58 -- First Amendment to Unit Power Sales Agreement, dated as of June 28, 1984, between

System Energy, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, andEntergy New Orleans (19 to Form 10-Q for the quarter ended September 30, 1984 in 1-3517).

(c) 59 -- Revised Unit Power Sales Agreement (10(ss) in 33-4033). (c) 60 -- Contract For Disposal of Spent Nuclear Fuel and/or High-Level Radioactive Waste,

dated June 30, 1983, among the DOE, System Fuels and Entergy Arkansas (10(b)57 toForm 10-K for the year ended December 31, 1983 in 1-10764).

(c) 61 -- Middle South Utilities, Inc. and Subsidiary Companies Intercompany Income Tax


(c) 62 -- First Amendment, dated January 1, 1990, to the Middle South Utilities, Inc. and


(c) 63 -- Second Amendment dated January 1, 1992, to the Entergy Corporation and Subsidiary


(c) 64 -- Third Amendment dated January 1, 1994, to Entergy Corporation and Subsidiary


(c) 65 -- Fourth Amendment dated April 1, 1997 to Entergy Corporation and Subsidiary


(c) 66 -- Assignment of Coal Supply Agreement, dated December 1, 1987, between System

Fuels and Entergy Arkansas (B to Rule 24 letter filing dated November 10, 1987 in 70-5964).

(c) 67 -- Coal Supply Agreement, dated December 22, 1976, between System Fuels and

Antelope Coal Company (B-1 in 70-5964), as amended by First Amendment (A to Rule24 Certificate in 70-5964); Second Amendment (A to Rule 24 letter filing datedDecember 16, 1983 in 70-5964); and Third Amendment (A to Rule 24 letter filingdated November 10, 1987 in 70-5964).

(c) 68 -- Operating Agreement between Entergy Operations and Entergy Arkansas, dated as of

June 6, 1990 (B-1(b) to Rule 24 Certificate dated June 15, 1990 in 70-7679). (c) 69 -- Guaranty Agreement between Entergy Corporation and Entergy Arkansas, dated as of


(c) 70 -- Agreement for Purchase and Sale of Independence Unit 2 between Entergy Arkansas

and Entergy Power, dated as of August 28, 1990 (B-3(c) to Rule 24 Certificate datedSeptember 6, 1990 in 70-7684).

(c) 71 -- Agreement for Purchase and Sale of Ritchie Unit 2 between Entergy Arkansas and

Entergy Power, dated as of August 28, 1990 (B-4(d) to Rule 24 Certificate datedSeptember 6, 1990 in 70-7684).

(c) 72 -- Ritchie Steam Electric Station Unit No. 2 Operating Agreement between Entergy

Arkansas and Entergy Power, dated as of August 28, 1990 (B-5(a) to Rule 24Certificate dated September 6, 1990 in 70-7684).

(c) 73 -- Ritchie Steam Electric Station Unit No. 2 Ownership Agreement between Entergy

Arkansas and Entergy Power, dated as of August 28, 1990 (B-6(a) to Rule 24Certificate dated September 6, 1990 in 70-7684).

(c) 74 --

Power Coordination, Interchange and Transmission Service Agreement betweenEntergy Power and Entergy Arkansas, dated as of August 28, 1990 (10(c)71 to Form10-K for the year ended December 31, 1990 in 1-10764).

(c) 75 -- Loan Agreement dated June 15, 1993, between Entergy Arkansas and Independence

Country, Arkansas (B-1(a) to Rule 24 Certificate dated July 9, 1993 in 70-8171). (c) 76 -- Loan Agreement dated June 15, 1994, between Entergy Arkansas and Jefferson

County, Arkansas (B-1(a) to Rule 24 Certificate dated June 30, 1994 in 70-8405). (c) 77 -- Loan Agreement dated June 15, 1994, between Entergy Arkansas and Pope County,

Arkansas (B-1(b) to Rule 24 Certificate in 70-8405). (c) 78 -- Loan Agreement dated November 15, 1995, between Entergy Arkansas and Pope

County, Arkansas (10(c)96 to Form 10-K for the year ended December 31, 1995 in 1-10764).

(c) 79 -- Agreement as to Expenses and Liabilities between Entergy Arkansas and Entergy

Arkansas Capital I, dated as of August 14, 1996 (4(j) to Form 10-Q for the quarterended September 30, 1996 in 1-10764).

(c) 80 -- Loan Agreement dated December 1, 1997, between Entergy Arkansas and Jefferson

County, Arkansas (10(c)100 to Form 10-K for the year ended December 31, 1997 in 1-10764).

(c) 81 -- Refunding Agreement, dated December 1, 2001, between Entergy Arkansas and Pope

Country, Arkansas (10(c)81 to Form 10-K for the year ended December 31, 2001 in 1-10764).

Entergy Gulf States

(d) 1 -- Guaranty Agreement, dated July 1, 1976, between Entergy Gulf States and AmericanBank and Trust Company (C and D to Form 8-K dated August 6, 1976 in 1-27031).

(d) 2 -- Guaranty Agreement, dated August 1, 1992, between Entergy Gulf States and Hibernia

National Bank, relating to Pollution Control Revenue Refunding Bonds of theIndustrial Development Board of the Parish of Calcasieu, Inc. (Louisiana) (10-1 toForm 10-K for the year ended December 31, 1992 in 1-27031).

(d) 3 -- Guaranty Agreement, dated January 1, 1993, between Entergy Gulf States and

Hancock Bank of Louisiana, relating to Pollution Control Revenue Refunding Bonds ofthe Parish of Pointe Coupee (Louisiana) (10-2 to Form 10-K for the year endedDecember 31, 1992 in 1-27031).

(d) 4 -- Deposit Agreement, dated as of December 1, 1983 between Entergy Gulf States,

Morgan Guaranty Trust Co. as Depositary and the Holders of Depository Receipts,relating to the Issue of 900,000 Depositary Preferred Shares, each representing 1/2share of Adjustable Rate Cumulative Preferred Stock, Series E-$100 Par Value (4-17 toForm 10-K for the year ended December 31, 1983 in 1-27031).

(d) 5 -- Agreement effective February 1, 1964, between Sabine River Authority, State of

Louisiana, and Sabine River Authority of Texas, and Entergy Gulf States, CentralLouisiana Electric Company, Inc., and Louisiana Power & Light Company, assupplemented (B to Form 8-K dated May 6, 1964, A to Form 8-K dated October 5,1967, A to Form 8-K dated May 5, 1969, and A to Form 8-K dated December 1, 1969in 1-27031).

(d) 6 -- Joint Ownership Participation and Operating Agreement regarding River Bend Unit 1

Nuclear Plant, dated August 20, 1979, between Entergy Gulf States, Cajun, andSRG&T; Power Interconnection Agreement with Cajun, dated June 26, 1978, andapproved by the REA on August 16, 1979, between Entergy Gulf States and Cajun; andLetter Agreement regarding CEPCO buybacks, dated August 28, 1979, betweenEntergy Gulf States and Cajun (2, 3, and 4, respectively, to Form 8-K dated September7, 1979 in 1-27031).

(d) 7 -- Ground Lease, dated August 15, 1980, between Statmont Associates Limited

Partnership (Statmont) and Entergy Gulf States, as amended (3 to Form 8-K datedAugust 19, 1980 and A-3-b to Form 10-Q for the quarter ended September 30, 1983 in1-27031).

(d) 8 -- Lease and Sublease Agreement, dated August 15, 1980, between Statmont and EntergyGulf States, as amended (4 to Form 8-K dated August 19, 1980 and A-3-c to Form 10-Q for the quarter ended September 30, 1983 in 1-27031).

(d) 9 -- Lease Agreement, dated September 18, 1980, between BLC Corporation and Entergy

Gulf States (1 to Form 8-K dated October 6, 1980 in 1-27031). (d) 10 -- Joint Ownership Participation and Operating Agreement for Big Cajun, between

Entergy Gulf States, Cajun Electric Power Cooperative, Inc., and Sam Rayburn G&T,Inc, dated November 14, 1980 (6 to Form 8-K dated January 29, 1981 in 1-27031);Amendment No. 1, dated December 12, 1980 (7 to Form 8-K dated January 29, 1981 in1-27031); Amendment No. 2, dated December 29, 1980 (8 to Form 8-K dated January29, 1981 in 1-27031).

(d) 11 -- Agreement of Joint Ownership Participation between SRMPA, SRG&T and Entergy

Gulf States, dated June 6, 1980, for Nelson Station, Coal Unit #6, as amended (8 toForm 8-K dated June 11, 1980, A-2-b to Form 10-Q for the quarter ended June 30,1982; and 10-1 to Form 8-K dated February 19, 1988 in 1-27031).

(d) 12 -- Agreements between Southern Company and Entergy Gulf States, dated February 25,

1982, which cover the construction of a 140-mile transmission line to connect the twosystems, purchase of power and use of transmission facilities (10-31 to Form 10-K forthe year ended December 31, 1981 in 1-27031).

(d) 13 -- Transmission Facilities Agreement between Entergy Gulf States and Mississippi Power

Company, dated February 28, 1982, and Amendment, dated May 12, 1982 (A-2-c toForm 10-Q for the quarter ended March 31, 1982 in 1-27031) and Amendment, datedDecember 6, 1983 (10-43 to Form 10-K for the year ended December 31, 1983 in 1-27031).

(d) 14 -- First Amended Power Sales Agreement, dated December 1, 1985 between Sabine

River Authority, State of Louisiana, and Sabine River Authority, State of Texas, andEntergy Gulf States, Central Louisiana Electric Co., Inc., and Louisiana Power andLight Company (10-72 to Form 10-K for the year ended December 31, 1985 in 1-27031).

+(d) 15 -- Deferred Compensation Plan for Directors of Entergy Gulf States and Varibus

Corporation, as amended January 8, 1987, and effective January 1, 1987 (10-77 toForm 10-K for the year ended December 31, 1986 in 1-27031). Amendment datedDecember 4, 1991 (10-3 to Amendment No. 8 in Registration No. 2-76551).

+(d) 16 -- Trust Agreement for Deferred Payments to be made by Entergy Gulf States pursuant to

the Executive Income Security Plan, by and between Entergy Gulf States and BankersTrust Company, effective November 1, 1986 (10-78 to Form 10-K for the year endedDecember 31, 1986 in 1-27031).

+(d) 17 -- Trust Agreement for Deferred Installments under Entergy Gulf States' Management

Incentive Compensation Plan and Administrative Guidelines by and between EntergyGulf States and Bankers Trust Company, effective June 1, 1986 (10-79 to Form 10-Kfor the year ended December 31, 1986 in 1-27031).

+(d) 18 -- Nonqualified Deferred Compensation Plan for Officers, Nonemployee Directors and

Designated Key Employees, effective December 1, 1985, as amended, continued andcompletely restated effective as of March 1, 1991 (10-3 to Amendment No. 8 inRegistration No. 2-76551).

+(d) 19 -- Trust Agreement for Entergy Gulf States' Nonqualified Directors and Designated Key

Employees by and between Entergy Gulf States and First City Bank, Texas-Beaumont,N.A. (now Texas Commerce Bank), effective July 1, 1991 (10-4 to Form 10-K for theyear ended December 31, 1992 in 1-27031).

(d) 20 -- Lease Agreement, dated as of June 29, 1987, among GSG&T, Inc., and Entergy Gulf

States related to the leaseback of the Lewis Creek generating station (10-83 to Form10-K for the year ended December 31, 1988 in 1-27031).

(d) 21 -- Nuclear Fuel Lease Agreement between Entergy Gulf States and River Bend Fuel

Services, Inc. to lease the fuel for River Bend Unit 1, dated February 7, 1989 (10-64 toForm 10-K for the year ended December 31, 1988 in 1-27031).

(d) 22 -- Trust and Investment Management Agreement between Entergy Gulf States and

Morgan Guaranty and Trust Company of New York (the "Decommissioning TrustAgreement) with respect to decommissioning funds authorized to be collected byEntergy Gulf States, dated March 15, 1989 (10-66 to Form 10-K for the year endedDecember 31, 1988 in 1-27031).

(d) 23 -- Amendment No. 2 dated November 1, 1995 between Entergy Gulf States and Mellon

Bank to Decommissioning Trust Agreement (10(d)31 to Form 10-K for the year endedDecember 31, 1995 in 1-27031).

(d) 24 -- Partnership Agreement by and among Conoco Inc., and Entergy Gulf States, CITGO

Petroleum Corporation and Vista Chemical Company, dated April 28, 1988 (10-67 toForm 10-K for the year ended December 31, 1988 in 1-27031).

+(d) 25 -- Gulf States Utilities Company Executive Continuity Plan, dated January 18, 1991 (10-6

to Form 10-K for the year ended December 31, 1990 in 1-27031). +(d) 26 -- Trust Agreement for Entergy Gulf States' Executive Continuity Plan, by and between

Entergy Gulf States and First City Bank, Texas-Beaumont, N.A. (now TexasCommerce Bank), effective May 20, 1991 (10-5 to Form 10-K for the year endedDecember 31, 1992 in 1-27031).

+(d) 27 -- Gulf States Utilities Board of Directors' Retirement Plan, dated February 15, 1991 (10-

8 to Form 10-K for the year ended December 31, 1990 in 1-27031). (d) 28 -- Operating Agreement between Entergy Operations and Entergy Gulf States, dated as of

December 31, 1993 (B-2(f) to Rule 24 Certificate in 70-8059). (d) 29 -- Guarantee Agreement between Entergy Corporation and Entergy Gulf States, dated as

of December 31, 1993 (B-5(a) to Rule 24 Certificate in 70-8059). (d) 30 -- Service Agreement with Entergy Services, dated as of December 31, 1993 (B-6(c) to

Rule 24 Certificate in 70-8059). (d) 31 -- Amendment, dated January 1, 2000, to Service Agreement with Entergy Services

(10(d)31 to Form 10-K for the year ended December 31, 2002 in 1-27031). *(d) 32 -- Amendment, dated August 1, 2003, to Service Agreement with Entergy Services. (d) 33 -- Third Amendment, dated January 1, 1994, to Entergy Corporation and Subsidiary


(d) 34 -- Fourth Amendment, dated April 1, 1997, to Entergy Corporation and Subsidiary


(d) 35 -- Agreement as to Expenses and Liabilities between Entergy Gulf States and Entergy

Gulf States Capital I, dated as of January 28, 1997 (10(d)52 to Form 10-K for the yearended December 31, 1996 in 1-27031).

(d) 36 -- Refunding Agreement dated as of May 1, 1998 between Entergy Gulf States and Parish

of Iberville, State of Louisiana (B-3(a) to Rule 24 Certificate dated May 29, 1998 in70-8721).

(d) 37 -- Refunding Agreement dated as of May 1, 1998 between Entergy Gulf States and

Industrial Development Board of the Parish of Calcasieu, Inc. (B-3(b) to Rule 24Certificate dated January 29, 1999 in 70-8721).

(d) 38 -- Refunding Agreement (Series 1999-A) dated as of September 1, 1999 between Entergy

Gulf States and Parish of West Feliciana, State of Louisiana (B-3(c) to Rule 24Certificate dated October 8, 1999 in 70-8721).

(d) 39 -- Refunding Agreement (Series 1999-B) dated as of September 1, 1999 between Entergy

Gulf States and Parish of West Feliciana, State of Louisiana (B-3(d) to Rule 24Certificate dated October 8, 1999 in 70-8721).

Entergy Louisiana

(e) 1 -- Agreement, dated April 23, 1982, among Entergy Louisiana and certain other Systemcompanies, relating to System Planning and Development and Intra-SystemTransactions (10(a)1 to Form 10-K for the year ended December 31, 1982, in 1-3517).

(e) 2 --

Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a)2 in2-41080).

(e) 3 -- Amendment, dated as of February 10, 1971, to Middle South Utilities System Agency

Agreement, dated December 11, 1970 (5(a)4 in 2-41080). (e) 4 -- Amendment, dated May 12, 1988, to Middle South Utilities System Agency

Agreement, dated December 11, 1970 (5(a)4 in 2-41080). (e) 5 -- Middle South Utilities System Agency Coordination Agreement, dated December 11,

1970 (5(a)3 in 2-41080). (e) 6 -- Service Agreement with Entergy Services, dated as of April 1, 1963 (5(a)5 in 2-42523). (e) 7 -- Amendment, dated as of April 27, 1984, to Service Agreement with Entergy Services

(10(a)7 to Form 10-K for the year ended December 31, 1984 in 1-3517). (e) 8 -- Amendment, dated January 1, 2000, to Service Agreement with Entergy Services

(10(e)12 to Form 10-K for the year ended December 31, 2002 in 1-8474). *(e) 9 -- Amendment, dated August 1, 2003, to Service Agreement with Entergy Services. (e) 10 through(e) 25 -- See 10(a)10 through 10(a)25 above. (e) 26 -- Fuel Lease, dated as of January 31, 1989, between River Fuel Company #2, Inc., and

Entergy Louisiana (B-1(b) to Rule 24 Certificate in 70-7580). (e) 27 -- Reallocation Agreement, dated as of July 28, 1981, among System Energy and certain

other System companies (B-1(a) in 70-6624). (e) 28 -- Compromise and Settlement Agreement, dated June 4, 1982, between Texaco, Inc. and

Entergy Louisiana (28(a) to Form 8-K dated June 4, 1982 in 1-8474). (e) 29 -- Unit Power Sales Agreement, dated as of June 10, 1982, between System Energy and


(e) 30 -- First Amendment to the Unit Power Sales Agreement, dated as of June 28, 1984,


(e) 31 -- Revised Unit Power Sales Agreement (10(ss) in 33-4033). (e) 32 -- Middle South Utilities, Inc. and Subsidiary Companies Intercompany Tax Allocation

Agreement, dated April 28, 1988 (D-1 to Form U5S for the year ended December 31,1987).

(e) 33 -- First Amendment, dated January 1, 1990, to the Middle South Utilities, Inc. and

Subsidiary Companies Intercompany Income Tax Allocation Agreement, dated January1, 1990 (D-2 to Form U5S for the year ended December 31, 1989).

(e) 34 -- Second Amendment dated January 1, 1992, to the Entergy Corporation and Subsidiary


(e) 35 -- Third Amendment dated January 1, 1994 to Entergy Corporation and Subsidiary


(e) 36 -- Fourth Amendment dated April 1, 1997 to Entergy Corporation and Subsidiary


(e) 37 -- Contract for Disposal of Spent Nuclear Fuel and/or High-Level Radioactive Waste,

dated February 2, 1984, among DOE, System Fuels and Entergy Louisiana (10(d)33 toForm 10-K for the year ended December 31, 1984 in 1-8474).

(e) 38 -- Operating Agreement between Entergy Operations and Entergy Louisiana, dated as of

June 6, 1990 (B-2(c) to Rule 24 Certificate dated June 15, 1990 in 70-7679).

(e) 39 -- Guarantee Agreement between Entergy Corporation and Entergy Louisiana, dated as of


(e) 40 -- Installment Sale Agreement, dated July 20, 1994, between Entergy Louisiana and St.

Charles Parish, Louisiana (B-6(e) to Rule 24 Certificate dated August 1, 1994 in 70-7822).

(e) 41 -- Installment Sale Agreement, dated November 1, 1995, between Entergy Louisiana and

St. Charles Parish, Louisiana (B-6(a) to Rule 24 Certificate dated December 19, 1995in 70-8487).

(e) 42 -- Refunding Agreement (Series 1999-A), dated as of June 1, 1999, between Entergy

Louisiana and Parish of St. Charles, State of Louisiana (B-6(a) to Rule 24 Certificatedated July 6, 1999 in 70-9141).

(e) 43 -- Refunding Agreement (Series 1999-B), dated as of June 1, 1999, between Entergy

Louisiana and Parish of St. Charles, State of Louisiana (B-6(b) to Rule 24 Certificatedated July 6, 1999 in 70-9141).

(e) 44 -- Refunding Agreement (Series 1999-C), dated as of October 1, 1999, between Entergy

Louisiana and Parish of St. Charles, State of Louisiana (B-11(a) to Rule 24 Certificatedated October 15, 1999 in 70-9141).

(e) 45 -- Agreement as to Expenses and Liabilities between Entergy Louisiana, Inc. and Entergy

Louisiana Capital I dated July 16, 1996 (4(d) to Form 10-Q for the quarter ended June30, 1996 in 1-8474).

Entergy Mississippi

(f) 1 -- Agreement dated April 23, 1982, among Entergy Mississippi and certain other Systemcompanies, relating to System Planning and Development and Intra-SystemTransactions (10(a)1 to Form 10-K for the year ended December 31, 1982 in 1-3517).

(f) 2 -- Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a)2 in

2-41080). (f) 3 -- Amendment, dated February 10, 1971, to Middle South Utilities System Agency

Agreement, dated December 11, 1970 (5(a)4 in 2-41080). (f) 4 -- Amendment, dated May 12, 1988, to Middle South Utilities System Agency

Agreement, dated December 11, 1970 (5(a)4 in 2-41080). (f) 5 -- Middle South Utilities System Agency Coordination Agreement, dated December 11,

1970 (5(a)3 in 2-41080). (f) 6 -- Service Agreement with Entergy Services, dated as of April 1, 1963 (D in 37-63). (f) 7 -- Amendment, dated April 27, 1984, to Service Agreement with Entergy Services

(10(a)7 to Form 10-K for the year ended December 31, 1984 in 1-3517). (f) 8 -- Amendment, dated January 1, 2000, to Service Agreement with Entergy Services

(10(f)12 to Form 10-K for the year ended December 31, 2002 in 1-31508). *(f) 9 -- Amendment, dated August 1, 2003, to Service Agreement with Entergy Services. (f) 10 through(f) 25 -- See 10(a)10 through 10(a)25 above. (f) 26 -- Installment Sale Agreement, dated as of June 1, 1974, between Entergy Mississippi and

Washington County, Mississippi (B-2(a) to Rule 24 Certificate dated August 1, 1974 in70-5504).

(f) 27 -- Amended and Restated Installment Sale Agreement, dated as of April 1, 1994, between

Entergy Mississippi and Warren County, Mississippi (B-6(a) to Rule 24 Certificatedated May 4, 1994 in 70-7914).

(f) 28 -- Amended and Restated Installment Sale Agreement, dated as of April 1, 1994, betweenEntergy Mississippi and Washington County, Mississippi, (B-6(b) to Rule 24Certificate dated May 4, 1994 in 70-7914).

(f) 29 -- Refunding Agreement, dated as of May 1, 1999, between Entergy Mississippi and

Independence County, Arkansas (B-6(a) to Rule 24 Certificate dated June 8, 1999 in70-8719).

(f) 30 -- Substitute Power Agreement, dated as of May 1, 1980, among Entergy Mississippi,

System Energy and SMEPA (B-3(a) in 70-6337). (f) 31 -- Amendment, dated December 4, 1984, to the Independence Steam Electric Station

Operating Agreement (10(c)51 to Form 10-K for the year ended December 31, 1984 in0-375).

(f) 32 -- Amendment, dated December 4, 1984, to the Independence Steam Electric Station

Ownership Agreement (10(c)54 to Form 10-K for the year ended December 31, 1984in 0-375).

(f) 33 -- Owners Agreement, dated November 28, 1984, among Entergy Arkansas, Entergy

Mississippi and other co-owners of the Independence Station (10(c)55 to Form 10-Kfor the year ended December 31, 1984 in 0-375).

(f) 34 -- Consent, Agreement and Assumption, dated December 4, 1984, among Entergy

Arkansas, Entergy Mississippi, other co-owners of the Independence Station andUnited States Trust Company of New York, as Trustee (10(c)56 to Form 10-K for theyear ended December 31, 1984 in 0-375).

(f) 35 -- Reallocation Agreement, dated as of July 28, 1981, among System Energy and certain

other System companies (B-1(a) in 70-6624). +(f) 36 -- Post-Retirement Plan (10(d)24 to Form 10-K for the year ended December 31, 1983 in

0-320). (f) 37 -- Unit Power Sales Agreement, dated as of June 10, 1982, between System Energy and

Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans(10(a)39 to Form 10-K for the year ended December 31, 1982 in 1-3517).

(f) 38 -- First Amendment to the Unit Power Sales Agreement, dated as of June 28, 1984,

between System Energy and Entergy Arkansas, Entergy Louisiana, EntergyMississippi, and Entergy New Orleans (19 to Form 10-Q for the quarter endedSeptember 30, 1984 in 1-3517).

(f) 39 -- Revised Unit Power Sales Agreement (10(ss) in 33-4033). (f) 40 -- Sales Agreement, dated as of June 21, 1974, between System Energy and Entergy

Mississippi (D to Rule 24 Certificate dated June 26, 1974 in 70-5399). (f) 41 -- Service Agreement, dated as of June 21, 1974, between System Energy and Entergy

Mississippi (E to Rule 24 Certificate dated June 26, 1974 in 70-5399). (f) 42 -- Partial Termination Agreement, dated as of December 1, 1986, between System Energy

and Entergy Mississippi (A-2 to Rule 24 Certificate dated January 8, 1987 in 70-5399). (f) 43 -- Middle South Utilities, Inc. and Subsidiary Companies Intercompany Income Tax


(f) 44 -- First Amendment dated January 1, 1990 to the Middle South Utilities Inc. and

Subsidiary Companies Intercompany Tax Allocation Agreement (D-2 to Form U5S forthe year ended December 31, 1989).

(f) 45 -- Second Amendment dated January 1, 1992, to the Entergy Corporation and Subsidiary


(f) 46 -- Third Amendment dated January 1, 1994 to Entergy Corporation and Subsidiary


(f) 47 -- Fourth Amendment dated April 1, 1997 to Entergy Corporation and Subsidiary

Companies Intercompany Income Tax Allocation Agreement (D-5 to Form U5S for the

year ended December 31, 1996). *+(f)48 -- Employment Agreement effective July 24, 2003 between Carolyn C. Shanks and

Entergy Mississippi.

Entergy New Orleans

(g) 1 -- Agreement, dated April 23, 1982, among Entergy New Orleans and certain otherSystem companies, relating to System Planning and Development and Intra-SystemTransactions (10(a)1 to Form 10-K for the year ended December 31, 1982 in 1-3517).

(g) 2 -- Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a)2 in

2-41080). (g) 3 -- Amendment dated as of February 10, 1971, to Middle South Utilities System Agency

Agreement, dated December 11, 1970 (5(a)4 in 2-41080). (g) 4 -- Amendment, dated May 12, 1988, to Middle South Utilities System Agency

Agreement, dated December 11, 1970 (5(a)4 in 2-41080). (g) 5 -- Middle South Utilities System Agency Coordination Agreement, dated December 11,

1970 (5(a)3 in 2-41080). (g) 6 -- Service Agreement with Entergy Services dated as of April 1, 1963 (5(a)5 in 2-42523). (g) 7 -- Amendment, dated as of April 27, 1984, to Service Agreement with Entergy Services

(10(a)7 to Form 10-K for the year ended December 31, 1984 in 1-3517). (g) 8 -- Amendment, dated January 1, 2000, to Service Agreement with Entergy Services

(10(g)12 to Form 10-K for the year ended December 31, 2002 in 0-5807). *(g) 9 -- Amendment, dated August 1, 2003, to Service Agreement with Entergy Services. (g) 10 through(g) 25 -- See 10(a)10 through 10(a)25 above. (g) 26 -- Reallocation Agreement, dated as of July 28, 1981, among System Energy and certain

other System companies (B-1(a) in 70-6624). (g) 27 -- Unit Power Sales Agreement, dated as of June 10, 1982, between System Energy and


(g) 28 -- First Amendment to the Unit Power Sales Agreement, dated as of June 28, 1984,


(g) 29 -- Revised Unit Power Sales Agreement (10(ss) in 33-4033). (g) 30 -- Transfer Agreement, dated as of June 28, 1983, among the City of New Orleans,

Entergy New Orleans and Regional Transit Authority (2(a) to Form 8-K dated June 24,1983 in 1-1319).

(g) 31 -- Middle South Utilities, Inc. and Subsidiary Companies Intercompany Income Tax


(g) 32 -- First Amendment, dated January 1, 1990, to the Middle South Utilities, Inc. and


(g) 33 -- Second Amendment dated January 1, 1992, to the Entergy Corporation and Subsidiary


(g) 34 -- Third Amendment dated January 1, 1994 to Entergy Corporation and Subsidiary

Companies Intercompany Income Tax Allocation Agreement (D-3(a) to Form U5S for

the year ended December 31, 1993). (g) 35 -- Fourth Amendment dated April 1, 1997 to Entergy Corporation and Subsidiary


(12) Statement Re Computation of Ratios

*(a) Entergy Arkansas' Computation of Ratios of Earnings to Fixed Charges and ofEarnings to Fixed Charges and Preferred Dividends, as defined.

*(b) Entergy Gulf States' Computation of Ratios of Earnings to Fixed Charges and of

Earnings to Fixed Charges and Preferred Dividends, as defined. *(c) Entergy Louisiana's Computation of Ratios of Earnings to Fixed Charges and of

Earnings to Fixed Charges and Preferred Dividends, as defined. *(d) Entergy Mississippi's Computation of Ratios of Earnings to Fixed Charges and of

Earnings to Fixed Charges and Preferred Dividends, as defined. *(e) Entergy New Orleans' Computation of Ratios of Earnings to Fixed Charges and of

Earnings to Fixed Charges and Preferred Dividends, as defined. *(f) System Energy's Computation of Ratios of Earnings to Fixed Charges, as defined.

*(21) Subsidiaries of the Registrants

(23) Consents of Experts and Counsel

*(a) The consent of Deloitte & Touche LLP is contained herein at page 355. *(b) Consent of Ernst & Young LLP.

*(24) Powers of Attorney

(31) Rule 13a-14(a)/15d-14(a) Certifications

*(a) Rule 13a-14(a)/15d-14(a) Certification for Entergy Corporation. *(b) Rule 13a-14(a)/15d-14(a) Certification for Entergy Corporation. *(c) Rule 13a-14(a)/15d-14(a) Certification for Entergy Arkansas. *(d) Rule 13a-14(a)/15d-14(a) Certification for Entergy Gulf States. *(e) Rule 13a-14(a)/15d-14(a) Certification for Entergy Gulf States and Entergy Louisiana. *(f) Rule 13a-14(a)/15d-14(a) Certification for Entergy Mississippi. *(g) Rule 13a-14(a)/15d-14(a) Certification for Entergy New Orleans. *(h) Rule 13a-14(a)/15d-14(a) Certification for System Energy. *(i) Rule 13a-14(a)/15d-14(a) Certification for Entergy Arkansas, Entergy Gulf States,

Entergy Louisiana, Entergy Mississippi, Entergy New Orleans.*(j) Rule 13a-14(a)/15d-14(a) Certification for System Energy.

(32) Section 1350 Certifications

*(a) Section 1350 Certification for Entergy Corporation. *(b) Section 1350 Certification for Entergy Corporation. *(c) Section 1350 Certification for Entergy Arkansas. *(d) Section 1350 Certification for Entergy Gulf States. *(e) Section 1350 Certification for Entergy Gulf States and Entergy Louisiana. *(f) Section 1350 Certification for Entergy Mississippi. *(g) Section 1350 Certification for Entergy New Orleans. *(h) Section 1350 Certification for System Energy. *(i) Section 1350 Certification for Entergy Arkansas, Entergy Gulf States, Entergy

Louisiana, Entergy Mississippi, Entergy New Orleans.*(j) Section 1350 Certification for System Energy.

(99) Additional Exhibits

*(a) Entergy-Koch, LP Financial Statements for the years 2003, 2002, and 2001.

_________________* Filed herewith.+ Management contracts or compensatory plans or arrangements.

EXHIBIT INDEX

*(a) 9 -- Officer' Certificate for Entergy Corporation. *(a) 10-- Officer' Certificate for Entergy Corporation. *(a) 11-- Credit Agreement, dated as of November 24, 2003, among Entergy Corporation,

Bayerische Hypo-und Vereinsbank AG, New York Branch, the Bank, and BayerischeHypo-und Vereinsbank AG, New York Branch, as Administrative Agent.

*(a) 9 -- Amendment, dated August 1, 2003, to Service Agreement with Entergy Services. *(a) 25 -- Thirty-fifth Assignment of Availability Agreement, Consent and Agreement, dated as of

December 22, 2003, among System Energy, Entergy Arkansas, Entergy Louisiana,Entergy Mississippi, and Entergy New Orleans, and Union Bank of California, N.A.

*(a) 38 -- Thirty-fifth Supplementary Capital Funds Agreement and Assignment, dated as of

December 22, 2003, among Entergy Corporation, System Energy, and Union Bank ofCalifornia, N.A.

*+(a) 99 -- Employment Agreement effective November 24, 2003 between Mark T. Savoff and

Entergy Services. *(b) 63 -- Letter of Credit and Reimbursement Agreement, dated as of December 22, 2003, among

System Energy Resources, Inc., Union Bank of California, N.A., as administrating bankand funding bank, Keybank National Association, as syndication agent, Banc OneCapital Markets, Inc., as documentation agent, and the Banks named therein, asParticipating Banks.

*(c) 9 -- Amendment, dated August 1, 2003, to Service Agreement with Entergy Services. *(d) 32 -- Amendment, dated August 1, 2003, to Service Agreement with Entergy Services.

*(e) 9 -- Amendment, dated August 1, 2003, to Service Agreement with Entergy Services. *(f) 9 -- Amendment, dated August 1, 2003, to Service Agreement with Entergy Services. *+(f)48 -- Employment Agreement effective July 24, 2003 between Carolyn C. Shanks and Entergy

Mississippi. *(g) 9 -- Amendment, dated August 1, 2003, to Service Agreement with Entergy Services.

(12) Statement Re Computation of Ratios

*(a) Entergy Arkansas' Computation of Ratios of Earnings to Fixed Charges and of Earningsto Fixed Charges and Preferred Dividends, as defined.

*(b) Entergy Gulf States' Computation of Ratios of Earnings to Fixed Charges and of

Earnings to Fixed Charges and Preferred Dividends, as defined. *(c) Entergy Louisiana's Computation of Ratios of Earnings to Fixed Charges and of

Earnings to Fixed Charges and Preferred Dividends, as defined. *(d) Entergy Mississippi's Computation of Ratios of Earnings to Fixed Charges and of

Earnings to Fixed Charges and Preferred Dividends, as defined. *(e) Entergy New Orleans' Computation of Ratios of Earnings to Fixed Charges and of

Earnings to Fixed Charges and Preferred Dividends, as defined. *(f) System Energy's Computation of Ratios of Earnings to Fixed Charges, as defined.

*(21) Subsidiaries of the Registrants

(23) Consents of Experts and Counsel

*(a) The consent of Deloitte & Touche LLP is contained herein at page 367. *(b) Consent of Ernst & Young LLP.

*(24) Powers of Attorney

(31) Rule 13a-14(a)/15d-14(a) Certifications

*(a) Rule 13a-14(a)/15d-14(a) Certification for Entergy Corporation. *(b) Rule 13a-14(a)/15d-14(a) Certification for Entergy Corporation. *(c) Rule 13a-14(a)/15d-14(a) Certification for Entergy Arkansas. *(d) Rule 13a-14(a)/15d-14(a) Certification for Entergy Gulf States. *(e) Rule 13a-14(a)/15d-14(a) Certification for Entergy Gulf States and Entergy Louisiana. *(f) Rule 13a-14(a)/15d-14(a) Certification for Entergy Mississippi. *(g) Rule 13a-14(a)/15d-14(a) Certification for Entergy New Orleans. *(h) Rule 13a-14(a)/15d-14(a) Certification for System Energy. *(i) Rule 13a-14(a)/15d-14(a) Certification for Entergy Arkansas, Entergy Gulf States,

Entergy Louisiana, Entergy Mississippi, Entergy New Orleans.*(j) Rule 13a-14(a)/15d-14(a) Certification for System Energy.

(32) Section 1350 Certifications

*(a) Section 1350 Certification for Entergy Corporation. *(b) Section 1350 Certification for Entergy Corporation. *(c) Section 1350 Certification for Entergy Arkansas. *(d) Section 1350 Certification for Entergy Gulf States. *(e) Section 1350 Certification for Entergy Gulf States and Entergy Louisiana. *(f) Section 1350 Certification for Entergy Mississippi. *(g) Section 1350 Certification for Entergy New Orleans.

*(h) Section 1350 Certification for System Energy. *(i) Section 1350 Certification for Entergy Arkansas, Entergy Gulf States, Entergy

Louisiana, Entergy Mississippi, Entergy New Orleans.*(j) Section 1350 Certification for System Energy.

(99) Additional Exhibits

*(a) Entergy-Koch, LP Financial Statements for the years 2003, 2002, and 2001.

_________________* Filed herewith.+ Management contracts or compensatory plans or arrangements.

Exhibit 4(a)9

ENTERGY CORPORATION

OFFICER'S CERTIFICATE

Steven C. McNeal, the Vice President and Treasurer of Entergy Corporation, a Delaware corporation (the "Company"), pursuant to the authority granted inthe Board Resolutions of the Company dated May 11, 2000 and July 25, 2003, and Sections 102, 201 and 301 of the Indenture defined herein, does hereby

certify to Deutsche Bank Trust Company Americas, as trustee (the "Trustee") under the Indenture (For Unsecured Debt Securities) of the Company dated asof December 1, 2002 (the "Indenture") that:

1. The Securities of the seventh series to be issued under the Indenture shall be designated "6.23% Senior Notes due March 15, 2008" (the "SeniorNotes"). All capitalized terms used in this certificate which are not defined herein shall have the meanings set forth in Exhibit A hereto; all capitalized

terms used in this certificate which are not defined herein or in Exhibit A hereto shall have the meanings set forth in the Indenture.

2. The Senior Notes shall be issued by the Company in the initial aggregate principal amount of $15,000,000. Additional Senior Notes, withoutlimitation as to amount, having substantially the same terms as the Outstanding Senior Notes (except a different issue date and issue price and bearinginterest from the last Interest Payment Date to which interest has been paid or duly provided for on the Outstanding Senior Notes, and, if no interest

has been paid, from November 20, 2003), may also be issued by the Company pursuant to the Indenture without the consent of the existing Holders ofthe Senior Notes. Such additional Senior Notes shall be part of the same series as the Outstanding Senior Notes.

3. The Senior Notes shall mature and the principal thereof shall be due and payable together with all accrued and unpaid interest thereon on March 15,

2008.

4. The Senior Notes shall bear interest as provided in the form thereof set forth in Exhibit A hereto. For the purposes of Section 310 of the Indenture, aperiod from and including the 15th of one month to but not including the 15th of the next month will be considered a full month.

5. The principal of, and premium, if any, and each installment of interest on the Senior Notes shall be payable upon presentation of the Senior Notes at

the office or agency of the Company in The City of New York; provided that payment of principal of, premium, if any, and each installment of interestmay be made at the option of the Company by check mailed to the address of the persons entitled thereto or by wire transfer to an account designatedby the person entitled thereto; and provided further that after payment of the Senior Notes in full, the Holders thereof shall promptly surrender such

Senior Notes at the office or agency of the Company in The City of New York. Notices and demands to or upon the Company in respect of the SeniorNotes and the Indenture may be served at the office or agency of the Company in The City of New York. The Corporate Trust Office of the Trusteewill initially be the agency of the Company for such payment and service of notices and demands and the Company hereby appoints Deutsche Bank

Trust Company Americas as its agent for all such purposes; provided, however, that the Company reserves the right to change, by one or moreOfficer's Certificates, any such office or agency and such agent. The registration and registration of transfers and exchanges in respect of the SeniorNotes may be effected at the Corporate Trust Office of the Trustee. The Trustee will initially be the Security Registrar and the Paying Agent for the

Senior Notes.

6. The Senior Notes will be redeemable at the option of the Company prior to the Stated Maturity of the principal thereof as provided in the form thereofset forth in Exhibit A hereto.

7. No service charge shall be made for the registration of transfer or exchange of the Senior Notes; provided, however, that the Company may require

payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with the exchange or transfer.

8. If the Company shall make any deposit of money and/or Eligible Obligations with respect to any Senior Notes, or any portion of the principal amountthereof, as contemplated by Section 701 of the Indenture, the Company shall not deliver an Officer's Certificate described in clause (z) in the first

paragraph of said Section 701 unless the Company shall also deliver to the Trustee, together with such Officer's Certificate, either:

(A) an instrument wherein the Company, notwithstanding the satisfaction and discharge of its indebtedness in respect of the Senior Notes, shallassume the obligation (which shall be absolute and unconditional) to irrevocably deposit with the Trustee or Paying Agent such additional sums of

money, if any, or additional Eligible Obligations (meeting the requirements of Section 701), if any, or any combination thereof, at such time or times,as shall be necessary, together with the money and/or Eligible Obligations theretofore so deposited, to pay when due the principal of and premium, ifany, and interest due and to become due on such Senior Notes or portions thereof, all in accordance with and subject to the provisions of said Section701; provided, however, that such instrument may state that the obligation of the Company to make additional deposits as aforesaid shall be subject to

the delivery to the Company by the Trustee of a notice asserting the deficiency accompanied by an opinion of an independent p ublic accountant ofnationally recognized standing, selected by the Trustee, showing the calculation thereof; or

(B) an Opinion of Counsel to the effect that, as a result of a change in law occurring after the date of this certificate, the Holders of such Senior Notes,or portions of the principal amount thereof, will not recognize income, gain or loss for United States federal income tax purposes as a result of the

satisfaction and discharge of the Company's indebtedness in respect thereof and will be subject to United States federal income tax on the sameamounts, at the same times and in the same manner as if such satisfaction and discharge had not been effected.

9. So long as any Senior Notes remain Outstanding, the Company will comply with the following covenants in addition to those specified in Article Sixof the Indenture:

(a) Limitation on Debt. The Company shall not permit the total principal amount of all Debt of the Company and its subsidiaries, determined on aconsolidated basis and without duplication of liability therefor, at any time to exceed 65% of Capitalization, as defined below, determined as of thelast day of the Company's most recently ended fiscal quarter. For purposes of this restriction "Debt" and "Capitalization" shall not include juniorsubordinated deferrable interest debentures of a Significant Subsidiary issued to a subsidiary trust which has issued preferred securities that are

included in the calculation of "Capitalization," and any Debt of any subsidiary of the Company that is Non-Recourse Debt. "Non-Recourse Debt"means any Debt of any subsidiary of the Company that does not constitute Debt of the Company or of any Significant Subsidiary. "Capitalization"

means, as of any date of determination, with respect to the Company and its subsidiaries determined on a consolidated basis, an amount equal to thesum of (i) the total principal amount of all Debt of the Company and its subsidiaries outstanding on such date, (ii) Consolidated Net Worth as of such

date and (iii) to the extent not otherwise included in Capitalization, all preferred stock and other preferred securities of the Company and itssubsidiaries, including preferred securities issued by any subsidiary trust, outstanding on such date.

(b) Disposition of Assets. The Company will not sell, lease, transfer, convey or otherwise dispose of (whether in one transaction or in a series oftransactions) any shares of voting common stock (or of stock or other instruments convertible into voting common stock) of any Principal UtilitySubsidiary (as defined below), or permit any Principal Utility Subsidiary to issue, sell or otherwise dispose of any of its shares of voting common

stock (or of stock or other instruments convertible into voting common stock) (each such case, a "Stock Disposition"), except to the Company or to a

Principal Utility Subsidiary, unless within 180 days of such Stock Disposition, the Company applies (or causes such Principal Utility Subsidiary toapply) all of the Net Available Cash (as defined below) from such Stock Disposition (i) to prepay, repay, purchase, repurchase, redeem, retire, defeaseor otherwise acquire for value Debt of the Company and/or Debt of one or more Domestic Regulated Utility Subsidiaries t hat remain a subsidiary ofthe Company and/or (ii) to reinvest in the business of one or more Domestic Regulated Utility Subsidiaries. For purposes of this restriction, a Stock

Disposition shall be treated as a separate transaction and not part of a series of transactions if it occurs 180 days or more after another StockDisposition.

"Principal Utility Subsidiary" means Entergy Arkansas, Inc., Entergy Gulf States, Inc., Entergy Louisiana, Inc., Entergy Mississippi, Inc., SystemEnergy Resources, Inc. and any other Domestic Regulated Utility Subsidiary (i) the total assets (after intercompany eliminations) of which exceed

20% of total assets of the Company and the total assets of its subsidiaries or (ii) the net worth of which exceeds 20% of the Consolidated Net Worth ofthe Company and its subsidiaries, in each case as shown on the most recent audited consolidated balance sheet of the Company and its subsidiaries. In

no event shall "Principal Utility Subsidiary "include any Domestic Regulated Utility Subsidiary that as of September 30, 2002, (i) had total assets(after intercompany eliminations) which were 5% or less of the Company's total assets and the total assets of its subsidiaries at such date or (ii) had a

net worth which was 5% or less of the Consolidated Net Worth of the Company and its subsidiaries at such date.

"Net Available Cash" from a Stock Disposition means cash payments received therefrom net of all legal, title and recording tax expenses,commissions and other fees and expenses incurred, and all federal, state and local taxes required to be paid or accrued as a liability under United

States generally accepted accounting principles, as a result of such Stock Disposition.

(c) Insurance. The Company will maintain insurance with responsible and reputable insurance companies or associations or through its own programof self-insurance in such amounts and covering such risks as is usually carried by companies engaged in similar businesses and owning similarproperties in the same general areas in which it operates and furnish to the Trustee, within a reasonable time after written request therefor, such

information as to the insurance carried as the Trustee may reasonably request;

(d) Compliance with Law. The Company will comply in all material respects with all applicable laws, rules, regulations and orders, such complianceto include, without limitation, paying before the same become delinquent all taxes, assessments and governmental charges imposed upon it or itsproperty, except to the extent being contested in good faith by appropriate proceedings, and compliance with ERISA and Environmental Laws.

"Environmental Laws" means any federal, state or local laws, ordinances or codes, rules, orders, or regulations relating to pollution or protection ofthe environment, including, without limitation, laws relating to hazardous substances, laws relating to reclamation of land and waterways and laws

relating to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances orwastes into the environment (including, without limitation, ambient air, surface water, ground water, land surface or subsurf ace strata) or otherwiserelating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollution, contaminants, chemicals, or

industrial, toxic or hazardous substances or wastes; and

(e) Reports to Holders of Senior Notes. The Company will deliver documents and reports specified in Section 1002 of the Indenture to the Holders ofSenior Notes.

10. So long as any Senior Notes remain Outstanding, each of the following events will constitute an "Event of Default" with respect to the Senior Notes inaddition to those Events of Default specified in Section 801 of the Indenture:

(a) Failure to pay any principal of or premium or interest on any Debt of the Company that is outstanding in a principal amount in excess of$50,000,000 in the aggregate, including such a failure with respect to Securities of another series, when the same becomes due and payable, whether

by scheduled maturity, required prepayment, acceleration, demand or otherwise, and such failure continues after the expiration of any applicable graceperiod specified in the agreement or instrument relating to such Debt; or

(b) Failure by the Company or any Significant Subsidiary to generally pay its debts as such debts become due, or admission in writing of its inabilityto pay debts generally, or making a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Company or

any Significant Subsidiary seeking to adjudicate the Company or any such Significant Subsidiary a bankrupt or insolvent, or seeking liquidation,winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy,

insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or othersimilar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it),either such proceeding shall remain undismissed or unstayed for a period of 30 days, or any of the actions sough t in such proceeding, including,

without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for anysubstantial part of its property, shall occur; or the Company or any Significant Subsidiary shall take any corporate action to authorize or to consent to

any of the actions set forth in this clause (b); or

(c) Any judgment or order for the payment of money in excess of $25,000,000 has been rendered against the Company and either (i) enforcementproceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of 10 consecutive Business

Days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect.

11. (a) So long as any Senior Notes remain Outstanding, the first sentence of Section 802 of the Indenture shall read, and shall be applicable to the SeniorNotes, as follows:

"If an Event of Default applicable to the Securities of any series but not applicable to other series of Outstanding Securities shall have occurred and becontinuing or, if a Prepayment Event (as defined below) with respect to the Senior Notes shall have occurred and be continuing, either the Trustee orthe Holders of a majority in aggregate principal amount of the Securities of such series or the Senior Notes, as the case may be, may then declare theprincipal amount (or, if any of the Securities of such series are Discount Securities, such portion of the principal amount as may be specified in the

terms thereof as contemplated by Section 301) of all Securities of such series or the Senior Notes, as the case may be, and interest accrued thereon tobe due and payable immediately."

(b) For the purposes of paragraph 11(a) above, "Prepayment Event" means the occurrence of any event or the existence of any condition under anyagreement or instrument relating to Debt of a Significant Subsidiary that is outstanding in a principal amount in excess of $50,000,000 in the

aggregate, which occurrence or event results in the declaration of such Debt being due and payable, or such Debt being required to be prepaid (otherthan by a regularly scheduled required prepayment), prior to the stated maturity thereof.

(c) So long as any Senior Notes remain Outstanding, notwithstanding anything set forth in Section 802 of the Indenture, the Senior Notes shallbecome automatically due and payable upon an actual entry of an order for relief under the United States federal bankruptcy code with respect to the

Company or any Significant Subsidiary.

12. The Senior Notes shall have such other terms and provisions as are provided in the form thereof set forth in Exhibit A hereto, and shall be issued insubstantially such form.

13. The Senior Notes will be issued and sold by the Company pursuant to Section 4(2) of the Securities Act. Unless not required by applicable law, each

Senior Note shall bear the non-registration legend in substantially the form set forth in such form set forth in Exhibit A hereto. By its acquisition ofany Senior Notes, each Holder will be deemed to have agreed to the transfer restrictions contained in such legend and the other procedures and

requirements relating to a transfer of Senior Notes. Nothing in the Indenture, the Senior Notes or this certificate shall be construed to require theCompany to register any Senior Notes under the Securities Act, unless otherwise expressly agreed by the Company, confirmed in writing to the

Trustee, or to make any transfer of such Senior Notes in violation of applicable law. In connection with any transfer of Senior Notes, the transferringHolders and their transferees shall provide the Company and the Trustee with such opinions (which may be an opinion of counsel wh o is an employee

of such Holder or an Affiliate thereof), certificates and other information as the Company or the Trustee may reasonably request regarding thecompliance of such transfer with the Securities Act and any applicable state securities laws or any exemption therefrom, provided, however, that if the

proposed transfer of Senior Notes is to a transferee that is an Institutional Investor, as defined in the separate Note Purchase Agreements datedNovember 20, 2003 by and between the Company and the respective purchasers named therein, the Company and the Trustee shall only require a

certificate from the transferee to the effect that it is such an Institutional Investor. In connection with any transfer of the Senior Notes, the Trustee, theSecurity Registrar and the Company shall be under no duty to inquire into, may conclusively presume the correctness of, and shall be fully protectedin relying upon such opinions, certificates and other information, received from the Holders and any transferees of a ny Senior Notes regarding the

validity, legality and due authorization of any such transfer, the eligibility of the transferee to receive such Senior Notes and any other facts andcircumstances related to such transfer.

14. (a) The undersigned has read all of the covenants and conditions contained in the Indenture, and the definitions in the Indenture relating thereto,

relating to the issuance, authentication and delivery of the Senior Notes and in respect of compliance with which this certificate is made;

(b) The statements contained in this certificate are based upon the familiarity of the undersigned with the Indenture, the documents accompanying thiscertificate, and upon discussions by the undersigned with officers and employees of the Company familiar with the matters set forth herein;

(c) In the opinion of the undersigned, he has made such examination or investigation as is necessary to enable him to express an informed opinion asto whether or not such covenants and conditions have been complied with; and

(d) In the opinion of the undersigned, such conditions and covenants and conditions precedent provided for in the Indenture (including any covenantscompliance with which constitutes a condition precedent) relating to the authentication and delivery of the Senior Notes requested in the

accompanying Company Order No. 7, have been complied with.

IN WITNESS WHEREOF, I have executed this Officer's Certificate this 20th day of November, 2003.

/s/ Steven C. McNeal____________

Steven C. McNealVice President and Treasurer

EXHIBIT A

THIS NOTE HAS NOT BEEN REGISTERED FOR OFFER OR SALE UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BESOLD, TRANSFERRED OR OTHERWISE DISPOSED OF ONLY IF REGISTERED PURSUANT TO THE PROVISIONS OF SUCH ACT OR IF ANEXEMPTION FROM REGISTRATION IS AVAILABLE, EXCEPT UNDER SUCH CIRCUMSTANCES WHERE NEITHER SUCH REGISTRATION

NOR SUCH AN EXEMPTION IS REQUIRED BY LAW.

No. R- PPN:________________

[FORM OF FACE OF SENIOR NOTE]

ENTERGY CORPORATION

6.23% SENIOR NOTES DUE MARCH 15, 2008

Entergy Corporation, a corporation duly organized and existing under the laws of the State of Delaware (herein referred to as the "Company", which termincludes any successor Person under the Indenture), for value received, hereby promises to pay to

or registered assigns, the principal sum of ____________________ Dollars on March 15, 2008, and to pay interest on said principal sum semi-annually onMarch 15 and September 15 of each year commencing March 15, 2004 (each an Interest Payment Date) at the rate of 6.23% per annum, until the principalhereof is paid or made available for payment and to pay interest, to the extent permitted by law, on any overdue principal and interest, at the rate of 6.23%per annum. Interest on the Securities of this series will accrue from, and include, November 20, 2003, to the first Interest Payment Date, and thereafter will

accrue from the last Interest Payment Date to which interest has been paid or duly provided for. In the event that any Interest Payment Date is not a BusinessDay, then payment of interest payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other

payment in respect of such delay) with the same force and effect as if made on the Interest Payment Date. The interest so payable, and punctually paid orduly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more

Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the Business Day next precedingsuch Interest Payment Date, provided, however, that interest payable at Maturity will be paid to the Person to whom principal is paid. Any such interest not

so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person inwhose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such

Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such SpecialRecord Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities ofthis series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture referred to on the reverse

hereof.

Payment of the principal of, and premium, if any, and interest on this Security will be made upon presentation at the office or agency of the Companymaintained for that purpose in The City of New York, the State of New York in such coin or currency of the United States of America as at the time of

payment is legal tender for payment of public and private debts, provided, however, that, at the option of the Company, the principal of, and premium, if any,and interest on this Security may be paid by check mailed to the address of the person entitled thereto, as such address shall appear on the Security Registeror by wire transfer to an account designated by the person entitled thereto; and provided, further, that, after payment in full of this Security the Holder shall

promptly surrender this Security at the office or agency of the Company in The City of New York, the State of New York.

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have thesame effect as if set forth at this place. Any capitalized term which is used herein and not otherwise defined shall have the meaning ascribed to such term in

the Indenture.

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall notbe entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.

ENTERGY CORPORATION

By:_______________________________________

[FORM OF CERTIFICATE OF AUTHENTICATION]

CERTIFICATE OF AUTHENTICATION

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

Dated:

Deutsche Bank Trust Company Americas, as Trustee

By:_______________________________________Authorized Signatory

[FORM OF REVERSE OF SENIOR NOTE]

This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more seriesunder an Indenture (For Unsecured Debt Securities), dated as of December 1, 2002 (herein, together with any amendments thereto, called the "Indenture",

which term shall have the meaning assigned to it in such instrument), between the Company and Deutsche Bank Trust Company Americas, as Trustee(herein called the "Trustee", which term includes any successor trustee under the Indenture), and reference is hereby made to the Indenture, including the

Board Resolutions and Officer's Certificate filed with the Trustee on November 20, 2003 creating the series designated on the face hereof, for a statement ofthe respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms

upon which the Securities are, and are to be, authenticated and del ivered.

The Securities of this series will be redeemable at the option of the Company prior to the Stated Maturity (each a "Redemption Date"), in whole or in part, atany time. The Company will give notice of its intent to redeem such Securities of this series at least 30 days prior to the Redemption Date. If the Company

redeems all or any part of the Securities of this series, it will pay a Redemption Price (the "Redemption Price") equal to the greater of

(1) 100% of the principal amount of the Securities of this series being redeemed, or

(2) as determined by the Independent Investment Banker, the sum of the present values of the remaining scheduled payments of principal of and interest onthe Securities of this series being redeemed (excluding the portion of any such interest accrued to the Redemption Date), discounted (for purposes ofdetermining such present values) to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the

Adjusted Treasury Rate plus 0.50%,

plus, in each case, accrued and unpaid interest on the Securities of this series being redeemed to the Redemption Date.

"Adjusted Treasury Rate" means, with respect to any Redemption Date:

(1) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical releasedesignated "H.15(519)" or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which

establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption "Treasury Constant Maturities," for thematurity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the remaining term of the Securities of thisseries, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue shall be determined and the Adjusted Treasury

Rate shall be interpolated or extrapolated from such yields on a straight line basis, rounding to the nearest month); or

(2) if such release (or any successor release) is not published during the week preceding the calculation date for the Adjusted Treasury Rate or does notcontain such yields, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price forthe Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date. The

Adjusted Treasury Rate shall be calculated on the third Business Day preceding the Redemption Date.

"Comparable Treasury Issue" means the United States Treasury security selected by the Independent Investment Banker as having a maturity comparable tothe remaining term of the Securities of this series that would be utilized, at the time of selection and in accordance with customary financial practice, in

pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Securities of this series.

"Comparable Treasury Price" means, with respect to any Redemption Date, (1) the average of five Reference Treasury Dealer Quotations for suchRedemption Date after excluding the highest and lowest such Reference Treasury Dealer Quotations or (2) if the Independent Investment Banker obtains

fewer than five such Reference Treasury Dealer Quotations, the average of all such Reference Treasury Dealer Quotations.

"Independent Investment Banker" means Barclays Capital Inc. or, if such firm is unwilling or unable to select the Comparable Treasury Issue, anindependent investment banking institution of national standing appointed by the Company.

"Reference Treasury Dealer" means (1) Barclays Capital Inc. and its successors; provided, however, that if any of the foregoing shall cease to be a primaryU.S. Government securities dealer in New York City (a "Primary Treasury Dealer"), the Company will substitute therefor another Primary Treasury Dealer,

and (2) any other Primary Treasury Dealer selected by the Independent Investment Banker after consultation with the Company.

"Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined bythe Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal

amount) quoted in writing to the Independent Investment Banker at 5:00 p.m. on the third Business Day preceding such Redemption Date.

The Company shall deliver to the Trustee before any Redemption Date for the Securities of this series its calculation of the Redemption Price applicable tosuch redemption. The Trustee shall be under no duty to inquire into, may presume the correctness of, and shall be fully protected in acting upon the

Company's calculation of any Redemption Price of the Securities of this series.

In lieu of stating the Redemption Price, notices of redemption of the Securities of this series shall state substantially the following: "The Redemption Priceof the Securities of this series to be redeemed shall equal the sum of (a) the greater of (i) 100% of the principal amount of such Senior Notes, or (ii) as

determined by the Independent Investment Banker, the sum of the present values of the remaining scheduled payments of principal of and interest on theSenior Notes being redeemed (excluding the portion of any such interest accrued to the redemption date), discounted (for purposes of determining such

present values) to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rateplus 0.50%."

If less than all of the Securities of this series are to be redeemed consistent with the terms hereof, the particular Securities to be redeemed shall be selectedby the Trustee from the Outstanding Securities of such series on a pro rata basis.

If at the time notice of redemption is given, the redemption moneys are not on deposit with the Trustee, then the redemption shall be subject to their receipton or before the Redemption Date and such notice shall be of no effect unless such moneys are received.

Upon payment of the Redemption Price, on and after the Redemption Date, interest will cease to accrue on the Securities of this series or portions thereofcalled for redemption.

The Indenture contains provisions for defeasance at any time of the entire indebtedness of this Security upon compliance with certain conditions set forth inthe Indenture including the Officer's Certificate described above.

If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared dueand payable in the manner and with the effect provided in the Indenture.

Each Holder shall be deemed to understand that the offer and sale of the Securities of this series have not been registered under the Securities Act and thatthe Securities of this series may not be offered or sold except as permitted in the non-registration legend on the face of this Security.

This Security shall be governed by and construed in accordance with the laws of the State of New York (including without limitation Section 5-1401 of theNew York General Obligations Law or any successor statute),except to the extent that the law of any other jurisdiction shall be mandatorily applicable.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of theCompany and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee withthe consent of the Holders of a majority in aggregate principal amount of the Securities at the time Outstanding of all series to be affected. The Indenture

contains provisions permitting the Holders of a majority in aggregate principal amount of the Securities of all series then Outstanding to waive complianceby the Company with certain provisions of the Indenture. The Indenture also contains provisions permitting the Holders of specified percentages inaggregate principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive

compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consentor waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Securityissued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this

Security.

As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect tothe Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trusteewritten notice of a continuing Event of Default with respect to the Securities of this series, the Holders of a majority in aggregate principal amount of the

Securities of all series at the time Outstanding in respect of which an Event of Default shall have occurred and be continuing shall have made written requestto the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonable indemnity satisfactory to it againstthe costs, expenses and liabilities to be incurred in compliance with such request, and the Trustee shall not have received from the Holders of a majority in

aggregate principal amount of Securities of all series at the time Ou tstanding in respect of which an Event of Default shall have occurred and be continuinga direction inconsistent with such request, and shall have failed to institute any such proceeding, for 60 days after receipt of such notice, request and offer ofindemnity. The foregoing shall not apply to any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof or any

premium or interest hereon on or after the respective due dates expressed herein.

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which isabsolute and unconditional, to pay the principal of and any premium and interest on this Security at the times, place and rate, and in the coin or currency,

herein prescribed.

The Securities of this series are issuable only in registered form without coupons in denominations of $100,000 and in any integral multiples of $1,000 inexcess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate

principal amount of Securities of this series and of like tenor and of authorized denominations, as requested by the Holder surrendering the same.

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover anytax or other governmental charge payable in connection therewith.

The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the absolute ownerhereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the

contrary.

All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture and in the Officer's Certificateestablishing the terms of the Securities of this series.

Exhibit 4(a)10

ENTERGY CORPORATION

OFFICER'S CERTIFICATE

Steven C. McNeal, the Vice President and Treasurer of Entergy Corporation, a Delaware corporation (the "Company"), pursuant to the authority granted inthe Board Resolutions of the Company dated May 11, 2000 and July 25, 2003, and Sections 102, 201 and 301 of the Indenture defined herein, does hereby

certify to Deutsche Bank Trust Company Americas, as trustee (the "Trustee") under the Indenture (For Unsecured Debt Securities) of the Company dated asof December 1, 2002 (the "Indenture") that:

1. The Securities of the sixth series to be issued under the Indenture shall be designated "6.90% Senior Notes due November 15, 2010" (the "SeniorNotes"). All capitalized terms used in this certificate which are not defined herein shall have the meanings set forth in Exhibit A hereto; all capitalized

terms used in this certificate which are not defined herein or in Exhibit A hereto shall have the meanings set forth in the Indenture.

2. The Senior Notes shall be issued by the Company in the initial aggregate principal amount of $140,000,000. Additional Senior Notes, withoutlimitation as to amount, having substantially the same terms as the Outstanding Senior Notes (except a different issue date and issue price and bearinginterest from the last Interest Payment Date to which interest has been paid or duly provided for on the Outstanding Senior Notes, and, if no interest

has been paid, from November 20, 2003), may also be issued by the Company pursuant to the Indenture without the consent of the existing Holders ofthe Senior Notes. Such additional Senior Notes shall be part of the same series as the Outstanding Senior Notes.

3. The Senior Notes shall mature and the principal thereof shall be due and payable together with all accrued and unpaid interest thereon on November

15, 2010.

4. The Senior Notes shall bear interest as provided in the form thereof set forth in Exhibit A hereto. For the purposes of Section 310 of the Indenture, aperiod from and including the 15th of one month to but not including the 15th of the next month will be considered a full month.

5. The principal of, and premium, if any, and each installment of interest on the Senior Notes shall be payable upon presentation of the Senior Notes at

the office or agency of the Company in The City of New York; provided that payment of principal of, premium, if any, and each installment of interestmay be made at the option of the Company by check mailed to the address of the persons entitled thereto or by wire transfer to an account designatedby the person entitled thereto; and provided further that after payment of the Senior Notes in full, the Holders thereof shall promptly surrender such

Senior Notes at the office or agency of the Company in The City of New York. Notices and demands to or upon the Company in respect of the SeniorNotes and the Indenture may be served at the office or agency of the Company in The City of New York. The Corporate Trust Office of the Trusteewill initially be the agency of the Company for such payment and service of notices and demands and the Company hereby appoints Deutsche Bank

Trust Company Americas as its agent for all such purposes; provided, however, that the Company reserves the right to change, by one or moreOfficer's Certificates, any such office or agency and such agent. The registration and registration of transfers and exchanges in respect of the SeniorNotes may be effected at the Corporate Trust Office of the Trustee. The Trustee will initially be the Security Registrar and the Paying Agent for the

Senior Notes.

6. The Senior Notes will be redeemable at the option of the Company prior to the Stated Maturity of the principal thereof as provided in the form thereofset forth in Exhibit A hereto.

7. No service charge shall be made for the registration of transfer or exchange of the Senior Notes; provided, however, that the Company may require

payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with the exchange or transfer.

8. If the Company shall make any deposit of money and/or Eligible Obligations with respect to any Senior Notes, or any portion of the principal amountthereof, as contemplated by Section 701 of the Indenture, the Company shall not deliver an Officer's Certificate described in clause (z) in the first

paragraph of said Section 701 unless the Company shall also deliver to the Trustee, together with such Officer's Certificate, either:

(A) an instrument wherein the Company, notwithstanding the satisfaction and discharge of its indebtedness in respect of the Senior Notes, shallassume the obligation (which shall be absolute and unconditional) to irrevocably deposit with the Trustee or Paying Agent such additional sums of

money, if any, or additional Eligible Obligations (meeting the requirements of Section 701), if any, or any combination thereof, at such time or times,as shall be necessary, together with the money and/or Eligible Obligations theretofore so deposited, to pay when due the principal of and premium, ifany, and interest due and to become due on such Senior Notes or portions thereof, all in accordance with and subject to the provisions of said Section701; provided, however, that such instrument may state that the obligation of the Company to make additional deposits as aforesaid shall be subject to

the delivery to the Company by the Trustee of a notice asserting the deficiency accompanied by an opinion of an independent p ublic accountant ofnationally recognized standing, selected by the Trustee, showing the calculation thereof; or

(B) an Opinion of Counsel to the effect that, as a result of a change in law occurring after the date of this certificate, the Holders of such Senior Notes,or portions of the principal amount thereof, will not recognize income, gain or loss for United States federal income tax purposes as a result of the

satisfaction and discharge of the Company's indebtedness in respect thereof and will be subject to United States federal income tax on the sameamounts, at the same times and in the same manner as if such satisfaction and discharge had not been effected.

9. So long as any Senior Notes remain Outstanding, the Company will comply with the following covenants in addition to those specified in Article Sixof the Indenture:

(a) Limitation on Debt. The Company shall not permit the total principal amount of all Debt of the Company and its subsidiaries, determined on aconsolidated basis and without duplication of liability therefor, at any time to exceed 65% of Capitalization, as defined below, determined as of thelast day of the Company's most recently ended fiscal quarter. For purposes of this restriction "Debt" and "Capitalization" shall not include juniorsubordinated deferrable interest debentures of a Significant Subsidiary issued to a subsidiary trust which has issued preferred securities that are

included in the calculation of "Capitalization," and any Debt of any subsidiary of the Company that is Non-Recourse Debt. "Non-Recourse Debt"means any Debt of any subsidiary of the Company that does not constitute Debt of the Company or of any Significant Subsidiary. "Capitalization"

means, as of any date of determination, with respect to the Company and its subsidiaries determined on a consolidated basis, an amount equal to thesum of (i) the total principal amount of all Debt of the Company and its subsidiaries outstanding on such date, (ii) Consolidated Net Worth as of such

date and (iii) to the extent not otherwise included in Capitalization, all preferred stock and other preferred securities of the Company and itssubsidiaries, including preferred securities issued by any subsidiary trust, outstanding on such date.

(b) Disposition of Assets. The Company will not sell, lease, transfer, convey or otherwise dispose of (whether in one transaction or in a series oftransactions) any shares of voting common stock (or of stock or other instruments convertible into voting common stock) of any Principal UtilitySubsidiary (as defined below), or permit any Principal Utility Subsidiary to issue, sell or otherwise dispose of any of its shares of voting common

stock (or of stock or other instruments convertible into voting common stock) (each such case, a "Stock Disposition"), except to the Company or to aPrincipal Utility Subsidiary, unless within 180 days of such Stock Disposition, the Company applies (or causes such Principal Utility Subsidiary to

apply) all of the Net Available Cash (as defined below) from such Stock Disposition (i) to prepay, repay, purchase, repurchase, redeem, retire, defeaseor otherwise acquire for value Debt of the Company and/or Debt of one or more Domestic Regulated Utility Subsidiaries t hat remain a subsidiary ofthe Company and/or (ii) to reinvest in the business of one or more Domestic Regulated Utility Subsidiaries. For purposes of this restriction, a Stock

Disposition shall be treated as a separate transaction and not part of a series of transactions if it occurs 180 days or more after another StockDisposition.

"Principal Utility Subsidiary" means Entergy Arkansas, Inc., Entergy Gulf States, Inc., Entergy Louisiana, Inc., Entergy Mississippi, Inc., SystemEnergy Resources, Inc. and any other Domestic Regulated Utility Subsidiary (i) the total assets (after intercompany eliminations) of which exceed

20% of total assets of the Company and the total assets of its subsidiaries or (ii) the net worth of which exceeds 20% of the Consolidated Net Worth ofthe Company and its subsidiaries, in each case as shown on the most recent audited consolidated balance sheet of the Company and its subsidiaries. In

no event shall "Principal Utility Subsidiary "include any Domestic Regulated Utility Subsidiary that as of September 30, 2002, (i) had total assets(after intercompany eliminations) which were 5% or less of the Company's total assets and the total assets of its subsidiaries at such date or (ii) had a

net worth which was 5% or less of the Consolidated Net Worth of the Company and its subsidiaries at such date.

"Net Available Cash" from a Stock Disposition means cash payments received therefrom net of all legal, title and recording tax expenses,commissions and other fees and expenses incurred, and all federal, state and local taxes required to be paid or accrued as a liability under United

States generally accepted accounting principles, as a result of such Stock Disposition.

(c) Insurance. The Company will maintain insurance with responsible and reputable insurance companies or associations or through its own programof self-insurance in such amounts and covering such risks as is usually carried by companies engaged in similar businesses and owning similarproperties in the same general areas in which it operates and furnish to the Trustee, within a reasonable time after written request therefor, such

information as to the insurance carried as the Trustee may reasonably request;

(d) Compliance with Law. The Company will comply in all material respects with all applicable laws, rules, regulations and orders, such complianceto include, without limitation, paying before the same become delinquent all taxes, assessments and governmental charges imposed upon it or itsproperty, except to the extent being contested in good faith by appropriate proceedings, and compliance with ERISA and Environmental Laws.

"Environmental Laws" means any federal, state or local laws, ordinances or codes, rules, orders, or regulations relating to pollution or protection ofthe environment, including, without limitation, laws relating to hazardous substances, laws relating to reclamation of land and waterways and laws

relating to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances orwastes into the environment (including, without limitation, ambient air, surface water, ground water, land surface or subsurf ace strata) or otherwiserelating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollution, contaminants, chemicals, or

industrial, toxic or hazardous substances or wastes; and

(e) Reports to Holders of Senior Notes. The Company will deliver documents and reports specified in Section 1002 of the Indenture to the Holders ofSenior Notes.

10. So long as any Senior Notes remain Outstanding, each of the following events will constitute an "Event of Default" with respect to the Senior Notes inaddition to those Events of Default specified in Section 801 of the Indenture:

(a) Failure to pay any principal of or premium or interest on any Debt of the Company that is outstanding in a principal amount in excess of$50,000,000 in the aggregate, including such a failure with respect to Securities of another series, when the same becomes due and payable, whether

by scheduled maturity, required prepayment, acceleration, demand or otherwise, and such failure continues after the expiration of any applicable graceperiod specified in the agreement or instrument relating to such Debt; or

(b)Failure by the Company or any Significant Subsidiary to generally pay its debts as such debts become due, or admission in writing of its inability topay debts generally, or making a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Company orany Significant Subsidiary seeking to adjudicate the Company or any such Significant Subsidiary a bankrupt or insolvent, or seeking liquidation,

winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy,insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other

similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it),either such proceeding shall remain undismissed or unstayed for a period of 30 days, or any of the actions sought in such proceeding, including,

without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for anysubstantial part of its property, shall occur; or the Company or any Significant Subsidiary shall take any corporate action to authorize or to consent to

any of the actions set forth in this clause (b); or

(c) Any judgment or order for the payment of money in excess of $25,000,000 has been rendered against the Company and either (i) enforcementproceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of 10 consecutive Business

Days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect.

11. (a) So long as any Senior Notes remain Outstanding, the first sentence of Section 802 of the Indenture shall read, and shall be applicable to the SeniorNotes, as follows:

"If an Event of Default applicable to the Securities of any series but not applicable to other series of Outstanding Securities shall have occurred and becontinuing or, if a Prepayment Event (as defined below) with respect to the Senior Notes shall have occurred and be continuing, either the Trustee orthe Holders of a majority in aggregate principal amount of the Securities of such series or the Senior Notes, as the case may be, may then declare theprincipal amount (or, if any of the Securities of such series are Discount Securities, such portion of the principal amount as may be specified in the

terms thereof as contemplated by Section 301) of all Securities of such series or the Senior Notes, as the case may be, and interest accrued thereon tobe due and payable immediately."

(b) For the purposes of paragraph 11(a) above, "Prepayment Event" means the occurrence of any event or the existence of any condition under anyagreement or instrument relating to Debt of a Significant Subsidiary that is outstanding in a principal amount in excess of $50,000,000 in the

aggregate, which occurrence or event results in the declaration of such Debt being due and payable, or such Debt being required to be prepaid (otherthan by a regularly scheduled required prepayment), prior to the stated maturity thereof.

(c) So long as any Senior Notes remain Outstanding, notwithstanding anything set forth in Section 802 of the Indenture, the Senior Notes shallbecome automatically due and payable upon an actual entry of an order for relief under the United States federal bankruptcy code with respect to the

Company or any Significant Subsidiary.

12. The Senior Notes shall have such other terms and provisions as are provided in the form thereof set forth in Exhibit A hereto, and shall be issued insubstantially such form.

13. The Senior Notes will be issued and sold by the Company pursuant to Section 4(2) of the Securities Act. Unless not required by applicable law, each

Senior Note shall bear the non-registration legend in substantially the form set forth in such form set forth in Exhibit A hereto. By its acquisition ofany Senior Notes, each Holder will be deemed to have agreed to the transfer restrictions contained in such legend and the other procedures and

requirements relating to a transfer of Senior Notes. Nothing in the Indenture, the Senior Notes or this certificate shall be construed to require theCompany to register any Senior Notes under the Securities Act, unless otherwise expressly agreed by the Company, confirmed in writing to the

Trustee, or to make any transfer of such Senior Notes in violation of applicable law. In connection with any transfer of Senior Notes, the transferringHolders and their transferees shall provide the Company and the Trustee with such opinions (which may be an opinion of counsel wh o is an employee

of such Holder or an Affiliate thereof), certificates and other information as the Company or the Trustee may reasonably request regarding thecompliance of such transfer with the Securities Act and any applicable state securities laws or any exemption therefrom, provided, however, that if the

proposed transfer of Senior Notes is to a transferee that is an Institutional Investor, as defined in the separate Note Purchase Agreements datedNovember 20, 2003 by and between the Company and the respective purchasers named therein, the Company and the Trustee shall only require a

certificate from the transferee to the effect that it is such an Institutional Investor. In connection with any transfer of the Senior Notes, the Trustee, theSecurity Registrar and the Company shall be under no duty to inquire into, may conclusively presume the correctness of, and shall be fully protectedin relying upon such opinions, certificates and other information, received from the Holders and any transferees of a ny Senior Notes regarding the

validity, legality and due authorization of any such transfer, the eligibility of the transferee to receive such Senior Notes and any other facts andcircumstances related to such transfer.

14. (a) The undersigned has read all of the covenants and conditions contained in the Indenture, and the definitions in the Indenture relating thereto,

relating to the issuance, authentication and delivery of the Senior Notes and in respect of compliance with which this certificate is made;

(b) The statements contained in this certificate are based upon the familiarity of the undersigned with the Indenture, the documents accompanying thiscertificate, and upon discussions by the undersigned with officers and employees of the Company familiar with the matters set forth herein;

(c) In the opinion of the undersigned, he has made such examination or investigation as is necessary to enable him to express an informed opinion asto whether or not such covenants and conditions have been complied with; and

(d) In the opinion of the undersigned, such conditions and covenants and conditions precedent provided for in the Indenture (including any covenantscompliance with which constitutes a condition precedent) relating to the authentication and delivery of the Senior Notes requested in the

accompanying Company Order No. 6, have been complied with.

IN WITNESS WHEREOF, I have executed this Officer's Certificate this 20th day of November, 2003.

/s/ Steven C. McNeal________________Steven C. McNeal

Vice President and Treasurer

EXHIBIT A

THIS NOTE HAS NOT BEEN REGISTERED FOR OFFER OR SALE UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BESOLD, TRANSFERRED OR OTHERWISE DISPOSED OF ONLY IF REGISTERED PURSUANT TO THE PROVISIONS OF SUCH ACT OR IF ANEXEMPTION FROM REGISTRATION IS AVAILABLE, EXCEPT UNDER SUCH CIRCUMSTANCES WHERE NEITHER SUCH REGISTRATION

NOR SUCH AN EXEMPTION IS REQUIRED BY LAW.

No. R- PPN:________________

[FORM OF FACE OF SENIOR NOTE]

ENTERGY CORPORATION

6.90% SENIOR NOTES DUE NOVEMBER 15, 2010

Entergy Corporation, a corporation duly organized and existing under the laws of the State of Delaware (herein referred to as the "Company", which termincludes any successor Person under the Indenture), for value received, hereby promises to pay to

or registered assigns, the principal sum of ____________________ Dollars on November 15, 2010, and to pay interest on said principal sum semi-annuallyon May 15 and November 15 of each year commencing May 15, 2004 (each an Interest Payment Date) at the rate of 6.90% per annum, until the principalhereof is paid or made available for payment and to pay interest, to the extent permitted by law, on any overdue principal and interest, at the rate of 6.90%per annum. Interest on the Securities of this series will accrue from, and include, November 20, 2003, to the first Interest Payment Date, and thereafter will

accrue from the last Interest Payment Date to which interest has been paid or duly provided for. In the event that any Interest Payment Date is not a BusinessDay, then payment of interest payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other

payment in respect of such delay) with the same force and effect as if made on the Interest Pa yment Date. The interest so payable, and punctually paid orduly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more

Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the Business Day next precedingsuch Interest Payment Date, provided, however, that interest payable at Maturity will be paid to the Person to whom principal is paid. Any such interest not

so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person inwhose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such

Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such SpecialRecord Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities ofthis series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture referred to on the reverse

hereof.

Payment of the principal of, and premium, if any, and interest on this Security will be made upon presentation at the office or agency of the Companymaintained for that purpose in The City of New York, the State of New York in such coin or currency of the United States of America as at the time of

payment is legal tender for payment of public and private debts, provided, however, that, at the option of the Company, the principal of, and premium, if any,and interest on this Security may be paid by check mailed to the address of the person entitled thereto, as such address shall appear on the Security Register

or by wire transfer to an account designated by the person entitled thereto; and provided, further, that, after payment in full of this Security the Holder shallpromptly surrender this Security at the office or agency of the Company in The City of New York, the State of New York.

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have thesame effect as if set forth at this place. Any capitalized term which is used herein and not otherwise defined shall have the meaning ascribed to such term in

the Indenture.

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall notbe entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.

ENTERGY CORPORATION

By:_______________________________________

[FORM OF CERTIFICATE OF AUTHENTICATION]

CERTIFICATE OF AUTHENTICATION

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

Dated:

Deutsche Bank Trust Company Americas, as Trustee

By:_______________________________________Authorized Signatory

[FORM OF REVERSE OF SENIOR NOTE]

This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more seriesunder an Indenture (For Unsecured Debt Securities), dated as of December 1, 2002 (herein, together with any amendments thereto, called the "Indenture",

which term shall have the meaning assigned to it in such instrument), between the Company and Deutsche Bank Trust Company Americas, as Trustee(herein called the "Trustee", which term includes any successor trustee under the Indenture), and reference is hereby made to the Indenture, including the

Board Resolutions and Officer's Certificate filed with the Trustee on November 20, 2003 creating the series designated on the face hereof, for a statement ofthe respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms

upon which the Securities are, and are to be, authenticated and del ivered.

The Securities of this series will be redeemable at the option of the Company prior to the Stated Maturity (each a "Redemption Date"), in whole or in part, atany time. The Company will give notice of its intent to redeem such Securities of this series at least 30 days prior to the Redemption Date. If the Company

redeems all or any part of the Securities of this series, it will pay a Redemption Price (the "Redemption Price") equal to the greater of

(1) 100% of the principal amount of the Securities of this series being redeemed, or

(2) as determined by the Independent Investment Banker, the sum of the present values of the remaining scheduled payments of principal of and interest onthe Securities of this series being redeemed (excluding the portion of any such interest accrued to the Redemption Date), discounted (for purposes ofdetermining such present values) to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the

Adjusted Treasury Rate plus 0.50%,

plus, in each case, accrued and unpaid interest on the Securities of this series being redeemed to the Redemption Date.

"Adjusted Treasury Rate" means, with respect to any Redemption Date:

(1) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical releasedesignated "H.15(519)" or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which

establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption "Treasury Constant Maturities," for thematurity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the remaining term of the Securities of thisseries, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue shall be determined and the Adjusted Treasury

Rate shall be interpolated or extrapolated from such yields on a straight line basis, rounding to the nearest month); or

(2) if such release (or any successor release) is not published during the week preceding the calculation date for the Adjusted Treasury Rate or does notcontain such yields, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price forthe Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date. The

Adjusted Treasury Rate shall be calculated on the third Business Day preceding the Redemption Date.

"Comparable Treasury Issue" means the United States Treasury security selected by the Independent Investment Banker as having a maturity comparable tothe remaining term of the Securities of this series that would be utilized, at the time of selection and in accordance with customary financial practice, in

pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Securities of this series.

"Comparable Treasury Price" means, with respect to any Redemption Date, (1) the average of five Reference Treasury Dealer Quotations for suchRedemption Date after excluding the highest and lowest such Reference Treasury Dealer Quotations or (2) if the Independent Investment Banker obtains

fewer than five such Reference Treasury Dealer Quotations, the average of all such Reference Treasury Dealer Quotations.

"Independent Investment Banker" means Barclays Capital Inc. or, if such firm is unwilling or unable to select the Comparable Treasury Issue, anindependent investment banking institution of national standing appointed by the Company.

"Reference Treasury Dealer" means (1) Barclays Capital Inc. and its successors; provided, however, that if any of the foregoing shall cease to be a primaryU.S. Government securities dealer in New York City (a "Primary Treasury Dealer"), the Company will substitute therefor another Primary Treasury Dealer,

and (2) any other Primary Treasury Dealer selected by the Independent Investment Banker after consultation with the Company.

"Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined bythe Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal

amount) quoted in writing to the Independent Investment Banker at 5:00 p.m. on the third Business Day preceding such Redemption Date.

The Company shall deliver to the Trustee before any Redemption Date for the Securities of this series its calculation of the Redemption Price applicable tosuch redemption. The Trustee shall be under no duty to inquire into, may presume the correctness of, and shall be fully protected in acting upon the

Company's calculation of any Redemption Price of the Securities of this series.

In lieu of stating the Redemption Price, notices of redemption of the Securities of this series shall state substantially the following: "The Redemption Priceof the Securities of this series to be redeemed shall equal the sum of (a) the greater of (i) 100% of the principal amount of such Senior Notes, or (ii) as

determined by the Independent Investment Banker, the sum of the present values of the remaining scheduled payments of principal of and interest on theSenior Notes being redeemed (excluding the portion of any such interest accrued to the redemption date), discounted (for purposes of determining such

present values) to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rateplus 0.50%."

If less than all of the Securities of this series are to be redeemed consistent with the terms hereof, the particular Securities to be redeemed shall be selectedby the Trustee from the Outstanding Securities of such series on a pro rata basis.

If at the time notice of redemption is given, the redemption moneys are not on deposit with the Trustee, then the redemption shall be subject to their receipton or before the Redemption Date and such notice shall be of no effect unless such moneys are received.

Upon payment of the Redemption Price, on and after the Redemption Date, interest will cease to accrue on the Securities of this series or portions thereofcalled for redemption.

The Indenture contains provisions for defeasance at any time of the entire indebtedness of this Security upon compliance with certain conditions set forth inthe Indenture including the Officer's Certificate described above.

If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared dueand payable in the manner and with the effect provided in the Indenture.

Each Holder shall be deemed to understand that the offer and sale of the Securities of this series have not been registered under the Securities Act and thatthe Securities of this series may not be offered or sold except as permitted in the non-registration legend on the face of this Security.

This Security shall be governed by and construed in accordance with the laws of the State of New York (including without limitation Section 5-1401 of theNew York General Obligations Law or any successor statute),except to the extent that the law of any other jurisdiction shall be mandatorily applicable.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of theCompany and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee withthe consent of the Holders of a majority in aggregate principal amount of the Securities at the time Outstanding of all series to be affected. The Indenture

contains provisions permitting the Holders of a majority in aggregate principal amount of the Securities of all series then Outstanding to waive complianceby the Company with certain provisions of the Indenture. The Indenture also contains provisions permitting the Holders of specified percentages inaggregate principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive

compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consentor waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Securityissued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this

Security.

As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect tothe Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trusteewritten notice of a continuing Event of Default with respect to the Securities of this series, the Holders of a majority in aggregate principal amount of the

Securities of all series at the time Outstanding in respect of which an Event of Default shall have occurred and be continuing shall have made written requestto the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonable indemnity satisfactory to it againstthe costs, expenses and liabilities to be incurred in compliance with such request, and the Trustee shall not have received from the Holders of a majority in

aggregate principal amount of Securities of all series at the time Ou tstanding in respect of which an Event of Default shall have occurred and be continuinga direction inconsistent with such request, and shall have failed to institute any such proceeding, for 60 days after receipt of such notice, request and offer ofindemnity. The foregoing shall not apply to any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof or any

premium or interest hereon on or after the respective due dates expressed herein.

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which isabsolute and unconditional, to pay the principal of and any premium and interest on this Security at the times, place and rate, and in the coin or currency,

herein prescribed.

The Securities of this series are issuable only in registered form without coupons in denominations of $100,000 and in any integral multiples of $1,000 inexcess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate

principal amount of Securities of this series and of like tenor and of authorized denominations, as requested by the Holder surrendering the same.

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover anytax or other governmental charge payable in connection therewith.

The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the absolute ownerhereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the

contrary.

All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture and in the Officer's Certificateestablishing the terms of the Securities of this series.

Exhibit 4(a)11

U.S. $35,000,000

CREDIT AGREEMENT

Dated as November 24, 2003

Among

ENTERGY CORPORATION

as Borrower

THE BANKS NAMED HEREIN

as Banks

BAYERISCHE HYPO- UND VEREINSBANK AG, NEW YORK BRANCH

as Administrative Agent

BAYERISCHE HYPO- UND VEREINSBANK AG, NEW YORK BRANCH

as Arranger

CREDIT AGREEMENT

Dated as of November 24, 2003

ENTERGY CORPORATION, a Delaware corporation (the "Borrower"), the banks (the "Banks") listed on the signature pages hereof and Bayerische Hypo-und Vereinsbank AG, New York Branch ("HypoVereinsbank"), as administrative agent (the "Administrative Agent") for the Lenders hereunder, agree asfollows:

I. DEFINITIONS AND ACCOUNTING TERMS

1. Certain Defined Terms.

As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and pluralforms of the terms defined):

"Advance" means an advance by a Lender to the Borrower as part of a Borrowing and refers to a Base Rate Advance or a Eurodollar RateAdvance, each of which shall be a "Type" of Advance.

"Affiliate" means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with suchPerson or is a director or officer of such Person.

"Agreement" means this Credit Agreement, as amended, supplemented or modified from time to time.

"Applicable Lending Office" means, with respect to each Lender, such Lender's Eurodollar Lending Office.

"Applicable Margin" means 185 basis points per annum for any Eurodollar Rate Advance.

"Approved Fund" means, with respect to any Lender that is a fund that invests in bank loans, any other fund that invests in commercial loansand is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor.

"Assignment and Acceptance" means an assignment and acceptance entered into by a Lender and an assignee of that Lender, and accepted bythe Administrative Agent, in substantially the form of Exhibit B hereto.

"Available Commitment" means, as to any Lender at any time of determination, an amount equal to the excess of (a) such Lender'sCommitment over (b) the aggregate principal amount of such Lender's Advances then outstanding.

"Base Rate" means, for any period, a fluctuating interest rate per annum at all times equal to the higher of:

i. the rate of interest announced publicly by HypoVereinsbank in New York, New York, from time to time, as HypoVereinsbank's baserate; and

ii. 1/2 of 1% per annum above the Federal Funds Rate in effect from time to time.

"Base Rate Advance" means an Advance that bears interest as provided in Section 2.05(a).

"Borrowing" means a borrowing consisting of simultaneous Advances of the same Type made by each of the Lenders pursuant to Section 2.01or Converted pursuant to Section 2.07 or 2.08.

"Business Day" means a day of the year on which banks are not required or authorized to close in New York City and, if the applicableBusiness Day relates to any Eurodollar Rate Advances, on which dealings are carried on in the London interbank market.

"Capitalization" means, as of any date of determination, with respect to the Borrower and its subsidiaries determined on a consolidated basis, anamount equal to the sum of (i) the total principal amount of all Debt of the Borrower and its subsidiaries outstanding on such date,(ii) Consolidated Net Worth as of such date and (iii) to the extent not otherwise included in Capitalization, all preferred stock and otherpreferred securities of the Borrower and its subsidiaries, including preferred securities issued by any subsidiary trust, outstanding on such date.

"Close", "Closing" means the execution and delivery of this Agreement by the Borrower, Administrative Agent, and the Lenders following thesatisfaction or waiver by the Lenders of the conditions precedent set forth in Section 3.01.

"Commitment" has the meaning specified in Section 2.01.

"Commitment Period" means the period beginning on (and including) the date of this Agreement and ending upon (and including) the dateoccurring seven calendar days after the date of this Agreement.

"Consolidated EBITDA" means, for any period, the sum of (i) net income of the Borrower and its subsidiaries for such period, but excludingtherefrom (to the extent otherwise included therein) any extraordinary gains or losses, plus (ii) to the extent deducted in determining such netincome for such period, Consolidated Interest Expense, income taxes, distributions on preferred securities of subsidiaries, preferred dividendrequirements, depreciation and amortization expense and any other non-cash charges constituting operating expense, determined in each case inaccordance with generally accepted accounting principles consistently applied.

"Consolidated Interest Expense" means, for any period, the interest expense during such period in respect of Debt of the Borrower and itssubsidiaries of the types described in clauses (i) through (iv) of the definition of "Debt", excluding interest in respect of nuclear fuel capitalleases.

"Consolidated Net Worth" means the sum of the capital stock (excluding treasury stock and capital stock subscribed for and unissued) andsurplus (including earned surplus, capital surplus and the balance of the current profit and loss account not transferred to surplus) accounts ofthe Borrower and its subsidiaries appearing on a consolidated balance sheet of the Borrower and its subsidiaries prepared as of the date ofdetermination in accordance with generally accepted accounting principles consistent with those applied in the preparation of the financialstatements referred to in Section 4.01(e), after eliminating all intercompany transactions and all amounts properly attributable to minorityinterests, if any, in the stock and surplus of subsidiaries.

"Convert", "Conversion" and "Converted" each refers to a conversion of Advances of one Type into Advances of another Type or the selectionof a new, or the renewal of the same, Interest Period for Eurodollar Rate Advances pursuant to Section 2.07 or 2.08.

"Debt" of any Person means (without duplication) all liabilities, obligations and indebtedness (whether contingent or otherwise) of such Person(i) for borrowed money or evidenced by bonds, debentures, notes, or other similar instruments, (ii) to pay the deferred purchase price ofproperty or services (other than such obligations incurred in the ordinary course of business on customary trade terms, provided that suchobligations are not more than 30 days past due), (iii) as lessee under leases which shall have been or should be, in accordance with generallyaccepted accounting principles, recorded as capital leases, (iv) under reimbursement agreements or similar agreements with respect to theissuance of letters of credit (other than obligations in respect of letters of credit opened to provide for the payment of goods or servicespurchased in the ordinary course of business), (v) under any Guaranty Obligations and (vi) liabilities in r espect of unfunded vested benefitsunder plans covered by Title IV of ERISA.

"Domestic Regulated Utility Subsidiary" means a direct or indirect domestic subsidiary of the Borrower engaged in generation, transmission ordistribution of electricity or the transmission or distribution of natural gas that is regulated as to rates by the Federal Energy RegulatoryCommission (or successor agency) or a state or local governmental body on a cost-of-service basis.

"Eligible Assignee" means a Person (a) (i) that is (A) a commercial bank organized under the laws of the United States, or any State thereof, andhaving total assets in excess of $500,000,000; (B) a commercial bank organized under the laws of any other country which is a member of theOECD, or a political subdivision of any such country, and having total assets in excess of $500,000,000, provided that such bank is actingthrough a branch or agency located in the United States or another country which is also a member of OECD; or (C) a Lender, a financialinstitution Affiliate of any Lender or an Approved Fund of any Lender immediately prior to an assignment and (ii) whose long-term publicsenior debt securities are rated at least "BBB-" by S&P or at least "Baa3" by Moody's; or (b) that is approved by the Borrower (whose approvalshall not be unreasonably withheld) and the Administrative Agent.

"Entergy Arkansas" means Entergy Arkansas, Inc., an Arkansas corporation.

"Entergy Gulf States" means Entergy Gulf States, Inc., a Texas corporation.

"Entergy Louisiana" means Entergy Louisiana, Inc., a Louisiana corporation.

"Entergy Mississippi" means Entergy Mississippi, Inc., a Mississippi corporation.

"Entergy New Orleans" means Entergy New Orleans, Inc., a Louisiana corporation.

"Environmental Laws" means any federal, state or local laws, ordinances or codes, rules, orders, or regulations relating to pollution orprotection of the environment, including, without limitation, laws relating to hazardous substances, laws relating to reclamation of land andwaterways and laws relating to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals, or industrial,toxic or hazardous substances or wastes into the environment (including, without limitation, ambient air, surface water, ground water, landsurface or subsurface strata) or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport orhandling of pollution, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes.

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated andrulings issued thereunder, each as amended and modified from time to time.

"ERISA Affiliate" of a Person or entity means any trade or business (whether or not incorporated) that is a member of a group of which suchPerson or entity is a member and that is under common control with such Person or entity within the meaning of Section 414 of the InternalRevenue Code of 1986, and the regulations promulgated and rulings issued thereunder, each as amended or modified from time to time.

"ERISA Plan" means an employee benefit plan maintained for employees of any Person or any ERISA Affiliate of such Person subject toTitle IV of ERISA.

"ERISA Termination Event" means (i) a Reportable Event described in Section 4043 of ERISA and the regulations issued thereunder (otherthan a Reportable Event not subject to the provision for 30-day notice to PBGC), or (ii) the withdrawal of the Borrower or any of its ERISAAffiliates from an ERISA Plan during a plan year in which the Borrower or any of its ERISA Affiliates was a "substantial employer" as definedin Section 4001(a)(2) of ERISA, or (iii) the filing of a notice of intent to terminate an ERISA Plan or the treatment of an ERISA Plan amendmentas a termination under Section 4041 of ERISA, or (iv) the institution of proceedings to terminate an ERISA Plan by the PBGC or to appoint atrustee to administer any ERISA Plan, or (v) any other event or condition that would constitute grounds under Section 4042 of ERISA for thetermination of, or the appointment of a trustee to administer any ERISA Plan.

"Eurocurrency Liabilities" has the meaning assigned to that term in Regulation D of the Board of Governors of the Federal Reserve System, asin effect from time to time.

"Eurodollar Lending Office" means, with respect to any Lender, the office of such Lender specified as its "Eurodollar Lending Office" oppositeits name on Schedule I hereto or in the Assignment and Acceptance pursuant to which it became a Lender, or such other office of such Lender assuch Lender may from time to time specify to the Borrower and the Administrative Agent.

"Eurodollar Rate" means, for the Interest Period for each Eurodollar Rate Advance made as part of the same Borrowing, an interest rate perannum equal to the average (rounded upward to the nearest whole multiple of 1/16 of 1% per annum, if such average is not such a multiple) ofthe rate per annum at which deposits in U.S. dollars are offered by the principal office of the Reference Bank in London, England, to primebanks in the London interbank market at 11:00 A.M. (London time) two Business Days before the first day of such Interest Period in an amountsubstantially equal to such Reference Bank's Eurodollar Rate Advance made as part of such Borrowing and for a period equal to such InterestPeriod. The Eurodollar Rate for the Interest Period for each Eurodollar Rate Advance made as part of the same Borrowing shall be determinedby the Administrative Agent on the basis of applicable rates furnished to and received by the Administrative Age nt from the Reference Bank twoBusiness Days before the first day of such Interest Period, subject, however, to the provisions of Section 2.07.

"Eurodollar Rate Advance" means an Advance that bears interest as provided in Section 2.05(b).

"Eurodollar Rate Reserve Percentage" of any Lender for the Interest Period for any Eurodollar Rate Advance means the reserve percentageapplicable during such Interest Period (or if more than one such percentage shall be so applicable, the daily average of such percentages forthose days in such Interest Period during which any such percentage shall be so applicable) under regulations issued from time to time by theBoard of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, withoutlimitation, any emergency, supplemental or other marginal reserve requirement) for such Lender with respect to liabilities or assets consistingof or including Eurocurrency Liabilities having a term equal to such Interest Period.

"Events of Default" has the meaning specified in Section 6.01.

"Federal Funds Rate" means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weightedaverage of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers,as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York,or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions receivedby the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

"Granting Lender" has the meaning specified in Section 8.07(i).

"Guaranty Obligations" means (i) direct or indirect guaranties in respect of, and obligations to purchase or otherwise acquire, or otherwise toassure a creditor against loss in respect of, Debt of any Person and (ii) other guaranty or similar obligations in respect of the financialobligations of others, including, without limitation, Support Obligations.

"Indemnified Person" has the meaning specified in Section 8.04(c).

"Interest Coverage Ratio" means as of any date of determination, the ratio of (i) Consolidated EBITDA for the period of four fiscal quartersending on such date to (ii) Consolidated Interest Expense for such period.

"Interest Period" means, for each Advance made as part of the same Borrowing, the period commencing on the date of such Advance or thedate of the Conversion of any Advance into such an Advance and ending on the last day of the period selected by the Borrower pursuant to theprovisions below and, thereafter, each subsequent period commencing on the last day of the immediately preceding Interest Period and endingon the last day of the period selected by the Borrower pursuant to the provisions below, unless such advance is converted into another InterestPeriod pursuant to Section 2.08. The duration of each such Interest Period shall be 1, 2, 3 or 6 months, or 1, 2, 3, 4 or 5 years (or any otherperiod agreed upon by the Borrower and the Lenders) as the Borrower may, upon notice received by the Administrative Agent not later than11:00 A.M. (New York City time) on the third Business Day prior to the first day of such Interest Period, select; provided, however, that:

i. the Borrower may not select any Interest Period that ends after the Maturity Date;

ii. Interest Periods commencing on the same date for Advances made as part of the same Borrowing shall be of the sameduration; and

iii. whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day ofsuch Interest Period shall be extended to occur on the next succeeding Business Day, provided, in the case of any

Interest Period for a Eurodollar Rate Advance, that if such extension would cause the last day of such Interest Period tooccur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding

Business Day.

"Junior Subordinated Debentures" means any junior subordinated deferrable interest debentures issued by any Significant Subsidiary orEntergy New Orleans from time to time.

"Lenders" means the Banks listed on the signature pages hereof and each Person that shall become a party hereto pursuant to Section 8.07.

"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of suchasset. For the purposes of this Agreement, a Person or any of its subsidiaries shall be deemed to own, subject to a Lien, any asset that it hasacquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retentionagreement relating to such asset.

"Majority Lenders" means at any time Lenders to which are owed at least 66-2/3% of the then aggregate unpaid principal amount of theAdvances, or, if no such principal amount is then outstanding, Lenders having at least 66-2/3% of the Commitments (without giving effect to any

termination in whole of the Commitments pursuant to Section 6.02), provided, that for purposes hereof, neither the Borrower, nor any of itsAffiliates, if a Lender, shall be included in (i) the Lenders holding such amount of the Advances or having such amount of the Commitments or(ii) determining the aggregate unpaid principal amount of the Advances or the total Commitments.

"Maturity Date" means November 24, 2008.

"Moody's" means Moody's Investors Service, Inc. or any successor thereto.

"Multiemployer Plan" means a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliateis making or accruing an obligation to make contributions, or has within any of the preceding three plan years made or accrued an obligationto make contributions.

"Net Available Cash" from a Stock Disposition means cash payments received therefrom net of all legal, title and recording tax expenses,commissions and other fees and expenses incurred, and all federal, state and local taxes required to be paid or accrued as a liability undergenerally accepted accounting principles, as a result of such Stock Disposition.

"Non-Recourse Debt" means any Debt of any subsidiary of the Borrower that does not constitute Debt of the Borrower, any SignificantSubsidiary or Entergy New Orleans.

"Notice of Borrowing" has the meaning specified in Section 2.02(a).

"Notice of Conversion" has the meaning specified in Section 2.08(a).

"OECD" means the Organization for Economic Cooperation and Development.

"Other Taxes" has the meaning specified in Section 2.13(b).

"PBGC" means the Pension Benefit Guaranty Corporation and any entity succeeding to any or all of its functions under ERISA.

"Person" means an individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association,joint venture or other entity, or a government or any political subdivision or agency thereof.

"Prepayment Event" means the occurrence of any event or the existence of any condition under any agreement or instrument relating to anyDebt of the Borrower or of a Significant Subsidiary that, in either case, is outstanding in a principal amount in excess of $50,000,000 in theaggregate, which occurrence or event results in the declaration of such Debt being due and payable, or required to be prepaid (other than by aregularly scheduled required prepayment), prior to the stated maturity thereof.

"Reference Bank" means HypoVereinsbank.

"Register" has the meaning specified in Section 8.07(c).

"Relevant Rating" means the Senior Debt Ratings of the Significant Subsidiary (other than SERI) having the second lowest Senior Debt Ratingsfrom Moody's and S&P of all Significant Subsidiaries (other than SERI).

"Reportable Event" has the meaning assigned to that term in Title IV of ERISA.

"S&P" means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., or any successor thereto.

"SEC" means the United States Securities and Exchange Commission.

"SEC Order" has the meaning specified in Section 3.01(a)(iii).

"Senior Debt Rating" means, as to any Person, the rating assigned by Moody's or S&P to the senior secured long-term debt of such Person.

"SERI" means System Energy Resources, Inc., an Arkansas corporation.

"Significant Subsidiary" means Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, SERI and any other DomesticRegulated Utility Subsidiary of the Borrower: (i) the total assets (after intercompany eliminations) of which exceed 5% of the total assets of theBorrower and its subsidiaries or (ii) the net worth of which exceeds 5% of the Consolidated Net Worth of the Borrower and its subsidiaries, ineach case as shown on the most recent audited consolidated balance sheet of the Borrower and its subsidiaries.

"SPC" has the meaning specified in Section 8.07(i).

"Stock Disposition" means, with respect to any Person, the issuance, sale, lease, transfer, conveyance or other disposition of (whether in onetransaction or in a series of transactions) any shares of voting common stock (or of stock or other instruments convertible into voting commonstock) of such Person.

"Support Obligations" means any financial obligation, contingent or otherwise, of any Person guaranteeing or otherwise supporting any Debtor other obligation of any other Person in any manner, whether directly or indirectly, and including, without limitation, any obligation of suchPerson, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or to purchase (or toadvance or supply funds for the purchase of) any security for the payment of such Debt, (ii) to purchase property, securities or services for thepurpose of assuring the owner of such Debt of the payment of such Debt, (iii) to maintain working capital, equity capital, available cash orother financial statement condition of the primary obligor so as to enable the primary obligor to pay such Debt, (iv) to provide equity capitalunder or in respect of equity subscription arrangements so as to assure any Person with respect to the payment of such Debt or the performanceof such obligation, or (v) to provide financial support for the performance of, or to arrange for the performance of, any non-monetaryobligations or non-funded debt payment obligations (including, without limitation, guaranties of payments under power purchase or othersimilar arrangements) of the primary obligor.

"Taxes" has the meaning specified in Section 2.13(a).

2. Computation of Time Periods.

In this Agreement in the computation of periods of time from a specified date to a later specified date, the word "from" means "from andincluding" and the words "to" and "until" each means "to but excluding".

3. Accounting Terms.

All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles consistent with thoseapplied in the preparation of the financial statements referred to in Section 4.01(e) hereof.

II. AMOUNTS AND TERMS OF THE ADVANCES

1. The Advances.

Each Lender severally agrees, on the terms and conditions hereinafter set forth, to make one Eurodollar Rate Advance to the Borrower on anyBusiness Day during the period from the date hereof until the last day of the Commitment Period in an amount not to exceed the amount setopposite such Lender's name on Schedule II hereto or, if such Lender has entered into any Assignment and Acceptance, set forth for suchLender in the Register maintained by the Administrative Agent pursuant to Section 8.07(c) (such Lender's "Commitment"). At no time may theprincipal amount outstanding hereunder exceed the aggregate amount of the Commitments; provided further that, the aggregate amount of theCommitments shall not exceed $35,000,000.

2. Making the Advances.

a. Each Borrowing shall be made on notice, given not later than 11:00 A.M. (New York City time) on the third Business Day prior to the date ofthe proposed Borrowing, by the Borrower to the Administrative Agent, which shall give to each Lender prompt notice thereof. Each such noticeof a Borrowing (a "Notice of Borrowing") shall be transmitted by telecopier, telex or cable, confirmed immediately in writing, in substantiallythe form of Exhibit A-1 hereto, specifying therein the requested (A) date of such Borrowing, (B) Type of Advances to be made in connectionwith such Borrowing, (C) aggregate amount of such Borrowing, (D) the Borrower's wire instructions, and (E) initial Interest Period for each

such Advance. Each Lender shall, before 12:00 noon (New York City time) on the date of any Borrowing, make available for the account of itsApplicable Lending Office to the Administrative Agent at its address referred to in Section 8.02, in same day funds, such Lender's ratable

portion of such Borrowing. After the Administrative Agent's receipt of such funds and upon fulfillment of the applicable conditions set forth inArticle III, the Administrative Agent will make such funds available to the Borrower at the Administrative Agent's aforesaid address.

b. Each Notice of Borrowing shall be irrevocable and binding on the Borrower. In the case of any Notice of Borrowing requesting Eurodollar RateAdvances, the Borrower shall indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any failure to

fulfill on or before the date specified in such Notice of Borrowing for such Borrowing the applicable conditions set forth in Article III,including, without limitation, any loss, cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds

acquired by such Lender to fund the Advance to be made by such Lender as part of such Borrowing when such Advance, as a result of suchfailure, is not made on such date.

c. Unless the Administrative Agent shall have received notice from a Lender prior to the date of any Borrowing that such Lender will not makeavailable to the Administrative Agent such Lender's ratable portion of such Borrowing, the Administrative Agent may assume that such Lender

has made such portion available to the Administrative Agent on the date of such Borrowing in accordance with subsection (a) of thisSection 2.02 and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding

amount. If and to the extent that such Lender shall not have so made such ratable portion available to the Administrative Agent, such Lenderand the Borrower (following the Administrative Agent's demand on such Lender for the corresponding amount) severally agree to repay to theAdministrative Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount

is made available t o the Borrower until the date such amount is repaid to the Administrative Agent, at (i) in the case of the Borrower, theinterest rate applicable at the time to Advances made in connection with such Borrowing and (ii) in the case of such Lender, the Federal FundsRate. If such Lender shall repay to the Administrative Agent such corresponding amount, such amount so repaid shall constitute such Lender's

Advance as part of such Borrowing for purposes of this Agreement.

d. The failure of any Lender to make the Advance to be made by it as part of any Borrowing shall not relieve any other Lender of its obligation, ifany, hereunder to make its Advance on the date of such Borrowing, but no Lender shall be responsible for the failure of any other Lender to

make the Advance to be made by such other Lender on the date of any Borrowing.

3. Reserved.

4. Repayment of Advances, Etc.

The Borrower shall repay the principal amount of each Advance made by each Lender on the Maturity Date.

5. Interest on Advances.

The Borrower shall pay interest on the unpaid principal amount of each Advance made by each Lender from the date of such Advance until such principalamount shall be paid in full, at the following rates per annum:

a. Base Rate Advances. If such Advance is a Base Rate Advance, a rate per annum equal at all times to the Base Rate in effect from time to time,payable quarterly on the last day of each March, June, September and December and on the date such Base Rate Advance shall be Converted or

paid in full.

b. Eurodollar Rate Advances. Subject to Section 2.06, if such Advance is a Eurodollar Rate Advance, a rate per annum equal at all times duringthe Interest Period for such Advance to the sum of the Eurodollar Rate for such Interest Period plus the Applicable Margin, payable on the lastday of each Interest Period for such Eurodollar Rate Advance and on the date such Eurodollar Rate Advance shall be Converted or paid in fulland, if such Interest Period has a duration of more than three months, on each day that occurs during such Interest Period every three months

from the first day of such Interest Period.

6. Additional Interest on Eurodollar Rate Advances.

The Borrower shall pay to each Lender, so long as such Lender shall be required under regulations of the Board of Governors of the FederalReserve System to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency Liabilities, additional intereston the unpaid principal amount of each Eurodollar Rate Advance of such Lender, from the date of such Advance until such principal amount ispaid in full, at an interest rate per annum equal at all times to the remainder obtained by subtracting (i) the Eurodollar Rate for the InterestPeriod for such Advance from (ii) the rate obtained by dividing such Eurodollar Rate by a percentage equal to 100% minus the Eurodollar RateReserve Percentage of such Lender for such Interest Period, payable on each date on which interest is payable on such Advance. Such additional

interest shall be determined by such Lender and notified to the Borrower through the Administrative Agent, and such determi nation shall beconclusive and binding for all purposes, absent manifest error.

7. Interest Rate Determination.

a. The Reference Bank agrees to furnish to the Administrative Agent timely information for the purpose of determining each Eurodollar Rate.

b. The Administrative Agent shall give prompt notice to the Borrower and the Lenders of the applicable interest rate determined by theAdministrative Agent for purposes of Section 2.05(a).

c. If, with respect to any Eurodollar Rate Advances, the Majority Lenders notify the Administrative Agent that the Eurodollar Rate for any InterestPeriod for such Advances will not adequately reflect the cost to such Majority Lenders of making, funding or maintaining their respective

Eurodollar Rate Advances for such Interest Period, the Administrative Agent shall forthwith so notify the Borrower and the Lenders, whereupon

i. each Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a BaseRate Advance, and

ii. the obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended until theAdministrative Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist.

8. Conversion of Advances.

a. Voluntary. The Borrower may, upon notice given to the Administrative Agent not later than 11:00 A.M. (New York City time) onthe third Business Day prior to the date of the proposed Conversion and subject to the provisions of Sections 2.07 and 2.11, on anyBusiness Day, Convert all Eurodollar Rate Advances of a specified Interest Period made in connection with the same Borrowinginto Advances of another specified Interest Period; provided, however, that any Conversion of, or with respect to, any EurodollarRate Advances into Advances of another specified Interest Period shall be made on, and only on, the last day of an Interest Period

for such Eurodollar Rate Advances, unless the Borrower shall also reimburse the Lenders in respect thereof pursuant toSection 8.04(b) on the date of such Conversion. Each such notice of a Conversion (a "Notice of Conversion") shall be by telecopier,telex or cable, confirmed immediately in wr iting, in substantially the form of Exhibit A-2 hereto, specifying therein (i) the date of

such Conversion, (ii) the Advances to be Converted, and (iii) the duration of the Interest Period for each such Advance.

b. Mandatory. If a Borrower shall fail to select the Type of any Advance or the duration of any Interest Period for any Borrowing inaccordance with the provisions contained in the definition of "Interest Period" in Section 1.01, or if any proposed Conversion of a

Borrowing shall not occur as a result of the circumstances described in paragraph (c) below, the Administrative Agent willforthwith so notify the Borrower and the Lenders, and such Advances will automatically, on the last day of the then existing Interest

Period therefor, Convert into Base Rate Advances.

c. Failure to Convert. Each notice of Conversion given pursuant to subsection (a) above shall be irrevocable and binding on theBorrower. The Borrower agrees to indemnify each Lender against any loss, cost or expense incurred by such Lender if, as a result

of the failure of the Borrower to satisfy any condition to such Conversion (including, without limitation, the occurrence of anyPrepayment Event or Event of Default, or any event that would constitute an Event of Default or a Prepayment Event with notice or

lapse of time or both), such Conversion does not occur. The Borrower's obligations under this subsection (c) shall survive therepayment of all other amounts owing to the Lenders and the Administrative Agent under this Agreement and the termination of the

Commitments.

9. Prepayments.

If the Borrower at any time prepays any Advance, then the Borrower shall give notice to the Administrative Agent prior to 11:00 A.M. (NewYork City time) at least two Business Days' prior to the date of prepayment, stating the proposed date and aggregate principal amount of theprepayment, and if such notice is given the Borrower shall, prepay the outstanding principal amounts of the Advances, together with accruedinterest to the date of such prepayment on the principal amount prepaid and, if such prepayment is prior to November 24, 2007 such otheramounts pursuant to Section 8.04(b); provided, however, that (i) partial prepayment shall not be permitted, and (ii) in the case of any suchprepayment of an Eurodollar Rate Advance, the Borrower shall be obligated to reimburse the Lenders in respect thereof pursuant toSection 8.04(b) on the date of such prepayment. Amounts so prepaid under this Section 2.09 may not be reborrowed.

10. Increased Costs.

a. If, due to either (i) the introduction of or any change (other than any change by way of imposition or increase of reserve requirements in the caseof Eurodollar Rate Advances, included in the Eurodollar Rate Reserve Percentage) in or in the interpretation of any law or regulation or (ii) thecompliance with any guideline or request from any central bank or other governmental authority (whether or not having the force of law), there

shall be any increase in the cost to any Lender of agreeing to make or making, funding or maintaining Eurodollar Rate Advances, then theBorrower shall from time to time, upon demand by such Lender (with a copy of such demand to the Administrative Agent), pay to the

Administrative Agent for the account of such Lender additional amounts sufficient to compensate such Lender for such increased cost. Acertificate as to the amount of such increased cost, submitted to the Borrower and the Administrative Agent by such Lender, shall be conclusiv e

and binding for all purposes, absent manifest error.

b. If any Lender determines that compliance with any law or regulation or any guideline or request from any central bank or other governmentalauthority (whether or not having the force of law) affects or would affect the amount of capital required or expected to be maintained by such

Lender or any corporation controlling such Lender and that the amount of such capital is increased by or based upon the existence of suchLender's commitment to lend hereunder and other commitments of this type (including such Lender's commitment to lend hereunder) or the

Advances, then, upon demand by such Lender (with a copy of such demand to the Administrative Agent), the Borrower shall immediately payto the Administrative Agent for the account of such Lender, from time to time as specified by such Lender, additional amounts sufficient tocompensate such Lender or such corporation in the light of such circumstances, to the extent that such Lender reasonably determines such

increase in capital to be alloc able to the existence of such Lender's commitment to lend hereunder or the Advances made by such Lender. Acertificate in reasonable detail as to such amounts submitted to the Borrower and the Administrative Agent by such Lender shall be conclusive

and binding for all purposes, absent manifest error.

11. Illegality.

Notwithstanding any other provision of this Agreement, if any Lender shall notify the Administrative Agent that the introduction of, any changein or any change in the interpretation of any law or regulation makes it unlawful, or any central bank or other governmental authority asserts

that it is unlawful, for any Lender or its Eurodollar Lending Office to perform its obligations hereunder to make Eurodollar Rate Advances or tofund or maintain Eurodollar Rate Advances hereunder, (i) the obligation of the Lenders to make, or to Convert Advances into, Eurodollar RateAdvances shall be suspended until the Administrative Agent shall notify the Borrower and the Lenders that the circumstances causing suchsuspension no longer exist and (ii) the Borrower shall forthwith prepay in full all Eurodollar Rate Advances of all Lenders then outstanding,together with interest accrued thereon, unless the Borrower, within five Business Days of notice from the Administrative Agent, Conver ts allEurodollar Rate Advances of all Lenders then outstanding into Advances of another Type in accordance with Section 2.08.

12. Payments and Computations.

a. The Borrower shall make each payment hereunder not later than 12:00 noon (New York City time) on the day when due in U.S. dollars to theAdministrative Agent at its address referred to in Section 8.02 in same day funds in accordance with the payment instructions set opposite thename of the Administrative Agent on Schedule I. The Administrative Agent will promptly thereafter cause to be distributed like funds relating

to the payment of principal or interest ratably (other than amounts payable pursuant to Section 2.02(c), 2.06, 2.10, 2.13 or 8.04(b)) to theLenders for the account of their respective Applicable Lending Offices, and like funds relating to the payment of any other amount payable to

any Lender to such Lender for the account of its Applicable Lending Office, in each case to be applied in accordance with the terms of thisAgreement. Upon its acceptance of an Assignment and Acceptance and recording of the information contained therein in the Register pursuant

to Section 8.07(d), from and after the effective date specified in such Assignment and Acceptance, the Administrative Agent shall make allpayments hereunder in respect of the interest assigned thereby to the Lender assignee thereunder, and the parties to such Assignment andAcceptance shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves.

b. The Borrower hereby authorizes each Lender, if and to the extent payment owed to such Lender is not made when due hereunder, to chargefrom time to time to the extent permitted by law against any or all of the Borrower's accounts with such Lender any amount so due.

c. All computations of interest based on clause (i) of the definition of "Base Rate" shall be made by the Administrative Agent on the basis of ayear of 365 or 366 days, as the case may be, and all computations of interest based on the Eurodollar Rate, the Federal Funds Rate or clause (ii)of the definition of "Base Rate" shall be made by the Administrative Agent, and all computations of interest pursuant to Section 2.07 shall bemade by a Lender, on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last

day) occurring in the period for which such interest is payable. Each determination by the Administrative Agent (or, in the case of Section 2.07,by a Lender) of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error.

d. Whenever any payment hereunder shall be stated to be due on a day other than a Business Day, such payment shall be made on the nextsucceeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest; provided,

however, if such extension would cause payment of interest on or principal of Eurodollar Rate Advances to be made in the next followingcalendar month, such payment shall be made on the next preceding Business Day.

e. Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Lendershereunder that the Borrower will not make such payment in full, the Administrative Agent may assume that the Borrower has made such

payment in full to the Administrative Agent on such date and the Administrative Agent may, in reliance upon such assumption, cause to bedistributed to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent that the Borrower shall nothave so made such payment in full to the Administrative Agent, each Lender shall repay to the Administrative Agent forthwith on demand suchamount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the

date such Lender repays such amount to the Administrative Agent, at the Federal Funds Rate.

f. Notwithstanding anything to the contrary contained herein, any amount payable by the Borrower hereunder that is not paid when due (whetherat stated maturity, by acceleration or otherwise) shall (to the fullest extent permitted by law) bear interest from the date when due until paid infull at a rate per annum equal at all times to the higher of the then current interest rate plus the Applicable Margin plus 2% and the Base Rate

plus 2%, payable upon demand.

13. Taxes.

a. Any and all payments by the Borrower hereunder shall be made, in accordance with Section 2.12, free and clear of and without deduction forany and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in thecase of each Lender and the Administrative Agent, taxes imposed on its income, and franchise taxes imposed on it, by the jurisdiction under thelaws of which such Lender or the Administrative Agent (as the case may be) is organized or any political subdivision thereof and, in the case ofeach Lender, taxes imposed on its income, and franchise taxes imposed on it, by the jurisdiction of such Lender's Applicable Lending Office or

any political subdivision thereof (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafterreferred to as "Taxes"). If the Borrower shall be required by law to deduct any Taxe s from or in respect of any sum payable hereunder to any

Lender or the Administrative Agent, (i) the sum payable shall be increased (unless and to the extent that (x) the Borrower is required to deductsuch Taxes because any Lender fails to provide the Administrative Agent and the Borrower with the forms described in subsection (d) below

and (y) such Lender is entitled to an exemption from United States withholding taxes with respect to such sum payable) as may be necessary sothat after making all required deductions (including deductions applicable to additional sums payable under this Section 2.13) such Lender or

the Administrative Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made,(ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant taxation authority or other

authority in accordance with applicable law.

b. In addition, the Borrower agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges orsimilar levies which arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this

Agreement (hereinafter referred to as "Other Taxes").

c. The Borrower will indemnify each Lender and the Administrative Agent for the full amount of Taxes or Other Taxes (including, withoutlimitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 2.13) paid by such Lender or theAdministrative Agent (as the case may be) and any liability (including penalties, interest and expenses) arising therefrom or with respect

thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. This indemnification shall be made within 30 days from thedate such Lender or the Administrative Agent (as the case may be) makes written demand therefor. Nothing herein shall preclude the right of theBorrower to contest any such Taxes or Other Taxes so paid, and the Lenders in question or the Administrative Agent (as the case may be) will,

following notice from, and at the expense of, the Borrower, take such actions as the Borrower may reasonably request to preserve theBorrower's rights to contest such Taxes or Other Taxes, and, promptly following receipt of any refund of amounts with respect to Taxes or Other

Taxes for which such Lenders or the Administrative Agent were previously indemnified under this Section 2.13, pay to the Borrower suchrefunded amounts (including any interest paid by the relevant taxing authority with respect to such amounts).

d. Prior to the date of the initial Borrowing in the case of each Bank, and on the date of the Assignment and Acceptance pursuant to which itbecame a Lender in the case of each other Lender, and from time to time thereafter if requested by the Borrower or the Administrative Agent,

each Lender organized under the laws of a jurisdiction outside the United States shall provide the Administrative Agent and the Borrower withthe forms prescribed by the Internal Revenue Service of the United States certifying that such Lender is exempt from United States withholding

taxes with respect to all payments to be made to such Lender hereunder. If for any reason during the term of this Agreement, any Lenderbecomes unable to submit the forms referred to above or the information or representations contained therein are no longer accurate in anymaterial respect, such Lender shall notify the Administrative Agent and the Borrower in writing to that effect. Unless the Borrower and the

Administrative Age nt have received forms or other documents satisfactory to them indicating that payments hereunder are not subject to UnitedStates withholding tax, the Borrower or, if the Borrower fails to do so, the Administrative Agent, shall withhold taxes from such payments at the

applicable statutory rate in the case of payments to or for any Lender organized under the laws of a jurisdiction outside the United States.

e. Any Lender claiming any additional amounts payable pursuant to this Section 2.13 shall use its best efforts (consistent with its internal policyand legal and regulatory restrictions) to change the jurisdiction of its Applicable Lending Office or take other actions customary or otherwise

reasonable under the circumstances if the making of such a change or the taking of such actions would avoid the need for, or reduce the amountof, any such additional amounts which may thereafter accrue and would not, in the reasonable judgment of such Lender, be otherwise

disadvantageous to such Lender.

f. Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower containedin this Section 2.13 shall survive the payment in full of principal and interest hereunder.

14. Sharing of Payments, Etc.

If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account ofthe Advances made by it (other than pursuant to Section 2.02(c), 2.06, 2.10, 2.13 or 8.04(b)) in excess of its ratable share of payments onaccount of the Advances obtained by all the Lenders, such Lender shall forthwith purchase from the other Lenders such participations in theAdvances made by them as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them, provided,however, that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lendershall be rescinded and such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with anamount equal to such Lender's ratable share (according to the proportion of (i) the amount of such Lender's required repaym ent to (ii) the totalamount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of thetotal amount so recovered. The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 2.14may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation asfully as if such Lender were the direct creditor of the Borrower in the amount of such participation.

15. Noteless Agreement; Evidence of Indebtedness.

a. Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to suchLender resulting from each Advance made by such Lender from time to time, including the amounts of principal and interest payable and paid

to such Lender from time to time hereunder.

b. The Administrative Agent shall also maintain accounts in which it will record (i) the amount of each Advance made hereunder, the Type thereofand the Interest Period (if any) with respect thereto, (ii) the amount of any principal or interest due and payable or to become due and payable

from the Borrower to each Lender hereunder, and (iii) the amount of any sum received by the Administrative Agent hereunder from theBorrower and each Lender's share thereof.

c. The entries maintained in the accounts maintained pursuant to subsections (a) and (b) above shall be prima facie evidence of the existence andamounts of the obligations therein recorded; provided, however, that the failure of the Administrative Agent or any Lender to maintain suchaccounts or any error therein shall not in any manner affect the obligation of the Borrower to repay such obligations in accordance with their

terms.

d. Any Lender may request that its Advances be evidenced by one or more promissory notes. In such event, the Borrower shall prepare, executeand deliver to such Lender one or more promissory notes payable to the order of such Lender and in a form acceptable to the Borrower and the

Administrative Agent. Thereafter, the Advances evidenced by such note(s) and interest thereon shall at all times (including after any assignmentpursuant to Section 8.07) be represented by notes from the Borrower, payable to the order of the payee named therein or any assignee pursuant

to Section 8.07, except to the extent that any such Lender or assignee subsequently returns any such notes for cancellation and requests that suchBorrowings once again be evidenced as in subsections (a) and (b) above.

III. CONDITIONS OF LENDING

1. Conditions Precedent to Closing.

The obligation of each Lender to Close is subject to the conditions precedent that on or before the date of Closing:

a. The Administrative Agent shall have received the following, each dated the same date (except for the financial statements referred to inparagraph (iv) below), in form and substance satisfactory to the Administrative Agent and (except for the notes described in paragraph (i)) with

one copy for each Lender:

i. A promissory note payable to the order of each Lender that requests one pursuant to Section 2.15.

ii. Certified copies of the resolutions of the Board of Directors of the Borrower approving this Agreement, and of all documentsevidencing other necessary corporate action with respect to this Agreement;

iii. A certificate of the Secretary or an Assistant Secretary of the Borrower certifying (A) the names and true signatures of the officersof the Borrower authorized to sign this Agreement and the other documents to be delivered hereunder; (B) that attached thereto aretrue and correct copies of the Certificate of Incorporation and the By Laws of the Borrower, in each case in effect on such date; and(C) that attached thereto are true and correct copies of all governmental and regulatory authorizations and approvals required for thedue execution, delivery and performance of this Agreement, including, without limitation, a copy of the order (File No. 70-9749) ofthe SEC under the Public Utility Holding Company Act of 1935 authorizing the Borrower's execution, delivery and performance of

this Agreement (the "SEC Order");

iv. Copies of the consolidated balance sheets of the Borrower and its subsidiaries as of December 31, 2002, and the relatedconsolidated statements of income, retained earnings and cash flows of the Borrower and its subsidiaries for the fiscal year thenended, and copies of the consolidated financial statements of the Borrower and its subsidiaries as of September 30, 2003, in each

case certified by a duly authorized officer of the Borrower as having been prepared in accordance with generally acceptedaccounting principles consistently applied;

v. A favorable opinion of counsel for the Borrower, acceptable to the Administrative Agent, substantially in the form of Exhibit Chereto and as to such other matters as any Lender through the Administrative Agent may reasonably request.

2. Conditions Precedent to Each Borrowing.

The obligation of each Lender to make an Advance on the occasion of each Borrowing (including the initial Borrowing) shall be subject to the furtherconditions precedent that on the date of such Borrowing:

a. the following statements shall be true (and each of the giving of the applicable Notice of Borrowing or Notice of Conversion and the acceptanceby the Borrower of any proceeds of a Borrowing shall constitute a representation and warranty by the Borrower that on the date of such

Borrowing or Conversion, as applicable, such statements are true):

i. The representations and warranties contained in Section 4.01 (excluding those contained in subsections (e) and (f) thereof if suchBorrowing does not increase the aggregate outstanding principal amount of Advances over the aggregate outstanding principal

amount of all Advances immediately prior to the making of such Borrowing) are correct on and as of the date of such Borrowing,before and after giving effect to such Borrowing and to the application of the proceeds therefrom, as though made on and as of such

date; and

ii. No event has occurred and is continuing, or would result from such Borrowing or from the application of the proceeds therefrom,that constitutes a Prepayment Event or an Event of Default or would constitute a Prepayment Event or an Event of Default with

notice or lapse of time or both.

b. The Administrative Agent shall have received such other approvals, opinions or documents with respect to the truth of the foregoing statements(i) and (ii) as any Lender through the Administrative Agent may reasonably request.

IV. REPRESENTATIONS AND WARRANTIES

1. Representations and Warranties of the Borrower.

The Borrower represents and warrants as follows:

a. The Borrower is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and isduly qualified to do business as a foreign corporation in each jurisdiction in which the nature of the business conducted or the property owned,

operated or leased by it requires such qualification, except where failure to so qualify would not materially adversely affect its condition(financial or otherwise), operations, business, properties, or prospects.

b. The execution, delivery and performance by the Borrower of this Agreement are within the Borrower's corporate powers, have been dulyauthorized by all necessary corporate action, and do not contravene (i) the Borrower's charter or by-laws, (ii) law applicable to the Borrower or

its properties, or (iii) any contractual or legal restriction binding on or affecting the Borrower or its properties.

c. No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required forthe due execution, delivery and performance by the Borrower of this Agreement, except for the following (each of which has been duly filed or

obtained, and is final and in full force and effect): (i) the filing of the Declaration on Form U-1 and amendments and exhibits thereto in FileNo. 70-9749 and (ii) the SEC Order.

d. This Agreement is the legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with its terms,subject, however, to any applicable bankruptcy, reorganization, rearrangement, moratorium or similar laws affecting generally the enforcementof creditors' rights and remedies and to general principles of equity (regardless of whether enforceability is considered in a proceeding in equity

or at law).

e. The consolidated financial statements of the Borrower and its subsidiaries as of December 31, 2002 and for the year ended on such date, as setforth in the Borrower's Annual Report on Form 10-K for the fiscal year ended on such date, as filed with the SEC, accompanied by an opinionof Deloitte & Touche LLP, and the consolidated financial statements of the Borrower and its subsidiaries as of September 30, 2003, and for thethree-month period ended on such date set forth in the Borrower's Quarterly Report on Form 10-Q for the fiscal quarter ended on such date, as

filed with the SEC, copies of each of which have been furnished to each Bank, fairly present (subject, in the case of such statements datedSeptember 30, 2003, to year-end adjustments) the consolidated financial condition of the Borrower and its subsidiaries as at such dates and the

consolidated results of the operations of the Borrower and its subsidiaries for the periods ended on such dates, in accordance wi th generallyaccepted accounting principles consistently applied. Except as disclosed in the Borrower's Quarterly Report on Form 10-Q for the fiscal periodended September 30, 2003, since December 31, 2002, there has been no material adverse change in the financial condition or operations of the

Borrower.

f. Except as disclosed in the Borrower's Annual Report on Form 10-K for the fiscal year ended December 31, 2002, and the Borrower's QuarterlyReport on Form 10-Q for the period ended September 30, 2003, there is no pending or threatened action or proceeding affecting the Borrower orany of its subsidiaries before any court, governmental agency or arbitrator that, if determined adversely, could reasonably be expected to have amaterial adverse effect upon the condition (financial or otherwise), operations, business, properties or prospects of the Borrower or on its ability

to perform its obligations under this Agreement, or that purports to affect the legality, validity, binding effect or enforceability of thisAgreement. There has been no change in any matter disclosed in such filings that could reasonably be expected to result in such a material

adverse effect.

g. No event has occurred and is continuing that constitutes a Prepayment Event or an Event of Default or that would constitute a PrepaymentEvent or an Event of Default but for the requirement that notice be given or time elapse or both.

h. The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning ofRegulation U issued by the Board of Governors of the Federal Reserve System), and not more than 25% of the value of the assets of the

Borrower and its subsidiaries subject to the restrictions of Section 5.02(a), (c) or (d) is, on the date hereof, represented by margin stock (withinthe meaning of Regulation U issued by the Board of Governors of the Federal Reserve System).

i. The Borrower is not an "investment company" or a company "controlled" by an "investment company" within the meaning of the InvestmentCompany Act of 1940, as amended, or an "investment advisor" within the meaning of the Investment Company Act of 1940, as amended. The

Borrower is a "holding company" as that term is defined in, and is registered under, the Public Utility Holding Company Act of 1935.

j. No ERISA Termination Event has occurred, or is reasonably expected to occur, with respect to any ERISA Plan that may materially andadversely affect the condition (financial or otherwise), operations, business, properties or prospects of the Borrower and its subsidiaries, taken

as a whole.

k. Schedule B (Actuarial Information) to the most recent annual report (Form 5500 Series) with respect to each ERISA Plan, copies of which havebeen filed with the Internal Revenue Service and furnished to the Banks, is complete and accurate and fairly presents the funding status of such

ERISA Plan, and since the date of such Schedule B there has been no material adverse change in such funding status.

l. The Borrower has not incurred, and does not reasonably expect to incur, any withdrawal liability under ERISA to any Multiemployer Plan.

V. COVENANTS OF THE BORROWER

1. Affirmative Covenants.

So long as any amount payable by the Borrower hereunder shall remain unpaid or any Lender shall have any Commitment hereunder, the Borrower will,unless the Majority Lenders shall otherwise consent in writing:

a. Keep Books; Corporate Existence; Maintenance of Properties; Compliance with Laws; Insurance; Taxes; Inspection Rights.

i. keep proper books of record and account, all in accordance with generally accepted accounting principles;

ii. except as otherwise permitted by Section 5.02(c), preserve and keep in full force and effect its existence and preserve and keep infull force and effect its licenses, rights and franchises to the extent necessary to carry on its business;

iii. maintain and keep, or cause to be maintained and kept, its properties in good repair, working order and condition, and from time totime make or cause to be made all needful and proper repairs, renewals, replacements and improvements, in each case to the extent

such properties are not obsolete and not necessary to carry on its business;

iv. comply in all material respects with all applicable laws, rules, regulations and orders, such compliance to include, withoutlimitation, paying before the same become delinquent all taxes, assessments and governmental charges imposed upon it or its

property, except to the extent being contested in good faith by appropriate proceedings, and compliance with ERISA andEnvironmental Laws;

v. maintain insurance with responsible and reputable insurance companies or associations or through its own program of self-insurance in such amounts and covering such risks as is usually carried by companies engaged in similar businesses and owning

similar properties in the same general areas in which it operates and furnish to the Administrative Agent, within a reasonable timeafter written request therefor, such information as to the insurance carried as any Lender, through the Administrative Agent, may

reasonably request;

vi. pay and discharge its obligations and liabilities in the ordinary course of business, except to the extent that such obligations andliabilities are being contested in good faith by appropriate proceedings; and

vii. from time to time upon reasonable notice, permit or arrange for the Administrative Agent, the Lenders and their respective agentsand representatives to inspect the records and books of account of the Borrower and its subsidiaries during regular business hours.

b. Use of Proceeds. The Borrower may use the proceeds of the Borrowings for only (i) general corporate purposes and (ii) subject to the terms andconditions of this Agreement, repurchases of common stock of the Borrower and/or investments in nonregulated and/or nonutility businesses.

c. Reporting Requirements. Furnish to the Lenders:

i. as soon as available and in any event within 60 days after the end of each of the first three quarters of each fiscal year of theBorrower, (A) consolidated balance sheets of the Borrower and its subsidiaries as of the end of such quarter and (B) consolidated

statements of income and retained earnings of the Borrower and its subsidiaries for the period commencing at the end of theprevious fiscal year and ending with the end of such quarter, each certified by a duly authorized officer of the Borrower as having

been prepared in accordance with generally accepted accounting principles, consistently applied;

ii. as soon as available and in any event within 120 days after the end of each fiscal year of the Borrower, a copy of the annual reportfor such year for the Borrower and its subsidiaries, containing consolidated financial statements for such year certified without

qualification by Deloitte & Touche LLP (or such other nationally recognized public accounting firm as the Administrative Agentmay approve), and certified by a duly authorized officer of the Borrower as having been prepared in accordance with generally

accepted accounting principles, consistently applied;

iii. as soon as available and in any event within 60 days after the end of each of the first three quarters of each fiscal year of theBorrower and within 120 days after the end of the fiscal year of the Borrower, a certificate of a duly authorized officer of the

Borrower, stating that no Prepayment Event or Event of Default has occurred and is continuing, or if a Prepayment Event or anEvent of Default has occurred and is continuing, a statement setting forth details of such Prepayment Event or Event of Default, as

the case may be, and the action that the Borrower has taken and proposes to take with respect thereto;

iv. as soon as possible and in any event within five days after the Borrower has knowledge of the occurrence of each PrepaymentEvent, Event of Default and each event that, with the giving of notice or lapse of time or both, would constitute a Prepayment Eventor an Event of Default, continuing on the date of such statement, a statement of the duly authorized officer of the Borrower setting

forth details of such Prepayment Event or Event of Default or event, as the case may be, and the actions that the Borrower has takenand proposes to take with respect thereto;

v. as soon as possible and in any event within five days after the Borrower receives notice of the commencement of any litigationagainst, or any arbitration, administrative, governmental or regulatory proceeding involving, the Borrower or any of its subsidiaries,

that, if adversely determined, could reasonably be expected to have a material adverse effect on the condition (financial orotherwise), operations, business, properties or prospects of the Borrower, notice of such litigation describing in reasonable detail the

facts and circumstances concerning such litigation and the Borrower's or such subsidiary's proposed actions in connectiontherewith;

vi. promptly after the sending or filing thereof, copies of all reports that the Borrower sends to any of its securities holders, and copiesof all reports and registration statements which the Borrower files with the SEC or any national securities exchange pursuant to the

Securities Act of 1933 or the Securities Exchange Act of 1934, as amended, and of all certificates pursuant to Rule 24 which theBorrower files with the SEC pursuant to the Public Utility Holding Company Act of 1935 in connection with the proceeding of the

SEC in File No. 70-9749 related to the SEC Order or any subsequent proceedings related thereto;

vii. as soon as possible and in any event (A) within 30 days after the Borrower knows or has reason to know that any ERISATermination Event described in clause (i) of the definition of ERISA Termination Event with respect to any ERISA Plan has

occurred and (B) within 10 days after the Borrower knows or has reason to know that any other ERISA Termination Event withrespect to any ERISA Plan has occurred, a statement of the chief financial officer of the Borrower describing such ERISA

Termination Event and the action, if any, that the Borrower proposes to take with respect thereto;

viii. promptly and in any event within two Business Days after receipt thereof by the Borrower from the PBGC, copies of each noticereceived by the Borrower of the PBGC's intention to terminate any ERISA Plan or to have a trustee appointed to administer any

ERISA Plan;

ix. promptly and in any event within 30 days after the filing thereof with the Internal Revenue Service, copies of each Schedule B(Actuarial Information) to the annual report (Form 5500 Series) with respect to each ERISA Plan;

x. promptly and in any event within five Business Days after receipt thereof by the Borrower from a Multiemployer Plan sponsor, acopy of each notice received by the Borrower concerning the imposition of withdrawal liability pursuant to Section 4202 of ERISA;

xi. promptly and in any event within five Business Days after Moody's or S&P has changed any Senior Debt Rating of any SignificantSubsidiary, notice of such change; and

xii. such other information respecting the condition or operations, financial or otherwise, of the Borrower or any of its subsidiaries asany Lender through the Administrative Agent may from time to time reasonably request.

(d) Interest Coverage Ratio. As of the end of each fiscal quarter of the Borrower, maintain an Interest Coverage Ratio of not less than 2.0:1.0.

2. Negative Covenants.

So long as any amount payable by the Borrower hereunder shall remain unpaid or any Lender shall have any Commitment hereunder, the Borrower will not,without the written consent of the Majority Lenders:

a. Liens, Etc. Create or suffer to exist any Lien upon or with respect to any of its properties (including, without limitation, any shares of any classof equity security of any of its Significant Subsidiaries or of Entergy New Orleans), in each case to secure or provide for the payment of Debt,other than: (i) Liens in existence on the date of this Agreement; (ii) Liens for taxes, assessments or governmental charges or levies to the extent

not past due, or which are being contested in good faith in appropriate proceedings diligently conducted and for which the Borrower hasprovided adequate reserves for the payment thereof in accordance with generally accepted accounting principles; (iii) pledges or deposits in theordinary course of business to secure obligations under worker's compensation laws or similar legislation; (iv) other pledges or deposits in the

ordinary course of business (other than for borrowed monies) that, in the aggregate, are not mate rial to the Borrower; (v) purchase moneymortgages or other liens or purchase money security interests upon or in any property acquired or held by the Borrower in the ordinary course of

business to secure the purchase price of such property or to secure indebtedness incurred solely for the purpose of financing the acquisition ofsuch property; (vi) Liens imposed by law such as materialmen's, mechanics', carriers', workers' and repairmen's Liens and other similar Liensarising in the ordinary course of business for sums not yet due or currently being contested in good faith by appropriate proceedings diligently

conducted; (vii) attachment, judgment or other similar Liens arising in connection with court proceedings, provided that such Liens, in theaggregate, shall not exceed $50,000,000 at any one time outstanding, (viii) other Liens not otherwise referred to in the foregoing clauses (i)through (vii) above, provided that such Liens, in the aggregate, shall not exceed $ 100,000,000 at any one time and (ix) Liens created for the

sole purpose of extending, renewing or replacing in whole or in part Debt secured by any Lien referred in the foregoing clauses (i) through (vi)above, provided that the principal amount of indebtedness secured thereby shall not exceed the principal amount of indebtedness so secured at

the time of such extension, renewal or replacement and that such extension, renewal or replacement, as the case may be, shall be limited to all ora part of the property or Debt that secured the Lien so extended, renewed or replaced (and any improvements on such property); provided,

further, that no Lien permitted under the foregoing clauses (i) through (ix) shall be placed upon any shares of any class of equity security of anySignificant Subsidiary or of Entergy New Orleans unless the obligations of the Borrower to the Lenders hereunder are simultaneously and

ratably secured by such Lien pursuant to documentation satisfactory to the Lende rs.

b. Limitation on Debt. Permit the total principal amount of all Debt of the Borrower and its subsidiaries, determined on a consolidated basis andwithout duplication of liability therefor, at any time to exceed 65% of Capitalization determined as of the last day of the most recently ended

fiscal quarter of the Borrower; provided, however, that for purposes of this Section 5.02(b) "Debt" and "Capitalization" shall not include(i) Junior Subordinated Debentures issued to a subsidiary trust which has issued preferred securities that are included in the calculation of

"Capitalization" and (ii) any Debt of any subsidiary of the Borrower that is Non-Recourse Debt.

c. Mergers, Etc. Merge with or into or consolidate with or into any other Person, except that the Borrower may merge with any other Person,provided that, immediately after giving effect to any such merger, (i) the Borrower is the surviving corporation or (A) the surviving corporationis organized under the laws of one of the states of the United States of America and assumes the Borrower's obligations hereunder in a manneracceptable to the Majority Lenders, and (B) after giving effect to such merger, the senior unsecured long-term debt of such Person shall be at

least BBB- and Baa3, (ii) no event shall have occurred and be continuing that constitutes a Prepayment Event or an Event of Default or wouldconstitute an Event of Default but for the requirement that notice be given or time elapse or both, and (iii) the Borrower shall not be liable withrespect to any Debt or allow its property to be subject to any Lien which would not be permiss ible with respect to it or its property under this

Agreement on the date of such transaction.

d. Disposition of Assets. Cause a Stock Disposition with respect to any Significant Subsidiary, or permit any Significant Subsidiary to cause aStock Disposition with respect to any other Person, except to the Borrower or a Significant Subsidiary, unless such Stock Disposition is

pursuant, required or related to any regulatory authority and/or governing body pertaining (1) to the organization or formation of a regionaltransmission organization or (2) to the separation or disaggregation of generation, transmission and/or distribution assets, and within 180 daysof such Stock Disposition, the Borrower applies (or causes such Significant Subsidiary to apply) all of the Net Available Cash from such StockDisposition (i) to prepay, repay, purchase, repurchase, redeem, retire, defease or otherwise acquire for value Debt of the Borrower and/or Debt

of one or more Domestic Regulated Utility Subsidiaries that remain a subsidiary of the Borrower and/or (ii) to reinvest in the busine ss of one ormore Domestic Regulated Utility Subsidiaries of the Borrower.

ARTICLE VI

EVENTS OF DEFAULT AND REMEDIES

SECTION 6.01.Events of Default.

Each of the following events shall constitute an "Event of Default" hereunder:

a. The Borrower shall fail to pay any principal of any Advance when the same becomes due and payable, or shall fail to pay interest thereon or anyother amount payable under this Agreement within three Business Days after the same becomes due and payable; or

b. Any representation or warranty made by the Borrower herein or by the Borrower (or any of its officers) in connection with this Agreement shallprove to have been incorrect or misleading in any material respect when made; or

c. The Borrower shall fail to perform or observe (i) any term, covenant or agreement contained in Section 5.01(b), 5.01(d) or 5.02 or (ii) any otherterm, covenant or agreement contained in this Agreement on its part to be performed or observed if the failure to perform or observe such other

term, covenant or agreement shall remain unremedied for 30 days after written notice thereof shall have been given to the Borrower by theAdministrative Agent or any Lender; or

d. The Borrower shall fail to pay any principal of or premium or interest on any Debt of the Borrower that is outstanding in a principal amount inexcess of $50,000,000 in the aggregate (but excluding Debt hereunder) when the same becomes due and payable (whether by scheduled

maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any,specified in the agreement or instrument relating to such Debt; or

e. The Borrower, any Significant Subsidiary or Entergy New Orleans shall generally not pay its debts as such debts become due, or shall admit inwriting its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be

instituted by or against the Borrower, any Significant Subsidiary or Entergy New Orleans seeking to adjudicate it a bankrupt or insolvent, orseeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any lawrelating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of areceiver, trustee, custodian or other similar official for it or for any substantial part of its property and, in the case of any such proceeding

instituted against it (but not instituted by it), either such proceeding shall remain undismissed or unstayed for a period of 30 days, or any o f theactions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee,

custodian or other similar official for, it or for any substantial part of its property) shall occur; or the Borrower, any Significant Subsidiary orEntergy New Orleans shall take any corporate action to authorize or to consent to any of the actions set forth above in this subsection (e); or

f. Any judgment or order for the payment of money in excess of $25,000,000 shall be rendered against the Borrower and either (i) enforcementproceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of 10 consecutive

Business Days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect;or

g. (i) An ERISA Plan of the Borrower or any ERISA Affiliate of the Borrower shall fail to maintain the minimum funding standards required bySection 412 of the Internal Revenue Code of 1986 for any plan year or a waiver of such standard is sought or granted under Section 412(d) of

the Internal Revenue Code of 1986, or (ii) an ERISA Plan of the Borrower or any ERISA Affiliate of the Borrower is, shall have been or will beterminated or the subject of termination proceedings under ERISA, or (iii) the Borrower or any ERISA Affiliate of the Borrower has incurred or

will incur a liability to or on account of an ERISA Plan under Section 4062, 4063 or 4064 of ERISA and there shall result from such eventeither a liability or a material risk of incurring a liability to the PBGC or an ERISA Plan, or (iv) any ERISA Termination Event with respect toan ERISA Plan of the Borrower or any ERISA Affiliate of the Borrower shall have occurred, and in the case of any event described in clau ses

(i) through (iv), (A) such event (if correctable) shall not have been corrected and (B) the then-present value of such ERISA Plan's vestedbenefits exceeds the then-current value of assets accumulated in such ERISA Plan by more than the amount of $25,000,000 (or in the case of anERISA Termination Event involving the withdrawal of a "substantial employer" (as defined in Section 4001(a)(2) of ERISA), the withdrawing

employer's proportionate share of such excess shall exceed such amount).

SECTION 6.02. Remedies.

If any Prepayment Event or Event of Default shall occur and be continuing, then, and in any such event, the Administrative Agent (i) shall at the request, ormay with the consent, of the Majority Lenders, by notice to the Borrower, declare the obligation of each Lender to make Advances to be terminated,whereupon the same shall forthwith terminate, and (ii) shall at the request, or may with the consent, of the Majority Lenders, by notice to the Borrower,declare the Advances, all interest thereon and all other amounts payable under this Agreement to be forthwith due and payable, whereupon the Advances, allsuch interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all ofwhich are hereby expressly waived by the Borrower; provided, however, that in the event of an actual or deemed entry of an order for relief with respect tothe Borrower, any Significant Subsidiary or E ntergy New Orleans under the Federal Bankruptcy Code, (A) the obligation of each Lender to make Advancesshall automatically be terminated and (B) the Advances, all such interest and all such amounts shall automatically become and be due and payable, withoutpresentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower.

ARTICLE VIITHE AGENT

SECTION 7.01. Authorization and Action.

Each Lender hereby appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under thisAgreement as are delegated to the Administrative Agent by the terms hereof, together with such powers as are reasonably incidental thereto. As to anymatters not expressly provided for by this Agreement (including, without limitation, enforcement or collection of the Advances), the Administrative Agentshall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in soacting or refraining from acting) upon the instructions of the Majority Lenders, and such instructions shall be binding upon all Lenders; provided, however,that the Administrative Agent shall not be required to take any action which exposes the Administrative Agent to personal liability or which is contrary tothis Agreement or applicable law. The Administrative Agent agrees to give to each Lender prompt notice of each notice given to it by the Borrower pursuantto the terms of this Agreement.

SECTION 7.02. Administrative Agent's Reliance, Etc.

Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it orthem under or in connection with this Agreement, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of

the foregoing, the Administrative Agent: (i) may consult with legal counsel (including counsel for the Borrower), independent public accountants and otherexperts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel,accountants or experts; (ii) makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties orrepresentations (whether written or oral) made in or in connection with this Agreement; (iii) shall not have any duty to ascertain or to inquire as to theperformance or observance of any of the terms, covenants or conditions of this Agreement on the part of the Borrower or to inspect the property (includingthe books and records) of the Borrower; (iv) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness,sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, thisAgreement or any other instrument or document furnished pursuant hereto; and (v) shall incur no liability under or in respect of this Agreement by actingupon any notice, consent, certificate or other instrument or writing (which may be by telecopier, telegram, cable or telex) believed by it to be genuine andsigned or sent by the proper party or parties.

ARTICLE 7.03. HypoVereinsbank and Affiliates.

With respect to its Commitment and the Advances made by it, HypoVereinsbank shall have the same rights and powers under this Agreement as any otherLender and may exercise the same as though it were not the Administrative Agent; and the term "Lender" or "Lenders" shall, unless otherwise expresslyindicated, include HypoVereinsbank in its individual capacity. HypoVereinsbank and its affiliates may accept deposits from, lend money to, act as trusteeunder indentures of, and generally engage in any kind of business with, the Borrower, any of its subsidiaries and any Person who may do business with orown securities of the Borrower or any such subsidiary, all as if HypoVereinsbank were not the Administrative Agent and without any duty to accounttherefor to the Lenders.

SECTION 7.04. Lender Credit Decision.

Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender and based on the financialstatements referred to in Section 4.01(e) and such other documents and information as it has deemed appropriate, made its own credit analysis and decisionto enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any otherLender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or nottaking action under this Agreement.

SECTION 7.05. Indemnification.

The Lenders agree to indemnify the Administrative Agent (to the extent not reimbursed by the Borrower), ratably according to the respective principalamounts of the Advances then outstanding to each of them (or if no Advances are at the time outstanding, ratably according to the respective amounts oftheir Commitments), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses ordisbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Administrative Agent in any way relating toor arising out of this Agreement or any action taken or omitted by the Administrative Agent under this Agreement, provided that no Lender shall be liablefor any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from theAdministrative Agent's gross negligence or willful misconduct. Without li mitation of the foregoing, each Lender agrees to reimburse the AdministrativeAgent promptly upon demand for its ratable share of any out-of-pocket expenses (including reasonable counsel fees) incurred by the Administrative Agentin connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legalproceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, to the extent that such expenses are reimbursableby the Borrower but for which the Administrative Agent is not reimbursed by the Borrower.

SECTION 7.06. Successor Administrative Agent.

The Administrative Agent may resign at any time by giving written notice thereof to the Lenders and the Borrower and may be removed at any time with orwithout cause by the Majority Lenders. Upon any such resignation or removal, the Majority Lenders shall have the right to appoint a successorAdministrative Agent, which, for so long as no Prepayment Event or Event of Default has occurred and is continuing, shall be a Lender and shall beapproved by the Borrower (with such approval not to be unreasonably withheld or delayed). If no successor Administrative Agent shall have been soappointed by the Majority Lenders and approved by the Borrower, and shall have accepted such appointment, within 30 days after the retiringAdministrative Agent's giving of notice of resignation or the Majority Lenders' removal of the retiring Administrative Agent, then the retiringAdministrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent, which shall be a commercial b ank organized under the lawsof the United States or of any other country that is a member of the OECD having a combined capital and surplus of at least $50,000,000. Upon theacceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shallthereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiringAdministrative Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Administrative Agent's resignation orremoval hereunder as Administrative Agent, the provisions of this Article VII shall inure to its benefit as to any actions taken or omitted to be taken by itwhile it was Administrative Agent under this Agreement. Notwithstanding the foregoing, if no Prepayment Event or Event of Default, and no event that withthe giving of notice or the passage of time, or both, would constitute a Prepayment Event or an Event of Default, shall have occurred and be continuing, thenno successor Administrative Agent shall be appointed under this Section 7.06 without the prior written consent of the Borrower, which consent shall not beunreasonably withheld or delayed.

ARTICLE VIIIMISCELLANEOUS

SECTION 8.01. Amendments, Etc.

No amendment or waiver of any provision of this Agreement, nor consent to any departure by the Borrower therefrom, shall in any event be effective unlessthe same shall be in writing and signed by the Majority Lenders, and then such waiver or consent shall be effective only in the specific instance and for thespecific purpose for which given; provided, however, that no amendment, waiver or consent shall, unless in writing and signed by all the Lenders (other thanany Lender that is the Borrower or an Affiliate of the Borrower), do any of the following: (a) waive any of the conditions specified in Section 3.01 or 3.02,(b) increase the Commitments of the Lenders or subject the Lenders to any additional obligations, (c) reduce the principal of, or interest on, the Advances orany other amounts payable hereunder, (d) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Advances, or thenumber of Lenders that shal l be required for the Lenders or any of them to take any action hereunder or (f) amend this Section 8.01; and provided further,that no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above to take suchaction, affect the rights or duties of the Administrative Agent under this Agreement, and provided further, that this Agreement may be amended and restatedwithout the consent of any Lender or the Administrative Agent if, upon giving effect to such amendment and restatement, such Lender or the AdministrativeAgent, as the case may be, shall no longer be a party to this Agreement (as so amended and restated) or have any Commitment or other obligation hereunderand shall have been paid in full all amounts payable hereunder to such Lender or the Administrative Agent, as the case may be.

SECTION 8.02. Notices, Etc.

All notices and other communications provided for hereunder shall be in writing (including telecopier, telegraphic, telex or cable communication) andmailed, telecopied, telegraphed, telexed, cabled or delivered, if to the Borrower, at its address at 639 Loyola Avenue, New Orleans, LA 70113, Attention:Treasurer; if to any Bank, at its Eurodollar Lending Office specified opposite its name on Schedule I hereto; if to any other Lender, at its Eurodollar LendingOffice specified in the Assignment and Acceptance pursuant to which it became a Lender; and if to the Administrative Agent, at its address at 245 ParkAvenue, 32nd Floor, New York, NY 10167, Attention: Loan Operations, Tina Chung/Mariana Mucenica (Telephone: (212) 672-5688/5811, Facsimile: (212)672-5691) or, as to each party, at such other address as shall be designated by such party in a written notice to the other parties. All such notices andcommunications shall, when mailed, telecopied, telegraphed, telexed o r cabled, be effective when deposited in the mails, telecopied, delivered to thetelegraph company, confirmed by telex answerback or delivered to the cable company, respectively, except that notices and communications to theAdministrative Agent pursuant to Article II or VII shall not be effective until received by the Administrative Agent. Except as otherwise provided in Section5.01(c), notices and other communications given by the Borrower to the Administrative Agent shall be deemed given to the Lenders.

SECTION 8.03. No Waiver; Remedies;

No failure on the part of any Lender or the Administrative Agent to exercise, and no delay in exercising, any right hereunder shall operate as a waiverthereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. Theremedies herein provided are cumulative and not exclusive of any remedies provided by law.

SECTION 8.04. Costs and Expenses; Indemnification.

a. The Borrower agrees to pay on demand all costs and expenses incurred by the Administrative Agent in connection with the preparation,execution, delivery, syndication administration, modification and amendment of this Agreement and the other documents to be delivered

hereunder, including, without limitation, the reasonable fees and out-of-pocket expenses of counsel for the Administrative Agent with respectthereto and with respect to advising the Administrative Agent as to its rights and responsibilities under this Agreement. Any invoices to the

Borrower with respect to the aforementioned expenses shall describe such costs and expenses in reasonable detail. The Borrower further agreesto pay on demand all costs and expenses, if any (including, without limitation, counsel fees and expenses of outside counsel and of internalcounsel), incurred by the Administrative Agent and the Lenders in connection with the enforcement (whether through negotiations, legal

proceedings or otherw ise) of, and the protection of the rights of the Lenders under, this Agreement and the other documents to be deliveredhereunder, including, without limitation, reasonable counsel fees and expenses in connection with the enforcement of rights under this Section

8.04(a).

a. If any payment of principal of, or Conversion of, any Eurodollar Rate Advance is made other than on the last day of the Interest Period for suchAdvance, as a result of a payment or Conversion pursuant to Section 2.07(c), 2.08, 2.09 or 2.11, acceleration of the maturity of the Advances

pursuant to Section 6.02, assignment to another Lender upon demand of the Borrower pursuant to Section 8.07(g) or (h) or for any other reason,the Borrower shall, upon demand by any Lender (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for

the account of such Lender any amounts required to compensate such Lender for any additional losses, costs or expenses which it mayreasonably incur as a result of such payment or Conversion, including, without limitation, any loss (including loss of anticipated profits upon

such Lender's representation to the Borrower that it has made reasonable efforts to mitigate such loss), cost or expense incurred by reason of theliquidation or reempl oyment of deposits or other funds acquired by any Lender to fund or maintain such Advance. Notwithstanding the

forgoing, the Borrower agrees that if the Borrower prepays any Advance prior to November 24, 2007, then the Borrower also shall pay to theLenders their loss of anticipated profit from the date of prepayment until November 24, 2007 and the Lenders shall not be required to mitigate

such loss. The Borrower and the Lenders agree that the lost profits shall be calculated as follows:

[1.85% * (Principal Amount) * (Actual Days / 360)] / [(1 + (Interest Rate) ^ (Actual Days /(2* 360))]

where

(i) Principal Amount is the aggregate principal amount of all Advances outstanding on the prepayment date

A. (ii) Interest Rate is the Eurodollar Rate for the time period which is half the length of time from the date of prepayment toNovember 24, 2007. The Eurodollar Rate used in the denominator shall be determined three days prior to the date of

prepayment.

iii. Actual Days is the actual number of days between the date of prepayment and November 24, 2007

Any Lender making a demand pursuant to this Section 8.04(b) shall provide the Borrower with a written certification of the amounts required to be paid tosuch Lender, showing in reasonable detail the basis for the Lender's determination of such amounts; provided, however, that no Lender shall be required todisclose any confidential or proprietary information in any certification provided pursuant hereto, and the failure of any Lender to provide such certificationshall not affect the obligations of the Borrower hereunder.

c. The Borrower hereby agrees to indemnify and hold each Lender, the Administrative Agent and their respective Affiliates and their respectiveofficers, directors, employees and professional advisors (each, an "Indemnified Person") harmless from and against any and all claims,

damages, losses, liabilities, costs or expenses (including reasonable attorney's fees and expenses, whether or not such Indemnified Person isnamed as a party to any proceeding or is otherwise subjected to judicial or legal process arising from any such proceeding) that any of them may

incur or which may be claimed against any of them by any Person or entity by reason of or in connection with the execution, delivery orperformance of this Agreement or any transaction contemplated hereby, or the use by the Borrower or any of its subsidiaries of the proceeds of

any Advance, except that no Indemnified Person shall be entitled to any indemnification hereunder to the extent that such claims, damag es,losses, liabilities, costs or expenses are finally determined by a court of competent jurisdiction to have resulted from the gross negligence or

willful misconduct of such Indemnified Person. The Borrower's obligations under this Section 8.04(c) shall survive the repayment of allamounts owing to the Lenders and the Administrative Agent under this Agreement and the termination of the Commitments. If and to the extent

that the obligations of the Borrower under this Section 8.04(c) are unenforceable for any reason, the Borrower agrees to make the maximumcontribution to the payment and satisfaction thereof which is permissible under applicable law. The Borrower also agrees not to assert any claimagainst any Lender, any of such Lender's affiliates, or any of their respective directors, officers, employees, attorneys and agents, on any theory

of liability, for special, indirect, consequential or punitive damages arising out of or otherwise relating to this Agreement, any of the transactionscontemplated herein or the actual or proposed use of the proceeds of the Advances.

SECTION 8.05. Right of Set-off.

Upon (i) the occurrence and during the continuance of any Prepayment Event or Event of Default and (ii) the making of the request or the granting of theconsent specified by Section 6.02 to authorize the Administrative Agent to declare the Advances due and payable pursuant to the provisions of Section 6.02,each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (generalor special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender to or for the credit or the accountof the Borrower against any and all of the obligations of the Borrower now or hereafter existing under this Agreement, whether or not such Lender shall

have made any demand under this Agreement and although such obligations may be unmatured. Each Lender agrees promptly to notify the Borrower afterany such set-off and application made by such Lender, provided that the failure to give such notice shall not affect the validity of such set-off andapplication. The rights of each Lender under this Section 8.05 are in addition to other rights and remedies (including, without limitation, other rights of set-off) which such Lender may have.

SECTION 8.06. Binding Effect.

This Agreement shall become effective when it shall have been executed by the Borrower, the Lenders and the Administrative Agent and thereafter shall bebinding upon and inure to the benefit of the Borrower, the Administrative Agent and each Lender and their respective successors and assigns, except that theBorrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Lenders.

SECTION 8.07. Assignments and Participations.

a. Each Lender may assign to one or more banks or other entities all or a portion of its rights and obligations under this Agreement (including,without limitation, all or a portion of its Commitment and the Advances owing to it); provided, however, that (i) notice of such assignment is

delivered to the Borrower (unless a Prepayment Event or an Event of Default shall have occurred and be continuing) and (ii)the AdministrativeAgent shall have consented to such assignment (with each such consent not to be unreasonably withheld or delayed) by signing the Assignmentand Acceptance referred to in clause (v) below; (iii) the Administrative Agent shall have acknowledged that the assignment complies with allrequirements of this Section 8.07; (iv) each such assignment shall be of a constant, and not a varying, percentage of all rights and obligations

under this Agreement; (v) the amount of the Commitment of the assigning Lender being assigned pursuant to each such assignmen t(determined as of the date of the Assignment and Acceptance with respect to such assignment) shall in no event be less than $10,000,000 and

shall be an integral multiple of $1,000,000 (or shall be the total amount of the assigning Lender's Commitment); and (vi) the parties to each suchassignment shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Register, an Assignment and

Acceptance, together with any promissory notes held by the assigning Lender and a processing and recordation fee of $3,500 (plus an amountequal to out-of-pocket legal expenses of the Administrative Agent, estimated by the Administrative Agent and advised to such parties). Upon

such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance, (x) theassignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such

Assignment and Acceptance, have t he rights and obligations of a Lender hereunder and (y) the Lender assignor thereunder shall, to the extentthat rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released

from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of anassigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto). Notwithstanding anything to the

contrary contained in this Agreement, any Lender at any time may assign all or any portion of its rights and obligations under this Agreement toany Affiliate or Approved Fund of such Lender.

b. By executing and delivering an Assignment and Acceptance, the Lender assignor thereunder and the assignee thereunder confirm to and agreewith each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lendermakes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or inconnection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any

other instrument or document furnished pursuant hereto; (ii) such assigning Lender makes no representation or warranty and assumes noresponsibility with respect to the financial condition of the Borrower or the performance or observance by the Borrower of any of its obligationsunder this Agreement or any other instrument or document furnished pursuant hereto; (iii) such assignee confirms that it has received a cop y of

this Agreement, together with copies of the financial statements referred to in Section 4.01(e) and such other documents and information as ithas deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee will,

independently and without reliance upon the Administrative Agent, such assigning Lender or any other Lender and based on such documentsand information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this

Agreement; (v) such assignee appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise suchpowers under this Agreement as are delegated to the Administrative Agent by the terms hereof, together with such powers as are reasonably

incidental thereto; and (vi) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms ofthis Agreement a re required to be performed by it as a Lender.

c. The Administrative Agent shall maintain at its address referred to in Section 8.02 a copy of each Assignment and Acceptance delivered to andaccepted by it and a register for the recordation of the names and addresses of the Lenders and the Commitment of, and principal amount of theAdvances owing to, each Lender from time to time (the "Register"). The entries in the Register shall be conclusive and binding for all purposes,

absent manifest error, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in theRegister as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower or any Lender

at any reasonable time and from time to time upon reasonable prior notice.

d. Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and an assignee, together with any promissory notes heldby the assigning Lender, the Administrative Agent shall, if such Assignment and Acceptance has been completed and is in substantially the

form of Exhibit B hereto, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) giveprompt notice thereof to the Borrower.

e. Each Lender may sell participations to one or more banks, financial institutions or other entities in or to all or a portion of its rights andobligations under this Agreement (including, without limitation, all or a portion of its Commitment and the Advances owing to it); provided,however, that (i) such Lender's obligations under this Agreement (including, without limitation, its Commitment to the Borrower hereunder)shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations,(iii) such Lender shall remain the maker of any such Advance for all purposes of this Agreement and (iv) the Borrower, the Administrative

Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligationsunder this Agreement.

f. Any Lender may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 8.07,disclose to the assignee or participant or proposed assignee or participant, any information relating to the Borrower furnished to such Lender by

or on behalf of the Borrower; provided that, prior to any such disclosure, the assignee or participant or proposed assignee or participant shallagree to preserve the confidentiality of any confidential information relating to the Borrower received by it from such Lender.

g. If any Lender shall make any demand for payment under Section 2.10 or 2.13, or if any Lender shall be the subject of any notification orassertion of illegality under Section 2.11, then within 30 days after any such demand (if, but only if, such demanded payment has been made by

the Borrower) or notification or assertion, the Borrower may, with the approval of the Administrative Agent (which approval shall not beunreasonably withheld) and provided that no Prepayment Event, Event of Default or event that, with the giving of notice or lapse of time or

both, would constitute an Event of Default, shall then have occurred and be continuing, demand that such Lender assign in accordance with thisSection 8.07 to one or more assignees designated by the Borrower and acceptable to the Administrative Agent all (but not less than all) of such

Lender's Commitment and the Advances owing to it within the period ending on the later to occur of such 30th day and the last day of the

longest of the then current Interest Periods for such Advances. If any such assignee designated by the Borrower and approved by theAdministrative Agent shall fail to consummate such assignment on terms acceptable to such Lender, or if the Borrower shall fail to designate

any such assignees acceptable to the Administrative Agent for all or part of such Lender's Commitment or Advances, then such demand by theBorrower shall become ineffective; it being understood for purposes of this subsection (h) that such assignment shall be conclusively deemed tobe on terms acceptable to such Lender, and such Lender shall be compelled to consummate such assignment to an Eligible Assignee designatedby the Borrower, if such Eligible Assignee (A) shall agree to such assignment by entering into an Assignment and Acceptance with such Lender

and (B) shall offer compensation to such Lender in an amount equal to all amounts then owing by the Borrower to such Lender hereunder,whether for principal, interest, fees, costs or expenses (ot her than the demanded payment referred to above and payable by the Borrower as a

condition to the Borrower's right to demand such assignment), or otherwise. In addition, in the event that the Borrower shall be entitled todemand the replacement of any Lender pursuant to this subsection (h), the Borrower may, in the case of any such Lender, with the approval of

the Administrative Agent (which approval shall not be unreasonably withheld) and provided that no Prepayment Event, Event of Default orevent that, with the giving of notice or lapse of time or both, would constitute an Event of Default, shall then have occurred and be continuing,terminate all (but not less than all) such Lender's Commitment and prepay all (but not less than all) such Lender's Advances not so assigned,

together with all interest accrued thereon to the date of such prepayment and all fees, costs and expenses and other amounts then owing by theBorrower to such Lender hereunder, at any time from and after such later occurring da y in accordance with Section 2.09 hereof (but without therequirement stated therein for ratable treatment of the other Lenders), if and only if, after giving effect to such termination and prepayment, thesum of the aggregate principal amount of the Advances of all Lenders then outstanding does not exceed the then remaining Commitments of the

Lenders. Notwithstanding anything set forth above in this subsection (h) to the contrary, the Borrower shall not be entitled to compel theassignment by any Lender demanding payment under Section 2.10(a) of its Commitment and Advances or terminate and prepay the

Commitment and Advances of such Lender if, prior to or promptly following any such demand by the Borrower, such Lender shall havechanged or shall change, as the case may be, its Applicable Lending Office for its Eurodollar Rate Advances so as to eliminate the further

incurrence of such increased cost. In furtherance of the foregoing, any such Lender demanding payment or giving notice as provided aboveagrees to use reasonable efforts to so change its Applicable Lending Office if, to do so, would not result in the incurrence by such Lender ofadditional costs or expenses which it deems material or, in the sole judgment of such Lender, be inadvisable for regulatory, competitive or

internal management reasons.

h. Anything in this Section 8.07 to the contrary notwithstanding, any Lender may assign and pledge all or any portion of its Commitment and theAdvances owing to it to any Federal Reserve Bank (and its transferees) as collateral security pursuant to Regulation A of the Board of

Governors of the Federal Reserve System and any Operating Circular issued by such Federal Reserve Bank. No such assignment shall releasethe assigning Lender from its obligations hereunder.

i. Notwithstanding anything to the contrary contained herein, any Lender (a "Granting Lender") may grant to a special purpose funding vehicle(an "SPC") of such Granting Lender identified as such in writing from time to time by the Granting Lender to the Administrative Agent and theBorrower, the option to provide to the Borrower all or any part of any Advance that such Granting Lender would otherwise be obligated to make

to the Borrower pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any such SPC to make anyAdvance, (ii) if such SPC elects not to exercise such option or otherwise fails to provide all or any part of such Advance, the Granting Lender

shall be obligated to make such Advance pursuant to the terms hereof and (iii) no SPC or Granting Lender shall be entitled to receive anygreater amount pursuant to Section 2.10 or 8.04(b) than the Granting Lender would have been entitled to receive had the Granting Lender nototherwise granted such SPC the option to provide any Advance to the Borrower. The making of an Advance by an SPC hereunder shall utilizethe Commitment of the Granting Lender to the same extent, and as if, such Advance were made by such Granting Lender. Each party heretohereby agrees that no SPC shall be liable for any indemnity or similar payment obligation under this Agreement for which a Lender would

otherwise be liable so long as, and to the extent that, the related Granting Lender provides such indemnity or makes such payment. Infurtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior tothe date that is one year and one day after the payment in full of all outstanding commercial paper or other senior indebtedness of any SPC, itwill not institute against or join any other person in instituting against such SPC any bankruptcy, reorganization, arrangement, insolvency or

liquidat ion proceedings under the laws of the United States or any State thereof. Notwithstanding the foregoing, the Granting Lenderunconditionally agrees to indemnify the Borrower, the Administrative Agent and each Lender against all liabilities, obligations, losses,

damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be incurred by orasserted against the Borrower, the Administrative Agent or such Lender, as the case may be, in any way relating to or arising as a consequenceof any such forbearance or delay in the initiation of any such proceeding against its SPC. Each party hereto hereby acknowledges and agrees

that no SPC shall have the rights of a Lender hereunder, such rights being retained by the applicable Granting Lender. Accordingly, and withoutlimiting the foregoing, each party hereby further acknowledges and agrees that no SPC shall have any voting rights hereunder and that thevoting rights attributable to any Advance made by an SPC shall be exercised only by the relevant Granting Lender and that each Granting

Lender shall serve as the administrative agent and attorney-in-fact for its SPC and shall on behalf of its SPC receive any and all payments madefor the benefit of such SPC and take all actions hereunder to the extent, if any, such SPC shall have any rights hereunder. In addition,

notwithstanding anything to the contrary contained in this Agreement any SPC may (i) with notice to, but without the prior written consent ofany other party hereto, assign all or a portion of its interest in any Advances to the Granting Lender and (ii) disclose on a confidential basis any

information relating to its Advances to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidityenhancement to such SPC. This Section 8.07(i) may not be amended without the prior written consent of each Granting Lender, all or any part

of whose Advance is being funded by an SPC at the time of such amendment.

SECTION 8.08. Governing Law.

THIS AGREEMENT AND ANY NOTE ISSUED PURSUANT TO SECTION 2.15 SHALL BE GOVERNED BY, AND CONSTRUED INACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

SECTION 8.09. Consent to Jurisdiction; Waiver of Jury Trial.

a. To the fullest extent permitted by law, the Borrower hereby irrevocably (i) submits to the non-exclusive jurisdiction of any New YorkState or Federal court sitting in New York City and any appellate court from any thereof in any action or proceeding arising out of or

relating to this Agreement and (ii) agrees that all claims in respect of such action or proceeding may be heard and determined in such NewYork State court or in such Federal court. The Borrower hereby irrevocably waives, to the fullest extent permitted by law, the defense of

an inconvenient forum to the maintenance of such action or proceeding. The Borrower also irrevocably consents, to the fullest extentpermitted by law, to the service of any and all process in any such action or proceeding by the mailing by certified mail of copies of suchprocess to the Borrower at its address specified in Section 8.02. The Borrower agrees, to the fullest extent permitted by law, that a finaljudgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in

any other manner provided by law.

b. THE BORROWER, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY WAIVE ALL RIGHT TOTRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS

AGREEMENT OR ANY INSTRUMENT OR DOCUMENT DELIVERED HEREUNDER.

SECTION 8.10. Execution in Counterparts.

This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when soexecuted shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

[The remainder of this page intentionally left blank.]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as ofthe date first above written.

ENTERGY CORPORATION

By /s/ Steven C. McNealSteven C. McNeal

Vice President and Treasurer

BAYERISCHE HYPO- UND VEREINSBANK AG, NEW YORKBRANCH

as Administrative Agent

By /s/ Yoram DanknerName: Yoram Dankner

Managing Director

By /s/ Sebastian BeuerleName:Sebastian Beuerle

Associate Director

BANKS

BAYERISCHE HYPO- UND VEREINSBANK AG, NEW YORKBRANCH

By /s/ Yoram DanknerName:Yoram Dankner

Managing Director

By /s/ Sebastian BeuerleName:Sebastian Beuerle

Associate Director

SCHEDULE I

ENTERGY CORPORATION

U.S. $35,000,000 Credit Agreement

Name of BankPaymentInstructions

EurodollarLending Office

Bayerische Hypo- undVereinsbank AG, New YorkBranch

Fedwire: Federal Reserve Bank of New YorkFavor: Bayerische Hypo- und VereinsbankAG, New York Branch

ABA No.: 026 008 808A/C#: 594 012 033 405 501Account Name: Loan ServicingReference: Entergy Term LoanAttention: Tina Chung

Swift: HYVEUS 33

Bayerische Hypo- undVereinsbank AG, Cayman IslandsBranchc/o Bayerische Hypo- undVereinsbank AG245 Park Avenue32nd FloorNew York, NY 10167

SCHEDULE II

COMMITMENT SCHEDULE

Name of Lender Commitment Amount

Bayerische Hypo- und Vereinsbank AG, New York Branch $35,000,000

Total Commitment: $35,000,000

EXHIBIT A-1

FORM OF NOTICE OF BORROWING

Bayerische Hypo- und Vereinsbank AG, New York Branch as Administrative Agent for the Lenders parties

to the Credit Agreement referred to below

245 Park Avenue, 32nd FloorNew York, New York 10167

[Date]

Attention: Bank Loan Syndications

Ladies and Gentlemen:

The undersigned, Entergy Corporation, refers to the Credit Agreement, dated as of November , 2003 (the "Credit Agreement", the terms definedtherein being used herein as therein defined), among the undersigned, certain Lenders parties thereto and Bayerische Hypo- und Vereinsbank AG,New York Branch, as Administrative Agent for said Lenders, and hereby gives you notice, irrevocably, pursuant to Section 2.02 of the CreditAgreement that the undersigned hereby requests a Borrowing under the Credit Agreement, and in that connection sets forth below the informationrelating to such Borrowing (the "Proposed Borrowing") as required by Section 2.02(a) of the Credit Agreement:

i. The Business Day of the Proposed Borrowing is , 20 .

ii. The Type of Advances to be made in connection with the Proposed Borrowing is Eurodollar Rate Advances.

iii. The aggregate amount of the Proposed Borrowing is $ .

iv. The Interest Period for each Eurodollar Rate Advance made as part of the Proposed Borrowing is ___ month[s] or year(s)1.

v. [ENTERGY WIRE INSTRUCTIONS].

____________________________1. Delete for Base Rate Advances.

The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed Borrowing:

A. the representations and warranties contained in Section 4.01 of the Credit Agreement are correct, before and after givingeffect to the Proposed Borrowing and to the application of the proceeds therefrom, as though made on and as of such date;

and

B. no event has occurred and is continuing, or would result from such Proposed Borrowing or from the application of theproceeds therefrom, that constitutes a Prepayment Event or an Event of Default or would constitute an Event of Default but

for the requirement that notice be given or time elapse or both.

Very truly yours,

ENTERGY CORPORATION

ByName:Title:

EXHIBIT A-2

FORM OF NOTICE OF CONVERSION

Bayerische Hypo- und Vereinsbank AG, New York Branch as Administrative Agent for the Lenders parties to the Credit Agreement referred to below245 Park Avenue, 32nd FloorNew York, New York 10167

[Date]

Attention: Bank Loan Syndications


The undersigned, Entergy Corporation, refers to the Credit Agreement, dated as of November , 2003 (the "Credit Agreement", the terms definedtherein being used herein as therein defined), among the undersigned, certain Lenders party thereto and Bayerische Hypo- und Vereinsbank AG, NewYork Branch, as Administrative Agent for said Lenders, and hereby gives you notice, irrevocably, pursuant to Section 2.08 of the Credit Agreement,that the undersigned hereby requests a Conversion under the Credit Agreement, and in that connection sets forth below the information relating tosuch Conversion (the "Proposed Conversion") as required by Section 2.08 of the Credit Agreement:

i. The Business Day of the Proposed Conversion is __________, _____.

ii. The Type of Advances comprising the Proposed Conversion is Eurodollar Rate Advances.

iii. The aggregate amount of the Proposed Conversion is $__________.

iv. The Type of Advances to which such Advances are proposed to be Converted is [Eurodollar Rate Advances].

v. The Interest Period for each Advance made as part of the Proposed Conversion is ___ month(s) or year(s)2.

___________________2. Delete for Base Rate Advances.

The undersigned hereby represents and warrants that the following statements are true on the date hereof, and will be true on the date of the ProposedConversion:

A. The Borrower's request for the Proposed Conversion is made in compliance with Section 2.08 of the Credit Agreement; and

B. The statements contained in Section 3.02 of the Credit Agreement are true.

Very truly yours,

ENTERGY CORPORATION

ByName:Title:

EXHIBIT B

FORM OF ASSIGNMENT AND ACCEPTANCE

Dated ___________, 20__

Reference is made to the Credit Agreement, dated as of November , 2003 (as amended, modified or supplemented from time to time, the "CreditAgreement"), among Entergy Corporation, a Delaware corporation (the "Borrower"), the Lenders (as defined in the Credit Agreement) andBayerische Hypo- und Vereinsbank AG, New York Branch, as Administrative Agent for the Lenders (the "Administrative Agent"). Terms defined inthe Credit Agreement are used herein with the same meaning.

____________ (the "Assignor") and ___________ (the "Assignee") agree as follows:

a. The Assignor hereby sells and assigns to the Assignee without recourse, and the Assignee hereby purchases and assumes from theAssignor, that interest in and to all of the Assignor's rights and obligations under the Credit Agreement as of the date hereof which

represents the percentage interest specified on Schedule 1 of all outstanding rights and obligations under the Credit Agreement, including,without limitation, such interest in the Assignor's Commitment and the Advances owing to the Assignor. After giving effect to such saleand assignment, the Assignee's Commitment and the amount of the Advances owing to the Assignee will be as set forth in Section b of

Schedule 1.

b. The Assignor (A) represents and warrants that it is the legal and beneficial owner of the interest being assigned by it hereunder and thatsuch interest is free and clear of any adverse claim; (B) makes no representation or warranty and assumes no responsibility with respect to

any statements, warranties or representations made in or in connection with the Credit Agreement or the execution, legality, validity,enforceability, genuineness, sufficiency or value of the Credit Agreement or any other instrument or document furnished pursuant thereto;and (C) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or theperformance or observance by the Borrower of any of its obligations under the Credit Agreement or any other instrument or documentfurnished pursuant thereto. Except as specified in this Section b, the assignment hereunder shall be without recourse to the Assignor.

c. The Assignee (A) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referredto in Section 4.01 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and

decision to enter into this Assignment and Acceptance; (B) agrees that it will, independently and without reliance upon the AdministrativeAgent, the Assignor or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue

to make its own credit decisions in taking or not taking action under the Credit Agreement; (C) appoints and authorizes theAdministrative Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement as are delegatedto the Administrative Agent by the terms thereof, together with such powers as are reasonably incidental thereto; (D) agrees that it will

perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed byit as a Lender; [and] (E) specifies as its Domestic Lending Office (and address for notices) and Eurodollar Lending Office the offices setforth beneath its name on the signature pages hereof [and (F) attaches the forms prescribed by the Internal Revenue Service of the UnitedStates certifying that it is exempt from United States withholding taxes with respect to all payments to be made to the Assignee under the

Credit Agreement].1

d. Following the execution of this Assignment and Acceptance by the Assignor and the Assignee, it will be delivered to the AdministrativeAgent for acceptance and recording by the Administrative Agent. The effective date of this Assignment and Acceptance shall be the date

of acceptance thereof by the Administrative Agent, unless otherwise specified on Schedule 1 hereto (the "Effective Date"); provided,however, that in no event shall this Assignment and Acceptance become effective prior to the payment for the processing and recordation

fee to the Administrative Agent as provided in Section 8.07(a) of the Credit Agreement.

e. Upon such acceptance and recording by the Administrative Agent, as of the Effective Date, (A) the Assignee shall be a party to the CreditAgreement and, to the extent provided in this Assignment and Acceptance, have the rights and obligations of a Lender thereunder and

(B) the Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its rights and be released from its obligationsunder the Credit Agreement.

f. Upon such acceptance and recording by the Administrative Agent, from and after the Effective Date, the Administrative Agent shall makeall payments under the Credit Agreement in respect of the interest assigned hereby (including, without limitation, all payments ofprincipal and interest with respect thereto) to the Assignee. The Assignor and Assignee shall make all appropriate adjustments in

payments under the Credit Agreement for periods prior to the Effective Date directly between themselves.

g. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THELAW OF THE STATE OF NEW YORK.

h. This Assignment and Acceptance may be signed in any number of counterparts, each of which shall be deemed an original, with the sameeffect as if the signatures thereto and hereto were up on the same instrument.

_________________________1. If the Assignee is organized under the laws of a jurisdiction outside the United States.

IN WITNESS WHEREOF, the parties hereto have caused this Assignment and Acceptance to be executed by their respective officers thereunto dulyauthorized, as of the date first above written, such execution being made on Schedule 1 hereto.

[NAME OF ASSIGNOR]

ByName:Title:

[NAME OF ASSIGNEE]

ByName:Title:

Eurodollar Lending Office:

[Address]

Accepted this ___ dayof ___________, 20__

BAYERISCHE - UND VEREINSBANK AG, NEW YORK BRANCHas Administrative Agent

By Name:Title:

By Name:Title:

Schedule 1to

Assignment and Acceptance

Dated __________, 20__

Section (a) Percentage Interest: % Section (b) Assignee's Commitment: $ Aggregate Outstanding Principal Amount of Advances owingto the Assignee:

$

Section (c)

Effective Date1: _________, 20__

______________________________1. This date should be no earlier than the date of acceptance by the Administrative Agent.

EXHIBIT C

FORM OF OPINION OFCOUNSEL FOR THE BORROWER

[Date]

To each of the Lenders parties to the Credit Agreement referred to below, and to Bayerische Hypo- und Vereinsbank AG, New York Branch as Administrative Agent

Entergy Corporation


I have acted as counsel to Entergy Corporation, a Delaware corporation (the "Borrower"), in connection with the preparation, execution and deliveryof the Credit Agreement, dated as of November 24, 2003, by and among the Borrower, the Banks parties thereto and the other Lenders from time totime parties thereto and Bayerische Hypo- und Vereinsbank AG, New York Branch, as Administrative Agent. This opinion is furnished to you at therequest of the Borrower pursuant to Section 3.01(a)(v) of the Credit Agreement. Unless otherwise defined herein or unless the context otherwiserequires, terms defined in the Credit Agreement are used herein as therein defined.

In such capacity, I have examined:

i. Counterparts of the Credit Agreement, executed by the Borrower;

ii. The Certificate of Incorporation of the Borrower (the "Charter");

iii. The Bylaws of the Borrower (the "Bylaws");

iv. A certificate of the Secretary of State of the State of Delaware, dated November __, 2003, attesting to the continued corporateexistence and good standing of the Borrower in that State;

v. A Certificate of the Secretary of State of the State of Louisiana, dated Novemeber __, 2003, attesting that the Borrower is aforeign corporation duly qualified to conduct business in that state;

vi. A copy of the Order dated April 3, 2001 of the Securities and Exchange Commission (File No. 70-9749) under the PublicUtility Holding Company Act of 1935 (the "SEC Order"); and

vii. The other documents furnished by the Borrower to the Administrative Agent pursuant to Section 3.01(a) of the CreditAgreement.

I have also examined such other corporate records of the Borrower, certificates of public officials and of officers of the Borrower, and agreements,instruments and other documents, as I have deemed necessary as a basis for the opinions expressed below.

In my examination, I have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submittedto me as originals, and the conformity with the originals of all documents submitted to me as copies. In making my examination of documents andinstruments executed or to be executed by persons other than the Borrower, I have assumed that each such other person had the requisite power andauthority to enter into and perform fully its obligations thereunder, the due authorization by each such other person for the execution, delivery andperformance thereof and the due execution and delivery thereof by or on behalf of such person of each such document and instrument. In the case ofany such person that is not a natural person, I have also assumed, insofar as it is relevant to the opinions set forth below, that each such other person isduly organized, validly existing and in good standing under the laws of the jurisdiction in which it was c reated, and is duly qualified and in goodstanding in each other jurisdiction where the failure to be so qualified could reasonably be expected to have a material effect upon its ability toexecute, deliver and/or perform its obligations under any such document or instrument. I have further assumed that each document, instrument,agreement, record and certificate reviewed by me for purposes of rendering the opinions expressed below has not been amended by any oralagreement, conduct or course of dealing between the parties thereto.

As to questions of fact material to the opinions expressed herein, I have relied upon certificates and representations of officers of the Borrower(including but not limited to those contained in the Credit Agreement and certificates delivered upon the execution and delivery of the CreditAgreement) and of appropriate public officials, without independent verification of such matters except as otherwise described herein.

Whenever my opinions herein with respect to the existence or absence of facts are stated to be to my knowledge or awareness, it is intended to signifythat no information has come to my attention or the attention of other counsel working under my direction in connection with the preparation of thisopinion letter that would give me or them actual knowledge of the existence or absence of such facts. However, except to the extent expressly set forthherein, neither I nor they have undertaken any independent investigation to determine the existence or absence of such facts, and no inference as to myor their knowledge of the existence or absence of such facts should be assumed.

On the basis of the foregoing, having regard for such legal consideration as I deem relevant, and subject to the other limitations and qualificationscontained in this letter, I am of the opinion that:

a. The Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and is dulyqualified to do business as a foreign corporation in each jurisdiction in which the nature of the business conducted or the property owned,

operated or leased by it requires such qualification.

b. The execution, delivery and performance by the Borrower of the Credit Agreement are within the Borrower's corporate powers, have beenduly authorized by all necessary corporate action and do not contravene (i) the Charter or the Bylaws or (ii) law, or (iii) any contractual or

legal restriction binding on or affecting the Borrower. The Credit Agreement has been duly executed and delivered on behalf of theBorrower.

c. No authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body, is requiredfor the due execution, delivery and performance by the Borrower of the Credit Agreement, except for the SEC Order, which has been

obtained, is final and in full force and effect, and is not the subject of any appeal.

d. Except as disclosed in the Borrower's Annual Report on Form 10-K for the fiscal year ended December 31, 2002, and in the Borrower'sQuarterly Report on Form 10-Q for the period ended September 30, 2003, there is no pending or, to the best of my knowledge, threatenedaction or proceeding affecting the Borrower or any of its subsidiaries before any court, governmental agency or arbitrator that reasonablycould be expected to affect materially and adversely the condition (financial or otherwise), operations, business, properties or prospects of

the Borrower or its ability to perform its obligations under the Credit Agreement, or that purports to affect the legality, validity, binding

effect or enforceability of the Credit Agreement. To the best of my knowledge, after inquiry, there has been no change in any matterdisclosed in such filings that reasonably could be expected to result in such a material adverse effect.

e. The Borrower is not an "investment company" or a company "controlled" by an "investment company", within the meaning of theInvestment Company Act of 1940, as amended, or an "investment adviser" within the meaning of the Investment Advisers Act of 1940, as

amended.

f. The Credit Agreement constitutes the legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordancewith its terms.

My opinions above are subject to the following qualifications:

i. My opinions are subject, as to enforceability, to (A) bankruptcy, insolvency, reorganization, moratorium and other similarlaws affecting creditors rights generally and (B) the application of general principles of equity, including but not limited to

the right to have specific performance of contract obligations, regardless of whether considered in a proceeding in equity or atlaw.

ii. My opinion in paragraph (a) above, insofar as it relates to the due incorporation, valid existence and good standing of theBorrower under Delaware law, is given exclusively in reliance upon a certification of the Secretary of State of Delaware,

upon which I believe I am justified in relying. A copy of such certification has been provided to you.

iii. My opinion set forth in paragraph (c) above as to the obtaining of necessary governmental and regulatory approvals is basedsolely upon a review of those laws that, in my experience, are normally applicable to the Borrower in connection with

transactions of the type contemplated by the Credit Agreement.

iv. My opinion in paragraph (f) above as to the legality, validity, binding nature and enforceability of the Credit Agreement isgiven in reliance upon a legal opinion of even date herewith of Thelen Reid & Priest LLP, New York counsel to the

Borrower, and is subject to the assumptions, limitations and qualifications contained therein. A copy of the legal opinion ofThelen Reid & Priest LLP, is being provided to you contemporaneously herewith.

Notwithstanding the qualifications set forth above, I have no actual knowledge of any matter within the scope of said qualifications that would causeme to change the opinions set forth in this letter.

I am licensed to practice law only in the State of Louisiana and, except as otherwise provided herein, my role as counsel to the Borrower is limited tomatters involving the laws of the State of Louisiana and the federal laws of the United States of America. Except to the extent otherwise expressly setforth herein, and except with respect to matters governed by the General Corporation Law of Delaware, I render no opinion on the laws of any otherjurisdiction or any subdivision thereof, and have made no independent investigation into any such laws except as specifically provided herein.

My opinions are expressed as of the date hereof, and I do not assume any obligation to update or supplement my opinions to reflect any fact orcircumstance that hereafter comes to my attention, or any change in law that hereafter occurs.

This opinion letter is being provided exclusively to and for the benefit of the addressees hereof. It is not to be furnished to or relied upon by any otherparty for any other purpose, without prior express written authorization from us, except that (A) Thelen Reid & Priest LLP may rely hereon inconnection with their opinion to you of even date herewith on behalf of the Borrower as to matters of New York law; and (B) any addressee of thisletter may deliver a copy hereof to any person that becomes a Lender under the Credit Agreement after the date hereof, and such person may rely onthis opinion as if it had been addressed and delivered to it on the date hereof as an original Bank that was a party to the Credit Agreement.

Very truly yours,

Denise C. RedmannAssistant General Counsel

Bank Addressees:

Exhibit 10(a)9

Amendment To

Service Agreement

The parties hereto do hereby stipulate and agree to that the SERVICE AGREEMENT entered into by and between them under date of April 1, 1963,and as heretofore amended on January 1, 1972, April 27, 1984, August 1, 1988, January 28, 1991, January 1, 1992, January 1, 1996, January 1, 1998,January 1, 1999, January 1, 2000, January 1, 2001, April 1, 2002 and January 1, 2003 be and the same hereby is further amended by substituting forthe Supplement to Exhibit II to the SERVICE AGREEMENT, the attached revised Supplement to Exhibit II. This Amendment is made and enteredinto as of August 1, 2003.

ENTERGY SERVICES, INC.

By ___________________________Nathan E. Langston

Senior Vice President and Chief Accounting Officer

ENTERGY CORPORATION

By ___________________________Donald C. Hintz

President

Exhibit E

ALLOCATION FORMULAE FORGROUPS OF CLIENT COMPANIES

Exhibit II, Supplement

Note: Each allocation formula will be based on data relevant to participating Client Companies to whom the services are provided.

ENERGY SALES

Based on total kilowatt-hours of energy sold to consumers.

Used primarily for the allocation of costs associated with the financial analyses of sales and related items.

CUSTOMERS

Based on a twelve-month average of residential, commercial, industrial, government, and municipal general business electric and gascustomers.

Used primarily for the allocation of costs associated with the support of customer based services. Would include customer service andsupport, marketing, economic forecasts, environmental services, financial and regulatory analyses and customer information systems.

EMPLOYEES

Based on the number of full-time employees at period end.

Used primarily for the allocation of costs associated with the support of employee-based services. Would include administration ofemployee benefits programs, employee communications, employee training, and various facilities-based benefits and information

technology desktop support.

RESPONSIBILITY RATIO

Based on the ratio of the company's load at time of system peak load. The peak load is the average of the twelve monthly highest clock-hour demands in kilowatts of the interconnected system occurring each month coincident with the system peak load.

Used primarily for the allocation of costs incurred in fossil plant support and integrated planning.

TRANSMISSION LINE MILES

Based on the number of miles of transmission lines, weighted for design voltage (Voltage < 400kv = 1; Voltage >=400kv =2).

Used primarily for the allocation of costs associated with project design, maintenance and installation of Entergy transmission lines.

SUBSTATIONS

Based on the number of high voltage substations weighted for Voltage (Voltage < 500kv = 1; Voltage >= 500kv = 2).

Used primarily for the allocation of related engineering and technical support for transmission and distribution substation operations andmaintenance as well as for engineering and project management associated with substation construction.

COMPOSITE - TRANSMISSION LINES/SUBSTATIONS

Based on two components: Transmission Line Miles (30% weighting) and the Number of High Voltage Substations (70% weighting).

Used primarily for the allocation of the costs associated with the support of the transmission and distribution function that has both atransmission line component as well as a substation or load component.

GAS CONSUMPTION

Based on the volume of natural gas consumed annually by all gas fired generating units within the Entergy System.

Used for the allocation of costs associated with services in support of gas purchased for generation units.

LEVEL OF ESI SERVICE

Based on ESI total billings to each System company, excluding corporate overhead.

Used for the allocation of costs associated with support of ESI as a legal entity.

SYSTEM CAPACITY (NON-NUCLEAR)

Based on the power level, in kilowatts, that could be achieved if all non-nuclear generating units were operating at maximum capabilitysimultaneously.

Used primarily for the allocation of costs associated with the support of the fossil operations of the System. This would include servicesprovided by plant support, environmental and purchasing.

LABOR DOLLARS BILLED

Based on total labor dollars billed to each company.

Used primarily to allocate the costs associated with employee benefits plans, payroll taxes, departmental indirect costs and performancebased compensation plans for ESI employees.

DISTRIBUTION LINE MILES

Based on the number of miles of distribution lines of 34.5kv or less.

Used primarily for the allocation of costs associated with project design, maintenance and installation of Entergy distribution lines.

COAL CONSUMPTION

Based on the quantity of tons of coal delivered for a twelve-month period to each coal plant within the Entergy System.

Used for the allocation of costs associated with services in support of coal purchased for coal generating units.

ACCOUNTS PAYABLE TRANSACTIONS

Based on a twelve-month number of accounts payable transactions processed.

Used for the allocation of costs associated with the support of the accounts payable function.

SQUARE FOOTAGE

Based on square footage occupied by ESI functional business units.

Used primarily to allocate the costs associated with facilities supervision and support.

INSURANCE PREMIUMS (NON-NUCLEAR)

Based on non-nuclear insurance premiums.

Used for the allocation of costs associated with risk management.

ASSET LOCATIONS

Based on the number of asset locations at period end.

Used for the allocation of costs associated with the fixed asset accounting function.

CAPITAL EXPENDITURE AUTHORIZATIONS (CEA)

Based on a twelve-month average of outstanding Capital Expenditure Authorizations and Storm Job Orders.

Used for the allocation of costs associated with the capital project costing accounting function.

TOTAL ASSETS

Based on total assets at period end.

Used primarily to allocate costs associated with the oversight and safeguarding of corporate assets. This would include servicesprovided by financial management and certain finance functions, among others. Also used when the services provided are driven by the

relative size and complexity of the System Companies and there is no functional relationship between the services and any otheravailable allocation formula.

BANK ACCOUNTS

Based on the number of bank accounts at period end.

Used for the allocation of costs associated with daily cash management activities.

SERVER AND MAINFRAME USAGE COMPOSITE

Based on the use of historical expenditures.

Used primarily for the allocation of costs associated with mainframe, unix servers and related database administration.

GENERAL LEDGER TRANSACTIONS

Based on the number of general ledger transactions for the period.

Used primarily for the allocation of costs associated with general ledger activities, including related information systems, and for generalaccounting activities.

TRANSITION TO COMPETITION

Based on a twelve-month average of residential, commercial, industrial, government, and municipal general business of gas and/orelectric customers.

Used primarily for the allocation of costs associated with the management support of the Entergy System's strategy for and transition tocompetition.

TELEPHONES

Based on the number of telephones within each Legal Entity at period end.

Used for the allocation of costs associated with maintenance and support of telephones.

FIBER

Based on capacity and use of the Entergy System's fiber optic network.

Used primarily for the allocation of fiber optic operations and maintenance expenses.

NUCLEAR UNITS

Based on the number of nuclear units managed and operated by each Entergy System Company.

Used primarily to allocate nuclear fuel-related services.

NUCLEAR SITES

Based on the number of nuclear sites managed and operated by each Entergy System Company.

Used to allocate miscellaneous nuclear-related services.

ACCOUNTS RECEIVABLE INVOICES

Based on a twelve-month number of accounts receivable transactions processed.

Used for the allocation of costs associated with the support of the accounts receivable function.

PAYCHECKS

Based on the number of paychecks issued at each Legal Entity at period end.

Used for the allocation of costs associated with the processing of payroll.

PROPERTY AND LIABILITY PAID LOSSES

Based on a five-year annual average of the property and liability losses paid by the system companies.

Used for the allocation of costs associated with the operation and maintenance of the Risk Information System.

COMPOSITE- SUPPLY CHAIN (Number of Transactions, Stockroom Count and Procurement Total Spending)

Based on three components with weighting to each: number of transactions, stockroom count, and procurement total spending.

Used for the allocation of costs associated with the management and operations of the materials management and work orderprocessing system.

SUPPLY CHAIN - Inventory Management Fossil, Transmission & Distribution Issues, Transfers & Returns

Based on the number of issues, transfer & return transactions for each Legal Entity at period end.

Used for the allocation of costs associated with the management and operations of investment recovery, including Fossil, but excludingNuclear.

SUPPLY CHAIN - Procurement Total Spending

Based on the dollar amount of procurement spending within each Legal Entity at period end.

Used for the allocation of costs associated with procurement activities for the Entergy System.

SUPPLY CHAIN - Labor Dollars

Based on the labor dollars for the Transformer, Meter, and Light Shops.

Used primarily for the allocation of costs associated with services provided by employees in the supply chain equipment refurbishmentand repair department.

DISTRIBUTION SUBSTATIONS TRANSFORMERS

Based on the number of transformers at the Distribution Substations at period end.

Used primarily for the allocation of costs associated with the maintenance, administrative activities, and technical analysis of allDistribution Substations.

REMOTE ACCESS SERVICES (RAS) ID's

Based on the number of RAS ID's within each Legal Entity at period end.

Used for the allocation of costs associated with providing Remote Access Service to Entergy employees and contractors.

VEHICLES

Based on the number of vehicles owned by each Legal Entity.

Used for the allocation of costs associated with the maintenance of company vehicles.

MANAGED ACCOUNTS

Based on the number of industrial and commercial managed accounts excluding non-regulated Texas.

Used for the allocation of costs associated with the maintenance of Entergy's industrial and commercial customer accounts.

NUMBER OF CALLS - CUSTOMER SERVICE CENTERS

Based on a twenty-four month average of customer calls for each Legal Entity.

Used for the allocation of costs associated with the administration and support of Entergy's Customer Service Centers.

RADIO USAGE

Based on usage of Entergy's 2-way radio system.

Used for the allocation of costs associated with the administration and support of Entergy's 2-way radio system.

TOTAL IT SPEND

Based on the total dollars spent in the Information Technology plan.

Used for the allocation of costs associated with the administration and support of Entergy's IT business planning.

SUPPLY CHAIN MATERIALS TRANSACTIONS

Based on the number of Supply Chain materials transactions for each Legal Entity.

Used for the allocation of costs associated with the support of systems that manage Supply Chain materials.

SECTION 263A TAX BENEFITS

Based on Section 263A tax benefits for each Legal Entity.

Used for the allocation of costs associated with tax administration, planning, and support related to Section 263A tax benefits.

Exhibit 10(a)25

[EXECUTION COPY]

THIRTY-FIFTH ASSIGNMENT OF AVAILABILITY AGREEMENT,CONSENT AND AGREEMENT

This Thirty-fifth Assignment of Availability Agreement, Consent and Agreement (hereinafter referred to as this "Assignment"), dated as of December22, 2003, is made by and among System Energy Resources, Inc. (the "Company"), Entergy Arkansas, Inc. ("EAI") (successor in interest to ArkansasPower & Light Company and Arkansas-Missouri Power Company ("Ark-Mo")), Entergy Louisiana, Inc. ("ELI"), Entergy Mississippi, Inc. ("EMI"),and Entergy New Orleans, Inc. ("ENOI") (hereinafter EAI, ELI, EMI and ENOI are called individually a "System Operating Company" andcollectively, the "System Operating Companies"), and Union Bank of California, N.A., as Administrating Bank (in such capacity, the "AdministratingBank" ) under the Reimbursement Agreement, dated as of December 22, 2003 (as amended, restated, supplemented or otherwise modified from timeto time, the "Reimbursement Agreement"), among the Company, Union Bank of California, N.A., as Funding Bank (in such capacity, the "FundingBank"), the Administrating Bank, KeyBank National Association, as Syndication Agent, Banc One Capital Markets, Inc., as Documentation Agent,and the banks named therein (the "Participating Banks"). Unless otherwise defined herein, capitalized terms used herein shall have the meaningassigned to such terms in the Reimbursement Agreement.

WHEREAS:

A. Entergy Corporation (formerly Middle South Utilities, Inc.) ("Entergy") owns all of the outstanding common stock of the Company and each of theSystem Operating Companies, and the Company has a 90% undivided ownership and leasehold interest in Unit 1 of the Grand Gulf Nuclear ElectricStation project (more fully described in the "Indenture" hereinafter referred to).

B. Prior hereto, (i) the Company, Manufacturers Hanover Trust Company, as agent for certain banks (the "Domestic Agent"), and said banks enteredinto an Amended and Restated Bank Loan Agreement dated as of June 30, 1977 (the "Amended and Restated Agreement"), the First Amendmentthereto dated as of March 20, 1980 (the "First Bank Loan Amendment"), the Second Amended and Restated Bank Loan Agreement dated as of June15, 1981 as amended by the First Amendment dated as of February 5, 1982 (as so amended, the "Second Amended and Restated Bank LoanAgreement"), and the Second Amendment of the Second Amended and Restated Bank Loan Agreement, dated as of June 30, 1983, as furtheramended by the Third Amendment thereto dated as of December 30, 1983 and the Fourth Amendment thereto dated as of June 28, 1984 (as so furtheramended, the "Se cond Bank Loan Second Amendment"); (ii) the banks party to the Amended and Restated Agreement made loans to the Companyin the aggregate principal amount of $565,000,000 and pursuant to the First Assignment of Availability Agreement, Consent and Agreement(substantially in the form of this Assignment), dated as of June 30, 1977, between the Company, the System Operating Companies, Ark-Mo and theDomestic Agent (the "First Assignment of Availability Agreement"), the Company assigned to the Domestic Agent (for the benefit of such banks), ascollateral security for the above loans, certain of the Company's rights under an Availability Agreement dated as of June 21, 1974, as amended by theFirst Amendment thereto dated as of June 30, 1977 (the "Original Availability Agreement"), between the Company, the System Operating Companiesand Ark-Mo; (iii) the First Bank Loan Amendment, among other things, increased the amount of the loans to be made by the banks party thereto to$808,000,000 and pursuant to the Fourth Assignment of Availability Agreement, Consent and Agreement (also substantially in the form of thisAssignment), dated as of March 20, 1980 (the "Fourth Assignment of Availability Agreement"), the Company's same rights under the OriginalAvailability Agreement were further assigned as collateral security for the loans made under the Amended and Restated Agreement as amended by theFirst Bank Loan Agreement; (iv) the Second Amended and Restated Bank Loan Agreement provided, among other things, for (a) the making ofrevolving credit loans by the banks named therein to the Company from time to time in an aggregate amount not in excess of $1,311,000,000 at anyone time outstanding, and (b) the making of a term loan by said banks in an aggregate amount not to exceed $1,311,000,000, and pursuant to the FifthAssignment of Availability Agreement, Consent and Agreement (a lso substantially in the form of this Assignment), dated as of June 15, 1981 (the"Fifth Assignment of Availability Agreement"), the Company's same rights under the original Availability Agreement, as amended by the SecondAmendment thereto dated June 15, 1981, were further assigned as collateral security for the loans made under the Second Amended and RestatedBank Loan Agreement; and (v) the Second Bank Loan Second Amendment, among other things, increased the amount of the loans to be made by thebanks party thereto to $1,711,000,000 and pursuant to the Eighth Assignment of Availability Agreement, Consent and Agreement (also substantiallyin the form of this Assignment), dated as of June 30, 1983 (the "Eighth Assignment of Availability Agreement"), the Company's same rights under theOriginal Availability Agreement, as amended by the Second Amendment thereto dated June 15, 1981, were further assigned as collateral security forthe loans made under the Second Amended and Restated Bank Loan Agreement, as amended by the Second Bank Loan Second Amendment.

C. Prior hereto (i) the Company, the System Operating Companies, Ark-Mo, and United States Trust Company of New York and Malcolm J. Hood(Gerard F. Ganey, successor), each as trustee (collectively, the "Trustees") for the holders of $400,000,000 aggregate principal amount of theCompany's First Mortgage Bonds, 9.25% Series due 1989 (the "First Series Bonds") issued under a Mortgage and Deed of Trust dated as of June 15,1977 between the Company and the Trustees (the "Mortgage"), as supplemented by a First Supplemental Indenture dated as of June 15, 1977 betweenthe Company and the Trustees (the Mortgage as so supplemented and as supplemented by a Second Supplemental Indenture dated as of January 1,1980, a Third Supplemental Indenture dated as of June 15, 1981, a Fourth Supplemental Indenture dated as of June 1, 1984, a Fifth SupplementalIndenture dated as of December 1, 1984, a Sixth Supplemental Indenture dated as of May 1, 1985, a Seventh Supplemental Indenture dated as of June15, 1985, an Eighth Supplemental Indenture dated as of May 1, 1986, a Ninth Supplemental Indenture dated as of May 1, 1986, a Tenth SupplementalIndenture dated as of September 1, 1986, an Eleventh Supplemental Indenture dated as of September 1, 1986, a Twelfth Supplemental Indenture datedas of September 1, 1986, a Thirteenth Supplemental Indenture dated as of November 15, 1987, a Fourteenth Supplemental Indenture dated as ofDecember 1, 1987, a Fifteenth Supplemental Indenture dated as of July 1, 1992, a Sixteenth Supplemental Indenture dated as of October 1, 1992, aSeventeenth Supplemental Indenture dated as of October 1, 1992, and an Eighteenth Supplemental Indenture dated as of April 1, 1993, and as thesame may from time to time hereafter be amended and supplemented in accordance with its terms, being hereinafter called the "Indenture"), enteredinto the Seco nd Assignment of Availability Agreement, Consent and Agreement dated as of June 30, 1977 (the "Second Assignment of AvailabilityAgreement") (substantially in the form of this Assignment) to secure the First Series Bonds; (ii) the Company, the System Operating Companies andthe Trustees, as trustees for the holders of $98,500,000 aggregate principal amount of the Company's First Mortgage Bonds, 12.50% Series due 2000(the "Second Series Bonds") issued under the Mortgage, as supplemented by a Second Supplemental Indenture, dated as of January 1, 1980, betweenthe Company and the Trustees, entered into the Third Assignment of Availability Agreement, Consent and Agreement dated as of January 1, 1980 (the"Third Assignment of Availability Agreement") (also substantially in the form of this Assignment) to secure the Second Series Bonds; (iii) theCompany, the System Operating Companies and the Trustee s, as trustees for the holders of $300,000,000 aggregate principal amount of theCompany's First Mortgage Bonds, 16% Series due 2000 (the "Third Series Bonds") issued under the Mortgage, as supplemented by a FifthSupplemental Indenture dated as of December 1, 1984 between the Company and the Trustees, entered into the Eleventh Assignment of AvailabilityAgreement, Consent and Agreement dated as of December 1, 1984 (the "Eleventh Assignment of Availability Agreement") (also substantially in theform of this Assignment) to secure the Third Series Bonds; (iv) the Company, the System Operating Companies and the Trustees, as trustees for theholders of $100,000,000 aggregate principal amount of the Company's First Mortgage Bonds, 15.375% Series due 2000 (the "Fourth Series Bonds")issued under the Mortgage, as supplemented by a Sixth Supplemental Indenture, dated as of May 1, 1985, between the Compan y and the Trustees,entered into the Thirteenth Assignment of Availability Agreement, Consent and Agreement dated as of May 1, 1985 (the "Thirteenth Assignment of

Availability Agreement") (also substantially in the form of this Assignment) to secure the Fourth Series Bonds; (v) the Company, the SystemOperating Companies and the Trustees, as trustees for the holders of $300,000,000 aggregate principal amount of the Company's First MortgageBonds, 11% Series due 2000 (the "Seventh Series Bonds") issued under the Mortgage, as supplemented by a Ninth Supplemental Indenture, dated asof May 1, 1986, between the Company and the Trustees, entered into the Sixteenth Assignment of Availability Agreement, Consent and Agreementdated as of May 1, 1986 (the "Sixteenth Assignment of Availability Agreement") (also substantially in the form of this Assignment) to secure theSeventh Series Bonds; (vi) the Compa ny, the System Operating Companies and the Trustees, as trustees for the holders of $300,000,000 aggregateprincipal amount of the Company's First Mortgage Bonds, 9 7/8% Series due 1991 (the "Eighth Series Bonds") issued under the Mortgage, assupplemented by a Tenth Supplemental Indenture, dated as of September 1, 1986, between the Company and the Trustees, entered into theSeventeenth Assignment of Availability Agreement, Consent and Agreement dated as of September 1, 1986 (the "Seventeenth Assignment ofAvailability Agreement") (also substantially in the form of this Assignment) to secure the Eighth Series Bonds; (vii) the Company, the SystemOperating Companies and the Trustees, as trustees for the holders of $250,000,000 aggregate principal amount of the Company's First MortgageBonds, 10-1/2 Series due 1996 (the "Ninth Series Bonds") issued under the Mortgage, as supplemented by an Eleventh Supplemental Indenture, datedas of September 1, 1986, between the Company and the Trustees, entered into the Eighteenth Assignment of Availability Agreement, Consent andAgreement dated as of September 1, 1986 (the "Eighteenth Assignment of Availability Agreement") (also substantially in the form of thisAssignment) to secure the Ninth Series Bonds; (viii) the Company, the System Operating Companies and the Trustees, as trustees for the holders of$200,000,000 aggregate principal amount of the Company's First Mortgage Bonds, 11 3/8% Series due 2016 (the "Tenth Series Bonds") issued underthe Mortgage, as supplemented by a Twelfth Supplemental Indenture, dated as of September 1, 1986, between the Company and the Trustees, enteredinto the Nineteenth Assignment of Availability Agreement, Con sent and Agreement dated as of September 1, 1986 (the "Nineteenth Assignment ofAvailability Agreement") (also substantially in the form of this Assignment) to secure the Tenth Series Bonds; (ix) the Company, the SystemOperating Companies and the Trustees, as trustees for the holders of $200,000,000 aggregate principal amount of the Company's First MortgageBonds, 14% Series due 1994 (the "Eleventh Series Bonds") issued under the Mortgage, as supplemented by a Thirteenth Supplemental Indenture,dated as of November 15, 1987, between the Company and the Trustees, entered into the Twentieth Assignment of Availability Agreement, Consentand Agreement dated as of November 15, 1987 (the "Twentieth Assignment of Availability Agreement") (also substantially in the form of thisAssignment) to secure the Eleventh Series Bonds; (x) the Company, the System Operating Companies and the Trustees, as trustees for the holders of$100,000,000 aggregate principal amount of the Company's First Mortgage Bonds, 14.34% Series due 1992 (the "Twelfth Series Bonds") issuedunder the Mortgage, as supplemented by a Fourteenth Supplemental Indenture, dated as of December 1, 1987, between the Company and the Trustees,entered into the Twenty-first Assignment of Availability Agreement, Consent and Agreement dated as of December 1, 1987 (the "Twenty-firstAssignment of Availability Agreement") (also substantially in the form of this Assignment) to secure the Twelfth Series Bonds; (xi) the Company, theSystem Operating Companies and the Trustees, as trustees for the holders of $45,000,000 aggregate principal amount of the Company's FirstMortgage Bonds, 8.40% Series due 2002 (the "Thirteenth Series Bonds") issued under the Mortgage, as supplemented by a Fifteenth SupplementalIndenture, dated as of July 1, 1992, betwe en the Company and the Trustees, entered into the Twenty-fourth Assignment of Availability Agreement,Consent and Agreement dated as of July 1, 1992 (the "Twenty-fourth Assignment of Availability Agreement") (also substantially in the form of thisAssignment) to secure the Thirteenth Series Bonds; (xii) the Company, the System Operating Companies and the Trustees, as trustees for the holdersof $105,000,000 aggregate principal amount of the Company's First Mortgage Bonds, 6.12% Series due 1995 (the "Fourteenth Series Bonds") issuedunder the Mortgage, as supplemented by a Sixteenth Supplemental Indenture, dated as of October 1, 1992, between the Company and the Trustees,entered into the Twenty-fifth Assignment of Availability Agreement, Consent and Agreement dated as of October 1, 1992 (the "Twenty-fifthAssignment of Availability Agreement") (also substantially in the form of this Assignment) t o secure the Fourteenth Series Bonds; (xiii) theCompany, the System Operating Companies and the Trustees, as trustees for the holders of $70,000,000 aggregate principal amount of the Company'sFirst Mortgage Bonds, 8.25% Series due 2002 (the "Fifteenth Series Bonds") issued under the Mortgage, as supplemented by a SeventeenthSupplemental Indenture, dated as of October 1, 1992, between the Company and the Trustees, entered into a Twenty-sixth Assignment of AvailabilityAgreement, Consent and Agreement dated as of October 1, 1992 (the "Twenty-sixth Assignment of Availability Agreement") (also substantially in theform of this Assignment) to secure the Fifteenth Series Bonds; (xiv) the Company, the System Operating Companies and the Trustees, as trustees forthe holders of $60,000,000 aggregate principal amount of the Company's First Mortgage Bonds, 6% Series due 1998 (the "Sixteenth Series Bonds") </B>issued under the Mortgage, as supplemented by an Eighteenth Supplemental Indenture, dated as of April 1, 1993, between the Companyand the Trustees, entered into a Twenty-seventh Assignment of Availability Agreement, Consent and Agreement dated as of April 1, 1993 (the"Twenty-seventh Assignment of Availability Agreement") (also substantially in the form of this Assignment) to secure the Sixteenth SeriesBonds; (xv) Entergy, the Company and the Trustees, as trustees for the holders of $60,000,000 aggregate principal amount of the Company'sFirst Mortgage Bonds, 7.58% Series due 1999 (the "Seventeenth Series Bonds") issued under the Mortgage, as supplemented by a NineteenthSupplemental Indenture, dated as of April 1, 1994, between the Company and the Trustees, entered into the Twenty-ninth Assignment ofAvailability Agreement, Consent and Agreement dated as of April 1, 1994 (the "Twenty-ninth Assignment of Avai lability Agreement") (alsosubstantially in the form of this Agreement), to secure the Seventeenth Series Bonds; (xvi) Entergy, the Company and the Trustees, as trusteesfor the holders of $100,000,000 aggregate principal amount of the Company's First Mortgage Bonds, 7.28% Series due 1999 (the "EighteenthSeries Bonds") issued under the Mortgage, as supplemented by a Twentieth Supplemental Indenture, dated as of August 1, 1996, between theCompany and the Trustees, entered into the Thirtieth Assignment of Availability Agreement, Consent and Agreement dated as of August 1,1996 (the "Thirtieth Assignment of Availability Agreement") (also substantially in the form of this Agreement) to secure the Eighteenth SeriesBonds; (xvii) Entergy, the Company and the Trustees, as trustees for the holders of $135,000,000 aggregate principal amount of theCompany's First Mortgage Bonds, 7.7% Series due 2000 (the " Nineteenth Series Bonds") issued under the Mortgage, as supplemented by aTwenty-first Supplemental Indenture, dated as of August 1, 1996, between the Company and the Trustees, entered into the Thirty-firstAssignment of Availability Agreement, Consent and Agreement dated as of August 1, 1996 (the "Thirty-first Assignment of AvailabilityAgreement") (also substantially in the form of this Agreement) to secure the Nineteenth Series Bonds; and (xviii) Entergy, the Company andthe Trustees, as trustees for the holders of $70,000,000 aggregate principal amount of the Company's First Mortgage Bonds, 4 7/8% Seriesdue 2007 (the "Twentieth Series Bonds") issued under the Mortgage, as supplemented by a Twenty-second Supplemental Indenture, dated asof September 1, 2002, between the Company and the Trustees, entered into the Thirty-fourth Assignment of Availability Agreement, Consentand Agreement dated as of September 1, 2002 (the "Thirty-fourth Assignment of Availability Agreement") (also substantially in the form of thisAgreement) to secure the Twentieth Series Bonds.

D. The Original Availability Agreement has been amended by the First Amendment thereto dated as of June 30, 1977, the SecondAmendment thereto dated June 15, 1981, the Third Amendment thereto dated June 28, 1984 and the Fourth Amendment thereto dated as ofJune 1, 1989 (the Original Availability Agreement, as so amended and as it may be further amended and supplemented, is hereinafterreferred to as the "Availability Agreement").

E. Unit 1 and Unit 2 of the Project have been designated by the Company and the System Operating Companies as being subject to theAvailability Agreement and as being System Entergy Generating Units (as defined in the Availability Agreement) thereunder.

F. The Company, Credit Suisse First Boston Limited, as agent for certain banks (the "Eurodollar Agent"), and said banks (includingsuccessors and assignees and such other banks as became party to the Loan Facility as defined below, the "Eurodollar Banks") were parties tothe Loan Agreement (the "Original Eurodollar Loan Agreement") dated February 5, 1982 (as amended, the "Loan Facility"). Under theOriginal Eurodollar Loan Agreement, the banks party thereto made loans to the Company in the aggregate principal amount of $315,000,000and, pursuant to the Sixth Assignment of Availability Agreement, Consent and Agreement (substantially in the form of this Assignment)dated as of February 5, 1982 between the Company, the System Operating Companies and the Eurodollar Agent (the "Sixth Assignment ofAvailability Agreement" ), the Company assigned to the Eurodollar Agent (for the benefit of said banks), as collateral security for the above

loans, certain of the Company's rights under the Availability Agreement. The Company, the Eurodollar Agent and the Eurodollar Bankswere parties to the First Amendment dated as of February 18, 1983 to the Loan Facility which, among other things, increased the amount ofthe loans to be made by the Eurodollar Banks to $378,000,000 and, pursuant to the Seventh Assignment of Availability Agreement, Consentand Agreement (also substantially in the form of this Assignment) dated as of February 18, 1983 between the Company, the SystemOperating Companies and the Eurodollar Agent (the "Seventh Assignment of Availability Agreement"), the Company assigned to theEurodollar Agent (for the benefit of the Eurodollar Banks), as collateral security for such loans, certain of the Company's rights under theAvailability Agreement.

G. The Company and Citibank, N.A. (the "Series A Bank") were parties to a letter of credit and reimbursement agreement dated as ofDecember 1, 1983 (the "Series A Reimbursement Agreement"), which provided, among other things, for the issuance by the Series A Bank forthe account of the Company of an irrevocable transferable letter of credit in support of the Claiborne County, Mississippi Adjustable/FixedRate Pollution Control Revenue Bonds (Middle South Energy, Inc. Project) Series A (the "Series A Bonds"), issued by Claiborne County,Mississippi pursuant to a trust indenture dated as of December 1, 1983 naming Deposit Guaranty National Bank as trustee. Pursuant to theNinth Assignment of Availability Agreement, Consent and Agreement (also substantially in the form of this Assignment), dated as ofDecember 1, 1983, between the Company, the System O perating Companies, the Series A Bank and Deposit Guaranty National Bank, astrustee (the "Ninth Assignment of Availability Agreement"), the Company assigned to the Series A Bank and Deposit Guaranty National Bank,as trustee, as collateral security for the Company's obligations under the Series A Reimbursement Agreement and the Series A Bonds, certainof the Company's rights under the Availability Agreement.

H. The Company and Citibank, N.A. (the "Series B Bank") were parties to a letter of credit and reimbursement agreement dated as of June1, 1984 (the "Series B Reimbursement Agreement"), which provided, among other things, for the issuance by the Series B Bank for theaccount of the Company of an irrevocable transferable letter of credit in support of the Claiborne County, Mississippi Adjustable/Fixed RatePollution Control Revenue Bonds (Middle South Energy, Inc. Project) Series B (the "Series B Bonds"), issued by Claiborne County,Mississippi pursuant to a trust indenture dated as of June 1, 1984 naming Deposit Guaranty National Bank as trustee. Pursuant to the TenthAssignment of Availability Agreement, Consent and Agreement (also substantially in the form of this Assignment), dated as of June 1, 1984,between the Company, the System Operating Companies, the Series B Bank an d Deposit Guaranty National Bank, as trustee (the "TenthAssignment of Availability Agreement"), the Company assigned to the Series B Bank and Deposit Guaranty National Bank, as trustee, ascollateral security for the Company's obligations under the Series B Reimbursement Agreement and the Series B Bonds, certain of theCompany's rights under the Availability Agreement.

I. The Company, Citibank, N.A., as a Co-Agent and as Coordinating Agent, and Manufacturers Hanover Trust Company, as a Co-Agent fora group of banks (the "Series C Banks"), were parties to a letter of credit and reimbursement agreement dated as of December 1, 1984 (the"Series C Reimbursement Agreement") which provided, among other things, for the issuance by the Series C Banks for the account of theCompany of an irrevocable transferable letter of credit in support of the Claiborne County, Mississippi Adjustable/Fixed Rate PollutionControl Revenue Bonds (Middle South Energy, Inc. Project) Series C (the "Series C Bonds"), issued by Claiborne County, Mississippipursuant to a trust indenture dated as of December 1, 1984 naming Deposit Guaranty National Bank as trustee. Pursuant to the TwelfthAssignment of Availability Agreement, Consent and Agreement (als o substantially in the form of this Assignment), dated as of December 1,1984, between the Company, the System Operating Companies, the Series C Banks and Deposit Guaranty National Bank, as trustee (the"Twelfth Assignment of Availability Agreement"), the Company assigned to the Series C Banks and Deposit Guaranty National Bank, astrustee, as collateral security for the Company's obligations under the Series C Reimbursement Agreement and the Series C Bonds, certain ofthe Company's rights under the Availability Agreement.

J. The Company, the System Operating Companies, the Trustees and Deposit Guaranty National Bank, as holder of $47,208,334 aggregateprincipal amount of the Company's First Mortgage Bonds, Pollution Control Series A (the "Fifth Series Bonds") issued under the Mortgage,as supplemented by a Seventh Supplemental Indenture dated as of June 15, 1985 between the Company and the Trustees, entered into theFourteenth Assignment of Availability Agreement, Consent and Agreement dated as of June 15, 1985 (the "Fourteenth Assignment ofAvailability Agreement") (also substantially in the form of this Assignment). The Fifth Series Bonds were issued as security, in part, for theClaiborne County, Mississippi 12 1/2% Pollution Control Revenue Bonds due 2015 (Middle South Energy, Inc. Project) (the "Series DBonds"), issued by Claiborne County, Mississippi pursuant to a trust indenture da ted as of June 15, 1985 naming Deposit Guaranty NationalBank as trustee. Pursuant to the Fourteenth Assignment of Availability Agreement, the Company assigned to the Trustees and DepositGuaranty National Bank, as collateral security for the Company's obligations under the Series D Bonds, certain of the Company's rightsunder the Availability Agreement.

K. The Company, the System Operating Companies, the Trustees and Deposit Guaranty National Bank, as holder of $95,643,750 aggregateprincipal amount of the Company's First Mortgage Bonds, Pollution Control Series B (the "Sixth Series Bonds") issued under the Mortgage,as supplemented by an Eighth Supplemental Indenture dated as of May 1, 1986 between the Company and the Trustees, entered into theFifteenth Assignment of Availability Agreement, Consent and Agreement dated as of May 1, 1986 (the "Fifteenth Assignment of AvailabilityAgreement") (also substantially in the form of this Assignment). The Sixth Series Bonds were issued as security, in part, for the ClaiborneCounty, Mississippi 9 1/2% Pollution Control Revenue Bonds due 2016 (Middle South Energy, Inc. Project) (the "Series E Bonds"), issued byClaiborne County, Mississippi pursuant to a trust indenture dated as of May 1, 1986 naming Deposit Guaranty National Bank as trustee.Pursuant to the Fifteenth Assignment of Availability Agreement, the Company assigned to the Trustees and Deposit Guaranty National Bank,as collateral security for the Company's obligations under the Series E Bonds, certain of the Company's rights under the AvailabilityAgreement.

L. The Company has entered into a sale and leaseback transaction with respect to a portion of its undivided interest in Unit 1 and to that endthe Company has entered into, among other agreements, (i) Facility Leases Nos. 1 and 2, dated as of December l, 1988, among Meridian TrustCompany and Stephen M. Carta (Stephen J. Kaba, successor) (collectively, the "Owner Trustee"), as Owner Trustee, and the Company, eachas supplemented by a separate Lease Supplement No. 1 thereto, each dated as of April 1, 1989, and a separate Lease Supplement No. 2thereto, each dated as of January 1, 1994, (ii) a Participation Agreement No. 1, dated as of December l, 1988, among Public Service ResourcesCorporation ("PSRC") as Owner Participant, the Loan Participants listed therein, GGIA Funding Corporation, as Funding Corporation, theOwner Trustee and the Company pursuant to which PSRC invested $400,000,000 in an undivided interest in Unit 1 (which interest wassubsequently acquired by Resources Capital Management Corporation from PSRC and subsequently acquired by RCMC I, Inc. (formerlyknown as RCMC Del., Inc.) from Resources Capital Management Corporation), and a Participation Agreement No. 2, dated as of December1, 1988, among Lease Management Realty Corporation IV ("LMRC") as Owner Participant, the Loan Participants listed therein, GGIAFunding Corporation, as Funding Corporation, the Owner Trustee and the Company pursuant to which LMRC invested $100,000,000 in anundivided interest in Unit 1 (which interest was subsequently acquired by Textron Financial Corporation from LMRC) (the ownerparticipants under all such participation agreements being referred to as the "Owner Participants") and (iii) the Original ReimbursementAgreement which provided, among other things, (x) for the issuance by the funding bank named therein (the "1988 Funding Bank"), for theaccoun t of the Company, of irrevocable transferable letters of credit (the "1988 LOCs") to the Owner Participants to secure certainobligations of the Company to the Owner Participants substantially in the form of Exhibit A to the Original Reimbursement Agreement withmaximum amounts of $104,000,000 and $26,000,000, respectively, (y) for the reimbursement to such 1988 Funding Bank by the participating

banks named therein (the "1988 Participating Banks") for all drafts paid by such 1988 Funding Bank under any 1988 LOC and (z) for thereimbursement by the Company to such 1988 Funding Bank for the benefit of the 1988 Participating Banks of sums equal to all drafts paidby such 1988 Funding Bank under any 1988 LOC. Pursuant to the Twenty-second Assignment of Availability Agreement, Consent andAgreement (substantially in the form of this Assignment), dated as of December 1, 1988 (the "Twenty-second Assignment of AvailabilityAgreement&qu ot;), the Company assigned to the Administrating Bank referred to in the Original Reimbursement Agreement, as collateralsecurity for the Company's obligations under the Original Reimbursement Agreement, certain of the Company's rights under the AvailabilityAgreement.

M. The Company, the System Operating Companies and Chemical Bank entered into the Twenty-third Assignment of AvailabilityAgreement, Consent and Agreement dated as of January 11, 1991 (the "Twenty-third Assignment of Availability Agreement") in connectionwith the execution and delivery of the First Amendment, dated as of January 11, 1991, to the Original Reimbursement Agreement (theOriginal Reimbursement Agreement, as amended by such First Amendment, is herein called the "1991 Reimbursement Agreement"), whichprovided, among other things, (i) for the issuance by the funding bank named therein (the "1991 Funding Bank"), for the account of theCompany, of irrevocable transferable letters of credit (the "1991 LOCs") to the Owner Participants to secure certain obligations of theCompany to the Owner Participants, substantially in the form of Exhibit A to the 1 991 Reimbursement Agreement, with maximum amountsof $116,601,440 and $29,150,360, respectively; (ii) for the reimbursement to the 1991 Funding Bank by the participating banks named therein(the "1991 Participating Banks") for all drafts paid by the 1991 Funding Bank under any 1991 LOC; and (iii) for the reimbursement by theCompany to the 1991 Funding Bank for the benefit of the 1991 Participating Banks of sums equal to all drafts paid by the 1991 FundingBank under any 1991 LOC.

N. The Company, the System Operating Companies and Chemical Bank entered into the Twenty-eighth Assignment of AvailabilityAgreement, Consent and Agreement dated as of December 17, 1993 (the "Twenty-eighth Assignment of Availability Agreement") in connectionwith the execution and delivery of the Second Amendment, dated as of December 17, 1993, to the Original Reimbursement Agreement (theOriginal Reimbursement Agreement, as amended by the First Amendment to the Original Reimbursement Agreement and such SecondAmendment, is herein called the "1993 Reimbursement Agreement"), which provided, among other things, (i) for the issuance by the fundingbank named therein (the "1993 Funding Bank"), for the account of the Company, of irrevocable transferable letters of credit (the "1993LOCs") to the Owner Participants to secure certain obligations of the Company to the Owner Participants , substantially in the form ofExhibit A to the 1993 Reimbursement Agreement, with maximum amounts of $132,131,960 and $33,032,990, respectively; (ii) for thereimbursement to the 1993 Funding Bank by the participating banks named therein (the "1993 Participating Banks") for all drafts paid bythe 1993 Funding Bank under any 1993 LOC; and (iii) for the reimbursement by the Company to the 1993 Funding Bank for the benefit ofthe 1993 Participating Banks of sums equal to all drafts paid by the 1993 Funding Bank under any 1993 LOC.

O. The Company, the System Operating Companies and The Chase Manhattan Bank (as successor by merger with Chemical Bank) enteredinto the Thirty-second Assignment of Availability Agreement, Consent and Agreement dated as of December 27, 1996 (the "Thirty-secondAssignment of Availability Agreement") in connection with the execution and delivery of the Amended and Restated ReimbursementAgreement, dated as of December 27, 1996, which amended and restated the 1993 Reimbursement Agreement (as so amended and restated,the "1996 Amended and Restated Reimbursement Agreement") and provided, among other things, (i) for the issuance by the funding banknamed therein (the "1996 Funding Bank"), for the account of the Company, of irrevocable transferable letters of credit (the "1996 LOCs") tothe Owner Participants to secure certain obligations of the Company to the Owner Participants , substantially in the form of Exhibit A to the1996 Amended and Restated Reimbursement Agreement, with maximum amounts of $148,719,125.41 and $34,946,720.11, respectively; (ii) forthe reimbursement to the 1996 Funding Bank by the participating banks named therein (the "1996 Participating Banks") for all drafts paidby the 1996 Funding Bank under any 1996 LOC; and (iii) for the reimbursement by the Company to the 1996 Funding Bank for the benefitof the 1996 Participating Banks of sums equal to all drafts paid by the 1996 Funding Bank under any 1996 LOC.

P. The Company, the System Operating Companies and The Chase Manhattan Bank entered into the Thirty-third Assignment of AvailabilityAgreement, Consent and Agreement dated as of December 20, 1999 (the "Thirty-third Assignment of Availability Agreement") in connectionwith the execution and delivery of the Amended and Restated Reimbursement Agreement, dated as of December 20, 1999, among theCompany, The Bank of Tokyo-Mitsubishi, Ltd., Los Angeles Branch, as the funding bank (the "1999 Funding Bank"), The Chase ManhattanBank, as administrating bank, Union Bank of California, N.A., as documentation agent, and the banks named therein (the "1999Participating Banks"), which amended and restated the 1996 Amended and Restated Reimbursement Agreement (as so amended andrestated, the "1999 Amended and Restated Reimbursement Agreement") and provided, among other things, (i ) for the issuance by the 1999Funding Bank, for the account of the Company, of irrevocable transferable letters of credit (the "1999 LOCs") to the Owner Participants tosecure certain obligations of the Company to the Owner Participants, substantially in the form of Exhibit A to the 1999 Amended andRestated Reimbursement Agreement, with maximum amounts of $156,885,463.65 and $36,061,469.99, respectively; (ii) for the reimbursementto the 1999 Funding Bank by the 1999 Participating Banks for all drafts paid by the 1999 Funding Bank under any 1999 LOC; and (iii) forthe reimbursement by the Company to the 1999 Funding Bank for the benefit of the 1999 Participating Banks of sums equal to all drafts paidby the 1999 Funding Bank under any 1999 LOC.

Q. On March 3, 2003, the Company terminated and replaced the 1999 Amended and Restated Reimbursement Agreement with the Letter ofCredit and Reimbursement Agreement, dated as of March 3, 2003 (the "2003 Reimbursement Agreement"), among the Company, Union Bankof California, N.A., as administrating bank, Union Bank of California, N.A., as funding bank (in such capacity, the "2003 Funding Bank"),and the banks named therein (the "2003 Participating Banks"), which provided, among other things, (i) for the issuance by the 2003 FundingBank, for the account of the Company, of irrevocable transferable letters of credit (the "2003 LOCs") to the Owner Participants to securecertain obligations of the Company to the Owner Participants, substantially in the form of Exhibit A to the 2003 Reimbursement Agreement,with maximum amounts of $161,546,191.84 and $36,515,236.09, respectively; (ii) for th e reimbursement to the 2003 Funding Bank by the2003 Participating Banks for all drafts paid by the 2003 Funding Bank under any 2003 LOC; and (iii) for the reimbursement by theCompany to the 2003 Funding Bank for the benefit of the 2003 Participating Banks of sums equal to all drafts paid by the 2003 FundingBank under any 2003 LOC.

R. The Company now wishes to terminate and replace the 2003 Reimbursement Agreement with the Reimbursement Agreement and toprovide for the cancellation of the 2003 LOCs and the issuance of new irrevocable transferable letters of credit (the "New LOCs") by theFunding Bank to further secure the Owner Participants. The Reimbursement Agreement provides, among other things, (i) for the issuance bythe Funding Bank, for the account of the Company, of irrevocable transferable letters of credit to the Owner Participants to secure certainobligations of the Company to the Owner Participants, such New LOCs to be substantially in the form of Exhibit A to the ReimbursementAgreement with maximum amounts of $161,546,191.84 and $36,515,236.09, respectively; (ii) for the reimbursement to the Funding Bank bythe Participating Banks for all drafts paid by the Funding Bank under any New LOC; and (iii) for the reimbursement by the Company to theFunding Bank for th e benefit of the Participating Banks of sums equal to all drafts paid by the Funding Bank under any New LOC (suchamounts, together with all Advances made by the Participating Banks pursuant to the Reimbursement Agreement, shall hereinafter be calledthe "Reimbursement Obligations").

S. The Company, by this instrument, wishes to (i) provide for the assignment by the Company to the Administrating Bank for the benefit ofthe Funding Bank, the Administrating Bank and the Participating Banks (collectively, the "LOC Banks") of certain of the Company's rightsunder the Availability Agreement, and (ii) create enforceable rights hereunder in the Administrating Bank, all as hereunder set forth.

T. The System Operating Companies are willing to, and by this instrument do, supplement their undertakings under the AvailabilityAgreement in the same manner as in the Assignments of Availability Agreement.

U. The Company, Entergy and the System Operating Companies have joined in an Application-Declaration on Form U-1, as amended andsupplemented to date, in File No. 70-7561, filed with the Securities and Exchange Commission under the Public Utility Holding Company Actof 1935 with respect to this Assignment and certain other matters, the Securities and Exchange Commission has issued orders (the "SECOrders") granting and permitting to become effective said Application-Declaration, as so amended and supplemented, and the SEC Ordersare in full force and effect on the date of execution and delivery hereof.

V. All things necessary to make this Assignment the valid, legally binding and enforceable obligation of each of the parties hereto have beendone and performed and the execution and performance hereof in all respects have been authorized and approved by all corporate andshareholder action necessary on the part of each thereof.

NOW, THEREFORE, in consideration of the terms and agreements hereinafter set forth, the parties agree with each other as follows:

ARTICLE I

SECURITY ASSIGNMENT AND AGREEMENT

1.1. Assignment and Creation of Security Interest. As security for (i) the due and punctual payment of the interest (including, if and to theextent permitted by law, interest on overdue principal, premium and interest) and premium, if any, on, and the principal of, theReimbursement Obligations (whether at maturity, pursuant to mandatory or optional prepayment, by acceleration or otherwise) and (ii) thedue and punctual payment of all fees and costs, expenses and other amounts which may become payable by the Company under theReimbursement Agreement, together in each case with all costs of collection thereof (all such amounts referred to in the foregoing clauses (i)and (ii) being hereinafter collectively referred to as "Obligations Secured Hereby"), the Company hereby assigns to the Administrating Bank,and creates a security interest in favor of the Administrating Bank for the benefit of the LOC Banks in, all of the Company's rights to receiveall moneys paid or to be paid to the Company pursuant to Section 4 of the Availability Agreement and all advances made or to be made to theCompany pursuant to Section 2.2(b) hereof, but only to the extent that such payments or advances are attributable to payments or advanceswith respect to Unit 1 or Unit 2, and all other claims, rights (but not obligations or duties), powers, privileges, interests and remedies of theCompany, whether arising under the Availability Agreement or this Assignment or by statute or in law or in equity or otherwise, resultingfrom any failure by any System Operating Company to perform its obligations under the Availability Agreement or this Assignment, but onlyto the extent that such claims, rights, powers, privileges, interests and remedies relate to Unit 1 and Unit 2, all to the extent, but only to theextent, required for the payment when due and payable of Obligations Secured Hereby, together in each case with full power and authority,in the nam e of the Administrating Bank, or the Company as assignor, or otherwise, to demand payment of, enforce, collect, receive andreceipt for any and all of the foregoing (the rights, claims, powers, privileges, interests and remedies referred to above being hereinaftersometimes called the "Collateral").

1.2. Other Agreements.

(a) The Company has not and will not assign the rights assigned in Section 1.1 as security for any indebtedness other than the ObligationsSecured Hereby, except as recited and provided in paragraph (b) of this Section 1.2.

(b) The Company has secured its Indebtedness for Borrowed Money (as defined below) represented by (i) loans made by certain banksreferred to in Whereas Clause B hereof by the First, Fourth, Fifth and Eighth Assignments of Availability Agreement, respectively, (ii) theFirst Series Bonds, the Second Series Bonds, the Third Series Bonds, the Fourth Series Bonds, the Seventh Series Bonds, the Eighth SeriesBonds, the Ninth Series Bonds, the Tenth Series Bonds, the Eleventh Series Bonds, the Twelfth Series Bonds, the Thirteenth Series Bonds, theFourteenth Series Bonds, the Fifteenth Series Bonds, the Sixteenth Series Bonds, the Seventeenth Series Bonds, the Eighteenth Series Bonds,the Nineteenth Series Bonds and the Twentieth Series Bonds, as referred to in Whereas Clause C hereof, by the Second, Third, Eleventh,Thirteenth, Sixteenth, Seventeenth, Eighteenth, Nineteenth, Twentieth, Twenty-first, Twenty-fourth, Twenty-fifth, Twenty-sixth, Twenty-seventh, Twenty-ninth, Thirtieth, Thirty-f irst and Thirty-fourth Assignments of Availability Agreement, respectively, (iii) loans made bycertain banks as referred to in Whereas Clause F hereof by the Sixth and Seventh Assignments of Availability Agreement, respectively, (iv)the obligations under the Series A Reimbursement Agreement referred to in Whereas Clause G hereof by the Ninth Assignment ofAvailability Agreement, (v) the obligations under the Series B Reimbursement Agreement as referred to in Whereas Clause H hereof by theTenth Assignment of Availability Agreement, (vi) the obligations under the Series C Reimbursement Agreement as referred to in WhereasClause I hereof by the Twelfth Assignment of Availability Agreement, (vii) the Fifth Series Bonds as referred to in Whereas Clause J hereofby the Fourteenth Assignment of Availability Agreement, (viii) the Sixth Series Bonds as referred to in Whereas Clause K hereof by theFifteenth Assignment of Availability Agreement, (ix) the obligations under the Original Reimbursement Agreement as ref erred to inWhereas Clause L hereof by the Twenty-second Assignment of Availability Agreement, (x) the obligations under the 1991 ReimbursementAgreement as referred to in Whereas Clause M hereof by the Twenty-third Assignment of Availability Agreement, (xi) the obligations underthe 1993 Reimbursement Agreement as referred to in Whereas Clause N hereof by the Twenty-eighth Assignment of Availability Agreement,(xii) the obligations under the 1996 Amended and Restated Reimbursement Agreement as referred to in Whereas Clause O hereof by theThirty-second Assignment of Availability Agreement, and (xiii) the obligations under the 1999 Amended and Restated ReimbursementAgreement as referred to in Whereas Clause P hereof by the Thirty-third Assignment of Availability Agreement, and shall be entitled tosecure the interest and premium, if any, on, and the principal of, other Indebtedness for Borrowed Money of the Company issued by theCompany to any person (except Entergy or any affiliate of Entergy) to finance t he cost of the Project (including, without limitation,Indebtedness outstanding under the Indenture) or to refund (including any successive refundings) any such Indebtedness (including suchIndebtedness now outstanding) issued for such purpose, the incurrence of which Indebtedness is at the time permitted by the Indenture(herein, together with such Indebtedness now outstanding, called "Additional Indebtedness"), by entering into an assignment of availabilityagreement, consent and agreement including, without limitation, the First through Twenty-seventh Assignments of Availability Agreement(each being hereinafter called an "Additional Assignment") with the holders of such Additional Indebtedness or representatives of or trusteesfor such holders, or both, as the case may be (herein called an "Additional Assignee"). Each Additional Assignment hereafter entered intoshall be substantially in the form of this Assignment, except that there shall be substituted in such Additional Assignment appropriatereferences to the Additional Indebtedness secured thereby, the applicable Additional Assignee and the agreement or instrument under whichsuch Additional Indebtedness is issued in lieu of the references herein to the Reimbursement Obligations, the LOC Banks, theReimbursement Agreement and the New LOCs, respectively, and such Additional Assignment may contain such other provisions as are notinconsistent with this Assignment and do not adversely affect the rights hereunder of the LOC Banks.

(c) Notwithstanding any provision of this Assignment to the contrary, or any priority in time of creation, attachment or perfection of asecurity interest, pledge or lien by the Administrating Bank, or any provision of or filing or recording under the Uniform Commercial Codeor any other applicable law of any jurisdiction, the Administrating Bank agrees that the claims of the Administrating Bank hereunder withrespect to the Availability Agreement and any security interest, pledge or lien in favor of the Administrating Bank now or hereafter existingin and to the Collateral shall rank pari passu with the claims of each Additional Assignee under the corresponding provisions of theAdditional Assignment to which it is a party with respect to the Availability Agreement and any security interest, pledge or lien in favor ofsuch Additional Assignee under such Additional Assignment now or hereafter existing in and to the Collateral, irrespective of the time ortimes at which prior, con current or subsequent Additional Assignments are entered into in accordance with Section 1.2(b) hereof.

1.3. Payments to the Administrating Bank. The Company agrees that, if and whenever it shall make a demand to a System OperatingCompany for any payment pursuant to Section 4 of the Availability Agreement or advances pursuant to Section 2.2(b) hereof with respect toUnit 1 or Unit 2, it will separately identify the respective portions of such payment or advance, if any, required for (i) the payment ofObligations Secured Hereby and (ii) the payment of any other amounts then due and payable in respect of Additional Indebtedness andinstruct such System Operating Company (subject to the provisions of Section 1.4 hereof) to pay or cause to be paid the amount so identifiedas required for the payment of Obligations Secured Hereby directly to the Administrating Bank. Any payments made by any SystemOperating Company pursuant to Section 4 of the Availability Agreement or advances pursuant to Section 2.2(b) hereof with respect to Unit 1or Unit 2 shall, to the exte nt necessary to satisfy in full the assignment set forth in Section 1.1 of this Assignment and the correspondingassignments set forth in the Additional Assignments, be made pro rata in proportion to the respective amounts secured by, and then due andowing under, such assignments.

1.4. Payments to the Company. Notwithstanding the provisions of Sections 1.1 and 1.3, unless and until the Administrating Bank shall havegiven written notice to the System Operating Companies of the occurrence and continuance of any Reimbursement Event of Default orPrepayment Event, all moneys paid or to be paid to the Company pursuant to Section 4 of the Availability Agreement or advanced pursuantto Section 2.2(b) hereof with respect to Unit 1 and Unit 2 shall be paid or advanced directly to the Company and the Company need notseparately identify the respective portions of payments or advances as provided in Section 1.3 hereof, provided that notice as to the amount ofany such payments or advances shall be given by the Company to the Administrating Bank simultaneously with the demand by the Companyfor any such payments or advances. If the Administrating Bank shall have duly notified the System Operating Companies of the occurrenceof any such Reimbursement E vent of Default or Prepayment Event, such payments or advances shall be made in the manner and in theamounts specified in Section 1.3 hereof until the Administrating Bank shall by further notice to the System Operating Companies givepermission that all such payments or advances may be made again to the Company, such permission being subject to revocation by asubsequent notice pursuant to the first sentence of this Section 1.4. The Administrating Bank shall give such permission if no suchReimbursement Event of Default or Prepayment Event continues to exist.

1.5. Definitions. For the purposes of this Assignment, the following terms shall have the following meanings:

(a) the term "Indebtedness for Borrowed Money" shall mean the principal amount of all indebtedness for borrowed money, secured orunsecured, of the Company then outstanding and shall include, without limitation, the principal amount of all bonds issued by agovernmental or industrial development agency or authority in connection with an industrial development revenue bond financing ofpollution control facilities constituting part of the Project; and

(b) the term "Subordinated Indebtedness of the Company" shall mean indebtedness marked on the books of the Company as subordinated andjunior in right of payment to the Obligations Secured Hereby (as defined in Section 1.1 hereof) to the extent and in the manner set forthbelow:

(i) if there shall occur a Reimbursement Event of Default or Prepayment Event, then so long as such ReimbursementEvent of Default or Prepayment Event shall be continuing and shall not have been cured or waived, or unless anduntil all the Obligations Secured Hereby shall have been paid in full in cash, no payment of principal, premium, if any,or interest shall be made upon Subordinated Indebtedness of the Company; and

(ii) in the event of any insolvency, bankruptcy, liquidation, reorganization or other similar proceedings, or anyreceivership proceedings in connection therewith, relative to the Company or its creditors or its property, and in theevent of any proceedings for voluntary liquidation, dissolution or other winding up of the Company, whether or notinvolving insolvency or bankruptcy proceedings, then the Obligations Secured Hereby shall first be paid in full incash, or payment thereof shall have been provided for, before any payment on account of principal, premium, if any,or interest is made upon Subordinated Indebtedness of the Company.

ARTICLE II

CONSENT TO ASSIGNMENT BY THE SYSTEM OPERATINGCOMPANIES AND OTHER AGREEMENTS

2.1. Consent to Assignment by the System Operating Companies.

(a) Each System Operating Company hereby consents to the assignment under Article I and agrees with the Administrating Bank to makepayments or advances to the Administrating Bank in the amounts and in the manner specified in Section 1.3 at the Administrating Bank'saddress as set forth in Section 6.1 hereof.

(b) Subject to the provisions of Section 4 of the Availability Agreement and Section 2.2(g) hereof, each System Operating Company agreesthat all payments or advances made to the Administrating Bank or to the Company as contemplated by Sections 1.3 and 1.4 hereof shall befinal as between such System Operating Company and the LOC Banks or the Company, as the case may be, and that it will not seek torecover from any LOC Bank for any reason whatsoever any moneys paid or advanced to the Administrating Bank by virtue of thisAssignment, but the finality of any such payment or advance shall not prevent the recovery of any overpayments or mistaken payments orexcess advances or mistaken advances which may be made by such System Operating Company unless a Reimbursement Event of Default orPrepayment Event has occurred and is continuing, in which case any such overpayment or mistaken payment or excess advances or mistakenadvances shall not be recoverable but shall constitute Subordinated Inde btedness of the Company to such System Operating Company.

2.2. Other Agreements. Anything in the Availability Agreement to the contrary notwithstanding, it is hereby agreed as follows:

(a) Regardless of whether any person or persons (other than the System Operating Companies) shall become a Party or Parties (as suchterms are defined in the Availability Agreement) to the Availability Agreement, the System Operating Companies shall at all times beobligated to make the payments required pursuant to Section 4 of the Availability Agreement and to make advances pursuant to Section2.2(b) hereof with respect to Unit 1 and Unit 2 to the same extent as if the System Operating Companies were the only Parties to the

Availability Agreement, except to the extent and only to the extent that such payments or advances are actually made by such person orpersons. In the event that any such person shall become a Party to the Availability Agreement, the Company and the System OperatingCompanies shall cause such person, at the time when such person becomes a Party to the Availability Agreement, to consent by writteninstrument to the terms and provisions of this Assignment, and there upon such person shall be bound by all of the terms and provisions ofthis Assignment (other than the provisions of the preceding sentence) to the same extent as if named a System Operating Company herein. Acopy of such written instrument, in form and substance satisfactory to the Administrating Bank, shall promptly be delivered to theAdministrating Bank together with an opinion of counsel to the effect that such instrument complies with the requirements hereof andconstitutes a valid, legally binding obligation of such person.

(b) In the event and to the extent that any action by any governmental regulatory authority, including, without limitation, the Federal EnergyRegulatory Commission or any successor thereto, shall have the effect of prohibiting the System Operating Companies from making anypayments which would otherwise be required pursuant to Section 4 of the Availability Agreement (as supplemented hereby) with respect toUnit 1 and Unit 2, the System Operating Companies shall make advances to the Company at the same time, and in the same amounts, as suchprohibited payments and all such advances shall constitute Subordinated Indebtedness of the Company.

(c) Each System Operating Company agrees that (i) all Indebtedness for Borrowed Money of the Company to such System OperatingCompany and all amounts paid by such System Operating Company pursuant to Section 4 of the Availability Agreement or advancedpursuant to Section 2.2(b) hereof shall constitute Subordinated Indebtedness of the Company and (ii) no such Subordinated Indebtedness ofthe Company shall be transferred or assigned (including by way of security) to any person (other than to a successor of such SystemOperating Company by way of merger, consolidation or the acquisition by such person of all or substantially all of such System OperatingCompany's assets). The Company agrees that it shall duly record all Subordinated Indebtedness of the Company as such on its books.

(d) The obligations of each System Operating Company to make the payments to the Company pursuant to the provisions of Section 4 of theAvailability Agreement and the advances pursuant to Section 2.2(b) hereof with respect to Unit 1 and Unit 2 having heretofore beenauthorized by the SEC Orders (and no other authorization by any governmental regulatory authority being required other than, with respectto the payments pursuant to the provisions of Section 4 of the Availability Agreement, appropriate orders, or the taking of other action, bythe Federal Energy Regulatory Commission or any successor thereto as to specific terms and provisions under which power and energyassociated therewith available at the Project shall be made available by the Company to the System Operating Companies and pursuant towhich the System Operating Companies shall agree to pay the Company for the right to receive such power and the energy associatedtherewith), each System Operating Company agrees that its d uty to perform such obligations shall be absolute and unconditional, (a)whether or not such System Operating Company shall have received all authorizations of governmental regulatory authorities necessary atthe time to permit such System Operating Company to perform its other duties and obligations hereunder, under the Availability Agreementor under the System Agreement (as defined in the Availability Agreement), (b) whether or not the Company shall have received allauthorizations of governmental regulatory authorities necessary at the time to permit the Company to perform its duties and obligationshereunder, under the Availability Agreement or under the System Agreement, (c) whether or not any authorizations referred to in theforegoing clauses (a) and (b) continue, at the time, in effect, (d) whether or not, at any time in question, the Company shall have performed itsduties and obligations hereunder, under the Availability Agreement or under the System Agreement, (e) whether or not the System Agreement shall, from time to time, be amended, modified or supplemented or shall be canceled or terminated or such System Operating Companyshall have withdrawn therefrom, (f) whether or not the Project shall be maintained in commercial operation, energy from the Project is beingproduced or delivered or is available (including, without limitation, delivery or availability to such System Operating Company), anabandonment of the Project shall have occurred or the Project shall be in whole or in part destroyed or taken, for any reason whatsoever, (g)whether or not the Company shall be solvent, (h) whether or not the Company or such System Operating Company shall continue to besubsidiary companies of Entergy (as said term is defined in Section 2(a)(8) of the Public Utility Holding Company Act of 1935), (i) regardlessof any event of force majeure, and (j) regardless of any other circumstance, happening, condition or event whatsoever, whether or not similarto any of the foregoing.

(e) In the event that Entergy shall cease to own a majority of the common stock of any System Operating Company and such lower ownershippercentage has been permitted pursuant to the consent of the LOC Banks, the obligations of such System Operating Company hereunder andunder the Availability Agreement shall not be increased by an amendment to or modification of the terms and provisions of theReimbursement Agreement unless such System Operating Company shall have consented in writing to such amendment or modification.

(f) The obligations of each System Operating Company under Section 4 of the Availability Agreement and Section 2.2(b) hereof to make thepayments or advances specified therein or herein with respect to Unit 1 and Unit 2 to the Company shall not be subject to any abatement,reduction, limitation, impairment, termination, set-off, defense, counterclaim or recoupment whatsoever or any right to any thereof(including, but not limited to, abatements, reductions, limitations, impairments, terminations, set-offs, defenses, counterclaims andrecoupments for or on account of any past, present or future indebtedness of the Company to such System Operating Company or any claimby such System Operating Company against the Company, whether or not arising hereunder, under the Availability Agreement or under theSystem Agreement and whether or not arising out of any action or nonaction on the part of the Company or any LOC Bank, including anydisposition of the Project or any part thereof pursuant to the Indenture, requirements of governmental authorities, actions of judicialreceivers or trustees or otherwise and whether or not arising from willful or negligent acts or omissions). The foregoing, however, shall not,subject to the provisions of paragraph (c) of this Section 2.2, affect in any other way any rights and remedies of such System OperatingCompany with respect to any amounts owed to such System Operating Company by the Company or any such claim by such SystemOperating Company against the Company. The obligations and liabilities of each System Operating Company hereunder and under theAvailability Agreement shall not be released, discharged or in any way affected by any reorganization, arrangement, compromise,composition or plan affecting the Company or any change, waiver, extension, indulgence or other action or omission in respect of anyindebtedness or obligation of the Company or such System Operating Company, whether or not the Company or such System OperatingCompany shall have had any n otice or knowledge of any of the foregoing. Neither failure nor delay by the Company or any LOC Bank toexercise any right or remedy provided herein or by statute or at law or in equity shall operate as a waiver thereof, nor shall any single orpartial exercise of any such right or remedy preclude any other or further exercise thereof, or the exercise of any other right or remedy. EachSystem Operating Company also hereby irrevocably waives, to the extent that it may do so under applicable law, any defense based on theadequacy of a remedy at law which may be asserted as a bar to the remedy of specific performance in any action brought against such SystemOperating Company for specific performance of this Assignment or the Availability Agreement by the Company or the Administrating Bankor for its benefit by a receiver or trustee appointed for the Company or in respect of all or a substantial part of the Company's assets underthe bankruptcy or insolvency law of any jurisdiction to which the Company is or its assets are subject. Anything in this Section 2.2(f) to thecontrary notwithstanding, no System Operating Company shall be precluded from asserting as a defense against any claim made against suchSystem Operating Company upon any of its obligations hereunder and under the Availability Agreement that it has fully performed suchobligations in accordance with the terms of this Assignment and the Availability Agreement.

(g) Each System Operating Company shall, subject to the provisions of Section 2.2(c) hereof, be proportionately subrogated to all rights of theAdministrating Bank against the Company in respect of any amounts paid or advanced by such System Operating Company pursuant to theprovisions of this Assignment and the Availability Agreement and applied to the payment of the Obligations Secured Hereby. The

Administrating Bank agrees that it will not deal with the Company in such a manner as to prejudice such rights of any System OperatingCompany.

ARTICLE III

TERM

Except as otherwise provided in Section 26 of the Reimbursement Agreement, this Assignment shall remain in full force and effect until, andshall terminate and be of no further force and effect after, all Obligations Secured Hereby shall have been paid in full in cash, provided thatthis Assignment shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the ObligationsSecured Hereby is rescinded or must otherwise be returned by the Administrating Bank or any other LOC Bank upon the insolvency,bankruptcy or reorganization of the Company, any System Operating Company or otherwise, all as though such payment had not beenmade. It is agreed that all the covenants and undertakings on the part of the System Operating Companies and the Company set forth in thisAssignment are exclusively for the benefit of, and may be enforced only by, the LOC Banks or for their benefit by a receiver or trustee for theCompany or in respect of all or a substantial part of its assets under the bankruptcy or insolvency law of any jurisdiction to which theCompany is or its assets are subject.

ARTICLE IV

ASSIGNMENT

Neither this Assignment nor the Availability Agreement nor any interest herein or therein may be assigned, transferred or encumbered byany of the parties hereto or thereto, except transfer or assignment by any LOC Bank to its successor or assignee in accordance with theReimbursement Agreement, except as otherwise provided in Article I hereof and except that

(i) in the event that any System Operating Company shall consolidate with or merge with or into another corporationor shall transfer to another corporation or other person all or substantially all of its assets, this Assignment and theAvailability Agreement shall be transferred by such System Operating Company to and shall be binding upon thecorporation resulting from such consolidation or merger or the corporation or other person to which such transfer ismade and, as a condition to such consolidation, merger or other transfer, such corporation or other person shalldeliver to the Company and the Administrating Bank a written assumption, in form and substance satisfactory to theAdministrating Bank, of such System Operating Company's obligations and liabilities under this Assignment and theAvailability Agreement and an opinion of counsel to the effect that such instrument complies with the requirementshereof and thereof and constitutes a valid, legally binding and enforceable obligat ion of such corporation or otherperson; and

(ii) in the event that the Company shall consolidate with or merge with or into another corporation or shall transfer toanother corporation or other person all or substantially all of its assets, this Assignment and the AvailabilityAgreement shall be transferred by the Company to and shall be binding upon the corporation resulting from suchconsolidation or merger or the corporation or other person to which such transfer is made and, as a condition to suchconsolidation, merger or other transfer, such corporation or other person shall deliver to the Administrating Bank awritten assumption, in form and substance satisfactory to the Administrating Bank, of the Company's obligations andliabilities under this Assignment and the Availability Agreement and an opinion of counsel to the effect that suchinstrument complies with the requirements hereof and thereof and constitutes a valid, legally binding and enforceableobligation of such corporation or other person.

ARTICLE V

AMENDMENTS

5.1. Restrictions on Amendments. Neither this Assignment nor the Availability Agreement may be amended, waived, modified, discharged orotherwise changed orally. This Assignment and the Availability Agreement may be amended, waived, modified, discharged or otherwisechanged only by a written instrument which has been signed by all the parties hereto, in the case of this Assignment, or by the personsspecified in Section 11 of the Availability Agreement, in the case of the Availability Agreement, and which has been approved in writing bythe LOC Banks or which does not materially adversely affect the rights of the LOC Banks.

5.2. The Administrating Bank's Execution. The Administrating Bank shall, at the request of the Company, execute any instrument amending,waiving, modifying, discharging or otherwise changing this Assignment, or any consent to the execution of any instrument amending,waiving, modifying, discharging or otherwise changing the Availability Agreement (a) as to which the Administrating Bank shall havereceived an opinion of counsel to the effect that such instrument has been duly authorized by each person executing the same and is permittedby the provisions of Section 5.1 hereof and that this Assignment, or the Availability Agreement, as the case may be, as amended, waived,modified, discharged or otherwise changed by such instrument, constitutes valid, legally binding and enforceable obligations of the Companyand each of the System Operating Companies, and (b) which shall have been executed by the Company and each of the System OperatingCompanies. The Administrating Bank sha ll be fully protected in relying upon the aforesaid opinion.

ARTICLE VI

NOTICES

6.1. Notices, etc., in Writing. All notices, consents, requests and other documents authorized or permitted to be given pursuant to thisAssignment shall be given in writing and either personally served on the party to whom (or an officer of a corporate party) it is given ormailed by registered or certified first-class mail, postage prepaid, or sent by telex or telegram, addressed as follows:

If to System Energy Resources, Inc., to:

Box 61000New Orleans, LA 70113

Attention: Treasurer

If to Entergy Arkansas, Inc., to:

639 Loyola AvenueNew Orleans, Louisiana 70113


If to Entergy Louisiana, Inc., to:



If to Entergy Mississippi, Inc., to:



If to Entergy New Orleans, Inc., to:



If to the Administrating Bank, to:

Union Bank of California, N.A.Energy Capital Services

445 South Figueroa Street, 15th FloorLos Angeles, California 90071

Attention.: David Musicant

with copies to each other party.

6.2. Delivery, etc. Notices, consents, requests and other documents shall be deemed given or served or submitted when delivered or, if mailedas provided in Section 6.1 hereof, on the third day after the day of mailing, or if sent by telex or telegram, 24 hours after the time of dispatch.A party may change its address for the receipt of notices, consents, requests and other documents at any time by giving notice thereof to theother parties. Any notice, consent, request or other document given hereunder may be signed on behalf of any party by any duly authorizedrepresentative of that party.

ARTICLE VII

ENFORCEMENT

7.1. Enforcement Action. At any time when a Reimbursement Event of Default or Prepayment Event under the Reimbursement Agreementhas occurred and is continuing, the Administrating Bank may proceed, either in its own name or as agent or otherwise, to protect and enforceits rights, those of the other LOC Banks and those of the Company under this Assignment and the Availability Agreement by suit in equity,action at law or other appropriate proceedings, whether for the specific performance of any covenant or agreement contained herein or in theAvailability Agreement or otherwise, and whether or not the Company shall have complied with any of the provisions hereof or thereof orproceeded to take any action authorized or permitted under applicable law. Each and every remedy of the LOC Banks shall, to the extentpermitted by law, be cumulative and shall be in addition to any other remedy given hereunder or under the Reimbursement Agreement ornow or hereafter existing at law or in equity or by statute.

7.2. Attorney-in-Fact. The Company hereby constitutes the Administrating Bank its true and lawful attorney, irrevocably, with full power (insuch attorney's name or otherwise), at any time when a Reimbursement Event of Default or Prepayment Event under the ReimbursementAgreement has occurred and is continuing, to enforce any of the obligations contained herein or in the Availability Agreement or to take anyaction or institute any proceedings which to the Administrating Bank may seem necessary or advisable in the premises.

ARTICLE VIII

SEVERABILITY; COUNTERPARTS

If any provision or provisions of this Assignment shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability ofthe remaining provisions shall not in any way be affected or impaired thereby.

This Assignment may be signed in two or more counterparts, each of which shall constitute an original but all of which when taken togethershall constitute but one contract, and shall become effective when it shall have been executed by all parties hereto and when theAdministrating Bank shall have received copies hereof which, when taken together, bear signatures of all parties hereto. Delivery of anexecuted counterpart of a signature page of this Assignment by facsimile transmission shall be as effective as delivery of a manually executedcounterpart of this Assignment.

ARTICLE IX

GOVERNING LAW

This Assignment and, so long as this Assignment shall be in effect, the Availability Agreement, shall be governed by and construed inaccordance with the laws of the State of New York.

ARTICLE X

SUCCESSION

Subject to Article IV hereof, this Assignment and the Availability Agreement shall be binding upon and inure to the benefit of the partieshereto and their respective successors and assigns, but no assignment hereof, or of the Availability Agreement, or of any right to any fundsdue or to become due under this Assignment or the Availability Agreement shall in any event relieve the Company or any System OperatingCompany of their respective obligations hereunder.

IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be duly executed by their respective officers thereunto dulyauthorized as of the day and year first above written.

ENTERGY ARKANSAS, INC.ENTERGY LOUISIANA, INC.ENTERGY MISSISSIPPI, INC.

ENTERGY NEW ORLEANS, INC.SYSTEM ENTERGY RESOURCES, INC.,

By

Name: Steven C. McNealTitle: Vice President and Treasurer

UNION BANK OF CALIFORNIA, N.A.,as Administrating Bank

By

Name: Title:

Exhibit 10(a)38

[EXECUTION COPY]

THIRTY-FIFTH SUPPLEMENTARY CAPITAL FUNDS AGREEMENT AND ASSIGNMENT

This Thirty-fifth Supplementary Capital Funds Agreement and Assignment (hereinafter referred to as this "Agreement"), dated as ofDecember 22, 2003, is made by and among Entergy Corporation ("Entergy"), System Energy Resources, Inc. (the "Company") and UnionBank of California, N.A., as Administrating Bank (in such capacity, the "Administrating Bank") under the Reimbursement Agreement, datedas of December 22, 2003 (as amended, restated, supplemented or otherwise modified from time to time, the "Reimbursement Agreement"),among the Company, Union Bank of California, N.A., as Funding Bank (in such capacity, the "Funding Bank"), the Administrating Bank,KeyBank National Association, as Syndication Agent, Banc One Capital Markets, Inc., as Documentation Agent, and the banks namedtherein (the "P articipating Banks"). Unless otherwise defined herein, capitalized terms used herein shall have the meaning assigned to suchterms in the Reimbursement Agreement.

WHEREAS:

A. Entergy and the Company are parties to a Capital Funds Agreement dated as of June 21, 1974, as amended by a First Amendment theretodated June 1, 1989 (the "Capital Funds Agreement").

B. Entergy owns all of the outstanding common stock of the Company, and the Company has a 90% undivided ownership and leaseholdinterest in Unit 1 of the Grand Gulf Nuclear Electric Station project (more fully described in the "Indenture" hereinafter referred to).

C. Prior hereto (i) the Company, Manufacturers Hanover Trust Company, as agent for certain banks (the "Domestic Agent"), and said banksentered into an Amended and Restated Bank Loan Agreement dated as of June 30, 1977 (the "Amended and Restated Agreement"), the FirstAmendment thereto, dated as of March 20, 1980 (the "First Bank Loan Amendment"), the Second Amended and Restated Bank LoanAgreement dated as of June 15, 1981, as amended by the First Amendment dated as of February 5, 1982 (as so amended, the "SecondAmended and Restated Bank Loan Agreement"), and the Second Amendment of the Second Amended and Restated Bank Loan Agreement,dated as of June 30, 1983, as further amended by the Third Amendment thereto dated as of December 30, 1983 and the Fourth Amendmentthereto dated as of June 28, 1984 (as so further amended, the "Second Bank Loan Second Amendment"); (ii) the banks party to the Amendedand Restated Agreement made loans to the Company in the aggregate principal amount of $565,000,000 and pursuant to the FirstSupplementary Capital Funds Agreement and Assignment (substantially in the form of this Agreement), dated as of June 30, 1977, betweenEntergy, the Company and the Domestic Agent (the "First Supplementary Capital Funds Agreement"), the Company and Entergysupplemented their undertakings under the Capital Funds Agreement for the benefit of the Domestic Agent and such banks; (iii) the FirstBank Loan Amendment, among other things, increased the amount of the loans made by the banks party thereto to $808,000,000 andpursuant to the Fourth Supplementary Capital Funds Agreement and Assignment (also substantially in the form of this Agreement), dated asof March 20, 1980 (the "Fourth Supplementary Capital Funds Agreement"), Entergy and the Company further supplemented theirundertakings under the Capital Funds Ag reement for the Domestic Agent and the banks under the Amended and Restated Agreement asamended by the First Bank Loan Agreement; (iv) the Second Amended and Restated Bank Loan Agreement provided, among other things,for (a) the making of revolving credit loans by the banks named therein to the Company from time to time in an aggregate amount not inexcess of $1,311,000,000 at any one time outstanding, and (b) the making of a term loan by said banks to the Company in an aggregateamount not to exceed $1,311,000,000, and, pursuant to the Fifth Supplementary Capital Funds Agreement and Assignment (also substantiallyin the form of this Agreement), dated as of June 15, 1981 (the "Fifth Supplementary Capital Funds Agreement"), Entergy and the Companyfurther supplemented their undertakings under the Capital Funds Agreement for the Domestic Agent and the banks under the SecondAmended and Restated Bank Loan Agreement; and (v) the Second Bank Loan Second Amendment, among other thing s, increased theamount of the loans to be made by the banks party thereto to $1,711,000,000 and pursuant to the Eighth Supplementary Capital FundsAgreement and Assignment (also substantially in the form of this Agreement), dated as of June 30, 1983 (the "Eighth Supplementary CapitalFunds Agreement"), Entergy and the Company further supplemented their undertakings under the Capital Funds Agreement for theDomestic Agent and the banks under the Second Amended and Restated Bank Loan Agreement, as amended by the Second Bank LoanSecond Amendment.

D. Prior hereto (i) Entergy, the Company, and United States Trust Company of New York and Malcolm J. Hood (Gerard F. Ganey,successor), each as trustee (collectively, the "Trustees") for the holders of $400,000,000 aggregate principal amount of the Company's FirstMortgage Bonds, 9.25% Series due 1989 (the "First Series Bonds") issued under a Mortgage and Deed of Trust dated as of June 15, 1977between the Company and the Trustees (the "Mortgage"), as supplemented by a First Supplemental Indenture, dated as of June 15, 1977,between the Company and the Trustees (the Mortgage, as so supplemented and as supplemented by a Second Supplemental Indenture datedas of January 1, 1980, a Third Supplemental Indenture dated as of June 15, 1981, a Fourth Supplemental Indenture dated as of June 1, 1984,a Fifth Supplemental Indenture dated as of December 1, 1984, a Sixth Supplemental Indenture dated as of May 1, 1985, a Sevent hSupplemental Indenture dated as of June 15, 1985, an Eighth Supplemental Indenture dated as of May 1, 1986, a Ninth SupplementalIndenture dated as of May 1, 1986, a Tenth Supplemental Indenture dated as of September 1, 1986, an Eleventh Supplemental Indenturedated as of September 1, 1986, a Twelfth Supplemental Indenture dated as of September 1, 1986, a Thirteenth Supplemental Indenture datedas of November 15, 1987, a Fourteenth Supplemental Indenture dated as of December 1, 1987, a Fifteenth Supplemental Indenture dated asof July 1, 1992, a Sixteenth Supplemental Indenture dated as of October 1, 1992, a Seventeenth Supplemental Indenture dated as of October1, 1992, and an Eighteenth Supplemental Indenture dated as of April 1, 1993, and as the same may from time to time hereafter be amendedand supplemented in accordance with its terms, being hereinafter called the "Indenture"), entered into the Second Supplementary CapitalFunds Agreement and Assignment dated as of June 30, 19 77 (the "Second Supplementary Capital Funds Agreement") (substantially in theform of this Agreement) to secure the First Series Bonds; (ii) Entergy, the Company and the Trustees, as trustees for the holders of$98,500,000 aggregate principal amount of the Company's First Mortgage Bonds, 12.50% Series due 2000 (the "Second Series Bonds") issuedunder the Mortgage, as supplemented by a Second Supplemental Indenture, dated as of January 1, 1980, between the Company and theTrustees, entered into the Third Supplementary Capital Funds Agreement and Assignment dated as of January 1, 1980 (the "ThirdSupplementary Capital Funds Agreement") (also substantially in the form of this Agreement) to secure the Second Series Bonds; (iii) Entergy,the Company and the Trustees, as trustees for the holders of $300,000,000 aggregate principal amount of the Company's First MortgageBonds, 16% Series due 2000 (the "Third Series Bonds" ;) issued under the Mortgage, as supplemented by a Fifth Supplemental Indenture,dated as of December 1, 1984, between the Company and the Trustees, entered into the Eleventh Supplementary Capital Funds Agreementand Assignment dated as of December 1, 1984 (the "Eleventh Supplementary Capital Funds Agreement") (also substantially in the form of thisAgreement) to secure the Third Series Bonds; (iv) Entergy, the Company and the Trustees, as trustees for the holders of $100,000,000aggregate principal amount of the Company's First Mortgage Bonds, 15.375% Series due 2000 (the "Fourth Series Bonds") issued under the

Mortgage, as supplemented by a Sixth Supplemental Indenture, dated as of May 1, 1985, between the Company and the Trustees, enteredinto the Thirteenth Supplementary Capital Funds Agreement and Assignment dated as of May 1, 1985 (the "Thirteenth SupplementaryCapital Funds Agreement") (also substantially in the form of this Agree ment) to secure the Fourth Series Bonds; (v) Entergy, the Companyand the Trustees, as trustees for the holders of $300,000,000 aggregate principal amount of the Company's First Mortgage Bonds, 11% Seriesdue 2000 (the "Seventh Series Bonds") issued under the Mortgage, as supplemented by a Ninth Supplemental Indenture, dated as of May 1,1986, between the Company and the Trustees, entered into the Sixteenth Supplementary Capital Funds Agreement and Assignment dated asof May 1, 1986 (the "Sixteenth Supplementary Capital Funds Agreement") (also substantially in the form of this Agreement) to secure theSeventh Series Bonds; (vi) Entergy, the Company and the Trustees, as trustees for the holders of $300,000,000 aggregate principal amount ofthe Company's First Mortgage Bonds, 9 7/8% Series due 1991 (the "Eighth Series Bonds") issued under the Mortgage, as supplemented by aTenth Supplemental Indenture, dated as of September 1, 1986, betwee n the Company and the Trustees, entered into the SeventeenthSupplementary Capital Funds Agreement and Assignment dated as of September 1, 1986 (the "Seventeenth Supplementary Capital FundsAgreement") (also substantially in the form of this Agreement) to secure the Eighth Series Bonds; (vii) Entergy, the Company and theTrustees, as trustees for the holders of $250,000,000 aggregate principal amount of the Company's First Mortgage Bonds, 10 1/2% Series due1996 (the "Ninth Series Bonds") issued under the Mortgage, as supplemented by an Eleventh Supplemental Indenture, dated as of September1, 1986, between the Company and the Trustees, entered into the Eighteenth Supplementary Capital Funds Agreement and Assignment datedas of September 1, 1986 (the "Eighteenth Supplementary Capital Funds Agreement") (also substantially in the form of this Agreement) tosecure the Ninth Series Bonds; (viii) Entergy, the Company and the Trustees, as trustees for the holders of $200,000,000 aggregate principalamount of the Company's First Mortgage Bonds, 11 3/8% Series due 2016 (the "Tenth Series Bonds") issued under the Mortgage, assupplemented by a Twelfth Supplemental Indenture, dated as of September 1, 1986, between the Company and the Trustees, entered into theNineteenth Supplementary Capital Funds Agreement and Assignment dated as of September 1, 1986 (the "Nineteenth Supplementary CapitalFunds Agreement") (also substantially in the form of this Agreement) to secure the Tenth Series Bonds; (ix) Entergy, the Company and theTrustees, as trustees for the holders of $200,000,000 aggregate principal amount of the Company's First Mortgage Bonds, 14% Series due1994 (the "Eleventh Series Bonds") issued under the Mortgage, as supplemented by a Thirteenth Supplemental Indenture, dated as ofNovember 15, 1987, between the Company and the Trustees, entered into the Twe ntieth Supplementary Capital Funds Agreement andAssignment dated as of November 15, 1987 (the "Twentieth Supplementary Capital Funds Agreement") (also substantially in the form of thisAgreement) to secure the Eleventh Series Bonds; (x) Entergy, the Company and the Trustees, as trustees for the holders of $100,000,000aggregate principal amount of the Company's First Mortgage Bonds, 14.34% Series due 1992 (the "Twelfth Series Bonds") issued under theMortgage, as supplemented by a Fourteenth Supplemental Indenture, dated as of December l, 1987, between the Company and the Trustees,entered into the Twenty-first Supplementary Capital Funds Agreement and Assignment dated as of December 1, 1987 (the "Twenty-firstSupplementary Capital Funds Agreement") (also substantially in the form of this Agreement) to secure the Twelfth Series Bonds; (xi) Entergy,the Company and the Trustees, as trustees for the holders of $45,000,000 aggregate princi pal amount of the Company's First MortgageBonds, 8.40% Series due 2002 (the "Thirteenth Series Bonds") issued under the Mortgage, as supplemented by a Fifteenth SupplementalIndenture, dated as of July 1, 1992, between the Company and the Trustees, entered into the Twenty-fourth Supplementary Capital FundsAgreement and Assignment dated as of July 1, 1992 (the "Twenty-fourth Supplementary Capital Funds Agreement") (also substantially in theform of this Agreement) to secure the Thirteenth Series Bonds; (xii) Entergy, the Company and the Trustees, as trustees for the holders of$105,000,000 aggregate principal amount of the Company's First Mortgage Bonds, 6.12% Series due 1995 (the "Fourteenth Series Bonds")issued under the Mortgage, as supplemented by a Sixteenth Supplemental Indenture, dated as of October 1, 1992, between the Company andthe Trustees, entered into the Twenty-fifth Supplementary Capital Funds Agreement and Assignment d ated as of October 1, 1992 (the"Twenty-fifth Supplementary Capital Funds Agreement") (also substantially in the form of this Agreement) to secure the Fourteenth SeriesBonds; (xiii) Entergy, the Company and the Trustees, as trustees for the holders of $70,000,000 aggregate principal amount of the Company'sFirst Mortgage Bonds, 8.25% Series due 2002 (the "Fifteenth Series Bonds") issued under the Mortgage, as supplemented by a SeventeenthSupplemental Indenture, dated as of October 1, 1992, between the Company and the Trustees, entered into the Twenty-sixth SupplementaryCapital Funds Agreement and Assignment dated as of October 1, 1992 (the "Twenty-sixth Supplementary Capital Funds Agreement") (alsosubstantially in the form of this Agreement) to secure the Fifteenth Series Bonds; (xiv) Entergy, the Company and the Trustees, as trustees forthe holders of $60,000,000 aggregate principal amount of the Company's First Mortgage Bon ds, 6% Series due 1998 (the "Sixteenth SeriesBonds") issued under the Mortgage, as supplemented by an Eighteenth Supplemental Indenture, dated as of April 1, 1993, between theCompany and the Trustees, entered into the Twenty-seventh Supplementary Capital Funds Agreement and Assignment dated as of April 1,1993 (the "Twenty-seventh Supplementary Capital Funds Agreement") (also substantially in the form of this Agreement) to secure theSixteenth Series Bonds; (xv) Entergy, the Company and the Trustees, as trustees for the holders of $60,000,000 aggregate principal amount ofthe Company's First Mortgage Bonds, 7.58% Series due 1999 (the "Seventeenth Series Bonds") issued under the Mortgage, as supplementedby a Nineteenth Supplemental Indenture, dated as of April 1, 1994, between the Company and the Trustees, entered into the Twenty-ninthSupplementary Capital Funds Agreement and Assignment dated as of April 1, 1994 (the "Twent y-ninth Supplementary Capital FundsAgreement") (also substantially in the form of this Agreement) to secure the Seventeenth Series Bonds; (xvi) Entergy, the Company and theTrustees, as trustees for the holders of $100,000,000 aggregate principal amount of the Company's First Mortgage Bonds, 7.28% Series due1999 (the "Eighteenth Series Bonds") issued under the Mortgage, as supplemented by a Twentieth Supplemental Indenture, dated as ofAugust 1, 1996, between the Company and the Trustees, entered into the Thirtieth Supplementary Capital Funds Agreement and Assignmentdated as of August 1, 1996 (the "Thirtieth Supplementary Capital Funds Agreement") (also substantially in the form of this Agreement) tosecure the Eighteenth Series Bonds; (xvii) Entergy, the Company and the Trustees, as trustees for the holders of $135,000,000 aggregateprincipal amount of the Company's First Mortgage Bonds, 7.7% Series due 2000 (the "Nineteenth Series B onds") issued under the Mortgage,as supplemented by a Twenty-first Supplemental Indenture, dated as of August 1, 1996, between the Company and the Trustees, entered intothe Thirty-first Supplementary Capital Funds Agreement and Assignment dated as of August 1, 1996 (the "Thirty-first Supplementary CapitalFunds Agreement") (also substantially in the form of this Agreement) to secure the Nineteenth Series Bonds; and (xviii) Entergy, theCompany and the Trustees, as trustees for the holders of $70,000,000 aggregate principal amount of the Company's First Mortgage Bonds, 47/8% Series due 2007 (the "Twentieth Series Bonds") issued under the Mortgage, as supplemented by a Twenty-second SupplementalIndenture, dated as of September 1, 2002, between the Company and the Trustees, entered into the Thirty-fourth Supplementary CapitalFunds Agreement and Assignment dated as of September 1, 2002 (the "Thirty-fourth Supplementary Capital Funds Agr eement") (alsosubstantially in the form of this Agreement) to secure the Twentieth Series Bonds.

E. The Company, Credit Suisse First Boston Limited, as agent for certain banks (the "Eurodollar Agent"), and said banks (includingsuccessors and assignees and such other banks as became party to the Loan Facility as defined below, the "Eurodollar Banks") were parties tothe Loan Agreement (the "Original Eurodollar Loan Agreement") dated February 5, 1982 (as amended, the "Loan Facility"). Under theOriginal Eurodollar Loan Agreement, the banks party thereto made loans to the Company in the aggregate principal amount of $315,000,000and, pursuant to the Sixth Supplementary Capital Funds Agreement and Assignment (substantially in the form of this Agreement) dated asof February 5, 1982 between Entergy, the Company and the Eurodollar Agent (the "Sixth Supplementary Capital Funds Agreement"), theCompany and Entergy supplemented their undertakings under the Capital Funds Agreement for the benefit of the Eurodollar Agent andsaid banks. The Company, the Eurodollar Agent and the Eurodollar Banks were parties to the First Amendment dated as of February 18,1983 to the Loan Facility which, among other things, increased the amount of the loans to be made by the Eurodollar Banks to $378,000,000and, pursuant to the Seventh Supplementary Capital Funds Agreement and Assignment (also substantially in the form of this Agreement)dated as of February 18, 1983 (the "Seventh Supplementary Capital Funds Agreement"), Entergy and the Company further supplementedtheir undertakings under the Capital Funds Agreement for the Eurodollar Agent and the Eurodollar Banks.

F. The Company and Citibank, N.A. (the "Series A Bank") were parties to a letter of credit and reimbursement agreement dated as ofDecember 1, 1983 (the "Series A Reimbursement Agreement") which provided, among other things, for the issuance by the Series A Bank forthe account of the Company of an irrevocable transferable letter of credit in support of the Claiborne County, Mississippi Adjustable/FixedRate Pollution Control Revenue Bonds (Middle South Energy, Inc. Project) Series A (the "Series A Bonds"), issued by Claiborne County,Mississippi pursuant to a trust indenture dated as of December 1, 1983 naming Deposit Guaranty National Bank as trustee. Pursuant to theNinth Supplementary Capital Funds Agreement and Assignment (also substantially in the form of this Agreement) dated as of December 1,1983 (the "Ninth Supplementary Capital Funds Agreement"), Entergy and the Comp any further supplemented their undertakings under theCapital Funds Agreement for the Series A Bank and the trustee under the indenture relating to the Series A Bonds.

G. The Company and Citibank, N.A. (the "Series B Bank") were parties to a letter of credit and reimbursement agreement dated as of June1, 1984 (the "Series B Reimbursement Agreement") which provided, among other things, for the issuance by the Series B Bank for the accountof the Company of an irrevocable transferable letter of credit in support of the Claiborne County, Mississippi Adjustable/Fixed RatePollution Control Revenue Bonds (Middle South Energy, Inc. Project) Series B (the "Series B Bonds"), issued by Claiborne County,Mississippi pursuant to a trust indenture dated as of June 1, 1984 naming Deposit Guaranty National Bank as trustee. Pursuant to the TenthSupplementary Capital Funds Agreement and Assignment (also substantially in the form of this Agreement) dated as of June 1, 1984 (the"Tenth Supplementary Capital Funds Agreement"), Entergy and the Company further supplem ented their undertakings under the CapitalFunds Agreement for the Series B Bank and Deposit Guaranty National Bank as trustee under the indenture relating to the Series B Bonds.

H. The Company, Citibank, N.A., as a Co-Agent and as Coordinating Agent, and Manufacturers Hanover Trust Company, as a Co-Agent fora group of banks (the "Series C Banks"), were parties to a letter of credit and reimbursement agreement dated as of December 1, 1984 (the"Series C Reimbursement Agreement") which provided, among other things, for the issuance by the Series C Banks for the account of theCompany of an irrevocable transferable letter of credit in support of the Claiborne County, Mississippi Adjustable/Fixed Rate PollutionControl Revenue Bonds (Middle South Energy, Inc. Project) Series C (the "Series C Bonds"), issued by Claiborne County, Mississippipursuant to a trust indenture dated as of December 1, 1984 naming Deposit Guaranty National Bank as trustee. Pursuant to the TwelfthSupplementary Capital Funds Agreement and Assignment (also substantially in the form of this Agr eement) dated as of December 1, 1984(the "Twelfth Supplementary Capital Funds Agreement"), Entergy and the Company further supplemented their undertakings under theCapital Funds Agreement for the Series C Banks and Deposit Guaranty National Bank as trustee under the indenture relating to the Series CBonds.

I. Entergy, the Company, the Trustees and Deposit Guaranty National Bank, as holder of $47,208,334 aggregate principal amount of theCompany's First Mortgage Bonds, Pollution Control Series A (the "Fifth Series Bonds") issued under the Mortgage, as supplemented by aSeventh Supplemental Indenture dated as of June 15, 1985 between the Company and the Trustees, entered into the FourteenthSupplementary Capital Funds Agreement and Assignment dated as of June 15, 1985 (the "Fourteenth Supplementary Capital FundsAgreement") (also substantially in the form of this Agreement) to secure the Fifth Series Bonds. The Fifth Series Bonds were issued assecurity, in part, for the Claiborne County, Mississippi 12 1/2% Pollution Control Revenue Bonds due 2015 (Middle South Energy, Inc.Project) (the "Series D Bonds"), issued by Claiborne County, Mississippi pursuant to a trust indenture dated as of June 15, 1985 naming Deposit Guaranty National Bank as trustee. Pursuant to the Fourteenth Supplementary Capital Funds Agreement, Entergy and the Companyfurther supplemented their undertakings under the Capital Funds Agreement for the Trustees and Deposit Guaranty National Bank astrustee under the indenture relating to the Series D Bonds.

J. Entergy, the Company, the Trustees and Deposit Guaranty National Bank, as holder of $95,643,750 aggregate principal amount of theCompany's First Mortgage Bonds, Pollution Control Series B (the "Sixth Series Bonds") issued under the Mortgage, as supplemented by anEighth Supplemental Indenture dated as of May l, 1986 between the Company and the Trustees, entered into the Fifteenth SupplementaryCapital Funds Agreement and Assignment dated as of May 1, 1986 (the "Fifteenth Supplementary Capital Funds Agreement") (alsosubstantially in the form of this Agreement) to secure the Sixth Series Bonds. The Sixth Series Bonds were issued as security, in part, for theClaiborne County, Mississippi 9 1/2% Pollution Control Revenue Bonds due 2016 (Middle South Energy, Inc. Project) (the "Series EBonds"), issued by Claiborne County, Mississippi pursuant to a trust indenture dated as of May 1, 1986 naming Deposit Gu aranty NationalBank as trustee. Pursuant to the Fifteenth Supplementary Capital Funds Agreement, Entergy and the Company further supplemented theirundertakings under the Capital Funds Agreement for the Trustees and Deposit Guaranty National Bank as trustee under the indenturerelating to the Series E Bonds.

K. The Company has entered into a sale and leaseback transaction with respect to a portion of its undivided interest in Unit 1 and to that endthe Company has entered into, among other agreements, (i) Facility Leases Nos. 1 and 2, dated as of December 1, 1988, among MeridianTrust Company and Stephen M. Carta (Stephen J. Kaba, successor) (collectively, the "Owner Trustee"), as Owner Trustee, and the Company,each as supplemented by a separate Lease Supplement No. 1 thereto, each dated as of April 1, 1989, and a separate Lease Supplement No. 2thereto, each dated as of January 1, 1994, (ii) a Participation Agreement No. 1, dated as of December 1, 1988, among Public ServiceResources Corporation ("PSRC") as Owner Participant, the Loan Participants listed therein, GGIA Funding Corporation, as FundingCorporation, the Owner Trustee and the Company pursuant to which PSRC invested $400,000,000 in an undivided interest in Unit 1 (whichinterest was subsequently acquired by Resources Capital Management Corporation from PSRC and subsequently acquired by RCMC I, Inc.(formerly known as RCMC Del., Inc.) from Resources Capital Management Corporation), and a Participation Agreement No. 2, dated as ofDecember 1, 1988, among Lease Management Realty Corporation IV ("LMRC") as Owner Participant, the Loan Participants listed therein,GGIA Funding Corporation, as Funding Corporation, the Owner Trustee and the Company pursuant to which LMRC invested $100,000,000in an undivided interest in Unit 1 (which interest was subsequently acquired by Textron Financial Corporation from LMRC) (the ownerparticipants under all such participation agreements being referred to as the "Owner Participants") and (iii) the Original ReimbursementAgreement which provided, among other things, (x) for the issuance by the funding bank named therein (the "1988 Funding Bank"), for theac count of the Company, of irrevocable transferable letters of credit (the "1988 LOCs") to the Owner Participants to secure certainobligations of the Company to the Owner Participants substantially in the form of Exhibit A to the Original Reimbursement Agreement withmaximum amounts of $104,000,000 and $26,000,000, respectively, (y) for the reimbursement to such 1988 Funding Bank by the participatingbanks named therein (the "1988 Participating Banks") for all drafts paid by such 1988 Funding Bank under any 1988 LOC and (z) for thereimbursement by the Company to such 1988 Funding Bank for the benefit of the 1988 Participating Banks of sums equal to all drafts paidby such 1988 Funding Bank under any 1988 LOC. Pursuant to the Twenty-second Supplementary Capital Funds Agreement and Assignment(substantially in the form of this Agreement), dated as of December 1, 1988 (the "Twenty-second Supplementary Capital Funds Agreement"),Entergy and the Company further supplemented their undertakings under the Capital Funds Agreement for the benefit of theAdministrating Bank named in the Original Reimbursement Agreement, the 1988 Funding Bank and the 1988 Participating Banks.

L. Entergy, the Company and Chemical Bank entered into the Twenty-third Supplementary Capital Funds Agreement and Assignment(substantially in the form of this Agreement), dated as of January 11, 1991 (the "Twenty-third Supplementary Capital Funds Agreement"), inconnection with the execution and delivery of the First Amendment, dated as of January 11, 1991, to the Original Reimbursement Agreement(the Original Reimbursement Agreement, as amended by such First Amendment, is herein called the "1991 Reimbursement Agreement"),which provided, among other things, (i) for the issuance by the funding bank named therein (the "1991 Funding Bank"), for the account ofthe Company, of irrevocable transferable letters of credit (the "1991 LOCs") to the Owner Participants to secure certain obligations of the

Company to the Owner Participants, substantially in the form of Exhibit A to the 1991 Reimbursement Agreement, with maximum amountsof $116,601,440 and $29,150,360, respectively; (ii) for the reimbursement to the 1991 Funding Bank by the participating banks named therein(the "1991 Participating Banks") for all drafts paid by the 1991 Funding Bank under any 1991 LOC; and (iii) for the reimbursement by theCompany to the 1991 Funding Bank for the benefit of the 1991 Participating Banks of sums equal to all drafts paid by the 1991 FundingBank under any 1991 LOC.

M. Entergy, the Company and Chemical Bank entered into the Twenty-eighth Supplementary Capital Funds Agreement and Assignment(substantially in the form of this Agreement), dated as of December 17, 1993 (the "Twenty-eighth Supplementary Capital Funds Agreement"),in connection with the execution and delivery of the Second Amendment, dated as of December 17, 1993, to the Original ReimbursementAgreement (the Original Reimbursement Agreement, as amended by the First Amendment to the Original Reimbursement Agreement andsuch Second Amendment, is herein called the "1993 Reimbursement Agreement"), which provided, among other things, (i) for the issuance bythe funding bank named therein (the "1993 Funding Bank"), for the account of the Company, of irrevocable transferable letters of credit (the"1993 LOCs") to the Owner Participants to secure certain obligations of the Company to the Owner Participants, substantially in the form ofExhibit A to the 1993 Reimbursement Agreement, with maximum amounts of $132,131,960 and $33,032,990, respectively; (ii) for thereimbursement to the 1993 Funding Bank by the participating banks named therein (the "1993 Participating Banks") for all drafts paid bythe 1993 Funding Bank under any 1993 LOC; and (iii) for the reimbursement by the Company to the 1993 Funding Bank for the benefit ofthe 1993 Participating Banks of sums equal to all drafts paid by the 1993 Funding Bank under any 1993 LOC.

N. Entergy, the Company and The Chase Manhattan Bank (as successor by merger with Chemical Bank) entered into the Thirty-secondSupplementary Capital Funds Agreement and Assignment (substantially in the form of this Agreement), dated as of December 27, 1996 (the"Thirty-second Supplementary Capital Funds Agreement"), in connection with the execution and delivery of the Amended and RestatedReimbursement Agreement, dated as of December 27, 1996, which amended and restated the 1993 Reimbursement Agreement (as soamended and restated, the "1996 Amended and Restated Reimbursement Agreement") and provided, among other things, (i) for the issuanceby the funding bank named therein (the "1996 Funding Bank"), for the account of the Company, of irrevocable transferable letters of credit(the "1996 LOCs") to the Owner Participants to secure certain obligations of the Company to the Owner Participants, substantially in theform of Exhibit A to the 1996 Amended and Restated Reimbursement Agreement, with maximum amounts of $148,719,125.41 and$34,946,720.11, respectively; (ii) for the reimbursement to the 1996 Funding Bank by the participating banks named therein (the "1996Participating Banks") for all drafts paid by the 1996 Funding Bank under any 1996 LOC; and (iii) for the reimbursement by the Company tothe 1996 Funding Bank for the benefit of the 1996 Participating Banks of sums equal to all drafts paid by the 1996 Funding Bank under any1996 LOC.

O. Entergy, the Company and The Chase Manhattan Bank entered into the Thirty-third Supplementary Capital Funds Agreement andAssignment (substantially in the form of this Agreement), dated as of December 20, 1999 (the "Thirty-third Supplementary Capital FundsAgreement"), in connection with the execution and delivery of the Amended and Restated Reimbursement Agreement, dated as of December20, 1999, among the Company, The Bank of Tokyo-Mitsubishi, Ltd., Los Angeles Branch, as the funding bank (the "1999 Funding Bank"),The Chase Manhattan Bank, as administrating bank, Union Bank of California, N.A., as documentation agent, and the banks named therein(the "1999 Participating Banks"), which amended and restated the 1996 Amended and Restated Reimbursement Agreement (as so amendedand restated, the "1999 Amended and Restated Reimbursement Agreement") and provided, amo ng other things, (i) for the issuance by the1999 Funding Bank, for the account of the Company, of irrevocable transferable letters of credit (the "1999 LOCs") to the OwnerParticipants to secure certain obligations of the Company to the Owner Participants, substantially in the form of Exhibit A to the 1999Amended and Restated Reimbursement Agreement, with maximum amounts of $156,885,463.65 and $36,061,469.99, respectively; (ii) for thereimbursement to the 1999 Funding Bank by the 1999 Participating Banks for all drafts paid by the 1999 Funding Bank under any 1999LOC; and (iii) for the reimbursement by the Company to the 1999 Funding Bank for the benefit of the 1999 Participating Banks of sumsequal to all drafts paid by the 1999 Funding Bank under any 1999 LOC.

P. On March 3, 2003, the Company terminated and replaced the 1999 Amended and Restated Reimbursement Agreement with the Letter ofCredit and Reimbursement Agreement, dated as of March 3, 2003 (the "2003 Reimbursement Agreement"), among the Company, Union Bankof California, N.A., as administrating bank, Union Bank of California, N.A., as funding bank (in such capacity, the "2003 Funding Bank"),and the banks named therein (the "2003 Participating Banks"), which provided, among other things, (i) for the issuance by the 2003 FundingBank, for the account of the Company, of irrevocable transferable letters of credit (the "2003 LOCs") to the Owner Participants to securecertain obligations of the Company to the Owner Participants, substantially in the form of Exhibit A to the 2003 Reimbursement Agreement,with maximum amounts of $161,546,191.84 and $36,515,236.09, respectively; (ii) for th e reimbursement to the 2003 Funding Bank by the2003 Participating Banks for all drafts paid by the 2003 Funding Bank under any 2003 LOC; and (iii) for the reimbursement by theCompany to the 2003 Funding Bank for the benefit of the 2003 Participating Banks of sums equal to all drafts paid by the 2003 FundingBank under any 2003 LOC.

Q. The Company now wishes to terminate and replace the 2003 Reimbursement Agreement with the Reimbursement Agreement and toprovide for the cancellation of the 2003 LOCs and the issuance of new irrevocable transferable letters of credit (the "New LOCs") by theFunding Bank to further secure the Owner Participants. The Reimbursement Agreement provides, among other things, (i) for the issuance bythe Funding Bank, for the account of the Company, of irrevocable transferable letters of credit to the Owner Participants to secure certainobligations of the Company to the Owner Participants, such New LOCs to be substantially in the form of Exhibit A to the ReimbursementAgreement with maximum amounts of $161,546,191.84 and $36,515,236.09, respectively; (ii) for the reimbursement to the Funding Bank bythe Participating Banks for all drafts paid by the Funding Bank under any New LOC; and (iii) for the reimbursement by the Company to theFunding Bank for th e benefit of the Participating Banks of sums equal to all drafts paid by the Funding Bank under any New LOC (suchamounts, together with all Advances made by the Participating Banks pursuant to the Reimbursement Agreement, shall hereinafter be calledthe "Reimbursement Obligations").

R. The Company and Entergy, by this instrument, wish (i) to continue to supplement their undertakings under the Capital Funds Agreementfor the benefit of the Funding Bank, the Administrating Bank and the Participating Banks (collectively, the "LOC Banks") and (ii) to createenforceable rights hereunder in the Administrating Bank as hereinafter set forth.

S. The Company, Entergy and certain other subsidiaries of Entergy have joined in an Application-Declaration on Form U-1, as amended andsupplemented to date, in File No. 70-7561, filed with the Securities and Exchange Commission under the Public Utility Holding Company Actof 1935 with respect to this Agreement and certain other matters, the Securities and Exchange Commission has issued orders (the "SECOrders") granting and permitting to become effective said Application-Declaration, as so amended and supplemented, and the SEC Ordersare in full force and effect on the date of the execution and delivery hereof.

T. All things necessary to make this Agreement the valid, legally binding and enforceable obligation of each of the parties hereto have beendone and performed and the execution and performance hereof in all respects have been authorized and approved by all corporate andshareholder action necessary on the part of each thereof.

NOW, THEREFORE, in consideration of the terms and agreements hereinafter set forth, the parties agree with each other as follows:

ARTICLE I.OBLIGATIONS OF ENTERGY AND THE COMPANY

1.1. Commercial Operation of the Project. The Company shall (and Entergy shall cause the Company to) use its best efforts to maintain theProject in commercial operation and, in connection therewith, take all such action, including, without limitation, all actions beforegovernmental authorities, as shall be necessary to enable the Company to do so.

1.2. Capital Structure of the Company. Entergy shall supply or cause to be supplied to the Company:

(a) such amounts of capital as may be required from time to time by the Company in order to maintain that portion of the Capitalization (asdefined in Section 1.6 hereof) of the Company as shall be represented by the aggregate of the par value of, or stated capital represented by,the outstanding shares of all classes of capital stock and the surplus of the Company, paid in, earned and other, if any, at an amount equal toat least 35% of the Capitalization of the Company or at such higher percentage as governmental regulatory authorities having jurisdiction inthe premises may require; and

(b) such amounts of capital in addition to (i) the capital heretofore made available to the Company by Entergy in exchange for shares of theCompany's common stock and (ii) the capital made available to the Company at any time in question through the incurrence by theCompany of Indebtedness for Borrowed Money (as defined in Section 1.6 hereof) as shall be required in order for the Company to continue toown its undivided ownership interest in the Project, to provide (without limitation) for interest charges of the Company, to permit thecommercial operation of Unit 1, to permit the continuation of such commercial operation and to pay in full all payments of the principal of,and premium, if any, and interest on Indebtedness for Borrowed Money (whether due at maturity, pursuant to mandatory or optionalprepayment, by acceleration or otherwise), it being understood and agreed that, in connection with the capital requirements of the Company,nuclear fuel leasing (including financing leases t herefor) and the entering into by the Company of industrial development revenue bondfinancing with respect to pollution control facilities and the issuance and sale by the Company of debt securities, and, to the extent necessaryor desirable, preferred stock, to banks, institutions and the public may constitute some of the means by which required capital can be madeavailable to the Company.

1.3. Manner of Performance. If, with respect to any amount of capital which Entergy shall, at any time in question, be obligated under theprovisions of Section 1.2 to supply or cause to be supplied to the Company, Entergy and the Company shall fail to agree on the type, or terms,of any particular security to be issued by the Company and sold to Entergy or to others for the purpose of securing such required capital or ifrequisite regulatory approvals are not obtained for any issuance and sale so agreed upon or if such issuance and sale cannot for any otherreason be carried out, then and in such event, Entergy shall supply such capital to the Company in the form of a cash capital contribution.

1.4. Payments in Respect of the Reimbursement Obligations. If at any time the Company shall require funds to pay the interest (including, ifand to the extent permitted by law, interest on overdue principal, premium and interest) and premium, if any, on, and the principal of, theReimbursement Obligations (whether at maturity, pursuant to mandatory or optional prepayment, by acceleration or otherwise) and theexpenses, commitment fees, participation fees, other financing fees and charges, trustees' fees and administration expenses attributable to theReimbursement Obligations or otherwise payable by the Company pursuant to the Reimbursement Agreement, and the funds of theCompany available for such purpose or purposes shall be insufficient for any reason, including, without limitation, the inability to borrow, orthe absence of, funds under any local agreement or similar instrument or instruments to which the Company is now or hereafter becomes aparty, Entergy will pay to t he Company in cash as a capital contribution the funds necessary to enable the Company to pay the amountsreferred to above in this Section 1.4.

1.5. Subordination of Claims of Entergy Against the Company. Entergy hereby agrees that (i) all amounts advanced by Entergy to theCompany (other than by way of purchases of capital stock of the Company or capital contributions to the Company) shall, for the purposes ofthis Agreement and so long as this Agreement shall be in full force and effect, constitute Subordinated Indebtedness of the Company (asdefined in Section 1.6 hereof) and (ii) no such Subordinated Indebtedness of the Company shall be transferred or assigned (including by wayof security) to any person (other than to a successor of Entergy by way of merger or consolidation or the acquisition by such person of all orsubstantially all of Entergy's assets). The Company agrees that it will record all Subordinated Indebtedness of the Company as such on itsbooks.

1.6. Definitions. For the purposes of this Agreement, the following terms shall have the following meanings:

(a) the term "Capitalization" shall mean, as of any particular time, an amount equal to the sum of the total principal amount of allIndebtedness for Borrowed Money of the Company (exclusive of Short Term Debt), secured or unsecured, then outstanding, and theaggregate of the par value of, or stated capital represented by, the outstanding shares of all classes of capital stock of the Company and thesurplus of the Company, paid in, earned and other, if any;

(b) the term "Indebtedness for Borrowed Money" shall mean the principal amount of all indebtedness for borrowed money, secured orunsecured, of the Company then outstanding and shall include, without limitation, the principal amount of all bonds issued by agovernmental or industrial development agency or authority in connection with an industrial development revenue bond financing ofpollution control facilities constituting part of the Project;

(c) the term "Short Term Debt" shall mean the principal amount of unsecured Indebtedness for Borrowed Money created or incurred by theCompany which matures by its terms not more than 12 months after the date of the creation or incurrence thereof, and which is notrenewable or extendable at the option of the Company for a period of more than 12 months from the date of the creation or incurrencethereof pursuant to any revolving credit or similar agreement; and

(d) the term "Subordinated Indebtedness of the Company" shall mean indebtedness marked on the books of the Company as subordinated andjunior in right of payment to the Obligations Secured Hereby (as defined in Section 5.1 hereof) to the extent and in the manner set forthbelow:

(i) if there shall occur a Reimbursement Event of Default or Prepayment Event, then so long as such ReimbursementEvent of Default or Prepayment Event shall be continuing and shall not have been cured or waived, or unless anduntil all the Obligations Secured Hereby shall have been paid in full in cash, no payment of principal, premium, if any,or interest shall be made upon Subordinated Indebtedness of the Company; and

(ii) in the event of any insolvency, bankruptcy, liquidation, reorganization or other similar case or proceedings, or anyreceivership proceedings in connection therewith, relative to the Company or its creditors or its property, and in theevent of any proceedings for voluntary liquidation, dissolution or other winding up of the Company, whether or not

involving insolvency or bankruptcy proceedings, then the Obligations Secured Hereby shall first be paid in full incash, or payment thereof shall have been provided for, before any payment on account of principal, premium, if any,or interest is made upon Subordinated Indebtedness of the Company.

ARTICLE II.NATURE OF THE OBLIGATIONS

OF ENTERGY AND THE COMPANY

2.1. Regulatory Approvals.

(a) Except as provided in Section 2.2 with respect to the obligations of Entergy to make cash capital contributions to the Company pursuantto the provisions of Sections 1.3 and 1.4 (as to which the SEC Orders are in full force and effect at the date of execution and delivery of thisAgreement), the performance of the obligations of Entergy hereunder shall be subject to the receipt and continued effectiveness of allauthorizations of governmental regulatory authorities necessary at the time to permit Entergy at the time to perform its duties andobligations then to be performed hereunder, including the receipt and continued effectiveness of all authorizations of governmentalauthorities necessary at the time to permit Entergy at the time to supply or cause to be supplied to the Company capital pursuant to theprovisions of Section 1.2 or to permit Entergy at the time to acquire securities issued and sold to Entergy by the Company.

(b) The performance of the obligations of the Company hereunder shall be subject to the receipt and continued effectiveness of allauthorizations of governmental regulatory authorities at the time necessary to permit the Company to perform its duties and obligationshereunder, including the receipt and continued effectiveness of all authorizations of governmental regulatory authorities at the time necessaryto permit the Company to operate the Project (or to have the Project operated for it) to the extent the Project is then operable, and to issueand to sell securities then to be issued and sold by the Company to Entergy or to others for the purpose of securing required capital.

(c) Entergy and the Company shall use their best efforts to secure and maintain all such authorizations of governmental regulatoryauthorities.

2.2. Nature of Obligations.

(a) The obligations of Entergy hereunder to make cash capital contributions to the Company pursuant to the provisions of Sections 1.3 and1.4 having heretofore been authorized by the SEC Orders (and no other authorization by any governmental regulatory authority beingrequired) and the LOC Banks having relied on such authorization in entering into the Reimbursement Agreement, Entergy agrees that itsduty to perform such obligations shall be absolute and unconditional, (a) whether or not Entergy shall have received all authorizations ofgovernmental regulatory authorities necessary at the time to permit Entergy to perform its other duties and obligations hereunder, (b)whether or not the Company shall have received all authorizations of governmental regulatory authorities necessary at the time to permit theCompany to perform its duties and obligations hereunder, (c) whether or not any authorizations referred to in the foregoing clauses (a) and(b) continue, at the time, in effect, (d) w hether or not, at any time in question, the Company shall have performed its duties and obligationsunder this Agreement, (e) whether or not the Project shall be maintained in commercial operation, energy from the Project is being producedor delivered or is available (including, without limitation, delivery or availability to other subsidiaries of Entergy), an abandonment of theProject shall have occurred or the Project shall be in whole or in part destroyed or taken, for any reason whatsoever, (f) whether or not theCompany shall be solvent, (g) regardless of any event of force majeure and (h) regardless of any other circumstance, happening, condition orevent whatsoever, whether or not similar to any of the foregoing. Subject to Section 2.1(a), all other obligations of Entergy hereunder aresimilarly absolute and unconditional.

(b) In the event that Entergy shall cease to own a majority of the common stock of the Company and such lower ownership percentage hasbeen permitted pursuant to the consent of the LOC Banks, the obligations of Entergy hereunder shall not be increased by any amendment to,or modification of, the terms and provisions of the Reimbursement Agreement unless Entergy shall have consented in writing to suchamendment or modification.

2.3. Waivers of Defenses. The obligations of Entergy under Sections 1.2, 1.3 and 1.4 to supply capital or cause capital to be supplied or to makecash capital contributions to the Company shall not be subject to any abatement, reduction, limitation, impairment, termination, set-off,defense, counterclaim or recoupment whatsoever or any right to any thereof (including, but not limited to, abatements, reductions,limitations, impairments, terminations, set-offs, defenses, counterclaims and recoupments for or on account of any past, present or futureindebtedness of the Company to Entergy or any claim by Entergy against the Company, whether or not arising under this Agreement andwhether or not arising out of any action or nonaction on the part of the Company, or any LOC Bank, including any disposition of the Projector any part thereof pursuant to the Indenture, requirements of governmental authorities, actions of judicial receivers or trustees or otherwiseand whether or not arising from wilful or negligent acts or omissions). The foregoing, however, shall not, subject to the provisions of Section1.5 hereof, affect in any other way any rights and remedies of Entergy with respect to any amounts owed to Entergy by the Company or anysuch claim by Entergy against the Company. The obligations and liabilities of Entergy hereunder shall not be released, discharged or in anyway affected by any reorganization, arrangement, compromise, composition or plan affecting the Company or any change, waiver, extension,indulgence or other action or omission in respect of any indebtedness or obligation of the Company or Entergy, whether or not the Companyor Entergy shall have had any notice or knowledge of any of the foregoing. Neither failure nor delay by the Company or the LOC Banks toexercise any right or remedy provided herein or by statute or at law or in equity shall operate as a waiver thereof, nor shall any single orpartial exercise of any such right or remedy preclude any other or further exercise thereof, or the exercise of any other right or remedy.Entergy also hereby irrevocably waives, to the extent that it may do so under applicable law, any defense based on the adequacy of a remedyat law which may be asserted as a bar to the remedy of specific performance in any action brought against Entergy for specific performanceof this Agreement by the Company or by the LOC Banks or for their benefit by a receiver or trustee appointed for the Company or in respectof all or a substantial part of the Company's assets under the bankruptcy or insolvency law of any jurisdiction to which the Company is or itsassets are subject. Anything in this Section 2.3 to the contrary notwithstanding, Entergy shall not be precluded from asserting as a defenseagainst any claim made against Entergy upon any of its obligations hereunder that it has fully performed such obligation in accordance withthe terms of this Agreement.

2.4. Subrogation, Etc. Entergy shall, subject to the provisions of Section 1.5, be subrogated to all rights of the LOC Banks against theCompany in respect of any amounts paid by Entergy pursuant to the provisions of this Agreement and applied to the payment of theObligations Secured Hereby (as defined in Section 5.1 hereof). The LOC Banks agree that they will not deal with the Company in such amanner as to prejudice such rights of Entergy.

ARTICLE III.TERM

This Agreement shall remain in full force and effect until, and shall terminate and be of no further force and effect after, all ObligationsSecured Hereby shall have been paid in full in cash, provided that this Agreement shall continue to be effective or be reinstated, as the case

may be, if at any time any payment of any of the Obligations Secured Hereby is rescinded or must otherwise be returned by theAdministrating Bank or any other LOC Bank upon the insolvency, bankruptcy or reorganization of the Company, Entergy or otherwise, allas though such payment had not been made. It is agreed that all the covenants and undertakings on the part of Entergy and the Company setforth in this Agreement are exclusively for the benefit of, and may be enforced only by, the LOC Banks as provided in the ReimbursementAgreement, or for their benefit by a receiver or trustee for the Company or in respect of all or a substantial part of its assets under thebankruptcy or insolvency law of an y jurisdiction to which the Company is or its assets are subject.

ARTICLE IV.ASSIGNMENT

Neither this Agreement nor any interest herein may be assigned, transferred or encumbered by any of the parties hereto, except transfer orassignment by the LOC Banks to their successors or assignees in accordance with Section 23(b) of the Reimbursement Agreement, except asotherwise provided in Article V hereof and except that:

(i) in the event that Entergy shall consolidate with or merge with or into another corporation or shall transfer toanother corporation or other person all or substantially all of its assets, this Agreement shall be transferred byEntergy to and shall be binding upon the corporation resulting from such consolidation or merger or the corporationor other person to which such transfer is made and, as a condition to such consolidation, merger or other transfer,such corporation or other person shall deliver to the Company and the Administrating Bank a written assumption, inform and substance satisfactory to the Administrating Bank, of Entergy's obligations and liabilities under thisAgreement and an opinion of counsel to the effect that such instrument complies with the requirements hereof andconstitutes a valid, legally binding and enforceable obligation of such corporation or other person; and

(ii) in the event that the Company shall consolidate with or merge with or into another corporation or shall transfer toanother corporation or other person all or substantially all of its assets, this Agreement shall be transferred by theCompany to and shall be binding upon the corporation resulting from such consolidation or merger or thecorporation or other person to which such transfer is made and, as a condition to such consolidation, merger or othertransfer, such corporation or other person shall deliver to the Administrating Bank a written assumption, in form andsubstance satisfactory to the Administrating Bank, of the Company's obligations and liabilities under this Agreementand an opinion of counsel to the effect that such instrument complies with the requirements hereof and constitutes avalid, legally binding and enforceable obligation of such corporation or other person.

ARTICLE V.SECURITY ASSIGNMENT AND AGREEMENT

5.1. Assignment and Creation of Security Interest. As security for (i) the due and punctual payment of the interest (including, if and to theextent permitted by law, interest on overdue principal, premium and interest) and premium, if any, on, and the principal of, theReimbursement Obligations (whether at the stated maturity thereof, pursuant to mandatory or optional prepayment, by acceleration orotherwise) and (ii) the due and punctual payment of all fees and costs, expenses and other amounts which may become payable by theCompany under the Reimbursement Agreement, together in each case with all costs of collection thereof (all such amounts referred to in theforegoing clauses (i) and (ii) being hereinafter collectively referred to as "Obligations Secured Hereby"), the Company hereby assigns to theAdministrating Bank and creates a security interest in favor of the Administrating Bank, for the benefit of the LOC Banks, in (x) all of theCompa ny's rights to receive all moneys paid, or caused to be paid, or to be paid or to be caused to be paid, to the Company by Entergypursuant to Section 1.4 of this Agreement, and (y) all other claims, rights (but not obligations or duties), powers, privileges, interests andremedies of the Company (including, without limitation, all of the Company's rights to receive all moneys paid, or caused to be paid, or to bepaid, or to be caused to be paid, to the Company by Entergy pursuant to Sections 1.2 and 1.3 of this Agreement), whether arising under thisAgreement or by statute or in law or in equity or otherwise, resulting from any failure by Entergy to perform its obligations under thisAgreement, but so far as this clause (y) is concerned only to the extent required for the payment when due and payable of the ObligationsSecured Hereby, together in each case with full power and authority, in the name of the Administrating Bank, or the Company as assignor, orotherwise, to demand payment of, enforce, collect, r eceive and receipt for any and all of the foregoing (the rights, claims, powers, privileges,interests and remedies referred to in clause (y) being hereinafter sometimes called the "Collateral").

5.2. Other Agreements.

(a) The Company will not assign the rights assigned in clause (x) of Section 5.1 as security for any indebtedness other than the ObligationsSecured Hereby and will not assign the other rights assigned in Section 5.1 as security for any indebtedness other than the ObligationsSecured Hereby, except as provided in paragraph (b) of this Section 5.2.

(b) The Company has secured its Indebtedness for Borrowed Money represented by (i) loans made by certain banks as referred to in WhereasClause C hereof by the First, Fourth, Fifth and Eighth Supplementary Capital Funds Agreements, (ii) the First Series Bonds, the SecondSeries Bonds, the Third Series Bonds, the Fourth Series Bonds, the Seventh Series Bonds, the Eighth Series Bonds, the Ninth Series Bonds,the Tenth Series Bonds, the Eleventh Series Bonds, the Twelfth Series Bonds, the Thirteenth Series Bonds, the Fourteenth Series Bonds, theFifteenth Series Bonds, the Sixteenth Series Bonds, the Seventeenth Series Bonds, the Eighteenth Series Bonds, the Nineteenth Series Bondsand the Twentieth Series Bonds, as referred to in Whereas Clause D hereof, by the Second, Third, Eleventh, Thirteenth, Sixteenth,Seventeenth, Eighteenth, Nineteenth, Twentieth, Twenty-first, Twenty-fourth, Twenty-fifth, Twenty-sixth, Twenty-seventh, Twenty-ninth,Thirtieth, Thirty-first and Thirty-fourth Supple mentary Capital Funds Agreements, respectively, (iii) loans made by certain banks asreferred to in Whereas Clause E hereof by the Sixth and Seventh Supplementary Capital Funds Agreements, respectively, (iv) the obligationsunder the Series A Reimbursement Agreement as referred to in Whereas Clause F hereof by the Ninth Supplementary Capital FundsAgreement, (v) the obligations under the Series B Reimbursement Agreement as referred to in Whereas Clause G hereof by the TenthSupplementary Capital Funds Agreement, (vi) the obligations under the Series C Reimbursement Agreement as referred to in WhereasClause H hereof by the Twelfth Supplementary Capital Funds Agreement, (vii) the Fifth Series Bonds as referred to in Whereas Clause Ihereof by the Fourteenth Supplementary Capital Funds Agreement, (viii) the Sixth Series Bonds as referred to in Whereas Clause J hereof bythe Fifteenth Supplementary Capital Funds Agreement, (ix) the obligations under the Original Reimbursement Agreement as referred to inWhereas Clause K hereof by the Twenty-second Supplementary Capital Funds Agreement, (x) the obligations under the 1991 ReimbursementAgreement as referred to in Whereas Clause L hereof by the Twenty-third Supplementary Capital Funds Agreement, (xi) the obligationsunder the 1993 Reimbursement Agreement as referred to in Whereas Clause M hereof by the Twenty-eighth Supplementary Capital FundsAgreement, (xii) the obligations under the 1996 Amended and Restated Reimbursement Agreement as referred to in Whereas Clause Nhereof by the Thirty-second Supplementary Capital Funds Agreement, and (xiii) the obligations under the 1999 Amended and RestatedReimbursement Agreement as referred to in Whereas Clause O hereof by the Thirty-third Supplementary Capital Funds Agreement, andshall be entitled to secure the interest and premium, if any, on, and the principal of, other Indebtedness for Borrowed Money of the Companyissued by the Company to any person (except Entergy or any affiliate of Entergy) to finance the cost of the Project (including, without

limitation, indebtedness outstanding under the Indenture) or to refund (including any successive refundings) any such Indebtedness issuedfor such purpose, the incurrence of which Indebtedness is at the time permitted by the Indenture (herein called "Additional Indebtedness"),by entering into a supplementary capital funds agreement and assignment including, without limitation, the First through Twenty-eighthSupplementary Capital Funds Agreements (each being hereinafter called an "Additional Supplementary Agreement") with the holders of suchAdditional Indebtedness or representatives of or trustees for such holders, or both, as the case may be (hereinafter called an "AdditionalAssignee"). Each Additional Supplementary Agreement shall be substantially in the form of this Agreement, except that there shall besubstituted in such Additional Supplementary Agreement appropriate references to such Additional Ind ebtedness, such Additional Assigneeand the agreement or instrument under which such Additional Indebtedness is issued in lieu of the references herein to the ReimbursementObligations, the LOC Banks, the Reimbursement Agreement and the New LOCs, respectively, and such Additional SupplementaryAgreement may contain such other provisions as are not inconsistent with this Agreement and do not adversely affect the rights hereunder ofthe LOC Banks.

(c) Notwithstanding any provision of this Agreement to the contrary, or any priority in time of creation, attachment or perfection of asecurity interest, pledge or lien by the Administrating Bank, or any provision of or filing or recording under the Uniform Commercial Codeor any other applicable law of any jurisdiction, the Administrating Bank agrees that the claims of the Administrating Bank under Sections1.2 and 1.3 of this Agreement and any security interest, pledge or lien in favor of the Administrating Bank now or hereafter existing in and tothe Collateral shall rank pari passu with the claims of each Additional Assignee under the corresponding sections of the AdditionalSupplementary Agreement to which it is a party and any security interest, pledge or lien in favor of such Additional Assignee thereunder nowor hereafter existing in and to the Collateral, irrespective of the time or times at which prior, concurrent or subsequent AdditionalSupplementary Agreements are e ntered into in accordance with Section 5.2(b) hereof.

5.3. Payments to the Administrating Bank. The Company agrees that, if and whenever it shall make a demand to Entergy for any paymentpursuant to Section 1.2, 1.3, or 1.4 of this Agreement or pursuant to the corresponding provisions of any Additional SupplementaryAgreement, it will separately identify the respective portions of such payment, if any, required for (i) the payment of Obligations SecuredHereby and (ii) the payment of any other amounts then due and payable in respect of Additional Indebtedness and instruct Entergy (subjectto the provisions of Section 5.4) to pay or cause to be paid the amount so identified as required for the payment of Obligations SecuredHereby directly to the Administrating Bank. Any payments made or caused to be made by Entergy pursuant to Section 1.2 or 1.3 of thisAgreement or pursuant to the corresponding provisions of any Additional Supplementary Agreement shall, to the extent necessary to satisfyin full the assignment set forth in Section 5.1 of this Agreement and the corresponding assignments set forth in the Additional SupplementaryAgreements, be made pro rata in proportion to the respective amounts secured by, and then due and owing under, such assignments.

5.4. Payments to the Company. Notwithstanding the provisions of Sections 5.1 and 5.3, unless and until the Administrating Bank shall havegiven written notice to Entergy of the occurrence and continuance of any Reimbursement Event of Default or Prepayment Event, all moneyspaid or to be paid to the Company pursuant to Sections 1.2, 1.3 and 1.4 of this Agreement shall be paid directly to the Company and theCompany need not separately identify the respective portions of payments as provided in Section 5.3 hereof, provided that notice as to theamount of any such payments or advances shall be given by the Company to the Administrating Bank simultaneously with the demand by theCompany for any such payment. If the Administrating Bank shall have duly notified Entergy of the occurrence of any such ReimbursementEvent of Default or Prepayment Event, such payments shall be made in the manner and in the amounts specified in Section 5.3 hereof untilthe Administrating Bank shall by further notice to Entergy give permission that all such payments may be made again to the Company, suchpermission being subject to revocation by a subsequent notice pursuant to the first sentence of this Section 5.4. The Administrating Bankshall give such permission if no such Reimbursement Event of Default or Prepayment Event continues to exist.

5.5. Consent and Agreement of Entergy.

(a) Entergy hereby consents to the foregoing assignment and agrees with the Administrating Bank to make payments to the AdministratingBank in the amounts and in the manner specified in Section 5.3 at the office of the Administrating Bank in Monterey Park, California, whichis presently located at 1980 Saturn Street, Monterey Park, California 91754, Attention: Commercial Loan Operations.

(b) Subject to the provisions of Section 2.4 hereof, Entergy agrees that all payments made to the Administrating Bank or to the Company ascontemplated by Sections 5.3 and 5.4 shall be final as between Entergy and the LOC Banks or the Company, as the case may be, and thatEntergy will not seek to recover from any LOC Banks for any reason whatsoever any moneys paid to the Administrating Bank by virtue ofthis Agreement, but the finality of any such payment shall not prevent the recovery of any overpayments or mistaken payments which may bemade by Entergy unless a Reimbursement Event of Default or Prepayment Event has occurred and is continuing, in which case any suchoverpayment or mistaken payment shall not be recoverable but shall constitute Subordinated Indebtedness of the Company to Entergy.

ARTICLE VI.AMENDMENTS

6.1. Restrictions on Amendments. This Agreement may not be amended, waived, modified, discharged or otherwise changed orally. It may beamended, waived, modified, discharged or otherwise changed only by a written instrument which has been signed by all the parties heretoand which has been approved in writing by the LOC Banks or which does not materially adversely affect the rights of the LOC Banks.

6.2. Administrating Bank's Execution. The Administrating Bank shall, at the request of the Company, execute any instrument amending,waiving, modifying, discharging or otherwise changing this Agreement (a) as to which the Administrating Bank shall have received anopinion of counsel to the effect that such instrument has been duly authorized by Entergy and the Company and is permitted by theprovisions of Section 6.1 and that this Agreement, as amended, waived, modified, discharged or otherwise changed by such instrument,constitutes valid, legally binding and enforceable obligations of the Company and Entergy, and (b) which shall have been executed by Entergyand the Company. The Administrating Bank shall be fully protected in relying upon the aforesaid opinion.

ARTICLE VII.NOTICES

7.1. Notices, Etc., in Writing. All notices, consents, requests and other documents authorized or permitted to be given pursuant to thisAgreement shall be given in writing and either personally served on the party to whom (or an officer of a corporate party) it is given ormailed by registered or certified first-class mail, postage prepaid, or sent by telex or telegram, addressed as follows:

If to System Energy Resources, Inc., to:

Box 61000New Orleans, LA 70113


If to Entergy Corporation, to:



If to the Administrating Bank, to:



Attention.: David Musicant

with copies to each party.

7.2. Delivery, Etc. Notices, consents, requests and other documents shall be deemed given or served or submitted when delivered or, if mailedas provided in Section 7.1 hereof, on the third day after the day of mailing, or if sent by telex or telegram, 24 hours after the time of dispatch.A party may change its address for the receipt of notices, consents, requests and other documents at any time by giving notice thereof to theother parties. Any notice, consent, request or other document given hereunder may be signed on behalf of any party by any duly authorizedrepresentative of that party.

ARTICLE VIII.ENFORCEMENT

8.1. Enforcement Action. At any time when a Reimbursement Event of Default or Prepayment Event under the Reimbursement Agreementhas occurred and is continuing, the Administrating Bank may proceed, in its own name, or as agent or otherwise, to protect and enforce itsrights, those of the other LOC Banks and those of the Company under this Agreement by suit in equity, action at law or other appropriateproceedings, whether for the specific performance of any covenant or agreement contained in this Agreement or otherwise, and whether ornot the Company shall have complied with any of the provisions hereof or proceeded to take any action authorized or permitted underapplicable law. Each and every remedy of the LOC Banks shall, to the extent permitted by law, be cumulative and shall be in addition to anyother remedy given hereunder or under the Reimbursement Agreement or now or hereafter existing at law or in equity or by statute.

8.2. Attorney-in-Fact. The Company hereby constitutes the Administrating Bank its true and lawful attorney, irrevocably, with full power (insuch attorney's name or otherwise), at any time when a Reimbursement Event of Default or Prepayment Event under the ReimbursementAgreement has occurred and is continuing, to enforce any of the obligations contained herein or to take any action or institute anyproceedings which to the Administrating Bank may seem necessary or advisable in the premises.

ARTICLE IX.SEVERABILITY; COUNTERPARTS

If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability ofthe remaining provisions shall not in any way be affected or impaired thereby.

This Agreement may be signed in two or more counterparts, each of which shall constitute an original but all of which when taken togethershall constitute but one contract, and shall become effective when it shall have been executed by all parties hereto and when theAdministrating Bank shall have received copies hereof which, when taken together, bear signatures of all parties hereto. Delivery of anexecuted counterpart of a signature page of this Agreement by facsimile transmission shall be as effective as delivery of a manually executedcounterpart of this Agreement.

ARTICLE X.GOVERNING LAW

This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

ARTICLE XI.SUCCESSION

Subject to Article IV hereof, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respectivesuccessors and assigns, but no assignment hereof, or of any right to any funds due or to become due under this Agreement, shall in any eventrelieve the Company or Entergy of their respective obligations hereunder.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers thereunto dulyauthorized as of the day and year first above written.

ENTERGY CORPORATION

By:



By


UNION BANK OF CALIFORNIA, N.A., asAdministrating Bank

By

Name: Title:

Exhibit 10(a)99

November 14, 2003

Mr. Mark T. Savoff662 Llagas Vista DriveMorgan Hill, CA 95037

Dear Mark:

On behalf of Entergy Services, Inc. ("ESI"), I would like to confirm our offer to you for the ESI system officer position of Executive VicePresident, Operations. The details of employment under this agreement (the "Agreement") are set forth below and supercede any other oral

or written employment offers, representations, agreements or contracts you may have received from, or entered into with, EntergyCorporation, ESI, or any other affiliate or subsidiary of Entergy Corporation (collectively, the "Entergy System") prior to the execution of

this Agreement, which prior offers, agreements or contracts you acknowledge are without effect.

1. Pre-Employment Contingencies. The employment contemplated by this Agreement is contingent upon your successful completion of acompany-arranged medical drug screen analysis and favorable security background and reference checks. Arrangements for the drug

screen will be made through our office upon your formal acceptance of this offer. Additionally, suitable documentation must beprovided in order to establish your identity and employment eligibility (I-9 INS certification). Finally, employment is contingent uponyour timely execution of this Agreement and the execution of this Agreement by an authorized agent for ESI. The earliest date upon

which these contingencies are met shall be the effective date of this Agreement.

2. Service At Will. The employment contemplated by this Agreement refers to employment by ESI or any other "System Company,"which shall mean Entergy Corporation and any other corporation 80% or more of whose stock (based on voting power or value) is

owned directly or indirectly by Entergy Corporation and any partnership or trade or business which is 80% or more controlled,directly or indirectly, by Entergy Corporation or by any other System Company, and shall include successors of all such entities. This

Agreement contemplates, and you agree that its provisions apply to, any System Company employer. You will devote substantially all ofyour full working time, attention and energy to the services required and will faithfully render your best efforts to promote, advance

and conduct the business of the Entergy System. Notwithstanding any other provision of this Agreement to the contrary, youremployment with ESI and any other System Company will be at-will and may be termina ted by you, ESI or any other System

Company employer with or without notice and with or without cause.

3. Base Salary. Your annual rate of pay shall be FIVE HUNDRED THOUSAND AND NO/100 ($500,000.00) DOLLARS or such greateramount as may be approved from time to time by the System Company then employing you, in its sole discretion, while you are

employed by such System Company in accordance with this Agreement (subject to all appropriate withholdings or other deductionsrequired by law or by the System Company's established policies), such salary to be payable in accordance with the System Company

employer's established payroll practices. If you should die while still employed in accordance with the terms of this Agreement, theamount of any monthly base salary that was earned by you prior to your death but not yet paid to you shall be paid to your estate. A

System Company employer shall have the right to require you to remit to it, or to withhold from other amounts payable to you, ascompensation or otherwise, an amount sufficient to satisfy all federal, state and local withholding tax requirements.

4. Additional Benefits. Upon employment, you are eligible for the following additional benefits:a. Executive Annual Incentive Plan. Beginning in the calendar year 2004, you will be eligible to participate in the Executive Annual

Incentive Plan ("EAIP") in accordance with its terms and conditions, with a target value of 70% of your annual base salary. Thefollowing generally illustrates the minimum, target and maximum payout opportunities for an entire year under the EAIP:

EAIP Payout Opportunity Achievement Level (expressed as % of Base Salary)

Minimum Target Maximum0% - 17.5% 70% 140%

$0 to $87,500 $350,000 $700,000

The actual award is based on a continuous level of achievement (between 25% and 200% of the 70% Target level) and is not bracketedat the 17.5%, 70% or 140% levels. Further, individual awards are discretionary.

b. Long Term Incentive Program. The Long Term Incentive Program ("LTIP") (a.k.a. Performance Unit Program) of the equity plan forwhich you are eligible ("Equity Plan") provides participants with performance units (each unit representing the cash equivalent of one

share of Entergy Corporation common stock) that will be earned by achieving pre-approved Entergy Corporation goals, as may beestablished by the Personnel Committee, for the applicable three-year performance period. Subject to Personnel Committee approval

and the terms and conditions of the Equity Plan, you will be eligible for a Target LTIP award of:8,500 performance units (with a maximum opportunity of 200% of that Target -- prorated) for the 2002 to 2004 performance

cycle; and,12,500 performance units (with a maximum opportunity of 200% of that Target -- prorated) for the 2003 to 2005 performance

cycle.

The 2002 to 2004 and the 2003 to 2005 performance cycles will be prorated based on the number of full months you are employedat System Management Level 2 with ESI or any other participating System Company during the applicable thirty-six (36) month

performance period. The 2004 to 2006 performance cycle opportunities for a full 36 months of participation are:

Annual Performance Units Program Achievement Level Opportunities Beginning in 2004

Minimum Target Maximum

0 or 3,125 Units 12,500 Units 25,000 Units

To illustrate how the 2002-2004 Annual Performance Units Program would work, assume that your employment begins onJanuary 1, 2004, and the Entergy System achieves the Target level of performance; your payout in early 2005 would be rounded

to 2,800 performance units (i.e., 8,500 Target performance units for the 36-month period times 12/36 prorated months ofparticipation equals 2,800 performance units, plus accumulated dividends). At maximum, the number of units would be 5,600

(i.e., 200% of the 2,800 units at Target.)

c. Annual Stock Option Plan. During your System Company employment, you will be eligible to receive stock option grants, if any, as maybe determined in the discretion of the Personnel Committee. Subject to approval by the Personnel Committee, in calendar year 2004, itis anticipated that you will be eligible to receive 40,300 stock options under the terms and conditions of the Equity Plan. Although it isanticipated that one-third of all options granted will vest at the first, second and third anniversaries of the date of grant if you are anactive System Company employee or otherwise eligible to vest on each such date, the vesting schedule and other grant terms will beestablished in accordance with the terms of the Equity Plan, as specified in the grant letter. Further, you will be required to invest

seventy-five percent (75%) of the after-tax net profit realized from the exercise of stock options into Entergy common stock, which mustbe held for a period of five years, or separa tion from service, if earlier.

d. Vacation. You will be eligible for five (5) weeks' vacation annually beginning in 2004.

e. Relocation Assistance (one month's salary). You will be eligible for benefits under Entergy's relocation program, including a lump sum

cash payment of one month's salary ($41,667); paid at the time you relocate, for miscellaneous relocation expenses.

f. Retirement Benefits.

You will be offered participation in both of the following non-qualified retirement plans, subject to their respective terms andconditions. Your actual benefit (at your retirement) will be calculated using the terms and conditions of the plan that produces the

higher benefit:

Retirement Plan and Pension Equalization Plan (PEP). The Pension Equalization Plan of Entergy Corporation and Subsidiaries(the "PEP") is an excess benefit retirement plan, which together with the qualified Retirement Plan accumulates benefits at the

rate of 1.5% for each year of service; and, is based upon your highest consecutive five-year average base salary plus annualincentive payments. You will become eligible for an unreduced benefit once you reach age 65. To the extent that this pensionformula produces a benefit payment that is greater than permitted by the qualified Retirement Plan, the PEP restores that

otherwise lost benefit.System Executive Retirement Plan (SERP). You will also be eligible to participate in the System Executive Retirement Plan of

Entergy Corporation and Subsidiaries (the "SERP"), which is an all-inclusive retirement plan that accumulates benefits atvarious rates that are approximately twice as much (for the first 15 years) as the 1.5% per year flat rate under the Retirement

Plan. The replacement rate that corresponds to your years of service is applied to your highest three-year average base salary andcorresponding annual incentive payments. Your participation in this Plan is contingent upon execution of a SERP Application

shortly after your hire date.

g. Change in Control Protection. You will be eligible to participate in the System Executive Continuity Plan of Entergy Corporation andSubsidiaries ("SECP"). Subject to the terms and conditions of the SECP, if a Change in Control should occur and you terminate your

employment for Good Reason (as defined in the SECP), your position would entitle you to a total cash benefit amount equal to three (3)times the sum of your annual base salary and Target EAIP in effect at the time of your separation. Additional benefits include gross-up

of any excise tax, plus subsidized medical and dental coverage for three years following your date of separation from service.

h. Remaining Benefits. You may participate in all other Entergy Corporation sponsored qualified employee benefit plans, welfare benefit

plans and programs for which you are eligible to participate, in accordance with the terms and conditions of such plans and programsas in effect and as may be amended from time to time. As of the date hereof, such plans and programs include the Executive DeferredCompensation Plan, qualified Savings Plan, qualified Retirement Plan, the BenefitsPlus welfare benefit plans, Defined ContributionRestoration Plan, Executive Disability Plan and Executive Financial Counseling Program. Your participation in some or all of these

plans will be contingent upon your execution of, and the acceptance by the plan's administrator of, a participation agreement, and uponyour satisfaction of other terms and conditions. Except as specifically set forth herein, the benefits provided under this Agreement shallin no way alter or affect the terms and conditions of any Syste m Company sponsored qualified employee benefit plans, non-qualified

employee benefits plans, programs, and welfare benefit plans in which you may otherwise be eligible to participate, and your eligibilityto participate in any such plans or programs shall continue to be determined in accordance with the terms and conditions of such plans

or programs, as may be amended from time to time.

5. Termination. You acknowledge and agree that this Agreement does not create any obligation on your part to work for ESI or any otherSystem Company, or an obligation for ESI or any other System Company to employ you, for any fixed period of time, and your

employment may be terminated at any time, for any reason. Upon termination, you may be eligible to participate in the Entergy SystemCompanies Severance Pay Plan for Officers and Directors, subject to certification by the Plan Administrator and under the terms andconditions of the Plan which currently provides for a total cash benefit amount equal to one (1) time your annual base salary plus one

week of base salary for each year of completed service.

6. Confidentiality. During your employment and thereafter, other than as authorized by a System Company or as required by law or as

necessary for you to perform your System Company duties, you shall hold in a fiduciary capacity for the benefit of the SystemCompanies and not disclose to any person or entity and not use for any purposes or release or disclose to any person, any trade secretsor proprietary information and materials (including, without limitation, all information concerning the business transactions, financial

arrangements, or marketing plans of any one or all of the System Companies) provided to you by any one or all of the SystemCompanies, or otherwise acquired by you in conjunction with your employment within the Entergy System, including, without

limitation, any information which if released to third persons would result in financial loss, loss of pecuniary advantage, or otherwise bedetrimental to the interests of any one of the System Companies, or any person transacting business with the System Companies

("Proprietary Information"). Disclosure of Proprietary Information pursuant to subpoena, judicial process, or request of agovernmental authority shall not be deemed a violation of this provision, provided that you give the System Company immediate noticeof any such subpoena or request and fully cooperate with any action by the System Company to object to, quash, or limit such request.

7. Injunctive Relief. In the event of any breach or threatened breach of the confidentiality provisions of this Agreement, all benefits

otherwise payable to you under this Agreement shall be cancelled and shall not vest or otherwise be payable to you, and any SystemCompany shall be entitled to an injunction, without bond, restraining you from violating the provisions of such Sections, in addition to

any other relief to which the System Company may be entitled.

8. Proprietary Rights. You agree to and hereby do assign to any System Company employing you all your rights in and to all inventions,

business plans, work models or procedures, whether patentable or not, which are made or conceived solely or jointly by you at any timeduring your employment or with the use of any System Company time and materials. You will disclose to such System Company allfacts known to you concerning such matters and, at the System Company's expense, do everything reasonably practicable to aid it in

obtaining and enforcing proper legal protection for, and vesting System Company in title to, such matters.

9. Representations and Warranties. You and ESI represent and warrant that neither is under a restriction or obligation inconsistent with

the execution of this Agreement or the performance of either party's obligations hereunder and neither knows of any reason why theperformance due under this Agreement should be hindered in any way.

10. Notices. Any notice required under this Agreement shall be in writing and deemed received (a) on the date delivered if hand-delivered,

or (b) on the third business day after being deposited in the United States mail, first class, registered or certified, return receiptrequested, with proper postage prepaid, and shall be addressed as follows, unless changed by any party in accordance with the notice

provisions of this Section:

If to a System Company, addressed in care of:

General CounselEntergy Services, Inc.

639 Loyola Avenue, 26th FloorNew Orleans, LA 70113

If to you, addressed as follows:

Mr. Mark T. Savoff662 Llagas Vista DriveMorgan Hill, CA 95037

11. Binding Agreement. Upon its effective date, this Agreement is binding upon you, ESI, and your and its successors, agents, heirs orassigns.

12. Nonassignability. Neither this Agreement nor the right to receive benefits hereunder may be assigned, encumbered or alienated by you

in any manner. Any attempt to so assign, encumber or alienate shall constitute a material violation of this Agreement and will beimmediate grounds for terminating your employment for cause.

13. Applicable Law. This Agreement shall be interpreted and enforced in accordance with the laws of the State of Delaware, without regard

to its principles of conflicts of laws.

14. Headings. Section headings contained in this Agreement are for reference only and shall not affect in any way the meaning or

interpretation of this Agreement.

15. Modifications and Waivers. This Agreement contains the entire understanding between ESI and you relating to your employment,

unless otherwise specifically provided. No provision of this Agreement may be modified, amended or waived except in a writing signedby both parties. The waiver by either party of a breach of any provision of this Agreement shall not operate to waive any subsequent

breach of the Agreement.

16. Severability. Should any part of this Agreement be found to be invalid or in violation of law, such part shall be of no force and effect

and the rest of this Agreement shall survive as valid and enforceable to the fullest extent permitted by law.

The offer of employment contemplated by this Agreement will remain outstanding until November 28, 2003. We look forward to your formalacceptance of our offer and to working with you. Please sign this Agreement and return the original signed Agreement to me. Please do not

hesitate to call should you have any questions or need any assistance.

Sincerely,

William E. MadisonSr. Vice President,

Human Resources & Administration

EnclosuresAccepted:_____________________________ on this _____ day of _________________, 2003.

Mark T. Savoff

(Following section to be executed by Authorized Agent of ESI after all Pre-employment Contingencies outlined in this Agreement have beenmet):

ENTERGY SERVICES, INC.,BY ITS DULY AUTHORIZED AGENT:

Date: _____________________________________

Signature: _________________________________

Printed Name: _____________________________

Title: _____________________________________

This document constitutes part of a prospectus covering Securities that have been registered under the Securities Act of 1933.

Exhibit 10(b)63

LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT

AMONG

SYSTEM ENERGY RESOURCES, INC.,

UNION BANK OF CALIFORNIA, N.A.,

as Administrating Bank and Funding Bank,

KEYBANK NATIONAL ASSOCIATION,

as Syndication Agent,

BANC ONE CAPITAL MARKETS, INC.,

as Documentation Agent

AND THE PARTICIPATING BANKS

NAMED HEREIN

DATED AS OF

DECEMBER 22, 2003

______________________________________________

UNION BANK OF CALIFORNIA, N.A.,as Lead Arranger

BANC ONE CAPITAL MARKETS, INC. and KEYBANK NATIONAL ASSOCIATION,as Co-Arrangers

LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT dated as of December 22, 2003, among SYSTEM ENERGYRESOURCES, INC., an Arkansas corporation (the "Company"), UNION BANK OF CALIFORNIA, N.A., as administrating bank (in suchcapacity, the "Administrating Bank"), UNION BANK OF CALIFORNIA, N.A., as issuer of the Letters of Credit (as defined below) (in suchcapacity, the "Funding Bank"), BANC ONE CAPITAL MARKETS, INC., as documentation agent (in such capacity, the "DocumentationAgent"), KEYBANK NATIONAL ASSOCIATION, as syndication agent (in such capacity, the "Syndication Agent" and, together with theDocumentation Agent and the Administrating Bank, collectively referred to as the "Agents"), and the banks listed on the signature pageshereof under the heading "Particip ating Banks" and the other banks from time to time party to this Agreement (each, a "Participating Bank"and, collectively, the "Participating Banks").

WHEREAS, the Company entered into two Participation Agreements dated as of December 1, 1988, each among (i) the Company, (ii)Meridian Trust Company and Stephen M. Carta, for themselves and as Owner Trustees (the "Owner Trustee"), (iii) the Original LoanParticipants, (iv) the GG1A Funding Corporation, as Funding Corporation, (v) Deutsche Bank Trust Company Americas (successor toBankers Trust Company) and Stanley Burg, for themselves and as Indenture Trustees (collectively, the "Indenture Trustee"), and (vi) each ofPublic Service Resources Corporation and Lease Management Realty Corporation IV, as applicable, as Owner Participant (each, an "InitialOwner Participant" and, collectively, the "Initial Owner Participants") and each relating to the acquisition of an undivided interest in theGrand Gulf Nuclear Station Unit No. 1 located in Claibo rne County, Mississippi ("Unit 1") through a trust for the benefit of each such InitialOwner Participant (each, a "Participation Agreement" and, collectively, the "Participation Agreements"), each of which undivided interest wasand continues to be leased to the Company pursuant to a Facility Lease dated as of December 1, 1988, among the Owner Trustee and theCompany and for the benefit of each such Initial Owner Participant and its successors, as supplemented by a Lease Supplement dated as ofApril l, 1989 and as supplemented by a Lease Supplement dated as of January 1, 1994 (each, a "Facility Lease" and, collectively, the "FacilityLeases");

WHEREAS, pursuant to the Letter of Credit and Reimbursement Agreement, dated as of March 3, 2003 (as amended, supplemented orotherwise modified from time to time, the "Existing Reimbursement Agreement"), among the Company, Union Bank of California, N.A., asadministrating bank, Union Bank of California, N.A., as funding bank (in such capacity, the "Existing Funding Bank"), and the participatingbanks named therein, the Existing Funding Bank issued to each of the Owner Participants (as defined in Section 1 hereof) an irrevocableletter of credit substantially in the form of Exhibit A thereto (the "Existing Letters of Credit"); and

WHEREAS, the Company has requested the Funding Bank to issue letters of credit to replace the Existing Letters of Credit; the FundingBank is willing, subject to the terms and conditions of this Agreement, to issue to each Owner Participant a new irrevocable letter of creditsubstantially in the form of Exhibit A hereto (each a "Letter of Credit", and, collectively, the "Letters of Credit").

NOW, THEREFORE, the Funding Bank, the Agents, the Participating Banks and the Company hereby agree as follows:

SECTION 1. Definitions. (a) Capitalized terms used herein and not otherwise defined herein shall have the respective meanings assignedthereto in Appendix A hereto. The following terms, as used herein, have the following respective meanings (such meanings to be applicable toboth the singular and plural forms of the terms defined):

"ABR", when used in reference to any drawing under a Letter of Credit or any Advance or Borrowing, refers to whether suchdrawing, Advance, or the Advances comprising such Borrowing, are bearing interest at a rate determined by reference to theAlternate Base Rate.

"ABR Advance" means an Advance in respect of which the Company has selected in accordance with Section 2(e)(i) hereof, or thisAgreement otherwise provides for, interest to be computed on the basis of the Alternate Base Rate.

"Adjusted LIBO Rate" means, with respect to any Eurodollar Rate Advance for any Interest Period, an interest rate per annum(rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) theStatutory Reserve Rate.

"Administrating Bank" has the meaning set forth in the preamble hereto.

"Advance" means any DLE Initial Advance, DLE Term Advance, EOL Initial Advance or EOL Term Advance, and "Advances"means DLE Initial Advances, DLE Term Advances, EOL Initial Advances and EOL Term Advances collectively.

"Aggregate Maximum Credit Amount" means $198,061,427.93.

"Agreement" means this Letter of Credit and Reimbursement Agreement, as the same may from time to time be amended,supplemented, restated or otherwise modified.

"Alternate Base Rate" means, for any day, a rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to thegreater of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%.For purposes hereof, "Prime Rate" shall mean the rate of interest per annum publicly announced from time to time by theAdministrating Bank in Los Angeles, California as the Union Bank Reference Rate; each change in the Prime Rate shall beeffective on the date such change is announced. The Prime Rate is a reference rate and does not necessarily represent the lowestor best rate actually charged to any customer. The Administrating Bank may make commercial loans or other loans at rates ofinterest at, above or below the Prime Rate. If the Administrating Bank shall have determined (which determination shall beconclusive absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate for any reason, including theinability or failure of the Administrating Bank to obtain sufficient quotations in accordance with the terms thereof, the AlternateBase Rate shall be determined without regard to clause (b) of the first sentence of this definition u ntil the circumstances givingrise to such inability no longer exist. Any change in the Alternate Base Rate due to a change in the Prime Rate or the FederalFunds Effective Rate shall be effective on the effective date of such change in the Prime Rate or the Federal Funds Effective Rate,respectively.

"Applicable Rate" means, for any day, (a) with respect to any drawing under a Letter of Credit that bears interest at a ratedetermined by reference to the Adjusted LIBO Rate or any Eurodollar Rate Advance subsequently made by the ParticipatingBanks in order to reimburse such drawing (including any Advances resulting from the subsequent Conversion of such EurodollarRate Advance), (i) for the period commencing on the date of such drawing (the "Draw Date") to and including the 60th dayfollowing the Draw Date, a rate per annum equal to the sum of (x) the Adjusted LIBO Rate for the Interest Period in effect plus(y) the Eurodollar Spread set forth below under the caption "Eurodollar Spread", based upon the ratings by Moody's and S&P,respectively, applicable on such date to the Index Debt, (ii) for the period following the 60th day following the Draw Date to andincluding the 180th day following the Draw Date, a rate per annum equal to the sum of (x) the Adjusted LIBO Rate in effect forsuch Interest Period plus (y) the Eurodollar Spread set forth below under the caption "Eurodollar Spread", based upon theratings by Moody's and S&P, respectively, applicable on such date to the Index Debt plus (z) 0.25% per annum and (iii) for theperiod following the 180th day following the Draw Date until the date that such Advance is due and payable, a rate per annumequal to the sum of (x) the Adjusted LIBO Rate in effect for such Interest Period plus (y) the Eurodollar Spread set forth belowunder the caption "Eurodollar Spread", based upon the ratings by Moody's and S&P, respectively, applicable on such date to theIndex Debt plus (z) 1.0% per annum; (b) with respect to the Participation Fees payable hereunder, the rate per annum set forthbelow under the caption &q uot;Participation Fee Rate", based upon the ratings by Moody's and S&P, respectively, applicable onsuch date to the Index Debt; and (c) with respect to the Commitment Fees payable hereunder, the rate per annum set forth belowunder the caption "Commitment Fee Rate", based upon the ratings by Moody's and S&P, respectively, applicable on such date tothe Index Debt:

Index DebtRatings

EurodollarSpread

ParticipationFee Rate

CommitmentFee Rate

Category 1 A3 or higher/A- orhigher

1.000% 1.000% 0.125%

Category 2 Baa1/BBB+ 1.125% 1.125% 0.150%

Category 3 Baa2/BBB 1.375% 1.375% 0.200%

Category 4 Baa3/BBB- 1.500% 1.500% 0.250%

Category 5 Ba1 or lower/BB+ orlower

2.375% 2.375% 0.375%

For purposes of the foregoing, (i) if either Moody's or S&P shall not have in effect a rating for the Index Debt (other than byreason of the circumstances referred to in the last sentence of this definition), then such rating agency shall be deemed to haveestablished a rating in Category 5; (ii) if the ratings established or deemed to have been established by Moody's and S&P for theIndex Debt shall fall within different Categories, the Applicable Rate shall be based on the lower of the two ratings; and (iii) if the

ratings established or deemed to have been established by Moody's and S&P for the Index Debt shall be changed (other than as aresult of a change in the rating system of Moody's or S&P), such change shall be effective as of the date on which it is firstannounced by the applicable rating agency. Each change in the Applicable Rate shall apply during the period commencing on theeffective date of such change and ending on the date immediately preceding the effe ctive date of the next such change. If therating system of Moody's or S&P shall change, or if either such rating agency shall cease to be in the business of rating corporatedebt obligations, the Company and the Banks shall negotiate in good faith to amend this definition to reflect such changed ratingsystem or the unavailability of ratings from such rating agency and, pending the effectiveness of any such amendment, theApplicable Rate shall be determined by reference to the rating most recently in effect prior to such change or cessation.

"Availability Agreement" means the Availability Agreement, dated as of June 21, 1974, among the Company and the OperatingCompanies, as amended heretofore and as amended from time to time.

"Availability Agreement Assignment" means the Thirty-Fifth Assignment of Availability Agreement, Consent and Agreement,dated as of December 22, 2003, among the Company, EAI, ELI, EMI, ENOI, and the Administrating Bank, substantially in theform of Exhibit I, and as amended from time to time in accordance with the terms of this Agreement.

"Bank" means the Funding Bank or any Participating Bank.

"Board" means the Board of Governors of the Federal Reserve System of the United States.

"Borrowing" means a borrowing consisting of Advances of the same Type and Interest Period made on the same date by theParticipating Banks, ratably in accordance with their respective Participation Percentages. A Borrowing may be referred toherein as being a "Type" of Borrowing, corresponding to the Type of Advances comprising such Borrowing. For purposes of thisAgreement, all Advances made as, or Converted to, the same Type and Interest Period on the same day shall be deemed a singleBorrowing until repaid or next Converted.

"Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in New York, New York, orLos Angeles, California, are authorized or required by law to close.

"Capital Funds Agreement" means the Capital Funds Agreement, dated as of June 21, 1974, between the Company and MiddleSouth Utilities, Inc. (the predecessor of Entergy), as amended and supplemented heretofore and from time to time.

"Closing Date" means December 22, 2003.

"Code" means the United States Internal Revenue Code of 1986, as amended, and the applicable regulations thereunder, as thesame may be amended from time to time.

"Collateral Agreements" means the Supplementary Capital Funds Agreement, the Availability Agreement, and the AvailabilityAgreement Assignment.

"Commitment Fee" has the meaning set forth in Section 3 hereof.

"Company" has the meaning set forth in the preamble hereto.

"Conversion", "Convert" or "Converted" each refers to a conversion of Advances pursuant to Section 2(f) hereof, including butnot limited to any selection of a longer or shorter Interest Period to be applicable to such Advances or any conversion of anAdvance as described in Section 2(f)(iv) hereof.

"Consolidated Indebtedness" means the Indebtedness of the Company and its consolidated Subsidiaries, as determined on aconsolidated basis in accordance with generally accepted accounting principles consistently applied.

"Date of Drawing" with respect to a Letter of Credit has the meaning set forth in such Letter of Credit.

"Date of Early Termination" with respect to a Letter of Credit has the meaning set forth in such Letter of Credit.

"Date of Issuance" with respect to the Letters of Credit means the date on which the Letters of Credit are issued upon request ofthe Company pursuant to Section 7(a) hereof.

"Debt Ratio" means, on any date of determination, the ratio of (i) the aggregate amount of Consolidated Indebtedness andPreferred Stock on such date to (ii) Total Liabilities and Equity as of such date.

"Deemed Loss Event" has the meaning assigned to that term in Appendix A to the Participation Agreements.

"Disclosure Documents" means the following documents, all of which have been furnished to the Banks prior to the Closing Date:(i) the Annual Report on Form 10-K with respect to the Company for the year ended December 31, 2002; (ii) the QuarterlyReport on Form 10-Q with respect to the Company for the quarter ended September 30, 2003; (iii) the Annual Report on Form10-K with respect to Entergy and the Operating Companies for the year ended December 31, 2002; and (iv) the Quarterly Reporton Form 10-Q with respect to Entergy and the Operating Companies for the quarter ended September 30, 2003.

"DLE Initial Advance" has the meaning assigned to that term in Section 2(c)(iii) hereof, and refers to an ABR Advance or aEurodollar Rate Advance (each of which shall be a "Type" of DLE Initial Advance). The Type of a DLE Initial Advance maychange from time to time when such DLE Initial Advance is Converted. For purposes of this Agreement, all DLE Initial Advancesof a Participating Bank (or portions thereof) made as, or Converted to, the same Type and Interest Period on the same day shallbe deemed a single DLE Initial Advance by such Participating Bank until repaid or next Converted.

"DLE Initial Advance Repayment Date" has the meaning assigned to that term in Section 2(b)(iii) hereof.

"DLE Term Advance" has the meaning assigned to that term in Section 2(c)(iv) hereof, and refers to an ABR Advance or aEurodollar Rate Advance (each of which shall be a "Type" of DLE Term Advance). The Type of a DLE Term Advance maychange from time to time when such DLE Term Advance is Converted. For purposes of this Agreement, all DLE Term Advancesof a Participating Bank (or portions thereof) made as, or Converted to, the same Type and Interest Period on the same day shallbe deemed a single DLE Term Advance by such Participating Bank until repaid or next Converted.

"Documentation Agent" has the meaning set forth in the preamble hereto.

"Dollars" or "$" means lawful money of the United States of America.

"EAI" means Entergy Arkansas, Inc., an Arkansas corporation.

"ELI" means Entergy Louisiana, Inc., a Louisiana corporation.

"EMI" means Entergy Mississippi, Inc., a Mississippi corporation.

"ENOI" means Entergy New Orleans, Inc., a Louisiana corporation.

"Entergy" means Entergy Corporation, a Delaware corporation, formerly Middle South Utilities, Inc., and the holder of all sharesof the common stock of the Company as of the date hereof.

"EOL Initial Advance" has the meaning assigned to that term in Section 2(c)(i) hereof, and refers to an ABR Advance or aEurodollar Rate Advance (each of which shall be a "Type" of EOL Initial Advance). The Type of a EOL Initial Advance maychange from time to time when such EOL Initial Advance is Converted. For purposes of this Agreement, all EOL InitialAdvances of a Participating Bank (or portions thereof) made as, or Converted to, the same Type and Interest Period on the sameday shall be deemed a single EOL Initial Advance by such Participating Bank until repaid or next Converted.

"EOL Initial Advance Repayment Date" has the meaning assigned to that term in Section 2(b)(ii) hereof.

"EOL Term Advance" has the meaning assigned to that term in Section 2(c)(ii) hereof, and refers to an ABR Advance or aEurodollar Rate Advance (each of which shall be a "Type" of EOL Term Advance). The Type of an EOL Term Advance maychange from time to time when such EOL Term Advance is Converted. For purposes of this Agreement, all EOL Term Advancesof a Participating Bank (or portions thereof) made as, or Converted to, the same Type and Interest Period on the same day shallbe deemed a single EOL Term Advance by such Participating Bank until repaid or next Converted.

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time.

"ERISA Affiliate" means any trade or business (whether or not incorporated) that is a member of a group of which the Companyis a member and which is treated as a single employer under Section 414 of the Code.

"Eurodollar", when used in reference to any Advance or Borrowing, refers to whether such Borrowing, or the Advancescomprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate.

"Eurodollar Rate Advance" means an Advance in respect of which the Company has selected in accordance with Section 2(e)(iii)hereof interest to be computed on the basis of the Adjusted LIBO Rate.

"Event of Default" means, unless otherwise specified, an event defined as an Event of Default under the Facility Leases.

"Event of Loss" has the meaning assigned to that term in Appendix A to the Participation Agreements.

"Excepted Encumbrances" shall mean, as of any particular time, any of the following:

(a) liens for taxes, assessments or governmental charges not then delinquent and liens for workmen's compensation awards andsimilar obligations not then delinquent and undetermined liens or charges incidental to construction, and liens for taxes,assessments or governmental charges then delinquent but the validity of which is being contested at the time by the Company ingood faith and as to which adequate reserves shall have been set aside on the books of the Company;

(b) any liens securing indebtedness, neither assumed nor guaranteed by the Company nor on which it customarily pays interest,existing upon real estate or rights in or relating to real estate acquired by the Company for substation, transmission line,transportation line, distribution line or right of way purposes;

(c) rights reserved to or vested in any governmental authority by the terms of any right, power, franchise, grant, license or permit,or by any provision of law, to terminate such right, power, franchise, grant, license or permit or to purchase or recapture or todesignate a purchaser of any of the property of the Company;

(d) rights currently reserved to or vested in others to take or receive any part of the power, gas, oil or other minerals or timbergenerated, developed, manufactured or produced by, or grown on, or acquired with, any property of the Company;

(e) easement, restrictions, exceptions or reservations in any property and/or rights of way of the Company for the purpose orroads, pipelines, substations, transmission lines, transportation lines, distribution lines, removal of coal or other minerals ortimber, and other like purposes, or for the joint or common use of real property, rights of way, facilities and/or equipment, anddefects, irregularities and deficiencies in titles of any property and/or rights of way, which do not materially impair in theaggregate the use of such property and/or rights of way for the purposes for which such property and/or rights of way are held bythe Company;

(f) rights reserved to or vested in any governmental authority to use, control or regulate any property of the Company;

(g) any obligations or duties, affecting the property of the Company, to any governmental authority with respect to any franchise,grant, license or permit; and

(h) any controls, liens, restrictions, regulations, easements, exceptions or reservations of any governmental authority applyingparticularly to nuclear fuel.

"Existing Funding Bank" has the meaning set forth in the preamble hereto.

"Existing Letters of Credit" has the meaning set forth in the preamble hereto and include (i) Irrevocable Transferable Letter ofCredit No. 306S234762, in the stated amount of $36,515,236.09, in favor of Textron Financial Corporation, and (ii) IrrevocableTransferable Letter of Credit No. 306S234761, in the stated amount of $161,546,191.84, in favor of RCMC I, Inc., in each caseissued by the Existing Funding Bank on March 3, 2003.

"Existing Reimbursement Agreement" has the meaning set forth in the preamble hereto.

"Facility Leases" has the meaning set forth in the preamble hereto.

"Federal Funds Effective Rate" means, for any day, the weighted average of the rates on overnight Federal funds transactionswith members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding BusinessDay by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, theaverage of the quotations for the day of such transactions received by the Administrating Bank from three Federal funds brokersof recognized standing selected by it.

"Fee Letter" means the letter agreement, dated the date hereof, among the Company, the Administrating Bank and the FundingBank, as the same may be amended, supplemented or otherwise modified from time to time.

"Financing Documents" means, unless otherwise specified, the Collateral Trust Indenture and the Underwriting Agreement.

"Fixed Charge Ratio" has the meaning set forth in Section 12(g) hereof.

"Funding Bank" has the meaning set forth in the preamble hereto.

"Grand Gulf" means the Grand Gulf Nuclear Station located in Claiborne County, Mississippi, including Unit 1.

"Holding Company Act" means the Public Utility Holding Company Act of 1935, as amended.

"Indebtedness" of any Person means at any date, without duplication, the following items to the extent required under generallyaccepted accounting principles to be disclosed in such Person's financial statements (including the notes thereto): (i) allobligations of such Person for borrowed money, or with respect to deposits or advances of any kind; (ii) all obligations of suchPerson evidenced by bonds, debentures, notes or similar instruments; (iii) all obligations of such Person upon which interestcharges are customarily paid; (iv) all obligations under leases which shall have been or should be, in accordance with generallyaccepted accounting principles, recorded as capital leases in respect of which such Person is liable as lessee; (v) all obligationsunder the Facility Leases (regardless of treatment in the financial statements or notes thereto); (vi) all obligations with respect toany sale and leaseback transaction permitted under Section 12(a)(v) he reof (regardless of treatment in the financial statements ornotes thereto); (vii) liabilities in respect of unfunded vested benefits under Plans, (viii) Withdrawal Liability incurred underERISA by such Person or any of its affiliates to any Multiemployer Plan, (ix) reimbursement obligations of such Person (whethercontingent or otherwise) in respect of letters of credit, bankers acceptances, surety or other bonds and similar instruments, (x) thebook value of any asset of such Person upon which a Lien is imposed for the purpose of securing Indebtedness of others; (xi) allobligations, contingent or otherwise, of such Person in connection with interest rate protection agreements or other similarinstruments, including currency swaps; (xii) all indebtedness created or arising under any conditional sale or other title retentionagreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender undersuch agreement in the event of default are limited to repo ssession or sale of such property); (xiii) all Indebtedness of anypartnership of which such Person is a general partner; and (xiv) obligations of such Person under direct or indirect guaranties inrespect of, and obligations (contingent or otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor againstloss in respect of, indebtedness or obligations of others of the kinds referred to above; provided, however, that the liabilities inclauses (vii) and (viii) above will only be counted as "Indebtedness" to the extent that they are required to be capitalized on thebalance sheet of such Person under generally accepted accounting principles.

"Indenture Event of Default" has the meaning assigned to that term in Appendix A to the Participation Agreements.

"Index Debt" means senior, secured, long-term indebtedness for borrowed money of the Company that is not guaranteed by anyother Person or subject to any other credit enhancement.

"Interest Expense" has the meaning set forth in Section 12(g) hereof.

"Interest Period" means with respect to any Eurodollar Rate Advance, the period commencing on the date of such Advance andending on the numerically corresponding day in the calendar month that is one, two, three or six months thereafter, as theCompany may elect, provided, that (i) if any Interest Period would end on a day other than a Business Day, such Interest Periodshall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendarmonth, in which case such Interest Period shall end on the next preceding Business Day and (ii) any Interest Period thatcommences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in thelast calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period.For purposes hereof, the date of a Eurodollar Rate Advance initially shall be the da te on which such Advance is made and, in thecase of an Advance that has been Converted, thereafter shall be the effective date of the most recent Conversion or continuationof such Advance.

"Letter of Credit" has the meaning set forth in the preamble hereto.

"LIBO Rate" means, with respect to any Eurodollar Rate Advance for any Interest Period, the rate, as determined by theAdministrating Bank, at which deposits in Dollars are offered to the Administrating Bank in the interbank eurodollar marketwhere its eurodollar and foreign currency and exchange operations are then being conducted, at approximately 11:00 a.m.,London time, two Business Days before the first day of such Interest Period in an amount substantially equal to Union Bank ofCalifornia, N.A.'s Participation Percentage of such Eurodollar Rate Loan and for a period equal to such Interest Period.

"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind inrespect of such asset. For the purposes of this Agreement, a Person or any of its Subsidiaries shall be deemed to own subject to aLien any asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement,capital lease or other title retention agreement relating to such asset.

"Maximum Available Credit Amount" with respect to any Letter of Credit means, at any date, the then Maximum Available CreditAmount, as defined in such Letter of Credit.

"Maximum Credit Amount" with respect to any Letter of Credit means, at any date, the then Maximum Credit Amount, asdefined in such Letter of Credit.

"Maximum Drawing Amount" with respect to a Letter of Credit means, at any date, the then Maximum Drawing Amount, asdefined in such Letter of Credit.

"Moody's" means Moody's Investors Service, Inc.

"Mortgage" means the Mortgage and Deed of Trust, dated as of June 15, 1977, to The Bank of New York (successor to UnitedStates Trust Company of New York) and Douglas J. MacInnes (successor to Gerard P. Ganey and Malcolm J. Hood), as amendedand supplemented from time to time.

"Multiemployer Plan" means a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which the Company or anyERISA Affiliate (other than one considered an ERISA Affiliate only pursuant to subsection (m) or (o) of Code Section 414) ismaking or accruing an obligation to make contributions, or has within any of the preceding five plan years made or accrued anobligation to make contributions.

"Notice of Drawing" means a notice substantially in the form of Exhibit B hereto.

"Obligations" means, with regard to any Person at any date, without duplication, (i) all obligations of such Person for borrowedmoney, (ii) all obligations of such Person with respect to deposits or advances of any kind, or for the deferred purchase price ofproperty or services, (iii) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (iv) allobligations of such Person upon which interest charges are customarily paid, (v) all obligations under leases relating to any saleand leaseback transaction permitted under Section 12(a)(v) hereof, (vi) all obligations under leases which shall have been orshould be, in accordance with generally accepted accounting principles, recorded as capital leases in respect of which such Personis liable as lessee, (vii) reimbursement obligations of such Person in respect of letters of credit, bankers acceptances, surety orother bonds and similar instruments, and (viii) obligations of such Pe rson under direct or indirect guaranties in respect of, andobligations to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness orobligations of others of the kinds referred to above; provided, however, that obligations under clause (ii), (vii), or (viii) above shallnot be included in this definition to the extent that such obligations are being contested by such Person in good faith and in anappropriate manner.

"Operating Companies" means EAI, ELI, EMI and ENOI, each being an "Operating Company".

"Original Reimbursement Agreement" means the Reimbursement Agreement, dated as of December 1, 1988, among the Company,Chemical Bank, as administrating bank, The Fuji Bank, Limited, as funding bank, and the participating banks named therein.

"Owner Participant" means RCMC I, Inc. (formerly known as RCMC Del., Inc.), assignee in interest of Resources CapitalManagement Corporation, assignee in interest of Public Service Resources Corporation and/or Textron Financial Corporation,assignee in interest of Lease Management Realty Corporation IV, as the case may be, and their respective permitted successorsand assigns.

"Owner Trustee" has the meaning set forth in the preamble hereto.

"Participant" has the meaning set forth in Section 23(a) hereof.

"Participating Banks" means the banks whose names are listed on the signature pages hereof under the heading "ParticipatingBanks" and any other financial institution that shall have become a party hereto pursuant to an assignment and assumptionagreement executed and delivered pursuant to Section 23(b), each being a "Participating Bank".

"Participation Agreements" has the meaning set forth in the preamble hereto.

"Participation Fee" has the meaning set forth in Section 3 hereof.

"Participation Percentage" with respect to a Participating Bank means the percentage set forth opposite such Participating Bank'sname in Schedule 1 hereto or, in the case of a Participating Bank party to an assignment and assumption agreement executed anddelivered to the Administrating Bank pursuant to Section 23(b), the percentage set forth opposite such Participating Bank's namein such assignment and assumption agreement.

"Participation Transfer Date" has the meaning set forth in Section 5(c) hereof.

"Participation Transfer Period" has the meaning set forth in Section 5(c) hereof.

"PBGC" means the Pension Benefit Guaranty Corporation referred to and defined in ERISA, and any entity succeeding to any orall of its functions under ERISA.

"Person" means an individual, a corporation, a partnership, a limited liability company, an association, a trust or any other entityor organization, including a government or political subdivision or an agency or instrumentality thereof.

"Plan" shall mean any pension plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section412 of the Code and which is maintained for employees of the Company or any ERISA Affiliate.

"Preferred Stock" means any mandatorily redeemable preferred stock of the Company.

"Prepayment Event" has the meaning set forth in Section 13 hereof.

"Regulation D" means Regulation D of the Board as from time to time in effect and all official rulings and interpretationsthereunder or thereof.

"Reimbursement Default" means any event or condition which constitutes a Reimbursement Event of Default or which with thegiving of notice or the lapse of time or both would, unless cured or waived, become a Reimbursement Event of Default.

"Reimbursement Event of Default" has the meaning set forth in Section 13 hereof.

"Reportable Event" means any reportable event as defined in Section 4043 (b) of ERISA or the regulations issued thereunder withrespect to a Plan (other than a Plan maintained by an ERISA Affiliate which is considered an ERISA Affiliate only pursuant to

subsection (m) or (o) of Code Section 414).

"Required Banks" means at any time Participating Banks whose aggregate Participation Percentages are equal to at least 66-2/3% at such time.

"SEC" means the Securities and Exchange Commission of the United States of America or any successor agency.

"Significant Operating Company" means an Operating Company whose entitlement percentage under the UPSA exceeds 20%.

"Significant Operating Group" means any two or more Operating Companies whose entitlement percentage under the UPSAexceeds 20% in the aggregate.

"S&P" shall mean Standard & Poor's Ratings Services.

"Stated Expiration Date" means May 30, 2007, as such date may be extended from time to time pursuant to Section 19 hereof.

"Statutory Reserve Rate" means a fraction (expressed as a decimal), the numerator of which is the number one and thedenominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal,special, emergency or supplemental reserves) expressed as a decimal established by the Board to which the Administrating Bankis subject for eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in Regulation D). Such reservepercentages shall include those imposed pursuant to Regulation D. Drawings under a Letter of Credit that bear interest at a ratedetermined by reference to the Adjusted LIBO Rate and Eurodollar Rate Advances shall be deemed to constitute eurocurrencyfunding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that maybe available from time to time to any Bank under Regulation D or any comparable regulation. The St atutory Reserve Rate shallbe adjusted automatically on and as of the effective date of any change in any reserve percentage.

"Subsidiary" means with respect to any Person (herein referred to as the "parent"), any corporation, association or other businessentity (a) of which securities or other ownership interests representing more than 50% of the ordinary voting power are, at thetime any determination is being made, owned, controlled or held or (b) which is, at the time any determination is made, otherwisecontrolled (by contract or agreement or otherwise) by the parent or one or more subsidiaries of the parent or by the parent andone or more subsidiaries of the parent.

"Supplementary Capital Funds Agreement" means the Thirty-Fifth Supplementary Capital Funds Agreement and Assignmentdated as of December 22, 2003, among the Company, Entergy and the Administrating Bank, substantially in the form of ExhibitH hereto and as amended from time to time in accordance with the terms of this Agreement.

"Syndication Agent" has the meaning set forth in the preamble hereto.

"Tax" and "Taxes" have the meanings set forth in Section 4(e) hereof.

"Termination Date" with respect to any Letter of Credit means the earliest of (A) 10:00 a.m. (New York time) on the Date of EarlyTermination (as defined in such Letter of Credit) applicable to such Letter of Credit, (B) 5:00 p.m. (New York time) on the date onwhich the Owner Participant to which such Letter of Credit is issued surrenders such Letter of Credit for cancellation to theFunding Bank as provided therein, (C) 5:00 p.m. (New York time) on the date on which the Funding Bank pays a Final Draw (asdefined in such Letter of Credit), and (D) either (I) if a draft and certificate, all in strict conformity with the terms and conditionsof such Letter of Credit, are presented after 10:00 a.m. (New York time) but prior to 5:00 p.m. (New York time) on the StatedExpiration Date, 5:00 p.m. (New York time) on the Business Day following the Stated Expiration Date, or otherwise (II) 5:00 p.m.(New York time) on the Stated Expiration Date.

"Termination Event" means (i) a Reportable Event, or (ii) the withdrawal of the Company or an ERISA Affiliate from a Planduring a plan year in which it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA, or (iii) the filing of anotice of intent to terminate a Plan or the treatment of a Plan amendment as a termination under Section 4041 of ERISA, or (iv)the institution of proceedings to terminate a Plan by the PBGC, or (v) any other event or condition which is reasonably expectedto constitute grounds for the imposition of a lien in favor of a Plan for the termination of, or the appointment of a trustee toadminister, a Plan under Section 4042 of ERISA.

"Total Liabilities and Equity" means, on any date of determination, the consolidated total liabilities and equity of the Company asshown on the most recent financial statement of the Company filed with the SEC on Form 10-K or Form 10-Q.

"Transaction Documents" means this Agreement, the Participation Agreements, the Indentures, the Notes, the Facility Leases, theLetters of Credit, the Fee Letter and the Collateral Agreements.

"Transferred Amount" has the meaning set forth in Section 5(c) hereof.

"Type" has the meaning assigned to such term in the definitions of "DLE Initial Advance", "DLE Term Advance", "EOL InitialAdvance", "EOL Term Advance" and "Borrowing" herein.

"Unit 1" has the meaning specified in the preamble hereto.

"UPSA" means the Unit Power Sales Agreement, dated as of June 10, 1982, among the Company and the Operating Companies,as amended heretofore and as amended from time to time.

"Withdrawal Liability" means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from suchMultiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

(b) The definitions in Section 1 shall apply equally to both the singular and plural forms of the terms defined. Unless otherwise specifiedherein, all accounting terms used herein shall be interpreted in accordance with generally accepted accounting principles, and all accountingdeterminations with respect to any Person required to be made hereunder shall be made, and all financial statements of any Person requiredto be delivered hereunder shall be prepared, in accordance with generally accepted accounting principles as in effect from time to time,applied on a basis consistent (except for changes concurred in by such Person's independent public accountants) with the most recent auditedconsolidated financial statements of such Person and its Subsidiaries delivered to the Banks. As used herein, the words "include", "includes",and "including" shall be deemed to be followed by the phrase "without limitation".

SECTION 2. Reimbursement and Advances. (a) Reimbursement on Demand. Subject to the provisions of subsections (b), (c) and (e), below, theCompany hereby agrees to pay (whether with the proceeds of Advances made pursuant to subsection (c), below, or otherwise) to the FundingBank on demand (i) on and after each date on which the Funding Bank shall pay any amount under a Letter of Credit pursuant to any draft,but only after so paid by the Funding Bank, a sum equal to such amount so paid (which sum shall constitute a demand loan from the FundingBank to the Company from the date of such payment by the Funding Bank until so paid by the Company), plus (ii) if the Company does notpay the Funding Bank such sum in full by 1:00 p.m., New York City time, on the same Business Day on which the Funding Bank shall havemade such payment, interest on any amount remaining unpaid by the Company to the Funding Bank under clause (i) above, from the date onwhich the Fundin g Bank shall have paid such amount under such Letter of Credit until payment in full, at an interest rate per annum equalto the Alternate Base Rate in effect from time to time.

(b) Reimbursement Upon the Occurrence of Certain Events. The Company shall reimburse the Funding Bank for each payment made by theFunding Bank under a Letter of Credit in accordance with the following paragraphs (i), (ii) and (iii):

(i) Reimbursement Defaults. If, on the date of any payment by the Funding Bank of a drawing under a Letter of Credit, either anEvent of Default or a Reimbursement Default has occurred and is continuing, the Company shall pay to the Funding Bank notlater than 1:00 p.m., New York City time, on or prior to the earlier of (x) the Stated Expiration Date and (y) the fifth dayfollowing the Business Day on which the Funding Bank shall make such payment a sum equal to the amount so paid under suchLetter of Credit, together with all accrued interest thereon at a rate per annum equal to the Alternate Base Rate in effect fromtime to time.

(ii) Events of Loss. Subject to paragraph (i) above, if, on the date of any payment by the Funding Bank of a drawing under aLetter of Credit, an Event of Loss has occurred and is continuing, the Company shall pay to the Funding Bank (whether with theproceeds of Advances made pursuant to subsection (c)(ii), below, or otherwise) not later than 1:00 p.m., New York City time, onor prior to the earlier of (x) the Stated Expiration Date and (y) the 35th day following the Business Day on which the FundingBank shall make such payment (the "EOL Initial Advance Repayment Date") a sum equal to the amount so paid under such Letterof Credit, together with all accrued interest thereon pursuant to subsection (e) below.

(iii) Deemed Loss Events and Other Circumstances. Subject to paragraphs (i) and (ii) above, if, on the date of any payment by theFunding Bank of a drawing under a Letter of Credit, (A) a Deemed Loss Event has occurred and is continuing or (B) any otherevent or circumstance (other than a Reimbursement Default, an Event of Default or an Event of Loss) giving rise to such drawinghas occurred, the Company shall reimburse the Funding Bank (whether with the proceeds of Advances made pursuant tosubsection (c)(iv) below or otherwise) not later than 1:00 p.m., New York City time, on or prior to the earlier of (x) the StatedExpiration Date and (y) the 90th day following the Business Day on which the Funding Bank shall make such payment (the "DLEInitial Advance Repayment Date") a sum equal to the amount so paid under such Letter of Credit, together with all accruedinterest thereon pursuant to subsection (e) below.

(c) Advances. Each Participating Bank agrees to make Advances for the account of the Company from time to time upon the terms andsubject to the conditions set forth below:

(i) EOL Initial Advances. If the Funding Bank shall make any payment under a Letter of Credit under the circumstances set forthin subsection (b)(ii) above (such payment referred to herein as an "EOL Payment"), then each Participating Bank shall beobligated to make, and each Participating Bank's payment made to the Funding Bank pursuant to Section 5 hereof in respect ofsuch EOL Payment shall be deemed to constitute, an advance made for the account of the Company by such Participating Bankon the date of such payment (each such advance being an "EOL Initial Advance" made by such Participating Bank and,collectively, the "EOL Initial Advances"). Each such EOL Initial Advance shall be made as an ABR Advance, shall bear interest atthe Alternate Base Rate and shall be entitled to be Converted in accordance with subsection (f) below. The Company shall repaythe unpaid principal amount of each EOL Initial Advance in accordance with subsection (h)(i), below. The Company may repaythe principal amount of any EOL Initial Advance with (and to the extent of) the proceeds of an EOL Term Advance madepursuant to paragraph (ii) below, and may prepay EOL Initial Advances in accordance with subsection (i) below.

(ii) EOL Term Advances. If the Funding Bank shall make any EOL Payment, then, subject to the satisfaction of the conditionsprecedent set forth in Section 7(f) hereof on and as of the EOL Initial Advance Repayment Date, each Participating Bank agreesto make one or more advances for the account of the Company (each such advance being an "EOL Term Advance" made by suchParticipating Bank and, collectively, the "EOL Term Advances") on the EOL Initial Advance Repayment Date in an aggregateprincipal amount equal to the amount of such Participating Bank's EOL Initial Advances maturing on such EOL Initial AdvanceRepayment Date. All EOL Term Advances comprising a single Borrowing shall be made upon written notice given by theCompany to the Administrating Bank not later than 10:00 a.m. (New York time) (A) in the case of a Borrowing comprised of ABRAdvances, on the Business Day of such proposed Borrowing and (B) in the case of a Borrowing comprised of Eurodollar RateAdvances, three Business Days prior to the date of such proposed Borrowing. The Administrating Bank shall notify eachParticipating Bank of the contents of such notice promptly after receipt thereof. Each such notice shall specify therein thefollowing information: (1) the date on which such Borrowing is to be made (which date shall be the EOL Initial AdvanceRepayment Date), (2) the principal amount of EOL Term Advances comprising such Borrowing, (3) the Type of Borrowing and(4) the duration of the initial Interest Period, if applicable, proposed to apply to the EOL Term Advances comprising suchBorrowing. The proceeds of each Participating Bank's EOL Term Advances shall be applied solely to the repayment of the EOLInitial Advances made by such Participating Bank and shall in no event be made available to the Company. The Company shallrepay the unpaid principal amount of each EOL Term Advance in accordance with subsection (h)(ii) below, and may prepay EOLTerm Advances i n accordance with subsection (i) below.

(iii) DLE Initial Advances. If the Funding Bank shall make any payment under a Letter of Credit under the circumstances setforth in subsection (b)(iii) above (such payment referred to herein as a "DLE Payment"), then each Participating Bank shall beobligated to make, and each Participating Bank's payment made to the Funding Bank pursuant to Section 5 hereof in respect ofsuch DLE Payment shall be deemed to constitute, an advance made for the account of the Company by such Participating Bankon the date of such payment (each such advance being a "DLE Initial Advance" made by such Participating Bank and,collectively, the "DLE Initial Advances"). Each such DLE Initial Advance shall be made as an ABR Advance, shall bear interest atthe Alternate Base Rate and shall be entitled to be Converted in accordance with subsection (f) below. The Company shall repaythe unpaid principal amount of each DLE Initial Advanc e in accordance with subsection (h)(iii) below. The Company may repaythe principal amount of any DLE Initial Advance with (and to the extent of) the proceeds of a DLE Term Advance made pursuantto paragraph (iv) below, and may prepay DLE Initial Advances in accordance with subsection (i) below.

(iv) DLE Term Advances. If the Funding Bank shall make any DLE Payment, then, subject to the satisfaction of the conditionsprecedent set forth in Section 7(g) hereof on and as of the DLE Initial Advance Repayment Date, each Participating Bank agrees

to make one or more advances for the account of the Company (each such advance being a "DLE Term Advance" made by suchParticipating Bank and, collectively, the "DLE Term Advances") on the DLE Initial Advance Repayment Date in an aggregateprincipal amount equal to the amount of such Participating Bank's DLE Initial Advances maturing on such DLE Initial AdvanceRepayment Date. All DLE Term Advances comprising a single Borrowing shall be made upon written notice given by theCompany to the Administrating Bank not later than 10:00 a.m. (New York time) (A) in the case of a Borrowing comprised of ABRAdvances, on the Business Day of such proposed Borrowing and (B) in the case of a Borrowing comprised of Eurodollar RateAdvances, three Business Days prior to the date of such proposed Borrowing. The Administrating Bank shall notify eachParticipating Bank of the contents of such notice promptly after receipt thereof. Each such notice shall specify therein thefollowing information: (1) the date on which such Borrowing is to be made (which date shall be the DLE Initial AdvanceRepayment Date), (2) the principal amount of DLE Term Advances comprising such Borrowing, (3) the Type of Borrowing and(4) the duration of the initial Interest Period, if applicable, proposed to apply to the DLE Term Advances comprising suchBorrowing. The proceeds of each Participating Bank's DLE Term Advances shall be applied solely to the repayment of the DLEInitial Advances made by such Participating Bank and shall in no event be made available to the Company. The Company shallrepay the unpaid principal amount of each DLE Term Advance in accordance with subsection (h)(iv) below, and may prepay DLETerm Advances in accordance with subsection (i) below.

(d) Application of Payments. Any payment made by the Company pursuant to subsection (a) or (b) above of less than all amounts owed to theFunding Bank pursuant thereto shall be applied first to interest owed pursuant thereto and second to the amount of the unreimburseddrawings under the Letters of Credit; provided, however, that if, at the time of any payment made by the Company pursuant to subsection (a)or (b) above, there shall be amounts due from the Company pursuant to subsection (a) or (b) above with respect to more than one Letter ofCredit, such payment shall be applied to all such Letters of Credit pro rata (in the above-mentioned order of priority) in accordance with theproportion that the aggregate amount due from the Company pursuant to subsection (a) or (b) above with respect to each such Letter ofCredit bears to the aggregate amount due from the Company pursuant to subsection (a) or (b) above with respect to all such Letters of Credit.

(e) Interest on Advances. The Company shall pay interest on the unpaid principal amount of each Advance from the date of such Advanceuntil such principal amount is paid in full at the applicable rate set forth below:

(i) Alternate Base Rate. Except to the extent that the Company shall elect to pay interest on any Advance for any Interest Periodpursuant to paragraph (iii) below, the Company shall pay interest on each Advance from the date thereof until the date suchAdvance is due, at an interest rate per annum equal to the Alternate Base Rate in effect from time to time. The Company shall payinterest on each Advance bearing interest in accordance with this subsection monthly in arrears on the first Business Day of eachcalendar month, on the date of Conversion of any ABR Advance to a Eurodollar Rate Advance, including any such Advancemade pursuant to subsection (b) above, and on the Stated Expiration Date or the earlier date for repayment of such Advance.

(ii) Interest Periods. Subject to the other requirements of this subsection (e) and in the definition of "Interest Period" contained inSection 1 hereof, the Company may from time to time elect to have the interest on all Advances comprising part of the sameBorrowing determined and payable for a specified Interest Period in accordance with paragraph (iii) below.

(iii) Eurodollar Rate. Subject to the requirements of this subsection (e) and subsection (f) below, the Company may from time totime elect to have any Advances comprising part of the same Borrowing Converted to Eurodollar Rate Advances. The InterestPeriod applicable to (x) any EOL Initial Advance that has been so Converted shall be of one month's duration, (y) any DLEInitial Advance that has been so Converted shall be of one, two or three whole months' duration, as the Company shall select inits notice delivered to the Administrating Bank pursuant to subsection (f) below and (z) any DLE Term Advance or EOL TermAdvance shall be of one, two, three or six whole months' duration, as the Company shall select in its notice delivered to theAdministrating Bank pursuant to subsection (f) below. If the Company shall have made such election, the Company shall payinterest on such Eurodollar Rate Advances at the Applicable Rate for the applicable Interest Period for such Eurodolla r RateAdvances, payable monthly in arrears on the first Business Day of each calendar month, on the date of Conversion of anyEurodollar Rate Advance, including any such Advance made pursuant to subsection (b) above, and on the Stated Expiration Dateor the earlier date for repayment of such Advance.

(iv) Interest Rate Determinations. The Administrating Bank shall give prompt notice to the Company and the Participating Banksof the Adjusted LIBO Rate determined from time to time by the Administrating Bank to be applicable to each Eurodollar RateAdvance.

(f) Conversion of Advances. The Company may elect to Convert one or more Advances of any Type to one or more Advances of the same orany other Type on the following terms and subject to the following conditions:

(i) Each Conversion shall be made as to all Advances comprising a single Borrowing upon irrevocable written notice given by theCompany to the Administrating Bank not later than 10:00 a.m. (New York time) on the third Business Day prior to the date of theproposed Conversion. The Administrating Bank shall notify each Participating Bank of the contents of such notice promptlyafter receipt thereof. Each such notice shall specify therein the following information: (A) the date of such proposed Conversion(which in the case of Eurodollar Rate Advances shall be the last day of the Interest Period then applicable to such Advances to beConverted), (B) the Type of, and Interest Period, if any, applicable to the Advances proposed to be Converted, (C) the aggregateprincipal amount of Advances proposed to be Converted, and (D) the Type of Advances to which such Advances are proposed tobe Converted and the Interest Period, if any, to be applicable thereto.

(ii) During the continuance of a Reimbursement Default (other than a Reimbursement Event of Default), the right of theCompany to Convert Advances to Eurodollar Rate Advances shall be suspended, and all Eurodollar Rate Advances thenoutstanding shall be Converted to ABR Advances on the last day of the Interest Period then in effect, if, on such day, aReimbursement Default (other than a Reimbursement Event of Default) shall be continuing.

(iii) During the continuance of a Reimbursement Event of Default, the right of the Company to Convert Advances to EurodollarRate Advances shall be suspended, and upon the occurrence of a Reimbursement Event of Default, all Eurodollar Rate Advancesthen outstanding shall immediately, without further act by the Company, be Converted to ABR Advances.

(iv) If no notice of Conversion is received by the Administrating Bank as provided in paragraph (i) above with respect to anyoutstanding Eurodollar Rate Advances on or before the third Business Day prior to the last day of the Interest Period then ineffect for such Eurodollar Rate Advances, the Administrating Bank shall treat such absence of notice as a deemed notice ofConversion providing for such Advances to be Converted to ABR Advances on the last day of such Interest Period.

(g) Other Terms Relating to the Making and Conversion of Advances. (i) Notwithstanding anything in subsections (c), (e) and (f) above to thecontrary:

(A) at no time shall more than five different Borrowings be outstanding hereunder; and

(B) each Borrowing consisting of Eurodollar Rate Advances or ABR Advances shall be in the aggregate principalamount of at least $5,000,000.

(ii) Each notice of Conversion pursuant to subsection (f) above shall be irrevocable and binding on the Company.

(h) Repayment of Advances. (i) The unpaid principal amount of each EOL Initial Advance, together with all accrued and unpaid interestthereon, shall be due and payable and repaid in full by the Company on the earlier to occur of (A) the EOL Initial Advance Repayment Dateand (B) upon the occurrence of a Reimbursement Default, an Event of Default or an Indenture Event of Default, the date two Business Daysafter the date on which demand for repayment thereof is made by the Funding Bank, the Required Banks or the Administrating Bank actingon behalf of the Required Banks.

(ii) The unpaid principal amount of each EOL Term Advance, together with all accrued and unpaid interest thereon, shall be due andpayable and repaid in full by the Company on the earliest to occur of (A) the date 330 days from the date of making such EOL TermAdvance, (B) the Stated Expiration Date and (C) upon the occurrence of a Reimbursement Default, an Event of Default or an IndentureEvent of Default, the date two Business Days after the date on which demand for repayment thereof is made by the Funding Bank, theRequired Banks or the Administrating Bank acting on behalf of the Required Banks.

(iii) The unpaid principal amount of each DLE Initial Advance, together with all accrued and unpaid interest thereon, shall be due andpayable and repaid in full by the Company on the earlier to occur of (A) the DLE Initial Advance Repayment Date and (B) upon theoccurrence of a Reimbursement Default, an Event of Default or an Indenture Event of Default, the date two Business Days after the date onwhich demand for repayment thereof is made by the Funding Bank, the Required Banks or the Administrating Bank acting on behalf of theRequired Banks .

(iv) The unpaid principal amount of each DLE Term Advance, together with all accrued and unpaid interest thereon, shall be due andpayable and repaid in full by the Company on the earliest to occur of (A) the date 270 days from the date of making such DLE TermAdvance, (B) the Stated Expiration Date and (C) upon the occurrence of a Reimbursement Default, an Event of Default or an IndentureEvent of Default, the date two Business Days after the date on which demand for repayment thereof is made by the Funding Bank, theRequired Banks or the Administrating Bank acting on behalf of the Required Banks.

(i) Prepayment of Advances. (i) The Company shall have no right to prepay any principal amount of any Advances except in accordance withparagraph (ii) below.

(ii) The Company may, (A) upon at least three Business Days' irrevocable written notice to the Administrating Bank, in the case of anyEurodollar Rate Advance, and (B) upon at least one Business Day's irrevocable written notice to the Administrating Bank, in the case of anyABR Advance, in each case stating the proposed date and aggregate principal amount of the prepayment and the specific Borrowing(s) to beprepaid, and if such notice is given, the Company shall, prepay, in whole or ratably in part, together with accrued interest to the date of suchprepayment on the principal amount prepaid and any amounts due pursuant to Section 2(l) hereof, the outstanding principal amount of allAdvances comprising the same Borrowing, in each case as the Company shall designate in such notice; provided, however, that each partialprepayment shall be in an aggregate principal amount not less than $5,000,000, or, if less, the aggregate principal amount of all Advancesthen outstanding.

(j) Default Interest. Any amounts payable by the Company hereunder that are not paid when due shall (to the fullest extent permitted by law)bear interest, from the date when due until paid in full, at the Alternate Base Rate plus 2% per annum, payable on demand.

(k) Evidence of Indebtedness. The Funding Bank and each Participating Bank shall maintain, in accordance with their usual practice, anaccount or accounts evidencing the indebtedness of the Company resulting from each drawing under a Letter of Credit (in the case of theFunding Bank) and from each Advance (in the case of each Participating Bank) made from time to time hereunder and the amounts ofprincipal and interest payable and paid from time to time hereunder.

(l) Breakage Costs. In the event of (i) the payment of any principal of any Eurodollar Rate Advance other than on the last day of an InterestPeriod applicable thereto (including as a result of a Reimbursement Event of Default or Prepayment Event), (ii) the Conversion for anyreason of any Eurodollar Rate Advance other than on the last day of the Interest Period applicable thereto, (iii) the failure to Convert,continue or prepay any Eurodollar Rate Advance on the date specified in any notice delivered pursuant hereto or (iv) the assignment of anyEurodollar Rate Advance other than on the last day of the Interest Period applicable thereto as a result of a request by the Companypursuant to Section 4(g), then, in any such event, the Company hereby agrees to compensate each Participating Bank for the loss, cost andexpense attributable to such event. Such loss, cost or expense to any Participating Bank shall be deemed to include an amount determined bysuch Participating B ank to be the excess, if any, of (x) the amount of interest which would have accrued on the principal amount of suchAdvance had such event not occurred, at the Adjusted LIBO Rate (in the case of a Eurodollar Rate Advance) that would have beenapplicable to such Advance, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in thecase of a failure to Convert or continue, for the period that would have been the Interest Period for such Advance), over (y) the amount ofinterest which would accrue on such principal amount for such period at the interest rate which such Participating Bank would bid were it tobid, at the commencement of such period, for Dollar deposits of a comparable amount and period from other banks in the eurodollar market.A certificate of any Participating Bank setting forth any amount or amounts that such Participating Bank is entitled to receive pursuant tothis Section shall be delivered to the Company and shall be conclusive abse nt manifest error. The Company shall pay such ParticipatingBank the amount shown as due on any such certificate within 10 days after receipt thereof. The obligations of the Company contained in thissubsection (1) shall survive the payment in full of amounts payable by the Company under Section 2 hereof and the termination of the Lettersof Credit and this Agreement or the substitution of any of the Banks pursuant to Sections 4(g) or (h) hereof.

SECTION 3. Fees. The Company agrees to pay to the Administrating Bank (a) for the account of the Funding Bank a fee with respect to eachLetter of Credit as separately agreed upon between the Company and the Funding Bank in accordance with the terms of the Fee Letter; (b)for the account of each Participating Bank, a fee with respect to each Letter of Credit (a "Participation Fee") equal to the Applicable Rate perannum of the product of (i) such Participating Bank's Participation Percentage and (ii) the Maximum Credit Amount applicable to suchLetter of Credit, from and including the Date of Issuance of such Letter of Credit to but excluding the Termination Date of such Letter ofCredit, payable quarterly in arrears on each January 15, April 15, July 15 and October 15 (commencing January 15, 2004), and on suchTermination Date; (c) upon the execution of this Agreement, for the account of the Funding Bank and each Participating Bank (including t heAdministrating Bank and the Syndication Agent), the up-front fees separately agreed upon between the Administrating Bank and theParticipating Banks and consented to by the Company; (d) for the account of the Administrating Bank, fees computed and payable in

accordance with the terms of the Fee Letter; and (e) for the account of each Participating Bank, a commitment fee with respect to the Lettersof Credit (the "Commitment Fee") equal to the Applicable Rate per annum of the product of (i) such Participating Bank's ParticipationPercentage and (ii) the excess of (A) the Aggregate Maximum Credit Amount over (B) the aggregate Maximum Drawing Amount of theLetters of Credit in effect from time to time, from and including the Date of Issuance of the Letters of Credit to but excluding theTermination Date of each Letter of Credit, payable quarterly in arrears on each January 15, April 15, July 15 and October 15 (commencingJanuary 15, 2004), and on each such Termination Date. Up on receipt from the Company of fees payable in accordance with the provisions ofthis Section 3, the Administrating Bank agrees to promptly pay to the account of the Funding Bank and each Participating Bank, asapplicable, the fees paid to it for the account of the Funding Bank or such Participating Bank pursuant to this Section 3.

SECTION 4. Change in Circumstances; Alternate Rate of Interest. (a) If prior to the commencement of any Interest Period for a EurodollarRate Advance:

(i) the Administrating Bank determines (which determination shall be conclusive absent manifest error) that adequate andreasonable means do not exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period;or

(ii) the Administrating Bank is advised by the Required Banks that the Adjusted LIBO Rate or the LIBO Rate, as applicable, forsuch Interest Period will not adequately and fairly reflect the cost to such Required Banks of making or maintaining theirEurodollar Rate Advances for such Interest Period;

then the Administrating Bank shall give notice thereof to the Company and the Participating Banks by telephone or telecopy as promptly aspracticable thereafter and, until the Administrating Bank notifies the Company and the Participating Banks that the circumstances givingrise to such notice no longer exist, (A) any request to Convert any ABR Advance to, or to continue any Eurodollar Rate Advance as, aEurodollar Rate Advance shall be ineffective and (B) if any request is made for a Eurodollar Rate Advance, such Borrowing shall be made asan ABR Advance.

(b) If, after the date hereof, any Bank shall have determined that the adoption of any applicable law, rule or regulation, or any changetherein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agencycharged with the interpretation or administration thereof, or compliance by any Bank with any request or directive (whether or not havingthe force of law) of any such authority, central bank or comparable agency shall impose, modify or deem applicable any reserve, specialdeposit or similar requirement (including, without limitation, any such requirement imposed by the Board) against letters of credit issued byor participated in or assets of, or deposits with or for the account of, any Bank or shall impose on any Bank any other condition regardingthis Agreement or the Letters of Credit and the result of the foregoing shall be to increase the cost to such Bank of issuing, maintaining orparticipating in any of the Lette rs of Credit or any drawing thereunder or making or maintaining any Eurodollar Rate Advance (or ofmaintaining its obligation to make such Advance) (which increase in cost shall be the result of such Bank's reasonable allocation of theaggregate of such cost increases resulting from such events), then, within 15 days after demand by such Bank, the Company agrees to pay tosuch Bank all additional amounts that are necessary to compensate such Bank for such increased cost incurred by such Bank.

(c) If any Bank shall have determined that the applicability of any law, rule, regulation or guideline adopted pursuant to or arising out of theJuly 1988 report of the Basle Committee on Banking Regulations and Supervisory Practices entitled "International Convergence of CapitalMeasurement and Capital Standards" (the "Basle Report"), or the adoption after the date hereof of any other law, rule, regulation orguideline regarding capital adequacy, or any change in any of the foregoing or in the interpretation or administration of any of the foregoingby any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or complianceby any Bank (or any lending office of any Bank) or any Bank's holding company with any request or directive regarding capital adequacy(whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducingthe rate of return on such Bank's capital or on the capital of such Bank's holding company, if any, as a consequence of this Agreement orunder or in connection with any Letter of Credit to a level below that which such Bank or such Bank's holding company could have achievedbut for such adoption, change or compliance (taking into consideration such Bank's policies and the policies of such Bank's holding companywith respect to capital adequacy) by an amount deemed by such Bank to be material, then, within 15 days after demand by such Bank, theCompany shall pay to such Bank such additional amount or amounts as will compensate such Bank or such Bank's holding company for anysuch reduction suffered. Notwithstanding the foregoing, any risk-based capital standard adopted and publicly announced prior to the ClosingDate (regardless of the date on which compliance with such standard is required), shall not be considered a basis for imposing additionalcosts on the Company under this subsection (c).

(d) The Company agrees that all payments made by the Company hereunder to any Bank shall be made free and clear of, and withoutreduction for or on account of, any stamp or other taxes, levies, imposts, duties, charges, fees, deductions, withholdings, restrictions orconditions of any nature whatsoever hereafter imposed, levied, collected, withheld or assessed by any country (or by any political subdivisionor taxing authority thereof or therein), except for franchise taxes and changes in the rate of tax on the overall net income of the Banks (suchnonexcluded taxes being called "Tax" or "Taxes"). If any Taxes are required to be withheld from any amounts payable by the Company toany Bank, the Company agrees that the amounts so payable to such Bank shall be increased to the extent necessary to yield to such Bank(after payment of all Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in th is Agreement;provided that the Company shall not be obligated to pay such amounts for the benefit of such Bank with respect to any period in which suchBank has failed (x) to file any form or certificate that it was entitled to file which would have exempted such Bank from such Taxes or (y) totake other action which would entitle such Bank to an exemption from such Taxes, if such action would not, in the reasonable judgment ofsuch Bank, be otherwise disadvantageous to it. Whenever any Tax is paid by the Company, as promptly as possible thereafter, the Companyshall send the applicable Bank a receipt or other evidence of payment thereof.

(e) A certificate as to the nature of the occurrence giving rise to, and the calculation of, compensation to the Funding Bank, a ParticipatingBank or a Participant pursuant to subsections (a), (b) and (c) of this Section 4 shall be submitted by the Funding Bank, such ParticipatingBank or such Participant to the Administrating Bank. Such certificate shall be submitted by the Administrating Bank to the Company andshall be conclusive evidence (absent demonstrable error) as to the amount thereof. Each such certificate shall provide the identity of theFunding Bank, such Participating Bank or such Participant.

(f) The Company agrees that each Participating Bank and each Participant shall have the same rights and obligations under this Section 4with respect to its respective participation to the same extent as if such Participating Bank or Participant were named instead of the FundingBank in this Section 4.

(g) In the event any Participating Bank gives a notice with respect to it or any of its Participants pursuant to Section 4(e) hereof, theCompany may require, at its expense, such Bank to assign all its Participation Percentage of the Letters of Credit and all its rights andobligations hereunder to a financial institution specified by the Company (a "Substitute Bank"); provided that (i) such assignment shall notconflict with or violate any law, rule or regulation or order of any court or other governmental agency or instrumentality, (ii) the Companyshall have received the written consent of the Funding Bank and the Administrating Bank (which consent, in the case of the Administrating

Bank, shall not unreasonably be withheld) to such assignment and (iii) the Company shall have paid to such assignor Bank all monies accruedand owing hereunder to it. The Substitute Bank shall execute a counterpart of this Agreement and such additional amendments, agreemen ts,instruments and documents as may be reasonably requested by the Administrating Bank.

(h) In the event the Funding Bank gives a notice with respect to itself pursuant to Section 4(e) hereof, the Company may replace such FundingBank with a financial institution specified by the Company (a "Substitute Funding Bank"); provided that (i) such replacement shall notconflict with or violate any law, rule or regulation or order of any court or other government agency or instrumentality, (ii) the Companyshall have received the written consent of the Owner Trustee and the Owner Participants to such substitution, and the Company shall havetaken all other applicable actions required under the Transaction Documents and (iii) the Company shall have paid to the Funding Bank allmonies accrued and owing hereunder to it. The Substitute Funding Bank shall execute a counterpart of this Agreement and such additionalamendments, agreements, instruments and documents as may be reasonably requested by the Administrating Bank.

SECTION 5. Participations. (a) By the issuance of a Letter of Credit and without any further action on the part of the Funding Bank or anyParticipating Bank in respect thereof, the Funding Bank shall be deemed to have granted to each Participating Bank, and each ParticipatingBank hereby shall be deemed to have acquired from the Funding Bank, a participation in such Letter of Credit equal to such ParticipatingBank's Participation Percentage of the Maximum Credit Amount of such Letter of Credit, effective upon the issuance of such Letter ofCredit. In consideration and in furtherance of the foregoing, each Participating Bank hereby absolutely and unconditionally agrees to pay tothe Funding Bank, in accordance with this Section 5, such Participating Bank's Participation Percentage of each payment made by theFunding Bank of a draft under a Letter of Credit. Upon payment of a draft under a Letter of Credit, the Funding Bank shall promptly givetelephonic notice (to be fol lowed by delivery by telecopy of a Notice of Drawing) to each Participating Bank of the date and amount of suchpayment. If such Notice of Drawing is received by a Participating Bank after 12:30 p.m. (New York time) such notice shall be deemed to havebeen received on the next Business Day. With respect to each Participating Bank, promptly upon receipt of such Notice of Drawing but in anyevent no later than 3:00 p.m. (New York time) on the date on which such Participating Bank shall have received or shall be deemed to havereceived such Notice of Drawing from the Funding Bank, such Participating Bank shall pay to the Funding Bank an amount equal to theproduct of (A) such Participating Bank's Participation Percentage and (B) the amount of the payment made by the Funding Bank on suchdraft; provided, however, that, with respect to the payment of any draw on a Letter of Credit, the Funding Bank shall not require suchParticipating Bank to pay (exclusive of interest) an amount greater than the product of (x) such Participating Bank's ParticipationPercentage and (y) the lesser of (m) the Maximum Available Credit Amount of such Letter of Credit immediately prior to adjustment forpayment by the Funding Bank of such draw and (n) the Maximum Drawing Amount of such Letter of Credit immediately prior toadjustment of the Maximum Drawing Amount of such Letter of Credit for payment by the Funding Bank of such draw; provided further thateach Participating Bank shall not be obligated to make any payment to the Funding Bank pursuant to this subsection (a) with respect to anywrongful payment under any Letter of Credit as a result of the gross negligence or willful misconduct of the Funding Bank. If payment of theamount due pursuant to the preceding sentence from a Participating Bank is received by the Funding Bank after 3:00 p.m. (New York time)on the date it is due, such Participating Bank agrees to pay to the Funding Bank along with its payment of the amount due pursuant to thepreceding sentence, int erest on such amount at a rate per annum equal to (i) for the period from and including the Business Day suchpayment is due to but excluding the next succeeding Business Day, the Federal Funds Effective Rate and (ii) for the period from andincluding the Business Day next succeeding the date such payment is due to but excluding the date such amount is paid in full, the AlternateBase Rate plus 2%. The Funding Bank agrees to give prompt written notice to a Participating Bank if the Funding Bank does not receive thepayment required by this subsection (a) from such Participating Bank on the date on which such payment was due from such ParticipatingBank. Any action taken or omitted to be taken (other than at the direction of the Participating Banks) which has the effect of extending aLetter of Credit beyond its Termination Date shall constitute gross negligence of the Funding Bank and shall release each Participating Bankfrom its obligation set forth in this subsection (a) to reimburse the Funding Bank for the payment of a drawing on such Letter of Credit.

(b) Each Participating Bank acknowledges and agrees that its obligation to make the payments specified in Section 2 or Section 5(a) hereofand the right of the Funding Bank to receive the same, in the manner specified therein, are absolute and unconditional (except as set forth insaid Section 2 or Section 5(a)) and shall not be affected by any circumstances whatsoever, including, without limitation (i) the occurrence andcontinuance of any Event of Default under any of the Facility Leases; (ii) any Reimbursement Default or Prepayment Event hereunder; (iii)any breach or default by the Company, the Administrating Bank or any Participating Bank hereunder; (iv) any lack of validity orenforceability of any Letter of Credit, this Agreement, any of the other Transaction Documents or any of the Financing Documents; (v) anyamendment or waiver of or any consent to departure from the Letters of Credit, this Agreement, any of the other Transaction Documents orany of the Financing Documents; (v i) the existence of any claim, setoff, defense or other right which the Participating Banks may have at anytime against the Company, the Owner Participants or the Owner Trustee (or any persons for whom any of the foregoing may be acting), theFunding Bank, the Administrating Bank, any other Participating Bank, or any other Person, whether in connection with this Agreement, theother Transaction Documents, the Financing Documents or any other documents contemplated hereby or thereby or any unrelatedtransactions; provided, that nothing herein shall prevent the assertion of any such claim by separate suit or compulsory counterclaim; (vii)any statement or other document presented under the Letters of Credit proving to be forged, fraudulent, invalid, or insufficient in anyrespect or any statement therein being untrue or inaccurate in any respect whatever; (viii) payment by the Funding Bank under any Letter ofCredit against presentation of a draft or a certificate which does not comply with the terms of such Letter of Credit; or (ix) any othercircumstances or happening whatsoever, whether or not similar to any of the foregoing; provided, however, that with regard to this Section5(b), the Participating Banks shall have no obligation to make, and the Funding Bank shall have no right to receive, payments that resultfrom the gross negligence or willful misconduct of the Funding Bank.

(c) Upon receipt of a payment from the Company pursuant to Section 2 hereof, the Funding Bank or the Administrating Bank (as the casemay be) shall promptly transfer to each Participating Bank such Participating Bank's pro rata share (determined in accordance with suchParticipating Bank's Participation Percentage) of such payment based on such Participating Bank's pro rata share (determined as aforesaid)of amounts paid pursuant to Section 5(a) hereof, and not previously reimbursed by the Company pursuant to Section 2 hereof, provided,however, that if a Participating Bank shall fail to pay to the Funding Bank any amount required by Section 5(a) hereof on the Business Dayfollowing the date on which such payment was due from such Participating Bank and the Company shall not have reimbursed the FundingBank for such amount pursuant to Section 2 hereof (such unreimbursed amount being hereinafter referred to as the "Transferred Amount"),the Fundi ng Bank shall be deemed to have purchased, on such following Business Day (a "Participation Transfer Date") from suchParticipating Bank, a participation in such Transferred Amount and shall be entitled, for the period from and including the ParticipationTransfer Date to the earlier of (i) the date on which the Company shall have reimbursed the Funding Bank for such Transferred Amount and(ii) the date on which such Participating Bank shall have reimbursed the Funding Bank for such Transferred Amount (the "ParticipationTransfer Period"), to the rights, privileges and obligations of a "Participating Bank" under this Agreement with respect to such TransferredAmount; provided further, that if, at any time after the occurrence of a Participation Transfer Date with respect to any Participating Bankand prior to the reimbursement by such Participating Bank of the Funding Bank with respect to the related Transferred Amount pursuant tosubsec tion (a) above, the Funding Bank shall receive any payment from the Company pursuant to Section 2 hereof, the Funding Bank shallnot be obligated to pay any amounts to such Participating Bank, and the Funding Bank shall retain such amounts (including, withoutlimitation, interest payments due from the Company pursuant to Section 2 hereof) for its own account as a Participating Bank; provided thatall such amounts shall be applied in satisfaction of the unpaid amounts (including, without limitation, interest payments due from suchParticipating Bank pursuant to Section 5(a) hereof) due from such Participating Bank with respect to such Transferred Amount; and,

provided further, that if, at any time after the occurrence of a Participation Transfer Date with respect to any Participating Bank and prior tothe reimbursement of the Funding Bank by such Participating Bank or the Company, such Participating Bank shall have (i) voluntarilydissolved, (ii) appointed a receiver, (iii) suffered the a ppointment of a receiver who takes possession of its books, records and assets,commences to collect all dues and claims and to sell all property of such Participating Bank, or (iv) suffered the appointment of a conservator,the Funding Bank shall thereafter be entitled to retain such participation for its own account. All payments due to the Participating Banksfrom the Funding Bank pursuant to this subsection (c) shall be made to the Participating Banks if, as, and to the extent possible, when theFunding Bank receives payments in respect of drawings under the Letters of Credit or Advances pursuant to Section 2 hereof, and in thesame funds in which such amounts are received; provided that if any Participating Bank to whom the Funding Bank is required to transferany such payment (or any portion thereof) pursuant to this subsection (c) does not receive such payment (or portion thereof) prior to 3:00p.m. (New York time) on the Business Day on which the Funding Bank received such payment from the Co mpany (which payment, ifreceived by the Funding Bank after 2:00 p.m. (New York time) on any Business Day, shall be deemed, for the purposes of this proviso, to havebeen received on the next succeeding Business Day), the Funding Bank agrees to pay to such Participating Bank, along with its payment ofthe portion of such payment due to such Participating Bank, interest on such amount at a rate per annum equal to (i) for the period from andincluding such Business Day to but excluding the next succeeding day, the Federal Funds Effective Rate and (ii) for the period from andincluding the date next succeeding such Business Day to but excluding the date such amount is paid in full, the Alternate Base Rate plus 2%.If, in connection with any case or other proceeding seeking liquidation, reorganization or other relief with respect to the Company or its debtsunder any bankruptcy, insolvency or other similar law now or hereafter in effect, the Funding Bank shall be required to return to theCompany, or to any trustee, receiver, liquidator, custodian or other similar official, all or any portion of such payments or interest, eachParticipating Bank shall, upon demand of the Funding Bank, forthwith return to the Funding Bank any amounts transferred to suchParticipating Bank by the Funding Bank in respect thereof pursuant to this subsection (c).

(d) The Funding Bank will exercise and give the same care and attention to the Letters of Credit as it gives to its other letters of credit andsimilar obligations, and each Participating Bank agrees that the Funding Bank's sole liability to each Participating Bank shall be (i) todistribute promptly, as and when received by the Funding Bank, and in accordance with the provisions of subsection (c) above, suchParticipating Bank's pro rata share (determined in accordance with such Participating Bank's Participation Percentage) of any payments tothe Funding Bank by the Company pursuant to Section 2 hereof in respect of drawings under the Letters of Credit or Advances, (ii) toexercise or refrain from exercising any right or to take or to refrain from taking any action under this Agreement or any Letter of Credit asmay be directed in writing by the Required Banks (or such higher percentage of Banks as may be otherwise expressly required under thisAgreement) or the Administrating Ban k acting on behalf of such Banks and (iii) as otherwise expressly set forth herein. The Funding Bankshall not be liable for any action taken or omitted at the request or with approval of the Required Banks or of the Administrating Bank actingon behalf of the Required Banks or for the nonperformance of the obligations of any other party under this Agreement, any of the otherTransaction Documents, any of the Financing Documents or any other document contemplated hereby or thereby. Without in any waylimiting any of the foregoing, the Funding Bank may rely upon the advice of counsel concerning legal matters and upon any writtencommunication or any telephone conversation which it believes to be genuine or to have been signed, sent or made by the proper person andshall not be required to make any inquiry concerning the performance by the Company, the Owner Trustee, any Owner Participant or anyother Person, of any of their respective obligations and liabilities under or in respect of this Agreement, the ot her Transaction Documents,the Financing Documents or any other documents contemplated hereby or thereby. The Funding Bank shall not have any obligation to makeany claim, or assert any Lien, upon any property held by the Funding Bank or assert any offset thereagainst; provided that the Funding Bankshall, if so directed by the Required Banks or the Administrating Bank acting on behalf of the Required Banks, have an obligation to make aclaim, or assert a Lien, upon property held by the Funding Bank in connection with this Agreement or assert an offset thereagainst. TheFunding Bank may accept deposits from, make loans or otherwise extend credit to, and generally engage in any kind of banking or trustbusiness with the Company or any of its Affiliates, or any other Person, and receive payment on such loans or extensions of credit andotherwise act with respect thereto freely and without accountability in the same manner as if this Agreement and the transactionscontemplated hereby were not in effect . Without limiting any of the foregoing, the Funding Bank agrees that (x) it will not give notice of aDate of Early Termination under a Letter of Credit without a writing executed by the Required Banks or executed by the AdministratingBank on behalf of the Required Banks directing it to give such notice (which writing shall specify the Date of Early Termination to be given insuch notice) and (y) if a Reimbursement Event of Default or Prepayment Event has occurred and is continuing, upon receipt of such awriting, it will give such notice as provided in such Letter of Credit.

(e) The Funding Bank makes no representation and shall have no responsibility with respect to: (i) the genuineness, legality, validity, bindingeffect or enforceability of this Agreement, any of the other Transaction Documents, any of the Financing Documents or any other documentscontemplated hereby or thereby; (ii) the truthfulness and accuracy of any of the representations contained in this Agreement, any of the otherTransaction Documents, any of the Financing Documents or any other documents contemplated hereby or thereby; (iii) the collectability ofany amounts due under this Agreement; (iv) the financial condition of the Company or any other Person; and (v) any act or omission of anyOwner Participant with respect to its use of any Letter of Credit. Each Participating Bank acknowledges and agrees that such ParticipatingBank has been, and will continue to be, solely responsible for making its own independent appraisal of and investigation into the financialcondition, affairs, status and nature of the Company and for making its own credit decision in taking or not taking any action, includingwithout limitation, entering into this Agreement.

(f) To the extent that the Funding Bank is not reimbursed and indemnified by the Company under Section 20, Section 21 or Section 22 hereof,each Participating Bank severally agrees to reimburse and indemnify the Funding Bank on demand, pro rata in accordance with suchParticipating Bank's Participation Percentage, for and against any and all liabilities, obligations, losses, damages, penalties, actions,judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or assertedagainst, the Funding Bank, in any way relating to or arising out of the Letters of Credit or this Agreement, or any action taken or omitted bythe Funding Bank under or in connection with this Agreement or the Letters of Credit; provided, however, that such Participating Bank shallnot be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses ordisbursements resulting from the Funding Bank's gross negligence or willful misconduct or from the Funding Bank's failure to refrain fromexercising or to exercise any right or to refrain from taking or to take any action under this Agreement or the Letters of Credit, as directed inwriting by the Required Banks or by the Administrating Bank acting on behalf of the Required Banks; and provided further that suchParticipating Bank shall not be liable to the Funding Bank or any other Participating Bank for the failure of the Company to reimburse theFunding Bank or any other Participating Bank for any drawing made under a Letter of Credit or any Advance, with respect to which suchParticipating Bank has paid the Funding Bank such Participating Bank's pro rata share (determined in accordance with such ParticipatingBank's Participation Percentage), or for the Company's failure to pay interest thereon. Each Participating Bank's obligations under thissubsection (f) shall survive the termination of this Agreement and the Lett ers of Credit. Nothing in this subsection (f) is intended to limit anyParticipating Bank's reimbursement obligation contained in subsection (a) above.

(g) Each Participating Bank agrees that it will promptly (i) notify the Administrating Bank of any occurrence giving rise to a right tocompensation to such Participating Bank pursuant to Section 4 hereof and (ii) submit to the Administrating Bank a certificate detailing suchoccurrence giving rise thereto and the calculation of the amount of compensation with respect thereto. The Administrating Bank agrees topresent promptly such certificate to the Company in accordance with Section 4 hereof.

(h) Each Participating Bank agrees that if it should receive any amount in respect of its participation other than from the Funding Bank orthe Administrating Bank (as the case may be) pursuant to subsection (c) above and other than as contemplated by Section 3, Section 4,Section 17(a), Section 21, or Section 22 hereof, such Participating Bank will remit all of the same to the Administrating Bank to distribute tothe Participating Banks pro rata in accordance with their Participation Percentages.

SECTION 6. Payments. (a) All payments by the Company or the Participating Banks to the Funding Bank pursuant to this Agreement shallbe made in lawful currency of the United States and in immediately available funds to the Funding Bank's account maintained with theAdministrating Bank for such purpose, or to such other account as the Funding Bank shall notify the Company and each Participating Bankin writing. All payments by the Funding Bank, the Company, or the Administrating Bank to a Participating Bank shall be made in lawfulcurrency of the United States and in immediately available funds at the address of such Participating Bank set forth below the name of suchParticipating Bank on the signature pages hereof, or at such other address as any Participating Bank shall notify each of the Funding Bank,the Company, and the Administrating Bank in writing. All payments by the Company or the Banks to the Administrating Bank pursuant tothis Agreement shall be made in lawful currency of the United States and in immediately available funds at the address of the AdministratingBank set forth below its name on the signature pages hereof, or at such other address as the Administrating Bank shall notify the Companyand each Bank in writing.

(b) Whenever any payment under this Agreement shall be due on a day which is not a Business Day, the date for payment thereof shall beextended to the next succeeding Business Day, and any interest payable thereon shall be payable for such extended time at the specified rate.

(c) Interest payable under Sections 2(a), 2(b)(i), 2(e)(i), 5(a) and 5(c) hereof (in each case only to the extent such interest is based on the PrimeRate) shall be computed on the basis of a year of 365 or 366 days (as applicable) and paid for the actual number of days elapsed (includingthe first day but excluding the last day). Interest payable under Section 2(e)(iii) hereof, interest payable hereunder that is based on theFederal Funds Effective Rate, and the fees payable under Section 3 hereof shall be computed on the basis of a year of 360 days and paid forthe actual number of days elapsed (including the first day but excluding the last day).

(d) Except as otherwise expressly provided in Section 3, 4 or 5 hereof, all payments hereunder from the Company to the Participating Banks,from the Funding Bank or the Administrating Bank to the Participating Banks, from the Participating Banks to the Funding Bank and fromthe Participating Banks to the Administrating Bank shall be made pro rata among the Participating Banks in accordance with theParticipation Percentages of such Participating Banks.

SECTION 7. Issuance of the Letters of Credit; Conditions Precedent to Issuance. (a) Subject to satisfaction of the conditions precedent set forthin subsections (b), (c), (d) and (e) of this Section 7, the Funding Bank shall issue the Letters of Credit to the beneficiaries in the amounts setforth in Schedule 2 hereto (which amounts in the aggregate do not exceed the Aggregate Maximum Credit Amount) on the date set forth inthe notice referred to in Section 7(b)(xvi) hereof (such date or such later date on which the conditions precedent are satisfied and such Lettersof Credit are issued being herein called the "Date of Issuance" of the Letters of Credit). All of such Letters of Credit shall be issuedsimultaneously. Each Letter of Credit shall be effective on its Date of Issuance and shall expire on the Termination Date applicable to suchLetter of Credit.

(b) As a condition precedent to the issuance of each Letter of Credit, the Administrating Bank and each Bank shall have received on or beforethe Date of Issuance of the Letters of Credit the following, each dated such date, in form and substance satisfactory to each Bank:

(i) an opinion of Thelen Reid & Priest LLP, (A) as New York counsel to the Company, substantially in the form of Exhibit Chereto, and (B) as New York counsel to Entergy (including certain Delaware opinions), substantially in the Form of Exhibit D-1hereto;

(ii) (A) an opinion of Denise C. Redmann, as Louisiana counsel to Entergy, substantially in the form of Exhibit D-2, (B) an opinionof Wise Carter Child & Caraway, Professional Association, as Mississippi counsel to the Company, substantially in the form ofExhibit E-1 hereto, and (C) an opinion of Friday, Eldredge & Clark, LLP, as Arkansas counsel to the Company, substantially inthe form of Exhibit E-2 hereto;

(iii) an opinion of (A) Wise Carter Child & Caraway, Professional Association, as Mississippi counsel to EMI, (B) Friday,Eldredge & Clark, LLP, as Arkansas counsel to EAI, (C) Denise C. Redmann, as Louisiana counsel to ELI, and (D) Denise C.Redmann, as Louisiana counsel to ENOI, substantially in the form of Exhibits F-1 to F-4 hereto, respectively;

(iv) an opinion of Hughes Hubbard & Reed LLP, (A) as special counsel for the Administrating Bank, substantially in the form ofExhibit G-1 hereto, and (B) as special counsel to the Funding Bank, substantially in the form of Exhibit G-2 hereto;

(v) copies of the resolutions of the Board of Directors of the Company authorizing the execution, delivery and performance by theCompany of this Agreement, the Collateral Agreements, each of the other Transaction Documents to which the Company is aparty and the Collateral Trust Indenture, certified by the Secretary or an Assistant Secretary of the Company (which certificateshall state that such resolutions are in full force and effect on the Date of Issuance of the Letters of Credit and have not beenmodified, rescinded or amended since the date of adoption thereof);

(vi) certified copies of all approvals, authorizations, orders or consents of, or notices to or registrations with, any governmentalbody or agency required for the Company, Entergy or any Operating Company to execute, deliver and perform its obligationsunder this Agreement and the other Transaction Documents to which it is a party and of all such approvals, authorizations,orders, consents, notices or registrations required to be obtained or made prior to the Date of Issuance of the Letters of Credit inconnection with the transactions contemplated by any of the Transaction Documents, the Collateral Agreements or any of theFinancing Documents to which any of the Company, Entergy or any Operating Company is a party;

(vii) a certificate as to the good standing of each of the Company, Entergy, and each Operating Company, as of a recent date, fromthe Secretary of State of the applicable state of such Person's organization and, in the case of the Company, the Secretary of Stateof the State of Mississippi;

(viii) the Administrating Bank shall have a perfected first priority security interest in the Collateral Agreements;

(ix) (i) a certificate of the Secretary or Assistant Secretary of each of the Company, Entergy, and each Operating Companycertifying (A) that attached thereto is a true and complete copy of the by-laws of such Person as in effect on the Closing Date andat all times since a date prior to the date of the resolutions described in clause (v) above or subclause (B) below, as applicable, (B)that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors of such Personauthorizing the execution, delivery and performance of the Collateral Agreements to which it is a party, and that such resolutionshave not been modified, rescinded or amended and are in full force and effect, (C) that (x) attached thereto is a true and complete

copy of the certificate or articles of incorporation, including all amendments thereto, of such Person and (y) that such certificateor articles of incorporation have not been amended since the date of the last amendment thereto , and (D) as to the incumbencyand specimen signature of each officer executing this Agreement, any Collateral Agreement or any other document or certificatedelivered in connection herewith on behalf of such Person; and (ii) a certificate of another officer as to the incumbency andspecimen signature of the Secretary or Assistant Secretary executing the certificate pursuant to subclause (i) above;

(x) an executed copy of the Supplementary Capital Funds Agreement;

(xi) an executed copy of the Availability Agreement Assignment;

(xii) a copy of each Disclosure Document;

(xiii) each of the Existing Letters of Credit, each together with a surrender certificate in the form of Exhibit 7 thereto dulyexecuted by a duly authorized representative of the applicable Owner Participant;

(xiv) evidence that all obligations of the Company under the Existing Reimbursement Agreement have been satisfied in full andthat the Existing Reimbursement Agreement has been terminated;

(xv) such other documents, instruments, approvals (and, if requested by any Bank, certified duplicates of executed copies thereof)or opinions as any Bank may reasonably request in writing; and

(xvi) a written notice with respect to each Letter of Credit of the proposed Date of Issuance of such Letter of Credit signed by theCompany and the Owner Participant to which such Letter of Credit shall be issued.

(c) The following statements shall be true and correct on the Date of Issuance of the Letters of Credit and the Administrating Bank and eachBank shall have received on such Date of Issuance a certificate signed by a duly authorized officer of the Company dated such Date ofIssuance, stating that:

(i) the representations and warranties contained in Section 10 hereof are true and correct on and as of such Date of Issuance asthough made on and as of such date; and

(ii) no Reimbursement Default, Prepayment Event, Event of Default, Indenture Event of Default, Event of Loss or Deemed LossEvent shall have occurred and be continuing and no Reimbursement Default, Prepayment Event, Event of Default, IndentureEvent of Default, Event of Loss or Deemed Loss Event shall result from the issuance of the Letters of Credit.

(d) On or before the Date of Issuance of the Letters of Credit:

(i) each of the Transaction Documents shall have been duly authorized and executed by the respective parties thereto and shall bein full force and effect;

(ii) the Administrating Bank shall have received executed copies (or duplicates thereof) of each of the Transaction Documents,each of which shall be in form and substance satisfactory to the Administrating Bank and the Banks;

(iii) all conditions precedent to the Closing set forth in Section 5(b) of the Participation Agreements executed by the OwnerParticipants to which such Letters of Credit are to be issued shall have been fulfilled (other than those conditions requiringissuance of such Letters of Credit and delivery of opinions with respect thereto by counsel to the Funding Bank);

(iv) all fees required to be paid pursuant to Section 3 on the Closing Date, shall have been received by the Administrating Bank,the Funding Bank and the other Participating Banks, as applicable; and

(v) the Company shall have paid all reasonable costs and expenses of the Administrating Bank, each other Agent and the FundingBank described in Section 21 hereof (including the reasonable fees and disbursements of counsel to the Administrating Bank andthe Funding Bank), to the extent invoiced at least three days prior to such Date of Issuance.

(e) On the Date of Issuance of the Letters of Credit, the full power operating license issued for Unit 1 by the Nuclear Regulatory Commissionshall be in full force and effect.

(f) Conditions Precedent to EOL Term Advances. The obligation of each Participating Bank to make an EOL Term Advance shall be subject tothe conditions precedent that, on the date of such EOL Term Advance, the following statements shall be true and the Administrating Bankshall have received a certificate of a duly authorized officer of the Company, dated the date of such EOL Term Advance stating that:

(i) the representations and warranties contained in Section 10 of this Agreement are true and correct in all material respects onand as of the date of such EOL Term Advance, before and after giving effect to such EOL Term Advance and to the application ofthe proceeds therefrom, as though made on and as of such date; and

(ii) no event has occurred and is continuing, or would result from such Advance, that constitutes an Event of Default,Reimbursement Default, Prepayment Event or Indenture Event of Default.

(g) Conditions Precedent to DLE Term Advances. The obligation of each Participating Bank to make any DLE Term Advance shall be subjectto the conditions precedent that, on the date of such DLE Term Advance, the following statements shall be true and the Administrating Bankshall have received a certificate of a duly authorized officer of the Company, dated the date of such DLE Term Advance stating that:

(i) the representations and warranties contained in Section 10 of this Agreement are true and correct in all material respects onand as of the date of such DLE Term Advance, before and after giving effect to such DLE Term Advance and to the application ofthe proceeds therefrom, as though made on and as of such date; and

(ii) no event has occurred and is continuing, or would result from such Advance, that constitutes an Event of Default, aReimbursement Default, Prepayment Event or Indenture Event of Default.

SECTION 8. Adjustment of Maximum Drawing Amounts and Maximum Available Credit Amounts; Terms of Drawing. The Maximum DrawingAmount and Maximum Available Credit Amount applicable to a given Letter of Credit shall be subject to modification as specified in suchLetter of Credit and drawings under each Letter of Credit shall be subject to the other terms and conditions set forth in such Letter ofCredit. If an Owner Participant exercises its right under Paragraph 5 of the Letter of Credit to revise Schedule II thereto, the Funding Bank

shall notify the Administrating Bank of such event and will provide to the Administrating Bank a copy of such revised Schedule, and theAdministrating Bank shall provide copies of such Schedule to the Participating Banks.

SECTION 9. Obligations Absolute. The payment obligations of the Company under this Agreement shall be absolute, unconditional andirrevocable, and shall be performed strictly in accordance with the terms of this Agreement, under all circumstances whatsoever, including,without limitation, the following circumstances:

(a) any actual, asserted or implied lack of validity or enforceability of any Letter of Credit, this Agreement, any of the other TransactionDocuments or any of the Financing Documents;

(b) any amendment or waiver of or any consent to departure from all or any of the Letters of Credit, this Agreement, any of the otherTransaction Documents or any of the Financing Documents;

(c) the existence of any claim, setoff, defense or other rights which the Company may have at any time against any of the Owner Participantsor the Owner Trustee, the Funding Bank, the Administrating Bank, any Participating Bank, or any other Person or entity, whether inconnection with this Agreement, the other Transaction Documents, the Financing Documents or any other documents contemplated herebyor thereby or any unrelated transactions; provided that nothing herein shall prevent the assertion of any such claim by separate suit orcompulsory counterclaim;

(d) any statement or any other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in anyrespect or any statement therein being untrue or inaccurate in any respect whatsoever;

(e) payment by the Funding Bank under any Letter of Credit against presentation of a draft or certificate which does not comply with theterms of such Letter of Credit; or

(f) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing.

SECTION 10. Representations and Warranties. The Company represents and warrants as follows:

(a) Corporate Existence and Power. It is a corporation duly incorporated, validly existing and in good standing under the laws of the State ofArkansas, is duly qualified to do business as a foreign corporation in and is in good standing under the laws of the State of Mississippi andeach other state in which the ownership of its properties or the conduct of its business makes such qualification necessary except where thefailure to be so qualified would not have a material adverse effect on its business or financial condition or its ability to perform its obligationsunder this Agreement or the other Transaction Documents to which it is a party, and has all corporate powers and all material governmentallicenses, authorizations, consents and approvals required to carry on its business as now conducted.

(b) Corporate Authorization. The execution, delivery and performance by it of this Agreement and each other Transaction Document to whichit is a party, have been duly authorized by all necessary corporate action on its part and do not, and will not, require the consent or approvalof its shareholders, or any trustee or holder of any Indebtedness or other obligation of it.

(c) No Violation, etc. Neither the execution, delivery or performance by it of this Agreement or any other Transaction Document to which it isa party, nor the consummation by it of the transactions contemplated hereby or thereby, nor compliance by it with the provisions hereof orthereof, conflicts or will conflict with, or results or will result in a breach or contravention of any of the provisions of its charter or by-laws orany Applicable Law, or any indenture, mortgage, lease or any other agreement or instrument to which it or any of its Affiliates is a party orby which its property or the property of any of its Affiliates is bound, or results or will result in the creation or imposition of any Lien (otherthan Liens permitted under Section 12(e) hereof) upon any of its property or the property of any of its Affiliates. There is no provision of itscharter or by-laws, or any Applicable Law, or, except as disclosed in the Disclosure Documents, any such indenture, m ortgage, lease or otheragreement or instrument which materially adversely affects, or in the future is likely (so far as it can now foresee) to materially adverselyaffect, its business, operations, affairs, condition, properties or assets. There is no provision of its charter or by-laws, or any Applicable Law,or any such indenture, mortgage, lease or other agreement or instrument which materially adversely affects, or in the future is likely (so faras it now can foresee) to materially adversely affect its ability to perform its obligations under this Agreement or any other TransactionDocument or Financing Document to which it is, or is to become, a party.

(d) Governmental Actions. No Governmental Action is or will be required in connection with (i) the execution, delivery or performance by itof, or the consummation by it of the transactions contemplated by, this Agreement or any other Transaction Document or FinancingDocument to which it is, or is to become, a party, or Sections 1.3 and 1.4 of the Supplementary Capital Funds Agreement or Section 2.2(b) ofthe Availability Agreement Assignment, or (ii) the execution and delivery of the Collateral Agreements, except such Governmental Actions(A) as have been, or on or before the Closing Date, in, the case of this Agreement and the other Transaction Documents, or the RefundingDate, in the case of the Financing Documents, will have been, duly obtained, given or accomplished, (B) as may be required under existingApplicable Law to be obtained, given or accomplished from time to time after the Closing Date in connection with the maintenance, use,possession or operation of G rand Gulf or otherwise with respect to Grand Gulf and its involvement therewith and which are, for Unit 1,routine in nature and which it has no reason to believe will not be timely obtained, and (C) as may be required under Applicable Law not nowin effect. No Governmental Action by any Governmental Authority, (I) under the Securities Act, the Securities Exchange Act, the TrustIndenture Act, the Federal Power Act, the Atomic Energy Act, the Nuclear Waste Act, the Holding Company Act, Title 77 of the MississippiCode of 1972, Subtitle 1 of Title 23 of the Arkansas Code of 1987, Title 45 of the Revised Code of Louisiana of 1957, or (II) relating to energyor nuclear matters, public utilities, the environment, or health and safety in connection with Grand Gulf, is or will be required (a) inconnection with the participation by the Administrating Bank or any Bank in the consummation of the transactions contemplated by thisAgreement, or in connection with the participation by the Owner Trustee, the Indenture Trustee, any Owner Participant, or any LoanParticipant in the consummation of the transactions contemplated by the Transaction Documents or the Financing Documents or (b) to beobtained by any of such Persons during the Lease Term, except such Governmental Actions of the character previously referred to in thissentence (1) as have been, or on or before the date hereof, in the case of this Agreement and the other Transaction Documents, or theRefunding Date, in the case of any Refunding Loan or any Financing Documents, will have been, duly obtained, given or accomplished, (2) asmay be required by Applicable Law not now in effect, (3) as may be required in consequence of any transfer of ownership of any Note orBond by the Holder thereof, the beneficial interest in the Trust by any Owner Participant, or any of the Undivided Interests by the OwnerTrustee, (4) as may be required in consequence of the issuance, sale or exchange and delivery of any obligations issued under and pursuant toany Collateral Trust Indenture, (5) as would be required by Applicable Law existing on any of the Lease Termination Dates in connectionwith taking possession of an interest in Unit 1, (6) as may be required by existing Applicable Law if, after any of the Lease Termination Dates,the Company should redeliver any Undivided Interest to the Owner Trustee pursuant to Section 5(a) of any of the Facility Leases or providetransmission services for the Owner Trustee and sell the Retained Assets to the Owner Trustee as provided under any of the Assignment andAssumption Agreements, or (7) as may be required in consequence of any exercise of remedies or other rights by any such Person underSection 16 of any of the Facility Leases. None of the Governmental Actions referred to in clause (A) of the first sentence of this Section 10(d)or in clause (b)(1) of the second sentence of this Section 10(d) are the subject of appeal or reconsideration or other review, and the time in

which to make an appeal or request the review or reconsideration of any such Governmental Action has expired without any appeal orrequest for review or reconsideration having been taken or made.

(e) Execution and Delivery. This Agreement and the other Transaction Documents to which it is a party have been duly executed anddelivered by it, and each of this Agreement and such other Transaction Documents is the legal, valid and binding obligation of the Company,enforceable against the Company in accordance with its terms, subject, however, to the application by a court of general principles of equityand to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' or lessors' rightsgenerally.

(f) Litigation. Except as disclosed in the Disclosure Documents, there is no pending or threatened action or proceeding affecting the Company,Entergy, EAI, EMI, ELI, ENOI or any Significant Operating Company or Significant Operating Group before any court, governmentalagency or arbitrator, as to which there is a reasonable possibility of an adverse determination that could affect the validity of this Agreement,any of the other Transaction Documents or the UPSA, or materially and adversely affect any of the related transactions, or as to which thereis a reasonable likelihood of an adverse determination that could materially and adversely affect the financial condition, business, properties,operations, or prospects of the Company or it and its Subsidiaries taken as a whole or the ability of the Company to perform its obligationsunder this Agreement or the other Transaction Documents to which it is a party.

(g) Material Adverse Change. The consolidated balance sheets of the Company, Entergy and each of EAI, EMI, ELI, and ENOI as atDecember 31, 2002, and the related consolidated statements of income, retained earnings and changes in financial position certified byDeloitte & Touche LLP, independent public accountants, and the most recent consolidated balance sheets of such companies and the relatedconsolidated statements of income and changes in financial position which have been furnished to each Bank, present fairly the consolidatedfinancial position of such companies as at such dates and the consolidated results of the operations of such companies for the periods endedon such dates, in accordance with generally accepted accounting principles consistently applied. Since December 31, 2002, there has been nomaterial adverse change in its consolidated financial condition, business, properties, operations or prospects of (i) the Company or (ii)Entergy and its Subsi diaries taken as a whole, except as disclosed in the Disclosure Documents to the parties hereto prior to the execution ofthis Agreement.

(h) Employee Benefit Plans. The Company and each of its ERISA Affiliates is in compliance in all material respects with the applicableprovisions of ERISA and the regulations and published interpretations thereunder. No Reportable Event has occurred as to which theCompany or any ERISA Affiliate was required to file a report with the PBGC, and the present value of all benefit liabilities under each Plan(based on those assumptions used to fund such Plan) did not, as of the last annual valuation date applicable thereto, exceed by a materialamount the value of the assets of such Plan. Neither the Company nor any ERISA Affiliate has incurred any Withdrawal Liability thatmaterially adversely affects the financial condition of the Company and its ERISA Affiliates taken as a whole. Neither the Company nor anyERISA Affiliate maintains or contributes to a Multiemployer Plan.

(i) Taxes. The Company, Entergy, and each of EAI, EMI, ELI and ENOI and each Subsidiary thereof has filed all tax returns (Federal, stateand local) required to be filed and paid all taxes shown thereon to be due, including interest and penalties, or provided adequate reserves forpayment thereof other than such taxes that the Company or such Subsidiary is contesting in good faith by appropriate legal proceedings.

(j) UPSA. The UPSA is in full force and effect and there is no default thereunder by any Significant Operating Company or SignificantOperating Group.

(k) Tax Shelter Regulations. The Company does not intend to treat the issuance of the Letters of Credit, any Advances or any othertransactions contemplated by this Agreement and the other Transaction Documents as being a "reportable transaction" (within the meaningof Treasury Regulation Section 1.6011-4). In the event that the Company determines to take any action inconsistent with such intention, theCompany will promptly notify the Administrating Bank thereof. The Company acknowledges that one or more of the Agents and/or theBanks may treat the Letters of Credit and any Advances, as the case may be, as part of a transaction that is subject to Treasury RegulationSection 1.6011-4 or Section 301.6112-1, and the Administrating Bank, the other Agents and the Banks, as applicable, may file such IRS formsor maintain such lists and other records as they may determine is required by such Treasury Regulations.

SECTION 11. Affirmative Covenants. The Company agrees that during the term of this Agreement it will:

(a) Preservation of Corporate Existence, etc. (i) Without limiting the right of the Company to merge with or into or consolidate with or intoany other corporation or entity in accordance with the provisions of Section 12(b) hereof, preserve and maintain its corporate existence in thestate of its incorporation and qualify and remain qualified as a foreign corporation in each jurisdiction in which such qualification isreasonably necessary in view of its business and operations or the ownership of its properties and (ii) preserve, renew and keep in full forceand effect the rights, privileges and franchises necessary or desirable in the normal conduct of its business.

(b) Compliance with Laws, etc. Comply, and cause each of its Subsidiaries to comply, in all material respects with all applicable laws(including, but not limited to, ERISA and environmental laws), rules, regulations, and orders of any governmental authority, thenoncompliance with which would materially and adversely affect the business or condition of it and its Subsidiaries, taken as a whole, suchcompliance to include, without limitation, paying before the same become delinquent all material taxes, assessments and governmentalcharges imposed upon it or upon its property, except to the extent compliance with any of the foregoing is then being contested in good faith.

(c) Maintenance of Insurance, etc. Maintain, and cause each of its Subsidiaries to maintain, insurance with responsible and reputableinsurance companies or associations or through its own program of self-insurance in such amounts and covering such risks as is usuallycarried by companies engaged in similar businesses and owning similar properties in the same general areas in which the Company operatesand furnish to the Administrating Bank, within a reasonable time after written request therefor, such information as to the insurance carriedas the Administrating Bank may reasonably request.

(d) Inspection Rights. At any reasonable time and from time to time as the Administrating Bank or any Participating Bank may reasonablyrequest, (i) permit the Administrating Bank or such Participating Bank or any agents or representatives thereof to visit the properties of theCompany and any of its Subsidiaries, and to discuss the affairs, finances and accounts of the Company and any of its Subsidiaries with any oftheir respective officers, and (ii) provide reasonable access to the financial records of the Company and any of its Subsidiaries which aregenerally made available to the Company's other bank creditors; provided, however, that the Company reserves the right to restrict access toany of its generating facilities in accordance with reasonably adopted procedures relating to safety and security. The Administrating Bankand each Participating Bank agree to use reasonable efforts to ensure that any information concerning the Company or any of its Subsidiaries obtained by the Administrating Bank or such Participating Bank pursuant to this Section which is not contained in a report or otherdocument filed with the SEC which is publicly available, distributed by the Company to its security holders or otherwise generally availableto the public, will, to the extent permitted by law and except as may be required by valid subpoena or in the normal course of theAdministrating Bank's or such Participating Bank's business operations (which shall include such Participating Bank's sharing of its liabilityunder the Letters of Credit with other banks), be treated confidentially by the Administrating Bank or such Participating Bank and will not

be distributed or otherwise made available by the Administrating Bank or such Participating Bank to any Person, other than (A) theAdministrating Bank's or such Bank's employees, authorized agents or representatives or (B) any Person: (1) to (or through) whom theAdministrating Bank or such Participating Bank assigns or trans fers (or may potentially assign or transfer) all or any of its rights andobligations under this Agreement; (2) with (or through) whom such Participating Bank enters into (or may potentially enter into) any sub-participation, any securitization, any hedge or otherwise, in relation to, or any other transaction under which payments are to be made byreference to, this Agreement; or (3) to whom, and to the extent that, information is required to be disclosed by any Applicable Law, provided,however, that in relation to clause (1) and (2) above, the Person to whom information is to be given has entered into a confidentialityundertaking for the benefit of the Company. Notwithstanding anything herein to the contrary, the Company, the Administrating Bank, theother Agents, each Bank and the respective Affiliates of each of the foregoing (and the respective partners, directors, officers, employees,agents, advisors and other representatives of each of the foregoing and their Affiliates) may disclose to any and all Persons, without limitationof any kind (x) any information with respect to the U.S. federal and state income tax treatment and tax structure of the transactionscontemplated hereby and any facts that may be relevant to understanding such tax treatment or tax structure, which facts shall not includefor this purpose the names of the parties or any other Person named herein, or information that would permit identification of the parties orsuch other Persons, or any pricing terms or other nonpublic business or financial information that is unrelated to such tax treatment, taxstructure or facts, and (y) all materials or any kind (including opinions or other tax analyses) relating to such tax treatment, tax structure orfacts that are provided to any of the Persons referred to above.

(e) Keeping of Books. Keep, and cause each of its Subsidiaries to keep, proper books of record and account in which entries shall be made ofall financial transactions and the assets and business of the Company and each of its Subsidiaries in accordance with generally acceptedaccounting principles.

(f) Maintenance of Properties. Maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its properties whichare used or which are useful in the conduct of its business in good working order and condition, ordinary wear and tear excepted, it beingunderstood that this covenant relates only to the good working order and condition of such properties and shall not be construed as acovenant of the Company or any of its Subsidiaries not to dispose of such properties by sale, lease, transfer or otherwise.

(g) Reporting Requirements. Furnish, or cause to be furnished, to the Administrating Bank, with sufficient copies for each Bank, thefollowing:

(i) within five days after an officer has knowledge about the occurrence of a Reimbursement Default or Prepayment Event or anEvent of Default or an Indenture Event of Default, the statement of an authorized officer of the Company setting forth details ofsuch Reimbursement Default or Prepayment Event or Event of Default or Indenture Event of Default and the action which theCompany has taken or proposes to take with respect thereto;

(ii) promptly after the sending or filing thereof and, with respect to Reports on Form 10-Q in any event within 60 days after theclose of each of the first three quarters in each fiscal year, copies of all reports which the Company or Entergy sends to itsSecurityholders generally, and copies of all reports on Form 10-K, Form 10-Q or Form 8K which any such company or any of itsrespective Subsidiaries files with the SEC;

(iii) as soon as available and in any event within 120 days after the end of each fiscal year of the Company, Entergy, and eachOperating Company, a copy of the annual report in the form required for reporting to the SEC for such year for such companyand its Subsidiaries, containing financial statements for such year accompanied by an opinion of Deloitte & Touche LLP or otherindependent public accountants of recognized national standing;

(iv) concurrently with the delivery of the financial statements specified in clauses (ii) and (iii) above, a certificate of the chieffinancial officer, treasurer, assistant treasurer or controller of the Company (A) stating whether he has any knowledge of theoccurrence at any time prior to the date of such certificate of any Reimbursement Default or Prepayment Event or Event ofDefault or an Indenture Event of Default not theretofore reported pursuant to the provisions of clause (i) of this subsection (g) orof the occurrence at any time prior to such date of any such Reimbursement Default or Prepayment Event or Event of Default orIndenture Event of Default, except Reimbursement Defaults or Prepayment Events or Events of Default or Indenture Events ofDefault theretofore reported pursuant to the provisions of clause (i) of this subsection (g) and remedied, and, if so, stating the factswith respect thereto; and (B) setting forth in a true and correct manner, the calculation of the ratio s required by Sections 12(f)and (g) hereof, as of the date of the most recent financial statements accompanying such certificate, to show the Company'scompliance with or the status of the financial covenants contained herein; and

(v) such other information respecting the condition or operations, financial or otherwise, of the Company or any of itsSubsidiaries, including, without limitation, copies of all reports and registration statements which the Company or any suchSubsidiary files with the SEC or any national securities exchange, as the Administrating Bank or any Bank may from time to timereasonably request.

(h) ERISA (i) Comply in all material respects with the applicable provisions of ERISA and (ii) furnish to the Administrating Bank (A) as soonas possible, and in any event within 30 days after any officer of the Company or any ERISA Affiliate knows or has reason to know that anyTermination Event (other than one described in clause (v) of such defined term) has occurred that alone or together with any other suchTermination Event could reasonably be expected to result in liability of the Company to the PBGC in an aggregate amount exceeding$20,000,000, a statement of an officer setting forth details as to such Termination Event and the action that the Company proposes to takewith respect thereto, together with a copy of the notice of such Termination Event, if any, given to the PBGC, (B) promptly after receiptthereof, a copy of any notice the Company or any ERISA Affiliate may receive from the PBGC relating to the intention of the PBGC toterminate any Plan or Plans (o ther than a Plan maintained by an ERISA Affiliate which is considered an ERISA Affiliate only pursuant tosubsection (m) or (o) of Code Section 414) or to appoint a trustee to administer any such Plan, and (C) within 10 days after the due date for afiling with the PBGC pursuant to Section 412(n) of the Code of a notice of failure to make a required installment or other payment withrespect to a Plan, a statement of an officer setting forth details as to such failure and the action that the Company proposes to take withrespect thereto, together with a copy of such notice given to the PBGC.

SECTION 12. Negative Covenants. The Company agrees that, during the term of this Agreement, it will not:

(a) Sales, etc., of Assets. Except in the ordinary course of business, sell, lease, assign, transfer, or otherwise dispose of or permit any of itsSubsidiaries to sell, lease, assign, transfer, or otherwise dispose of the assets of the Company or its Subsidiaries (whether in one transaction orin a series of transactions) provided, however, that (i) the Company may sell and leaseback the undivided interest in Unit 1 as contemplated bythe Transaction Documents; (ii) the Company or a Subsidiary thereof may sell and leaseback nuclear fuel under either capitalized ornoncapitalized leases; (iii) the Company or a Subsidiary thereof may, as part of an industrial development revenue bond financing ofpollution control facilities constituting part of Grand Gulf, sell, lease or otherwise transfer and leaseback (or repurchase pursuant to aconditional sale or other installment sale contract) such facilities; (iv) the Company or a Subsidiary thereof may sell, assign, transfe r or

otherwise dispose of undivided interests in Grand Gulf if such transactions are for the purpose of complying with an order or orders of agovernmental body having jurisdiction in the premises or for the purpose of complying with the conditions of any construction permits issuedto the Company or a Subsidiary thereof by the Nuclear Regulatory Commission, provided that (A) payment for any such transaction shall bein cash or its equivalent and (B) each co-owner shall have waived any right it might have had to require any participation or division ofGrand Gulf during the useful life of Grand Gulf and shall have entered into an agreement with the Company or a Subsidiary thereof for thejoint operation of Grand Gulf specifying, among other things, that it will share responsibility for the operating costs of Grand Gulf and thatthe Company or a Subsidiary thereof shall remain responsible for the operation of Grand Gulf, and provided further that the conditionsspecified in the foregoing clause (B) shall be deemed modified by any contrary requirements of the Nuclear Regulatory Commission; (v) theCompany or a Subsidiary thereof may sell and lease-back assets (up to $500 million in aggregate proceeds received) under either capitalizedor noncapitalized leases; and (vi) the Company or a Subsidiary thereof may sell accounts receivable in the ordinary course of business.

(b) Mergers, etc. Merge with or into or consolidate with or into any other corporation or entity, or permit any of its Subsidiaries to do so,unless (i) immediately after giving effect thereto, no event shall occur and be continuing which constitutes a Reimbursement Default orPrepayment Event, (ii) the consolidation or merger shall not materially and adversely affect the ability of the Company (or its successor bymerger or consolidation as contemplated by clause (iii) of this Section 12(b)) to perform its obligations hereunder or under any of the otherTransaction Documents or Financing Documents, (iii) in the case of any merger or consolidation to which the Company is a party, thecorporation or entity formed by such consolidation or into which the Company shall be merged shall (A) assume the Company's obligationsunder this Agreement, the other Transaction Documents, and the Financing Documents in a writing satisfactory in form and substance to theRequired Banks, and (B ) provide to the Banks an opinion to the effect that the instrument of assumption complies with the terms hereof andconstitutes a valid, legally binding and enforceable obligation of such corporation or entity.

(c) Assignment or Modification of Transaction Documents or Financing Documents. (i) Enter into any assignment of its obligations under anyof the Transaction Documents (other than this Agreement and the Collateral Agreements) or Financing Documents (except as contemplatedherein or therein), without first obtaining the express prior written consent of the Required Banks thereto, (ii) cancel, terminate, supplement,modify, waive or consent to any cancellation, termination, amendment, supplement or modification (each, a "Modification") of any of theTransaction Documents (other than this Agreement and the Collateral Agreements) or Financing Documents or any provisions thereof unlessit has given the Banks prior notice thereof, and if such Modification could materially and adversely affect the Required Banks' rights andinterests hereunder or the ability of the Company to perform its obligations hereunder, the Required Banks have given their prior writte nconsent within 15 Business Days and (iii) except as otherwise provided herein, enter into any Modification of any of the CollateralAgreements or this Section 12(c) without first obtaining the prior written consent of all Participating Banks.

(d) Cessation of Operations. Cease operating Unit 1 if a cheaper source of energy is available unless both (i) the marginal cost of energy atUnit 1 is greater than the cost of purchasing energy from other available sources and (ii) the cessation of operation of Unit 1 would not result,or reasonably be expected to result, in the cessation of allocations of capacity charges under the UPSA or the removal of Unit 1 from theFERC jurisdictional rate base.

(e) Liens. Create, assume or suffer to exist any Lien upon any of its assets, now owned or hereafter acquired, securing any Indebtedness orother obligation except: (i) Liens existing on the date of execution and delivery of this Agreement, (ii) Liens established under the Mortgage,and any successor or general and refunding mortgage so long as provision is made that no further bonds may be issued under anypredecessor mortgage except to secure bonds issued under the then current successor or general and refunding mortgage, (iii) Lienscontemplated to be granted by the Company or the Owner Trustee pursuant to Section 2.1 of the Indenture, (iv) Liens contemplated to begranted by the Company to the Owner Participant pursuant to the Participation Agreement, (v) Liens securing sale and leasebacktransactions permitted under Section 12(a)(v) hereof, (vi) Liens on nuclear fuel securing sale and leaseback transactions involving suchnuclear fuel, (vii) assignments of the Capital Funds Agreement permitted by the Supplementary Capital Funds Agreement, (viii) assignmentsof the Availability Agreement permitted by the Availability Agreement Assignment, (ix) deposits or pledges to secure the payment ofworkmen's compensation, unemployment insurance, old age pensions or other social security benefits or obligations; (x) mechanics',materialmen's, warehousemen's, carriers' or other like liens arising in the ordinary course of business securing obligations which are notoverdue for a period longer than 30 days, or which are being contested by the Company in good faith and as to which adequate reserves shallhave been set aside on the books of the Company; (xi) Liens incurred or created in connection with or to secure the performance of bids,tenders, contracts (other than for the payment of money), leases, statutory obligations, surety bonds or appeal bonds, and other liens of likenature incurred or created in the ordinary course of business; (xii) Liens created or incurred in connection w ith industrial developmentrevenue bond financing of pollution control facilities constituting part of Grand Gulf, provided that any proceeds received by the Company asa result of such financing (after deducting any costs and expenses incurred in connection therewith) are applied either to pay or prepayIndebtedness or to pay the construction costs of Grand Gulf; (xiii) purchase money liens on property purchased or acquired, not to exceed inthe aggregate the principal amount of $20,000,000, provided that (A) the aggregate of the liens pertaining to such property may not exceedsixty-five percentum (65%) of the cost or fair value, whichever is less, of such property at the time of acquisition, and (B) each such lien shallapply only to such property originally subject thereto plus improvements; (xiv) Liens of financing agencies or other persons providingfinancing on any part of Grand Gulf which is reacquired by the Company following a default by an owner thereof under any agreement forjoint operation of Grand Gulf referred to in Section 12(a)(iv) hereof, (xv) Liens on the UPSA, or the right to receive any payments thereunder,if, but only if, the Administrating Bank shall have a valid and perfected first priority security interest in the UPSA and the rights to receivepayment thereunder pro rata and pari passu with any other secured party; and (xvi) Excepted Encumbrances.

(f) Debt Ratio. Permit at any time the Debt Ratio to exceed 0.70 to 1.0.

(g) Fixed Charge Ratio. Permit with respect to each fiscal quarter (determined as of the last day of such fiscal quarter) a Fixed Charge Ratioto be less than 1.50. "Fixed Charge Ratio" with respect to any fiscal quarter shall mean the ratio of (i) the sum of (A) consolidated net incomeof the Company and its Subsidiaries for the 12-month period ended on the last day of such fiscal quarter plus (or minus) (B) all extraordinaryitems deducted (or added) in determining said net income plus (C) all income taxes deducted in determining said net income minus (D)income tax credits added in determining said net income plus (E) the sum of (1) all interest expense in respect of Indebtedness of theCompany and its Subsidiaries deducted in determining said net income and (2) the interest element of rental payments deducted indetermining such net income under operating lease obligations of the Company and its Subsidiaries during such 12-month period as shown intheir respective financial statements or notes thereto (the aggregate interest expense and interest element of rental payments described in thisclause (E) being referred to as "Interest Expense") to (ii) Interest Expense for such fiscal quarter.

SECTION 13. Reimbursement Events of Default; Prepayment Events. The following events shall be "Reimbursement Events of Default"hereunder unless waived by the Required Banks pursuant to Section 14 hereof.

(i) the Company shall (a) fail to pay when due any amount payable under Section 2 hereof, (b) fail to pay any amount payableunder Section 3 hereof within five (5) Business Days after the same shall become due, or (c) fail to observe or perform anycovenant or agreement contained in any of the Collateral Agreements; or

(ii) the Company shall violate any covenant contained in Section 12 hereof, except for violations resulting from an involuntary lienunder Section 12(e) hereof; or

(iii) the Company shall fail to observe or perform any covenant contained in Section 11(g)(i) hereof; or

(iv) the Company shall fail to make, or cause to be made, after the passage of any applicable grace period, any payment orpayments specified in Section 15(i) of any of the Facility Leases; or

(v) the Company shall fail to observe or perform any covenant or agreement contained in this Agreement (other than thosecovered by clauses (i), (ii) and (iii) above) for 30 days after written notice thereof has been given to the Company by theAdministrating Bank or any Bank; or

(vi) any representation, warranty, certification or statement made by the Company in this Agreement or in any certificate,financial statement or other document delivered pursuant to this Agreement shall prove to have been incorrect or misleading inany material respect when made; or

(vii) any material provision of this Agreement or any Collateral Agreement shall at any time for any reason cease to be valid andbinding upon the Company, or shall be declared to be null and void, or the validity or enforceability thereof shall be contested bythe Company or any governmental agency or authority, or the Company shall deny that it has any or further liability orobligation under this Agreement or any Collateral Agreement; or

(viii) (a) the Company or any Subsidiary of the Company shall fail to make any payment of any amount in respect of anyObligations, or to make any payment of any interest or premium thereon, when due (whether by scheduled maturity, requiredprepayment, acceleration, demand or otherwise) and such failure shall continue after the applicable grace period, if any, specifiedin such agreement or instrument relating to such Obligations;

(b) any other default under any agreement or instrument relating to any Obligations of the Company or anySubsidiary of the Company, or any other event, shall occur and shall continue after the applicable grace period, if any,specified in such agreement or instrument, if the effect of such default or event is to accelerate (other than by aspecified mandatory redemption provision in connection with pollution control bonds unrelated to any default orevent of default with respect thereto) the maturity of any such Obligations and if the total of all such Obligationswhich (x) have become due and not been paid under clause (viii)(a) and (y) have been accelerated under this clause(viii)(b) shall exceed $10,000,000 in the aggregate;

(c) if any EOL Term Advances or DLE Term Advances are outstanding, Entergy shall fail to make any payment ofany amount in respect of any of its Obligations the aggregate principal amount of which is greater than $25,000,000,or to make any payment of any interest or premium thereon, when due (whether by scheduled maturity, requiredprepayment, acceleration, demand or otherwise) and such failure shall continue after the applicable grace period, ifany, specified in such agreement or instrument relating to such Obligations;

(d) if any EOL Term Advances or DLE Term Advances are outstanding, any other default under any agreement orinstrument relating to any Obligations of Entergy the aggregate principal amount of which is greater than$25,000,000, or any other event, shall occur and shall continue after the applicable grace period, if any, specified insuch agreement or instrument, if the effect of such default or event is to accelerate (other than by a specifiedmandatory redemption provision in connection with pollution control bonds unrelated to any default or event ofdefault with respect thereto) the maturity of any Obligations and if the total of all such Obligations which (x) havebecome due and not been paid under clause (viii)(c) and (y) have been accelerated under this clause (viii)(d) shallexceed $25,000,000 in the aggregate; or

(e) any Obligations of the Company or any Subsidiary of the Company the aggregate principal amount of which isgreater than $10,000,000, or if any EOL Term Advances or DLE Term Advances are outstanding, any Obligations ofEntergy the aggregate principal amount of which is greater than $25,000,000, in any case shall be declared due andpayable, or required to be prepaid (other than by a regularly scheduled required prepayment or a specifiedmandatory redemption provision in connection with pollution control bonds unrelated to any default or event ofdefault with respect thereof) prior to the stated maturity thereof; or

(ix) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdictionseeking (a) relief in respect of the Company, any Significant Operating Company or Significant Operating Group or of asubstantial part of its or their property or assets, under Title 11 of the United States Code, as now constituted or hereafteramended, or any other Federal or state bankruptcy, insolvency, receivership or similar law, (b) the appointment of a receiver,trustee, custodian, sequestrator, conservator or similar official for such company or group, or for a substantial part of its or theirproperty or assets, or (c) the winding-up or liquidation of the Company or any Significant Operating Company or SignificantOperating Group; and such proceeding or petition shall continue undismissed for 60 days, or an order or decree approving orordering any of the foregoing shall be entered; or

(x) the Company or any Significant Operating Company or Significant Operating Group shall (a) voluntarily commence anyproceeding or file any petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, orany other Federal or state bankruptcy, insolvency, receivership or similar law, (b) consent to the institution of, or fail to contest ina timely and appropriate manner, any proceeding or the filing of any petition described in clause (ix) above, (c) apply for orconsent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for such company orcompanies, or for a substantial part of its or their property or assets, (d) file an answer admitting the material allegations of apetition filed against it or them in any such proceeding, (e) make a general assignment for the benefit of creditors, (f) becomeunable, admit in writing its or their inability or fail generally to pay its or their debts as t hey become due or (g) take any actionfor the purpose of effecting any of the foregoing; or

(xi) any judgment or order for the payment of money exceeding any applicable insurance coverage by more than $10,000,000shall be rendered against the Company or any Subsidiary of the Company and shall remain undischarged or unstayed for 30 daysand enforcement proceedings shall have been commenced by any creditor upon such judgment or order; or

(xii) within 30 days after the reporting of any Termination Event to the Administrating Bank, the Administrating Bank shall havenotified the Company in writing that the Required Banks have made a reasonable determination that, on the basis of such

Termination Event, the financial condition of the Company is, or could reasonably be expected to become, materially andadversely affected; or

(xiii) this Agreement or any Collateral Agreement, or any material provision thereof, shall for any reason cease to be, or beasserted by either the Company, Entergy, any Operating Company or any Governmental Authority not to be, a legal, valid andbinding obligation of the Company, Entergy or the Operating Companies, enforceable in accordance with its terms; or thesecurity interest or Lien purported to be created by any Collateral Agreement shall for any reason cease to be, or be asserted bythe Company not to be, a valid, first priority perfected security interest (subject to no Liens, except Liens not prohibited bySection 12(e) hereof) in the Collateral as defined under each such Collateral Agreement; or

(xiv) Entergy shall cease to own, directly or indirectly, free and clear of all Liens whatsoever, all of the common stock equity andall of the voting stock of any of the Company, EAI, ELI, EMI or ENOI (other than (a) non-voting preferred stock which has ormay have only limited voting rights upon the occurrence of any default or other contingency and (b) voting preferred stock of anysuch Person having not more than 30% of the total voting power of all voting capital stock of such Person).

The following event shall be a "Prepayment Event" hereunder unless waived by the Required Banks pursuant to Section 14 hereof: anychange in Applicable Law or any Governmental Action (including revocation or modification of any required regulatory approval) shalloccur which adversely affects, in other than immaterial ways, (I) the obligations or ability of the Company, Entergy, any Operating Company,any Owner Trustee, the Indenture Trustee, any Owner Participant, the Funding Corporation, the Funding Bank, the Administrating Bank,any Participating Bank or any Participant to make any required payment under, or otherwise to perform, or the right or ability of any suchPerson to enforce its rights under, this Agreement or any of the other Transaction Documents or (II) the value of the Collateral Agreementsor the Lease Indenture Estate, unless such result can be avoided by action which is within the control of and can be taken by a Bank orParticipant within a reason able period of time, and which is not adverse to the interests of or onerous to such Bank (and each Bank andParticipant covenants with each other Bank and Participant to take any such action).

If a Reimbursement Event of Default or Prepayment Event occurs and is continuing, the Required Banks may, in their sole discretion, (1) bynotice to the Company and the Owner Participants cause the Funding Bank to terminate the Letters of Credit of such Owner Participants asprovided therein, (2) declare the Advances and all other principal amounts outstanding hereunder, all interest thereon and all other amountspayable hereunder to be due and payable within two Business Days after demand therefor by the Required Banks to the Company,whereupon the Advances and all other principal amounts outstanding hereunder, all such interest and all such other amounts shall becomeand be forthwith due and payable at such time, without presentment, demand, protest or further notice of any kind, all of which are herebyexpressly waived by the Company, and/or (3) exercise in respect of any or all of the Collateral (as such term is defined in each CollateralAgreement), in addition to the other rights and remedies provided for herein and in the Collateral Agreements or otherwise available to theAdministrating Bank or the Banks, all the rights and remedies of a secured party on default under the Uniform Commercial Code in effect inthe State of New York and in effect in any other applicable jurisdiction; provided, however, that in the event of the occurrence of anyReimbursement Event of Default described in clause (ix) or clause (x) above, with respect to the Company, (A) the obligations of theParticipating Banks to make Advances shall automatically be terminated, and (B) the Advances and all other principal amounts outstandinghereunder, all interest accrued and unpaid thereon and all other amounts payable hereunder shall automatically become due and payable,without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Company.

SECTION 14. Amendments and Waivers. Subject to the provisos of this Section 14 and to Section 23 hereof, neither this Agreement nor anyprovision hereof (including, without limitation, any Letter of Credit) may be waived, amended or modified except pursuant to an agreementor agreements in writing entered into by the Company and the Required Banks; provided, however, that no such agreement shall (i) changethe Maximum Credit Amount with respect to any Letter of Credit (other than any reduction in such Maximum Credit Amount in accordancewith the provisions of such Letter of Credit), or extend or advance the maturity of the Letters of Credit or the dates for the reimbursement ofdrawings under the Letters of Credit or for the repayment of Advances or the payment of interest on such drawings or Advances, or reducethe rate of interest on any unreimbursed drawings or Advances, (ii) change the Participation Percentage of any Participating Bank or the feesprovi ded for in Section 3 hereof (other than fees payable to the Administrating Bank or the Funding Bank pursuant to the Fee Letter), (iii)waive, modify or eliminate any of the conditions specified in Section 7(f) or 7(g), (iv) reduce the principal of, or interest on, the Advances, anyamount reimbursable on demand pursuant to Section 2(a), or any fees or other amounts payable hereunder, (v) amend or modify theprovisions of this Section 14, Section 4 hereof, Section 5(b) hereof, Section 6(d) hereof, Section 9 hereof, Section 12(c)(iii) hereof, Section 13hereof, Section 17 hereof, Section 19 hereof, Section 21 hereof, Section 22 hereof or Section 23 hereof, the proviso in Section 18 or thedefinition of "Required Banks" or (vi) release any Collateral (as such term is defined in each Collateral Agreement) (except for any suchrelease expressly permitted under any Collateral Agreement) or change any provision of any Collateral Agreement providing for the releaseof Collateral, in each case without the p rior written consent of each Participating Bank and the Funding Bank; provided further that no suchagreement shall (I) change the identity of any Participating Bank or amend, modify or otherwise affect the rights or duties of the FundingBank hereunder, (II) amend or modify the provisions of Sections 5(a), (b), (c), (d), (e) or (f) hereof, or (III) change the fees provided for inSection 3(a) hereof, without the written consent of the Funding Bank, or amend, modify or otherwise affect the rights or duties of theAdministrating Bank hereunder, without the written consent of the Administrating Bank. The Administrating Bank and each Bank shall bebound by any modification or amendment authorized by this Section 14, and any consent by any Participating Bank pursuant to this Section14 shall bind any successor Participating Bank acquiring a participation from it whether or not such successor Participating Bank hasreceived actual notice thereof.

SECTION 15. Notices. All notices, requests and other communications to any party hereunder shall be in writing (including telex, telecopy orother facsimile transmission) and shall be given to such party, addressed to it, at its address or telex or telecopy number set forth below thename of such party on the signature pages hereof or such other address or telex or telecopy number as such party may hereafter specify forthat purpose by notice to the other parties. Each such notice, request or communication shall be effective (i) if given by telex, when such telexis transmitted to the telex number specified below and the appropriate answerback is received, (ii) if given by mail upon receipt but not laterthan 10 days after such communication is deposited in the mails with first-class postage prepaid, addressed as aforesaid, or (iii) if given byany other means, when delivered at the address for notices described above.

SECTION 16. No Waiver, Remedies. No failure on the part of the Administrating Bank or any Bank to exercise, and no delay in exercising,any power or right hereunder for any period of time shall operate as a waiver thereof nor shall any single or partial exercise of any such rightor power preclude any other or further exercise thereof or the exercise of any other right. The rights and remedies herein provided to theAdministrating Bank and the Banks are cumulative and not exclusive of any other rights or remedies which the Administrating Bank or anyBank may otherwise have. No waiver of any provision of this Agreement nor consent to any departure by the Company therefrom shall inany event be effective unless the same shall be authorized as provided in Section 14 above, and then such waiver or consent shall be effectiveonly in the specific instance and for the purpose for which given. No notice to or demand on the Company in any case shall entitle theCompany to any other or further notice or demand in similar or other circumstances.

SECTION 17. Right of Setoff. (a) If a Reimbursement Event of Default or Prepayment Event shall have occurred and be continuing, eachBank is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits(general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Bank to or forthe credit or the account of the Company against any of and all the obligations of the Company now and hereafter existing under thisAgreement, irrespective of whether or not such Bank shall have made any demand under this Agreement and although such obligations maybe unmatured. If the Funding Bank shall assert any setoff in accordance with the provisions of Section 5(d) hereof to be applied in reductionof the obligations of the Company pursuant to Section 2 hereof and a Participating Bank shall have fulfilled its obligations to the FundingBank hereun der, then such Participating Bank shall be entitled to share in such application in proportion to its Participation Percentage.Each Bank agrees promptly to notify the Company after any such setoff and application made by such Bank, but the failure to give suchnotice shall not affect the validity of such setoff and application. The rights of each Bank under this Section are in addition to other rights andremedies (including, without limitation, other rights of setoff) which such Bank may have.

(b) Each Participating Bank agrees that if it shall, through the exercise of a right of banker's lien, setoff or counterclaim against theCompany, including, but not limited to, a secured claim under Section 506 of Title 11 of the United States Code or other security or interestarising from, or in lieu of, such secured claim, received by such Participating Bank under any applicable bankruptcy, insolvency or othersimilar law or otherwise, obtain payment (voluntary or involuntary) in respect of amounts paid by it pursuant to Section 5(a) as a result ofwhich the unreimbursed portion of Section 5(a) payments made by it shall be proportionately less (determined in accordance with eachParticipating Bank's Participation Percentage) than the unreimbursed portion of Section 5(a) payments made by any other ParticipatingBank, it shall be deemed to have simultaneously purchased from such other Participating Bank a participation in the unreimbursed portionof Section 5(a) payments made by suc h other Participating Bank, so that the aggregate unreimbursed portion of Section 5(a) payments madeby it and participations in the unreimbursed portion of Section 5(a) payments made by each other Participating Bank and held by it shall bein the same proportion (determined in accordance with each Participating Bank's Participation Percentage) to the aggregate unreimbursedportion of Section 5(a) payments made by all Participating Banks as the principal amount of the unreimbursed portion of Section 5(a)payments made by it prior to such exercise of banker's lien, setoff or counterclaim was to the unreimbursed portion of all Section 5(a)payments made by all Participating Banks prior to such exercise of banker's lien, setoff or counterclaim; provided, however, that if any suchpurchase or purchases or adjustments shall be made pursuant to this Section 17(b) and the payment giving rise thereto shall thereafter berecovered, such purchase or purchases or adjustments shall be rescinded to the extent of s uch recovery and the purchase price or prices oradjustment restored without interest. The Company expressly consents to the foregoing arrangements and agrees that any Participating Bankholding a participation in an unreimbursed portion of Section 5(a) payments deemed to have been so purchased may exercise any and allrights of banker's lien, setoff or counterclaim with respect to any and all moneys owing by it to such Participating Bank as fully as if suchParticipating Bank held an unreimbursed portion of Section 5(a) payments in the amount of such participation.

SECTION 18. Continuing Obligation. Except with respect to Sections 20, 21 and 22, the obligations of the Company under this Agreementshall continue until the later of (i) the Termination Date of the last outstanding Letter of Credit or (ii) the date upon which all amounts dueand owing to the Administrating Bank and the Banks hereunder shall have been paid in full and shall (a) be binding upon the Company andits successors and assigns and (b) inure to the benefit of and be enforceable by the Banks and their successors, transferees and assigns;provided, however, that the Company may not assign all or any part of this Agreement or any Collateral Agreement without the prior writtenconsent of the Funding Bank and the Participating Banks.

SECTION 19. Extension of Letters of Credit. At least 120 days but not more than 365 days before the Stated Expiration Date of a Letter ofCredit, the Company may request the Banks, by giving written notice of such request to the Administrating Bank, to extend the StatedExpiration Date of such Letter of Credit, specifying the terms and conditions, including fees, to be applicable to such extension. TheAdministrating Bank shall promptly notify the Funding Bank and each Participating Bank of such request, and no later than 60 days fromthe date on which the Administrating Bank shall have received notice from the Company pursuant to the preceding sentence, theAdministrating Bank shall notify the Company of the consent or nonconsent of the Banks to such extension request, and if the AdministratingBank shall give no such notice to the Company, the Banks shall be deemed not to have consented to such extension request. No extension shallbe effective without the con sent of the Funding Bank and each of the Participating Banks. The Banks' consent shall be conditional upon thepreparation, execution and delivery of legal documentation in form and substance satisfactory to the Banks and their counsel incorporatingsubstantially the terms and conditions contained in the extension request as the same may be modified by agreement among the Companyand the Banks.

SECTION 20. Limited Liability of the Banks. As between the Company, on the one hand, and the Banks and the Administrating Bank, on theother hand, the Company assumes all risks of the acts or omissions of the Owner Participants with respect to their use of the Letters ofCredit. None of the Administrating Bank, the Banks or any of their officers or directors shall be liable or responsible for: (a) the use whichmay be made of the Letters of Credit or for any acts or omissions of the Owner Participants in connection therewith; (b) the validity,sufficiency or genuineness of documents, or of any endorsement(s) thereon, even if such documents should in fact prove to be in any or allrespects invalid, insufficient, fraudulent or forged; (c) payment by the Funding Bank against presentation of documents which do not complywith the terms of the appropriate Letter of Credit, including failure of any documents to bear any reference or adequate reference to theappropriat e Letter of Credit; or (d) any other circumstances whatsoever in making or failing to make payment under any Letter of Credit,except only that the Company and the Participating Banks shall have a claim against the Funding Bank, and the Funding Bank shall be liableto the Company and the Participating Banks to the extent, but only to the extent, of any direct, as opposed to consequential, damages sufferedby the Company or the Participating Banks, as the case may be, which the Company or the Participating Banks, as the case may be, provewere caused by (i) the Funding Bank's willful misconduct or gross negligence in determining whether documents presented under a Letter ofCredit comply with the terms thereof or (ii) the Funding Bank's willful failure to pay under a Letter of Credit after the presentation to it bythe appropriate Owner Participant of a draft and certificate strictly complying with the terms and conditions of such Letter of Credit. Infurtherance and not in limitation of the foregoing, the F unding Bank may accept documents that appear on their face to be in order, withoutresponsibility for further investigation, regardless of any notice or information to the contrary. Nothing in this Section 20 is intended to limitthe Company's reimbursement obligation contained in Section 2 hereof or any Participating Bank's reimbursement obligation contained inSection 5(a) hereof.

SECTION 21. Costs, Expenses and Taxes. The Company agrees to pay not later than 30 days after demand therefor, whether or not thetransactions contemplated herein are consummated, all reasonable costs and expenses of the Administrating Bank, each other Agent and theFunding Bank in connection with the preparation, negotiation, syndication, execution, delivery, filing and administration of this Agreementand any other documents which may be delivered in connection with this Agreement, including, without limitation, the reasonable fees andout-of-pocket expenses of special counsel for the Administrating Bank and the Funding Bank with respect thereto and with respect toadvising the Administrating Bank and the Funding Bank as to their rights and responsibilities under this Agreement and the CollateralAgreements, and to pay all reasonable counsel fees and expenses that may be incurred by the Administrating Bank and each of the Banks inconnection with any Reimburseme nt Event of Default or Prepayment Event or any waiver or amendment of, or the enforcement of, thisAgreement and such other documents which may be delivered in connection with this Agreement. In addition, the Company agrees to payany and all stamp and other taxes and fees payable or determined to be payable in connection with the execution, delivery, filing andrecording of this Agreement and such other documents and agrees to hold the Administrating Bank and the Banks harmless from and against

any and all liabilities with respect to or resulting from any delay in paying or omission to pay such taxes and fees; provided that theAdministrating Bank and the Banks agree promptly to notify the Company of any such taxes and fees which are incurred by theAdministrating Bank or such Bank (as the case may be). Without prejudice to the survival of any other obligation of the Company hereunder,the obligations of the Company contained in this Section 21 shall survive the payment in full of amounts payable b y the Company underSection 2 hereof and the termination of the Letters of Credit and this Agreement.

SECTION 22. Indemnification. The Company hereby agrees to indemnify and hold harmless the Administrating Bank, each other Agent andeach Bank from and against any and all claims, damages, losses, liabilities, costs or expenses whatsoever which the Administrating Bank,such other Agent or such Bank may reasonably incur (or which may be claimed against the Administrating Bank, such other Agent or suchBank by any Person or entity whatsoever) (a) by reason of any inaccuracy in any material respect, or untrue statement or alleged untruestatement of any material fact contained or incorporated by reference in any offering document distributed by or on behalf of the Companyin connection with obtaining purchasers of the Undivided Interest in Unit 1, or in any supplement or amendment to either thereof, or theomission or alleged omission to state therein a material fact necessary to make such statements, in the light of the circumstances under whichthey are or were made , not misleading; (b) by reason of or in connection with the execution, delivery and performance of this Agreement, theother Transaction Documents and the Financing Documents; or (c) by reason of or in connection with the execution and delivery or transferof, or payment or failure to make lawful payment under, any Letter of Credit; provided that the Company shall not be required to indemnifythe Administrating Bank, any other Agent or any Participating Bank for any claims, damages, losses, liabilities, costs or expenses to theextent, but only to the extent, caused by the willful misconduct or gross negligence of the Funding Bank in determining whether a draft orcertificate presented under a Letter of Credit complied with the terms of such Letter of Credit or the Funding Bank's willful failure to makelawful payment under a Letter of Credit after the presentation to it by the appropriate Owner Participant of a draft and certificate strictlycomplying with the terms and conditions of such Letter of Credit. Nothing in this Section 22 is intended to limit the Company'sreimbursement obligation contained in Section 2 hereof or any Participating Bank's reimbursement obligation contained in Section 5(a)hereof. Without prejudice to the survival of any other obligation of the Company hereunder, the indemnities and obligations of the Companycontained in this Section 22 shall survive the payment in full of amounts payable by the Company under Section 2 hereof and the terminationof the Letters of Credit and this Agreement or the substitution of any of the Banks pursuant to Sections 4(g) or (h) hereof.

SECTION 23. Sales of Participations; Assignments. (a) Without the consent of the Funding Bank, the Administrating Bank, the other Agents,the Company or any other Participating Bank, each Participating Bank may grant participations in its participation in the Letters of Credit(each Person to which a participation is granted being called a "Participant") and in such event such Participating Bank will, in its own nameand as agent for any such Participant, enforce all rights and interests of any Participant under this Agreement, and accept all performancesrequired of the Company under this Agreement; provided, however, that such Participating Bank shall remain entitled to exercise any right,remedy and power hereunder (other than, if agreed between the Participating Bank and the Participant, with respect to (i) the MaximumCredit Amounts or the effective Participation Percentage of such Participant, (ii) the maturity of the Letters of Credit or the dates for thereimbursement of drawings under the Letters of Credit or the payment of interest thereon, (iii) the rate of interest on unreimburseddrawings, or (iv) the fees to be paid hereunder), and shall remain fully obligated to the Funding Bank as provided herein. Any suchParticipant will be a "Participating Bank" for purposes of Section 2(1) and Section 4 hereof. If, at the time of a grant of a participationpursuant to this Section 23(a), such grant would result in a claim for compensation pursuant to Sections 2(1), 4(b), 4(c) or 4(d) hereofmaterially greater than that to which the Participating Bank granting such participation is entitled, such grant shall be subject to the consentof the Company.

(b) With the prior written consent of the Administrating Bank, the Funding Bank and the Company (which consent in the case of theAdministrating Bank and the Company shall not be unreasonably withheld and, in the case of the Company, shall not be required if aReimbursement Default has occurred and is continuing), any Participating Bank may cause all or a portion of its obligations hereunder to beassumed by a financial institution, and notwithstanding the provisions of Section 14 hereof, upon the execution and delivery to theAdministrating Bank (together with a processing and recordation fee of $3,500) of an assignment and acceptance agreement (which shall besatisfactory in form and substance to the Administrating Bank and the Funding Bank) executed by the Administrating Bank, the FundingBank, such transferring Participating Bank and such financial institution, such financial institution shall become a "Participating Bank" forpurposes of this Agreement and shall be enti tled to the rights, privileges and obligations of a Participating Bank hereunder and suchtransferring Participating Bank shall be released from its obligations with respect to the portion of its participation so assumed; provided,that (i) the obligations so transferred and assumed shall not be less than $5,000,000 (or, if less, the aggregate amount of the transferringParticipating Bank's obligations hereunder) and (ii) the prior written consent of the Company shall not be required for a transfer of all or aportion of a Participating Bank's obligations hereunder to another Participating Bank or an affiliate of a Participating Bank.

(c) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors andassigns permitted hereby, except that the Company may not assign or otherwise transfer any of its rights or obligations hereunder withoutthe prior written consent of each Bank (and any attempted assignment or transfer by the Company without such consent shall be null andvoid). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, theirrespective successors and assigns permitted hereby) any legal or equitable right, remedy or claim under or by reason of this Agreement.

SECTION 24. Administrating Bank. (a) In order to expedite the various transactions contemplated by this Agreement, Union Bank ofCalifornia, N.A. is hereby appointed to act as Administrating Bank on behalf of the Participating Banks. Each of the Participating Bankshereby authorizes and directs the Administrating Bank to take such action on behalf of such Participating Bank under the terms andprovisions of this Agreement and to exercise such powers hereunder as are specifically delegated to or required of the Administrating Bankby the terms and provisions hereof, together with such powers as are reasonably incidental thereto. The Administrating Bank is herebyexpressly authorized on behalf of the Participating Banks, without hereby limiting any implied authority, (i) to receive on behalf of each ofthe Participating Banks any payment of fees due to the Participating Banks hereunder and all other amounts accrued hereunder paid to theAdministrating Bank for the accounts of the Participating Banks, and promptly to distribute to each Participating Bank its proper share ofall payments so received; (ii) to give notice within a reasonable time on behalf of each of the Participating Banks to the Company of anyReimbursement Event of Default or Prepayment Event specified in this Agreement of which the Administrating Bank has actual knowledgeacquired in connection with its capacity as Administrating Bank hereunder; and (iii) to distribute to the Funding Bank and eachParticipating Bank copies of all notices, agreements and other material as provided for in this Agreement as received by the AdministratingBank.

(b) Neither the Administrating Bank nor any of its directors, officers, employees or agents shall be liable as such for any action taken oromitted by any of them hereunder except for its or his own gross negligence or willful misconduct, nor be responsible for any statement,warranty or representation herein or the contents of any document delivered in connection herewith nor be required to ascertain or to makeany inquiry concerning the performance or observance by the Company of any of the terms, conditions, covenants or agreements of thisAgreement. The Administrating Bank shall not be responsible to the Participating Banks for the due execution, genuineness, validity,enforceability or effectiveness of this Agreement, the Letters of Credit or any other instrument to which reference is made herein. TheAdministrating Bank shall in all cases be fully protected in acting, or refraining from acting, in accordance with written instructions signedby the Required Banks, and, except as otherwise specifically provided herein, such instructions and any action taken or failure to act

pursuant thereto shall be binding on all the Participating Banks. The Administrating Bank shall, in the absence of knowledge to the contrary,be entitled to rely on any paper or document believed by it to be genuine and correct and to have been signed or sent by the proper person orpersons. Neither the Administrating Bank nor any of its directors, officers, employees or agents shall have any responsibility to the Companyor the Funding Bank on account of the failure or delay in performance or breach by any Participating Bank or the Funding Bank of any of itsobligations hereunder or to any Participating Bank on account of the failure of or delay in performance or breach by any other ParticipatingBank, the Funding Bank or the Company of any of their respective obligations hereunder or in connection herewith. The AdministratingBank may execute any and all duties hereunder by or through agents or employees and shall be entitled to advice of legal counsel selected byit with respect to all matters arising hereunder and shall not be liable for any action taken or suffered in good faith by it in accordance withthe advice of such counsel. Neither the Syndication Agent nor the Documentation Agent shall have any duties or obligations in such capacityunder any of the Transaction Documents.

(c) With respect to the Participation Percentage of it hereunder, the Administrating Bank, in its individual capacity and not as theAdministrating Bank, shall have the same rights and powers hereunder and under any other agreement executed in connection herewith asany other Participating Bank and may exercise the same as though it were not the Administrating Bank, and the Administrating Bank and itsaffiliates may accept deposits from, lend money to and generally engage in any kind of business with the Company, any Subsidiary thereof orany other affiliate thereof as if it were not the Administrating Bank.

(d) Each Participating Bank agrees (i) to reimburse the Administrating Bank in the amount of such Participating Bank's pro rata share(determined in accordance with such Participating Bank's Participation Percentage) of any expenses incurred for the benefit of theParticipating Banks by the Administrating Bank, including counsel fees and compensation of agents and employees paid for servicesrendered on behalf of the Participating Banks, not reimbursed by the Company and (ii) to indemnify and hold harmless the AdministratingBank and any of its directors, officers, employees or agents, on demand, in the amount of its pro rata share (determined as aforesaid), fromand against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of anykind or nature whatsoever which may be imposed on, incurred by or asserted against it in its capacity as the Administrating Bank or againstany of its directors, officers, e mployees or agents in any way relating to or arising out of this Agreement or any action taken or omitted by itor any of them under this Agreement, to the extent not reimbursed by the Company, provided that no Participating Bank shall be liable to theAdministrating Bank for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses ordisbursements resulting from the gross negligence or willful misconduct of the Administrating Bank or any of its directors, officers,employees or agents.

(e) Each Participating Bank acknowledges that it has, independently and without reliance upon the Administrating Bank or any otherParticipating Bank and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision toenter into this Agreement. Each Participating Bank also acknowledges that it will, independently and without reliance upon theAdministrating Bank or any other Participating Bank and based on such documents and information as it shall deem appropriate at the time,continue to make its own decisions in taking or not taking action under or based upon this Agreement, any related agreement or anydocument famished hereunder.

SECTION 25. Termination by the Company. The Company may, upon 30 days written notice to the Administrating Bank, terminate thisAgreement; provided, however, that any such proposed termination shall not be effective until (i) all Owner Participants have delivered theirLetters of Credit to the Funding Bank for cancellation together with a duly executed request for cancellation in the form of Exhibit 7 toExhibit A hereto, and (ii) the Company has paid all fees, expenses and interest accrued hereunder.

SECTION 26. Termination of Availability Agreement Assignment. The parties hereto agree that the Availability Agreement Assignment shallbe terminated upon the earlier of (a) the release or termination of each other collateral assignment of the Availability Agreement entered intoby the Company and each Operating Company (other than any collateral assignment that relates to the Original Reimbursement Agreementor any amendment or restatement thereof) and (b) the indefeasible repayment in full of all Indebtedness of the Company (other thanIndebtedness under this Agreement) secured by each such other collateral assignment of the Availability Agreement.

SECTION 27. Severability. Any provision of this Agreement which is prohibited, unenforceable or not authorized in any jurisdiction shall, asto such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or nonauthorization without invalidating the remainingprovisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction. The parties shall endeavor ingood-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which comes asclose as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 28. Governing Law; Jurisdiction; Consent to Service of Process; Waiver of Jury Trial. (a) This Agreement shall be governed by, andconstrued and interpreted in accordance with, the laws of the State of New York.

(b) Each party to this Agreement hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdictionof the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District ofNew York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or forrecognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims inrespect of any such action or proceeding may be heard and determined in such New York State court or, to the extent permitted by law, insuch Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may beenforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect anyright that the Admini strating Agent, the Funding Bank or any other Bank may otherwise have to bring any action or proceeding relating tothis Agreement against the Company or its properties in the courts of any jurisdiction.

(c) Each party to this Agreement hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, anyobjection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to thisAgreement in any court referred to in subsection (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extentpermitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 15 hereto. Nothingin this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

(e) EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT ITMAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATINGTO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT ORANY OTHER THEORY). EACH PARTY HERETO (i) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANYOTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENTOF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (ii) ACKNOWLEDGES THAT IT AND THE OTHER

PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUALWAIVERS AND CERTIFICATIONS IN THIS SECTION.

SECTION 29. Headings. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute apart of this Agreement for any other purpose.

SECTION 30. Counterparts. This Agreement may be signed in two or more counterparts, each of which shall constitute an original but all ofwhich when taken together shall constitute but one contract, and shall become effective when it shall have been executed by all parties heretoand when the Administrating Bank shall have received copies hereof which, when taken together, bear signatures of all parties hereto.Delivery of an executed counterpart of a signature page of this Agreement, any certificate, document (other than any Letter of Credit) orlegal opinion contemplated or required by the terms of this Agreement by facsimile transmission shall be as effective as delivery of amanually executed counterpart of this Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officersthereunto duly authorized as of the date first above written.


By

Name:Title:

Address for Notice:

System Energy Resources, Inc.Box 61000

New Orleans, LA 70161Attention: Treasurer

Telecopy: (504) 576-4455

BANC ONE CAPITAL MARKETS, INC., as Documentation Agent

By

Name:Title:

Address for Notice:

Bank One, NA1 Bank One Plaza, Suite IL1-0367

Chicago, Illinois 60670Telecopy: (312) 325-3020Attn: Madeleine Pember

PARTICIPATING BANKS

$39,687,142.65/20.0378% UNION BANK OF CALIFORNIA, N.A.,

as Administrating Bank, as Funding Bank and as a Participating Bank

By

Name:Title:

Address for Notice:



Telecopy: (213) 236-4096Attn.: Chad Canfield

Address for Payments:

Union Bank of California, N.A.1980 Saturn Street

Monterey Park, California 91754ABA # 122-000-496Acct # 070-196431

Attn: Commercial Loan OperationsRef: Systems Energy Resources, Inc.

$24,687,142.64/12.4644% BANK ONE, NA (MAIN OFFICE-CHICAGO), as a Participating

Bank

By

Name:Title:

Address for Notice:

Bank One, NA1 Bank One Plaza

Chicago, Illinois 60670Telecopy: (312) 325-3020Attn: Madeleine Pember


Bank One, NAChicago, IL

ABA # 071000013Acct # 4811-5286-0000

Acct Name LS2 OSD Money Transfers IncomingRef: System Energy Resources

$24,687,142.64/12.4644% KEYBANK NATIONAL ASSOCIATION,

as Syndication Agent and as a Participating Bank

By

Name:Title:

Address for Notice:

KeyBank National AssociationEnergy Group

127 Public SquareCleveland, Ohio 44114-1306

Telecopy: 216-689-3443Attn.: Sherrie Manson


KeyBank National AssociationCleveland, Ohio

ABA # 041-001-039Acct # 1140228209035

Acct Name KCIB Loan Services

$23,000,000.00/11.6126% BNP PARIBAS, as a Participating Bank

By

Name:Title:

By

Name:Title:

Address for Notice:

BNP Paribas787 Seventh Avenue

New York, New York 10019Telecopy: (212) 841-2555

Attn: Manoj Khatri


BNP ParibasNew York, NY

ABA # 026-007-689Acct # 103-130-00103

Acct Name Loan Servicing Clearing AccountRef: System Energy Resources, Inc.

$23,000,000.00/11.6126% MIZUHO CORPORATE BANK, LTD.,

as a Participating Bank

By

Name: Jun ShimmachiTitle: Vice President

Address for Notice:

Mizuho Corporate Bank, Ltd. 1251 Avenue of the Americas

New York, NY 10020Telecopy: (212) 282-4488

Attn: Nelson Chang


Mizuho Corporate Bank, Ltd.ABA # 026004307

Acct # H79-740-222205Attn: Judy Kwong - LAU

Ref: System Energy Resources, Inc.

$23,000,000.00/11.6126% WACHOVIA BANK, NATIONAL ASSOCIATION, as a Participating

Bank

By

Name:Title:

Address for Notice:

Wachovia Bank, National Association201 S. College Street OP-9

Charlotte, North Carolina 28288-1183Telecopy: (704) 714-0097Attn: Cynthia Rawson


Wachovia Bank, National AssociationCharlotte, North Carolina 28288

ABA # 053000219Acct # 01459168118011

Acct Name UtilitiesAttn: Cynthia Rawson

$20,000,000.00/10.0978% THE BANK OF NOVA SCOTIA, as a Participating Bank

By

Name:Title:

Address for Notice:

The Bank of Nova ScotiaNew York AgencyOne Liberty Plaza


Attn: Paul Farrell


The Bank of Nova ScotiaNew York AgencyABA # 026002532

Credit NYATL Acct # 2309165CORBK77Ref: System Energy Resources

$20,000,000.00/10.0978% UFJ BANK LIMITED, NEW YORK BRANCH, as a

Participating Bank

By

Name: John T. FeeneyTitle: Vice President

Address for Notice:

UFJ Bank LimitedNew York Branch55 East 52nd Street


Attn: John T. Feeney


Federal Reserve Bank of New YorkABA # 026009823

Acct # 99315Acct Name UFJ Bank - New York

Ref: System Energy Resources, Inc.

EXHIBIT A

IRREVOCABLE TRANSFERABLE LETTER OF CREDIT

No. [ ]

December __, 2003

[Owner Participant]

[Address]

(the "Owner Participant")

Attn: [ ]

Dear Sirs:

1. We hereby establish, at the request of System Energy Resources, Inc. (the "Company"), in your favor, our Irrevocable Transferable Letterof Credit No. ___________ (the "Letter of Credit"), in an amount not to exceed [$36,515,236.09][$161,546,191.84] (as such amount may bereduced pursuant to the terms hereof, the "Maximum Credit Amount"), effective immediately and expiring on the Termination Date.Capitalized terms used herein and in Schedules II and III and Exhibits 1, 2, 3, 4, 5, 6 and 7 hereto shall have the meanings set forth inSchedule I hereto. This Letter of Credit is issued in connection with the leasing of an undivided interest in Unit No. 1 of the Grand GulfNuclear Station to the Company pursuant to a Facility Lease, dated as of December 1, 1988, as supplemented by Lease Supplement No. 1,dated as of April 1, 1989, and Lease Supplement No. 2, dated as of January 1, 1994 (collectively, the "< I>Facility Lease"), among theCompany and the Owner Trustee under a trust agreement with you.

2. The Maximum Credit Amount may be reduced at any time and from time to time upon receipt by us at the address for presentation ofdocuments set forth below of a copy of the instrument effecting such reduction, signed by the Company and by you in the form of Exhibit 1hereto (a "Reduction Certificate"). Upon receipt of such certificate, the Maximum Credit Amount shall be automatically and permanentlyreduced by the amount specified as the Reduction Amount in such Reduction Certificate (the "Reduction Amount").

3. We hereby irrevocably authorize you to draw on us, in accordance with the terms and conditions hereinafter set forth, an amount not inexcess of the least of (x) the Maximum Drawing Amount applicable to the date of such drawing (the "Date of Drawing"), as modified inaccordance with the next paragraph and (y) the Maximum Available Credit Amount applicable to the Date of Drawing, as modified inaccordance with the next paragraph and (z) in the case of a Partial Draw, the Partial Drawing Amount applicable to the Date of Drawing;provided, however, that at no time shall we be required to pay any drawing under this Letter of Credit in excess of the lesser of the MaximumAvailable Credit Amount and the Maximum Drawing Amount, in each case as in effect on the applicable Date of Drawing.

4. The Maximum Drawing Amounts and the Maximum Available Credit Amount shall be modified from time to time as follows:

(a) upon receipt by us of a Reduction Certificate, the Maximum Available Credit Amount shall be permanently reduced by theReduction Amount set forth in such Reduction Certificate;

(b) upon payment by us of each Partial Draw (as hereinafter defined) under the Letter of Credit, (i) the Maximum DrawingAmount applicable to each Date of Drawing subsequent to such payment shall be automatically reduced by an amount equal tothe amount of the drawing so paid and (ii) the Maximum Available Credit Amount shall be automatically reduced by an amountequal to the amount of the drawing so paid;

(c) upon the application by us of amounts paid by the Company pursuant to Section 2 of the Reimbursement Agreement toreimburse any Partial Draw hereunder (as such application is allocated in accordance with Section 2(d) of the ReimbursementAgreement), (i) the Maximum Drawing Amount applicable to each Date of Drawing subsequent to such application shall beautomatically increased by the amount of such payment(s) allocated as a reimbursement of drawings hereunder and (ii) theMaximum Available Credit Amount shall be automatically increased by the amount of such payment(s) allocated as areimbursement of drawings hereunder; provided, however, that the Maximum Available Credit Amount shall never exceed theMaximum Credit Amount;

(d) upon the payment by us of any Final Draw (as hereinafter defined) under the Letter of Credit, (i) the Maximum DrawingAmount applicable to each Date of Drawing subsequent to such payment shall be automatically reduced to zero and (ii) theMaximum Available Credit Amount shall be automatically reduced to zero; and

(e) if adjustments are made to Casualty Values, corresponding adjustments shall be made to the Maximum Drawing Amountsshown in Schedule II (as theretofore reduced pursuant to clause (b) above and, if applicable, reinstated pursuant to clause (c)above), provided that adjustments pursuant to this clause (e) shall be effective automatically upon receipt by us of a notice fromyou in the form of Exhibit 2 hereto, and provided further that such adjustments shall in no event cause the Maximum DrawingAmount to exceed the Maximum Credit Amount.

5. Upon return of this Letter of Credit together with a notice in the form of Exhibit 2 hereto, we will promptly initial and attach to this Letterof Credit a revised Schedule II reflecting the adjustments contained in such notice and return this Letter of Credit to you with such revisedSchedule attached.

6. Upon the application by us of amounts paid by the Company pursuant to Section 2 of the Reimbursement Agreement to reimburse anyPartial Draw hereunder, we will give you prompt (and in any event within three Business Days of such application) written notice of suchapplication and the amount thereof. Such notice shall be given in accordance with the provisions set forth in the eighth paragraph of thisLetter of Credit.

7. Funds under this Letter of Credit are available to you either (a) against presentation as set forth herein on or prior to the earlier of (x) May30, 2007 and (y) the Termination Date and provided there has not been a Final Draw and provided a written notice indicating the Date ofEarly Termination (as hereinafter defined) has not been delivered to you, of (i) your draft in the form of Exhibit 3 attached hereto and (ii) acompleted certificate signed by you in the form of Exhibit 4 attached hereto (a "Partial Draw") or (b) against presentation on or prior to theTermination Date of (i) your draft in the form of Exhibit 3 attached hereto and (ii) a completed certificate signed by you in the form ofExhibit 5 attached hereto (a "Final Draw"). Each of a Partial Draw and a Final Draw are sometimes referred to herein as a "Draw". Eachsuch draft and certificate shall be dated the date of presentation and shall be pr esented either (i) by personal delivery at our office located at

1980 Saturn Street, Monterey Park, California 91754-7417, Attention: Standby Letter of Credit Unit (or at any other office in Monterey Parkor Los Angeles, California which may be designated by us by written notice (given in the manner set forth in the next paragraph) delivered toyou at least 15 days prior to the applicable Date of Drawing) or (ii) by telecopy at (323) 720-2773 (or at any other telecopy number inMonterey Park or Los Angeles, California which may be designated by us by written notice (given in the manner set forth in the nextparagraph) delivered to you at least 15 days prior to the applicable Date of Drawing). If presentation is by telecopy, promptly thereafter, butnot as a condition to a draw, you shall forward such draft and certificate to us at the location specified in or pursuant to (i) above. We agree,so long as this Letter of Credit is in effect, that we will maintain an office in the city of Monterey Park or Los A ngeles, California where suchpresentation may be made. If we receive such draft and certificate by personal delivery or by telecopy at such office, all in strict conformitywith the terms and conditions of this Letter of Credit, prior to 10:00 a.m. (Los Angeles time) on any Business Day, we will honor the draft onthe same Business Day by remitting the proceeds thereof to you at your account no. ___________, at [name of bank]. If we receive such draftand certificate by personal delivery or by telecopy at such office, all in strict conformity with the terms and conditions of this Letter of Credit,on or after 10:00 a.m. (Los Angeles time) on any Business Day, we will honor the draft on the next Business Day by wire transfer of federalfunds to your account with any bank located in the United States of America or by deposit of immediately available funds into a designatedaccount that you maintain with us. Upon receipt of a draft and certificate which are not in strict conformity with the terms and condit ions ofthis Letter of Credit, we will promptly (and in any event within three Business Days of such receipt) notify you of such nonconformity and thereason therefor; provided that our failure to so notify you of such nonconformity or the reason therefor shall not amend, modify, extend orotherwise affect your rights hereunder and shall not create any additional rights hereunder; provided further that, notwithstanding thegenerality of the foregoing, any such failure shall not have the effect of extending the time during which you may draw hereunder orconverting such nonconforming draft and certificate into a draft and certificate in strict conformity with the terms and conditions of thisLetter of Credit.

8. Notwithstanding any other provision of this Letter of Credit, we shall have the right, upon the occurrence of any of the events listed inSchedule III hereto, to terminate this Letter of Credit by delivering to you a written notice indicating the date of such termination (the "Dateof Early Termination"); provided that on or before the Date of Early Termination you will have the right to draw once an amount not in excessof the lesser of (i) the Maximum Available Credit Amount and (ii) the Maximum Drawing Amount, in each case as in effect on such date inaccordance with the procedures described herein; provided further, that upon delivery of such written notice to you indicating the Date ofEarly Termination, your right to make a Partial Draw hereunder shall automatically terminate. The written notice referred to in thepreceding sentence shall be given by telex or facsimile transmission addressed to you at [Name], [Address], Telecopy: _________ __,Attention: ___________ (or to such other address or telex number designated by you by written notice delivered to us at least 15 days prior tothe notice of early termination) and shall be effective upon receipt of the appropriate answerback or confirmation by you of your receipt ofthe facsimile transmission or, if no such answerback or confirmation is given, the end of the Business Day on which actual transmission ismade to the address above. We will also forward copies of such notice by overnight delivery service (with a request to such delivery servicethat they obtain a receipt from such addressee (to the extent that such a receipt service is then available, it being understood that the failureof such delivery service to actually obtain such a receipt shall not be the responsibility of the Funding Bank and the Funding Bank shall bearno liability for such failure)) and registered mail (return receipt requested) to the address set forth above. The Date of Early Terminationspecified in such writt en notice shall be:

(a) in the case of events specified in paragraphs (i), (ix) and (x) of Schedule III, not earlier than ten days after such notice iseffective, or, if the tenth day is not a Business Day, the next following Business Day, and

(b) in the case of all other events specified in Schedule III, not earlier than 30 days after such notice is effective.

You have no obligation upon the receipt of such written notice indicating the Date of Early Termination to investigate or otherwise questionwhether any of the events specified in Schedule III has occurred and the fact that such an event shall not have occurred shall not in any wayaffect your right to draw hereunder upon the receipt of such written notice.

9. Except as set forth below, this Letter of Credit shall be governed by the Uniform Customs and Practice for Documentary Credits (revisioneffective January 1, 1994), International Chamber of Commerce Publication No. 500, and, as to matters not covered therein, be governed bythe laws of the State of New York, including without limitation the Uniform Commercial Code as in effect in such State. Unless you areotherwise notified in writing, communications to us with respect to this Letter of Credit shall be in writing and shall be addressed to us at1980 Saturn Street, Monterey Park, California 91754-7417, Attention: Standby Letter of Credit Unit, and shall specifically refer to thenumber of this Letter of Credit.

10. This Letter of Credit may be transferred and assigned in its entirety more than once. Upon receipt by us at the address for presentation ofdocuments set forth above of a copy of the instrument effecting such transfer and assignment, signed by the transferor and by the transferee,in the form of Exhibit 6 hereto then, in such case, we will, upon surrender of this Letter of Credit, issue an irrevocable transferable letter ofcredit in the name of the transferee and providing for notices to be sent to the transferee at the address set forth therein and in all otherrespects identical to this Letter of Credit and the transferee, instead of the transferor, shall, without necessity of further act, be entitled to allthe benefits of, and rights under, this Letter of Credit in the transferor's place.

11. Any drawing under this Letter of Credit will be paid from our general funds and not directly or indirectly from funds or collateraldeposited with or for our account by the Company, or pledged with or for our account by the Company and we will seek reimbursement forpayments made pursuant to a drawing under this Letter of Credit only after such payments have been made.

12. This Letter of Credit sets forth in full our undertaking, and such undertaking shall not in any way be modified, amended, amplified orlimited by reference to any document, instrument or agreement referred to herein, except only Schedules I, II and III and Exhibits 1, 2, 3, 4,5, 6 and 7 hereto and the notices referred to herein; and any such reference shall not be deemed to incorporate herein by reference anydocument, instrument or agreement except as set forth above.

13. We (a) hereby irrevocably submit for ourself and our property to the nonexclusive jurisdiction of the courts of the State of New York inNew York County, and to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York, for thepurposes of any suit, action or other proceeding arising out of this Letter of Credit brought by the account party or the beneficiary hereof ortheir successors or assigns, and

(b) hereby waive, and agree not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, to the extentpermitted by applicable law, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action orproceeding is improper, or that this Letter of Credit, or the subject matter hereof or any of the transactions contemplated hereby may not beenforced in or by such courts. We generally consent to service of process by registered mail, return receipt requested, addressed to us at 1980Saturn Street, Monterey Park, California 91754-7417, Attention: Standby Letter of Credit Unit, or such other office in the State of Californiaas from time to time may be designated by us in writing to the account party and the beneficiary hereof, or their successors or assigns, as thecase may be.

Very truly yours,UNION BANK OF CALIFORNIA, N.A.

By__________________________Name:Title:

EXHIBIT 1

[Date]

Union Bank of California, N.A.1980 Saturn StreetMonterey Park, California 91754-7417

Attention: Standby Letter of Credit Unit

Dear Sirs:

Reference is made to that certain Irrevocable Transferable Letter of Credit bearing Letter of Credit No. ________ dated [Date of Issuance](the "Letter of Credit"), which has been established by you in favor of [name of Owner Participant] (the "Owner Participant").

We hereby request that the Maximum Credit Amount be reduced by $_________ (the "Reduction Amount").

Capitalized terms used herein and not otherwise defined herein shall have the meanings given to them in the Letter of Credit.


By_____________________________Title:

[OWNER PARTICIPANT]

By_____________________________[Name and Title of AuthorizedRepresentative of Owner Participant]

EXHIBIT 2

[Date]



Dear Sirs:

Reference is made to that certain Irrevocable Transferable Letter of Credit bearing Letter of Credit No. _________ dated [Date of Issuance](the "Letter of Credit"), which has been established by you in favor of [name of Owner Participant] (the "Owner Participant").

The undersigned, a duly authorized representative of the Owner Participant, hereby certifies that Casualty Values have been adjusted inaccordance with the provisions of the Transaction Documents and the amounts shown on Schedule II to the Letter of Credit should bemodified, in accordance with the terms of clause (e) of the fourth paragraph of the Letter of Credit, to the amounts shown in Appendix Ahereto.

The Letter of Credit is returned herewith and we request that you initial and return the Letter of Credit with the revised Schedule IIattached.


[OWNER PARTICIPANT]

By_____________________________[Name and Title of Authorized

Representative of Owner Participant]

EXHIBIT 3

[Place]

[Date]

ON [Business Day of presentation if presented before 10:00 a.m. (Los Angeles, California time); next Business Day if presented at or after10:00 a.m.]

PAY TO U.S. $[not to exceed least of [Name of beneficiary] (i) the Maximum Available Credit Amount and (ii) the Maximum Drawing Amount and (iii) in the case of a Partial Draw, the Partial Drawing Amount] DOLLARS,

[Insert wire instructions]

FOR VALUE RECEIVED AND CHARGE TO ACCOUNT OF LETTER OF CREDIT NO. _____________ OF


[OWNER PARTICIPANT]

By___________________________[Name and Title of AuthorizedRepresentative of Owner Participant]

EXHIBIT 4

CERTIFICATE FOR A PARTIAL DRAW

The undersigned, a duly authorized representative of [name of Owner Participant] (the "Owner Participant"), as beneficiary under thatcertain Irrevocable Transferable Letter of Credit No. __________ dated [the Date of Issuance], established by Union Bank of California, N.A.(the "Funding Bank"), and issued pursuant to that certain Letter of Credit and Reimbursement Agreement, dated as of December __, 2003(the "Reimbursement Agreement"), among System Energy Resources, Inc., Union Bank of California, N.A., as Administrating Bank, theFunding Bank, Banc One Capital Markets, Inc., as Documentation Agent, KeyBank National Association, as Syndication Agent, and thebanks named therein as Participating Banks (the "Letter of Credit"), hereby certifies as follows:

1. A Partial Drawing Event has occurred and is continuing.

2. The Owner Participant has not heretofore made a Final Draw under the Letter of Credit. The Owner Participant has notheretofore received notice of a Date of Early Termination.

3. The amount of the accompanying draft does not exceed the least of (i) the Maximum Available Credit Amount on the datehereof, as determined in accordance with the terms of the Letter of Credit, and (ii) the Maximum Drawing Amount availableunder the Letter of Credit on the date hereof, as determined in accordance with the terms of the Letter of Credit, and (iii) thePartial Drawing Amount for such Partial Drawing Event.


IN WITNESS WHEREOF, the undersigned has executed this Certificate as of ________________, 200__.

[OWNER PARTICIPANT]

By____________________________[Name and Title of AuthorizedRepresentative of Owner Participant]

EXHIBIT 5

CERTIFICATE FOR A FINAL DRAW

The undersigned, a duly authorized representative of [name of Owner Participant] (the "Owner Participant"), as beneficiary under thatcertain Irrevocable Transferable Letter of Credit No. _____________ dated [the Date of Issuance] established by Union Bank of California,N.A. (the "Funding Bank"), and issued pursuant to that certain Letter of Credit and Reimbursement Agreement, dated as of December __,2003 (the "Reimbursement Agreement"), among System Energy Resources, Inc., Union Bank of California, N.A., as Administrating Bank, theFunding Bank, Banc One Capital Markets, Inc., as Documentation Agent, KeyBank National Association, as Syndication Agent, and thebanks named therein as Participating Banks (the "Letter of Credit"), hereby certifies as follows:

1. [Insert one of the following: A Deemed Loss Event (as defined in Schedule I to the Letter of Credit) has occurred and iscontinuing./ An Event of Loss (as defined in Schedule I to the Letter of Credit) has occurred and is continuing./ An Event ofDefault (as defined in Schedule I to the Letter of Credit) has occurred and is continuing./ Notice has been given by the FundingBank of a Date of Early Termination and such Date of Early Termination is on or after the date hereof.]

2. The Owner Participant has not heretofore made a Final Draw under the Letter of Credit.

3. The amount of the accompanying draft does not exceed the lesser of (i) the Maximum Available Credit Amount on the datehereof and (ii) the Maximum Drawing Amount available under the Letter of Credit on the date hereof, each as determined inaccordance with the terms of the Letter of Credit.


IN WITNESS WHEREOF, the undersigned has executed this Certificate as of ______________, 200__.

[OWNER PARTICIPANT]

By____________________________[Name and Title of AuthorizedRepresentative of Owner Participant]

EXHIBIT 6



Dear Sirs:

Reference is made to that certain Irrevocable Transferable Letter of Credit bearing Letter of Credit No. __________ dated [Date of Issuance](the "Letter of Credit"), which has been established by you in favor of [name of Owner Participant] (the "Transferor").

The Transferor has transferred and assigned (and hereby confirms to you said transfer and assignment) all of its rights in and under theLetter of Credit to [name of Transferee] (the "Transferee") and confirms that the Transferor no longer has any rights under or interest in theLetter of Credit.

The Letter of Credit is returned herewith and we request that you issue an irrevocable transferable letter of credit in the name of theTransferee and providing for notices to be sent to the Transferee at the address set forth below and in all other respects identical to the Letterof Credit.

Transferee hereby certifies that it is a duly authorized transferee under the terms of the Letter of Credit and is accordingly entitled, uponpresentation of the drafts and certificates called for therein, to receive payment thereunder. Notices under the Letter of Credit should be sentto us as follows: [Name], [Address], [Telex Number], Attention: , [Answerback].

[NAME OF TRANSFEROR]

By_________________________[Name and Title of AuthorizedRepresentative of Transferor]

[NAME OF TRANSFEREE]

By_________________________[Name and Title of AuthorizedRepresentative of Transferee]

EXHIBIT 7



Dear Sirs:

Reference is made to that certain Irrevocable Transferable Letter of Credit bearing Letter of Credit No. ___________ dated [Date ofIssuance] (the "Letter of Credit"), which has been established by you in favor of [name of Owner Participant] (the "Owner Participant").

The undersigned, a duly authorized representative of the Owner Participant, hereby surrenders the Letter of Credit for immediatecancellation. The Letter of Credit is returned herewith and we request that you cancel the Letter of Credit as of the date hereof.


[OWNER PARTICIPANT]

By________________________[Name and Title of AuthorizedRepresentative of Owner Participant]

SCHEDULE I

The following terms shall have the following meanings for purposes of the Letter of Credit and the Schedules and Exhibits thereto. Termsdefined in the Letter of Credit shall have the meanings given to them therein. Terms defined by reference to the Participation Agreementshall have the meanings assigned to them therein from time to time.

"Administrating Bank" means Union Bank of California, N.A., a national banking association.

"Availability Agreement" means the Availability Agreement, dated as of June 21, 1974, among the Company and the Operating Companies, asamended heretofore and as amended from time to time.

"Availability Agreement Assignment" means the Thirty-fifth Assignment of Availability Agreement, Consent and Agreement, dated as ofDecember 22, 2003, among the Company, EAI, ELI, EMI, ENOI, and the Administrating Bank, substantially in the form of Exhibit I to theReimbursement Agreement, and as amended from time to time.

"Applicable Law" has the meaning assigned to it in the Participation Agreement.

"Bank" means the Funding Bank or any Participating Bank.

"Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in New York, New York or Los Angeles,California are authorized or required by law to close.

"Code" means the United States Internal Revenue Code of 1986, as amended, and the applicable regulations thereunder, as the same may beamended from time to time.

"Collateral Agreements" means the Supplementary Capital Funds Agreement, the Availability Agreement and the Availability AgreementAssignment.

"Date of Issuance" means December 22, 2003.

"Date of Early Termination" has the meaning assigned to it in the eighth paragraph of the Letter of Credit.

"Deemed Loss Event" has the meaning specified in the Participation Agreement.

"DLE Term Advance" has the meaning assigned to it in Section 1 of the Reimbursement Agreement.

"EAI" means Entergy Arkansas Inc., an Arkansas corporation.

"ELI" means Entergy Louisiana, Inc., a Louisiana corporation.

"EMI" means Entergy Mississippi, Inc., a Mississippi corporation.

"ENOI" means Entergy New Orleans, Inc., a Louisiana corporation.

"Entergy" means Entergy Corporation, a Delaware corporation.

"EOL Term Advance" has the meaning assigned to it in Section 1 of the Reimbursement Agreement.

"ERISA" has the meaning assigned to it in the Participation Agreement.

"ERISA Affiliate" means any trade or business (whether or not incorporated) that is a member of a group of which the Company is amember and which is treated as a single employer under Section 414 of the Code.

"Event of Default" has the meaning assigned to it in the Facility Lease.

"Event of Loss" has the meaning specified in the Participation Agreement.

"Facility Lease" has the meaning assigned to it in the Participation Agreement.

"Fee Letter" means the letter agreement, dated December 22, 2003, among the Company, the Administrating Bank and the Funding Bank, asthe same may be amended, supplemented or otherwise modified from time to time.

"Funding Bank" means Union Bank of California, N.A., a national banking association.

"Funding Corporation" has the meaning assigned to it in the Participation Agreement.

"Governmental Action" has the meaning assigned to it in the Participation Agreement..

"Governmental Authority" has the meaning assigned to it in the Participation Agreement.

"Holding Company Act" means the Public Utility Holding Company Act of 1935, as amended.

"Indebtedness" of any Person means at any date, without duplication, the following items to the extent required under generally acceptedaccounting principles to be disclosed in such Person's financial statements (including the notes thereto): (i) all obligations of such Person forborrowed money, or with respect to deposits or advances of any kind; (ii) all obligations of such Person evidenced by bonds, debentures, notesor similar instruments; (iii) all obligations of such Person upon which interest charges are customarily paid; (iv) all obligations under leases

which shall have been or should be, in accordance with generally accepted accounting principles, recorded as capital leases in respect ofwhich such Person is liable as lessee; (v) all obligations under the Facility Leases (regardless of treatment in the financial statements or notesthereto); (vi) all obligations with respect to any sale and leaseback transaction permitted under Section 12(a)(v) of the ReimbursementAgreement (regardless of treatment in the financial statements or notes thereto); (vii) liabilities in respect of unfunded vested benefits underPlans; (viii) Withdrawal Liability incurred under ERISA by such Person or any of its affiliates to any Multiemployer Plan; (ix)reimbursement obligations of such Person (whether contingent or otherwise) in respect of letters of credit, bankers acceptances, surety orother bonds and similar instruments; (x) the book value of any asset of such Person upon which a Lien is imposed for the purpose of securingIndebtedness of others; (xi) all obligations, contingent or otherwise, of such Person in connection with interest rate protection agreements orother similar instruments, including currency swaps; (xii) all indebtedness created or arising under any conditional sale or other titleretention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under suchagreement in the event of def ault are limited to repossession or sale of such property); (xiii) all Indebtedness of any partnership of whichsuch Person is a general partner; and (xiv) obligations of such Person under direct or indirect guaranties in respect of, and obligations(contingent or otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness orobligations of others of the kinds referred to above; provided, however, that the liabilities in clauses (vii) and (viii) above will only be countedas "Indebtedness" to the extent that they are required to be capitalized on the balance sheet of such Person under generally acceptedaccounting principles.

"Indenture" has the meaning assigned to it in the Participation Agreement.

"Indenture Trustee" has the meaning assigned to it in the Participation Agreement.

"Lease Indenture Estate" has the meaning assigned to it in the Participation Agreement.

"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of suchasset. For the purposes of the Reimbursement Agreement and the Letter of Credit, a Person or any of its Subsidiaries shall be deemed to ownsubject to a Lien any asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement,capital lease or other title retention agreement relating to such asset.

"Maximum Available Credit Amount" shall mean an amount equal to the Maximum Credit Amount, as such amount may be modified fromtime to time in accordance with the fourth paragraph of the Letter of Credit.

"Maximum Drawing Amount" means, with respect to a Date of Drawing, the amount shown opposite the period including such Date ofDrawing in the Table of Maximum Drawing Amounts attached as Schedule II to the Letter of Credit, as such amounts may be modified fromtime to time in accordance with the fourth paragraph of the Letter of Credit (collectively, the "Maximum Drawing Amounts").

"Multiemployer Plan" means a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which the Company or any ERISA Affiliate(other than one considered an ERISA Affiliate only pursuant to subsection (m) or (o) or Code Section 414) is making or accruing anobligation to make contributions, or has within any of the preceding five plan years made or accrued an obligation to make contributions.

"Notes" has the meaning assigned to it in the Participation Agreement.

"Obligations" means, with regard to any Person at any date, without duplication, (i) all obligations of such Person for borrowed money, (ii)all obligations of such Person with respect to deposits or advances of any kind, or for the deferred purchase price of property or services, (iii)all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (iv) all obligations of such Person upon whichinterest charges are customarily paid, (v) all obligations under leases relating to any sale and leaseback transaction permitted under Section12(a)(v) of the Reimbursement Agreement, (vi) all obligations under leases which shall have been or should be, in accordance with generallyaccepted accounting principles, recorded as capital leases in respect of which such Person is liable as lessee, (vii) reimbursement obligations ofsuch Person in respect of letters of credit, bankers acceptances, surety or other bonds and similar instruments, and (viii ) obligations of suchPerson under direct or indirect guaranties in respect of, and obligations to purchase or otherwise acquire, or otherwise to assure a creditoragainst loss in respect of, indebtedness or obligations of others of the kinds referred to above; provided, however, that obligations under clause(ii), (vii), or (viii) above shall not be included in this definition to the extent that such obligations are being contested by such Person in goodfaith and in an appropriate manner.

"Operating Companies" means EAI, EMI, ELI and ENOI, each being an "Operating Company".

"Owner Participant" means RCMC I, Inc. (formerly known as RCMC Del., Inc.), assignee in interest of Resources Capital ManagementCorporation, assignee in interest of Public Service Resources Corporation, and/or Textron Financial Corporation, assignee in interest ofLease Management Realty Corporation IV, as the case may be, and their respective permitted successors and assigns.

"Owner Trustee" has the meaning assigned to it in the Participation Agreement.

"Partial Draw" has the meaning assigned to it in the seventh paragraph of the Letter of Credit.

"Partial Drawing Amount" means, with respect to any Partial Drawing Event, an amount not exceeding the amount of Rent due and unpaidthe non-payment of which gave rise to such Partial Drawing Event.

"Partial Drawing Event" means an Event of Default under Section 15(i) of the Facility Lease.

"Participant" has the meaning assigned to it in Section 23(a) of the Reimbursement Agreement.

"Participating Banks" means the banks, other than Union Bank of California, N.A. solely in its role as administrating bank, whose names arelisted on the signature pages of the Reimbursement Agreement under the heading "Participating Banks", and any other financial institutionthat shall have become a party to the Reimbursement Agreement pursuant to an assignment and assumption agreement executed anddelivered pursuant to Section 23(b) of the Reimbursement Agreement, each being a "Participating Bank".

"Participation Agreement" means the Participation Agreement, dated as of December 1, 1988, among the Owner Participant, the FundingCorporation, the banks named therein as Original Loan Participants, Meridian Trust Company and Stephen M. Carta in their individualcapacities and as Owner Trustee, Deutsche Bank Trust Company Americas (successor to Bankers Trust Company) and Stanley Burg, in theirindividual capacities and as Indenture Trustee, and the Company.

"Participation Percentage" with respect to a Participating Bank means the percentage set forth opposite such Participating Bank's name inSchedule 1 to the Reimbursement Agreement or, in the case of a Participating Bank party to an assignment and assumption agreement

executed and delivered to the Administrating Bank pursuant to Section 23(b) of the Reimbursement Agreement, the percentage set forthopposite such Participating Bank's name in such assignment and assumption agreement.

"PBGC" means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any entity succeeding to any or all of itsfunctions under ERISA.

"Person" has the meaning assigned to it in the Participation Agreement.

"Plan" means any pension plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Codeand which is maintained for employees of the Company or any ERISA Affiliate.

"Reimbursement Agreement" means the Letter of Credit and Reimbursement Agreement, dated as of December 22, 2003, among theCompany, the Administrating Bank, the Funding Bank, Banc One Capital Markets, Inc., as Documentation Agent, KeyBank NationalAssociation, as Syndication Agent, and the banks named therein as Participating Banks, as the same may from time to time be amended,supplemented or modified.

"Rent" has the meaning assigned to it in the Participation Agreement.

"Reportable Event" means any reportable event as defined in Section 4043(b) of ERISA or the regulations issued thereunder with respect to aPlan (other than a Plan maintained by an ERISA Affiliate which is considered an ERISA Affiliate only pursuant to subsection (m) or (o) ofCode Section 414).

"Required Banks" means at any time Participating Banks whose aggregate Participation Percentages are equal to at least 66-2/3% at suchtime.

"Significant Operating Company" means an Operating Company whose entitlement percentage under the UPSA exceeds 20%.

"Significant Operating Group" means any two or more Operating Companies whose entitlement percentage under the UPSA exceeds 20% inthe aggregate.

"Stated Expiration Date" means May 30, 2007.

"Subsidiary" means with respect to any Person (herein referred to as the "parent"), any corporation, association or other business entity (a)of which securities or other ownership interests representing more than 50% of the ordinary voting power are, at the time any determinationis being made, owned, controlled or held or (b) which is, at the time any determination is made, otherwise controlled (by contract oragreement or otherwise) by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.

"Supplementary Capital Funds Agreement" means the Thirty-fifth Supplementary Capital Funds Agreement and Assignment, dated as ofDecember 22, 2003, among Entergy, the Company and the Administrating Bank, substantially in the form of Exhibit H to theReimbursement Agreement, and as amended from time to time.

"Termination Date" means the earliest of (i) 10:00 a.m., New York time, on the Date of Early Termination, (ii) 5:00 p.m. (New York time) onthe date on which the Owner Participant surrenders the Letter of Credit for cancellation to the Bank with a notice in the form of Exhibit 7 tothe Letter of Credit, (iii) 5:00 p.m. (New York time) on the date on which the Bank pays a Final Draw, and (iv) either (x) if a draft andcertificate, all in strict conformity with the terms and conditions of the Letter of Credit, are presented after 10:00 a.m. but prior to 5:00 p.m.(New York time) on the Stated Expiration Date, 5:00 p.m. (New York time) on the Business Day following the Stated Expiration Date, orotherwise (y) 5:00 p.m. (New York time) on the Stated Expiration Date.

"Termination Event" means (i) a Reportable Event or (ii) the withdrawal of the Company or an ERISA Affiliate from a Plan during a planyear in which it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA, or (iii) the filing of a notice of intent to terminate aPlan or the treatment of a Plan amendment as a termination under Section 4041 of ERISA, or (iv) the institution of proceedings to terminatea Plan by the PBGC, or (v) any other event or condition which is reasonably expected to constitute grounds for the imposition of a lien infavor of a Plan for the termination of, or the appointment of a trustee to administer, a Plan under Section 4042 of ERISA.

"Transaction Documents" means the Reimbursement Agreement, the Participation Agreement, the Indenture, the Notes, the Facility Lease,the Letter of Credit, the Fee Letter and the Collateral Agreements.

"Unit 1" has the meaning assigned to it in the Participation Agreement.

"UPSA" means the Unit Power Sales Agreement, dated as of June 10, 1982, among the Company and the Operating Companies, as amendedheretofore and as amended from time to time.

"Withdrawal Liability" means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan,as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

SCHEDULE II

Table of Maximum Drawing Amounts

Applicable Period RCMC I, Inc. Textron FinancialCorporation

Total

From December22, 2003 to andincluding January15, 2004

$158,136,888.84 $36,199,589.80 $194,336,478.64

From January 16,2004 to andincluding July 15,2004

$159,473,928.66 $36,344,542.95 $195,818,471.61

From July 16,2004 to andincluding January15, 2005

$159,476,544.74 $36,515,236.09 $195,991,780.83


$159,597,658.86 $36,453,795.29 $196,051,454.15


$161,546,191.84 $35,580,460.73 $197,126,652.57


$153,817,210.32 $34,692,157.31 $188,509,367.63


$155,915,634.88 $35,033,434.72 $191,049,069.60

From January 16,2007 to andincluding May 30,2007

$147,841,136.44 $33,307,429.80 $181,148,566.24

SCHEDULE III

The Bank shall have the right upon the occurrence of any of the events listed below to terminate the Letter of Credit in accordance with theterms of the Letter of Credit.

(i) the Company shall (a) fail to pay when due any amount payable under Section 2 of the Reimbursement Agreement, (b) fail topay any amount payable under Section 3 of the Reimbursement Agreement within five (5) Business Days after the same shallbecome due, or (c) fail to observe or perform any covenant or agreement contained in any of the Collateral Agreements; or

(ii) the Company shall violate any covenant contained in Section 12 of the Reimbursement Agreement, except for violationsresulting from an involuntary lien under Section 12(e) of the Reimbursement Agreement; or

(iii) the Company shall fail to observe or perform any covenant contained in Section 11(g)(i) of the Reimbursement Agreement; or

(iv) the Company shall fail to make, or cause to be made, after the passage of any applicable grace period, any payment orpayments specified in Section 15(i) of any of the Facility Leases; or

(v) the Company shall fail to observe or perform any covenant or agreement contained in the Reimbursement Agreement (otherthan those covered by clauses (i), (ii) and (iii) above) for 30 days after written notice thereof has been given to the Company by theAdministrating Bank or any Bank; or

(vi) any representation, warranty, certification or statement made by the Company in the Reimbursement Agreement or in anycertificate, financial statement or other document delivered pursuant to the Reimbursement Agreement shall prove to have beenincorrect or misleading in any material respect when made; or

(vii) any material provision of the Reimbursement Agreement or any Collateral Agreement shall at any time for any reason ceaseto be valid and binding upon the Company, or shall be declared to be null and void, or the validity or enforceability thereof shallbe contested by the Company or any governmental agency or authority, or the Company shall deny that it has any or furtherliability or obligation under the Reimbursement Agreement or any Collateral Agreement; or

(viii) (a) the Company or any Subsidiary of the Company shall fail to make any payment of any amount in respect of anyObligations, or to make any payment of any interest or premium thereon, when due (whether by scheduled maturity, requiredprepayment, acceleration, demand or otherwise) and such failure shall continue after the applicable grace period, if any, specifiedin such agreement or instrument relating to such Obligations;

(b) any other default under any agreement or instrument relating to any Obligations of the Company or anySubsidiary of the Company, or any other event, shall occur and shall continue after the applicable grace period, if any,specified in such agreement or instrument, if the effect of such default or event is to accelerate (other than by aspecified mandatory redemption provision in connection with pollution control bonds unrelated to any default orevent of default with respect thereto) the maturity of any such Obligations and if the total of all such Obligationswhich (x) have become due and not been paid under clause (viii)(a) and (y) have been accelerated under this clause(viii)(b) shall exceed $10,000,000 in the aggregate;

(c) if any EOL Term Advances or DLE Term Advances are outstanding, Entergy shall fail to make any payment ofany amount in respect of any of its Obligations the aggregate principal amount of which is greater than $25,000,000,or to make any payment of any interest or premium thereon, when due (whether by scheduled maturity, requiredprepayment, acceleration, demand or otherwise) and such failure shall continue after the applicable grace period, ifany, specified in such agreement or instrument relating to such Obligations;

(d) if any EOL Term Advances or DLE Term Advances are outstanding, any other default under any agreement orinstrument relating to any Obligations of Entergy the aggregate principal amount of which is greater than$25,000,000, or any other event, shall occur and shall continue after the applicable grace period, if any, specified in

such agreement or instrument, if the effect of such default or event is to accelerate (other than by a specifiedmandatory redemption provision in connection with pollution control bonds unrelated to any default or event ofdefault with respect thereto) the maturity of any Obligations and if the total of all such Obligations which (x) havebecome due and not been paid under clause (viii)(c) and (y) have been accelerated under this clause (viii)(d) shallexceed $25,000,000 in the aggregate; or

(e) any Obligations of the Company or any Subsidiary of the Company the aggregate principal amount of which isgreater than $10,000,000, or if any EOL Term Advances or DLE Term Advances are outstanding, any Obligations ofEntergy the aggregate principal amount of which is greater than $25,000,000, in any case shall be declared due andpayable, or required to be prepaid (other than by a regularly scheduled required prepayment or a specifiedmandatory redemption provision in connection with pollution control bonds unrelated to any default or event ofdefault with respect thereof) prior to the stated maturity thereof; or

(ix) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdictionseeking (a) relief in respect of the Company, any Significant Operating Company or Significant Operating Group or of asubstantial part of its or their property or assets, under Title 11 of the United States Code, as now constituted or hereafteramended, or any other Federal or state bankruptcy, insolvency, receivership or similar law, (b) the appointment of a receiver,trustee, custodian, sequestrator, conservator or similar official for such company or group, or for a substantial part of its or theirproperty or assets, or (c) the winding-up or liquidation of the Company or any Significant Operating Company or SignificantOperating Group; and such proceeding or petition shall continue undismissed for 60 days, or an order or decree approving orordering any of the foregoing shall be entered; or

(x) the Company or any Significant Operating Company or Significant Operating Group shall (a) voluntarily commence anyproceeding or file any petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, orany other Federal or state bankruptcy, insolvency, receivership or similar law, (b) consent to the institution of, or fail to contest ina timely and appropriate manner, any proceeding or the filing of any petition described in clause (ix) above, (c) apply for orconsent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for such company orcompanies, or for a substantial part of its or their property or assets, (d) file an answer admitting the material allegations of apetition filed against it or them in any such proceeding, (e) make a general assignment for the benefit of creditors, (f) becomeunable, admit in writing its or their inability or fail generally to pay its or their debts as they become due or (g) take any actionfor the purpose of effecting any of the foregoing; or

(xi) any judgment or order for the payment of money exceeding any applicable insurance coverage by more than $10,000,000shall be rendered against the Company or any Subsidiary of the Company and shall remain undischarged or unstayed for 30 daysand enforcement proceedings shall have been commenced by any creditor upon such judgment or order; or

(xii) within 30 days after the reporting of any Termination Event to the Administrating Bank, the Administrating Bank shall havenotified the Company in writing that the Required Banks have made a reasonable determination that, on the basis of suchTermination Event, the financial condition of the Company is, or could reasonably be expected to become, materially andadversely affected; or

(xiii) the Reimbursement Agreement or any Collateral Agreement, or any material provision thereof, shall for any reason cease tobe, or be asserted by either the Company, Entergy, any Operating Company or any Governmental Authority not to be, a legal,valid and binding obligation of the Company, Entergy or the Operating Companies, enforceable in accordance with its terms; orthe security interest or Lien purported to be created by any Collateral Agreement shall for any reason cease to be, or be assertedby the Company not to be, a valid, first priority perfected security interest (subject to no Liens, except Liens not prohibited bySection 12(e) of the Reimbursement Agreement) in the Collateral as defined under each such Collateral Agreement; or

(xiv) Entergy shall cease to own, directly or indirectly, free and clear of all Liens whatsoever, all of the common stock equity andall of the voting stock of any of the Company, EAI, ELI, EMI or ENOI (other than (a) non-voting preferred stock which has ormay have only limited voting rights upon the occurrence of any default or other contingency and (b) voting preferred stock of anysuch Person having not more than 30% of the total voting power of all voting capital stock of such Person); or

(xv) any change in Applicable Law or any Governmental Action (including revocation or modification of any required regulatoryapproval) shall occur which adversely affects, in other than immaterial ways, (I) the obligations or ability of the Company,Entergy, any Operating Company, any Owner Trustee, the Indenture Trustee, any Owner Participant, the Funding Corporation,the Funding Bank, the Administrating Bank, any Participating Bank or any Participant to make any required payment under, orotherwise to perform, or the right or ability of any such Person to enforce its rights under, the Reimbursement Agreement or anyof the other Transaction Documents or (II) the value of the Collateral Agreements or the Lease Indenture Estate, unless suchresult can be avoided by action which is within the control of and can be taken by a Bank or Participant within a reasonableperiod of time, and which is not adverse to the interests of or onerous to such Bank (and each Bank and Participant has covenanted with each other Bank and Participant to take any such action).

Capitalized terms used herein and not otherwise defined herein have the meanings given to them in the Letter of Credit.

EXHIBIT B

Form of Notice of Drawing

[Company/Participating Bank][Address]

Dear Sirs:

Reference is made to that certain Irrevocable Transferable Letter of Credit bearing Letter of Credit No. ___________ dated________________, which has been established by us in favor of [insert names(s) of beneficiar(ies)].

We have received (i) a draft for payment of U.S. $___________ on [insert date to be paid] and (ii) a Certificate for [a Partial Draw/a FinalDraw] from [insert name of beneficiary presenting draft and certificate].

On [insert date of payment], we paid such draft in the amount of U.S. $___________.

[Insert the following in the case of notice of a Participating Bank: Your pro rata share of such drawing (based upon your ParticipationPercentage) is $____________.]


UNION BANK OF CALIFORNIA, N.A.

By___________________________Title:

SCHEDULE 1

Participating Bank Participation PercentageUnion Bank of California, N.A. Bank One, NA (Main Office-Chicago)KeyBank National AssociationBNP Paribas Mizuho Corporate Bank, Ltd. Wachovia Bank, National Association The Bank of Nova ScotiaUFJ Bank Limited, New York Branch

20.0378%12.4644%12.4644%11.6126%11.6126%11.6126%10.0978%10.0978%

SCHEDULE 2

Beneficiaries and Amounts

of Letters of Credit to Be Issued

LETTERS OF CREDIT

Beneficiary:

RCMC I, Inc.1300 Market Street, Suite 400Wilmington, Delaware 19801

Attn: Ms. Eileen A. Moran, President

Maximum Credit Amount: $161,546,191.84

Initial Maximum Drawing Amount: $158,136,888.84

Applicable Period Maximum DrawingAmount

From December 22, 2003 to and including January 15,2004

$158,136,888.84

From January 16, 2004 to and including July 15, 2004 $159,473,928.66

From July 16, 2004 to and including January 15, 2005 $159,476,544.74





From January 16, 2007 to and including May 30, 2007 $147,841,136.44

Beneficiary:

Textron Financial Corporation40 Westminster StreetProvidence, Rhode Island 02940

Attn: General Counsel

Maximum Credit Amount: $36,515,236.09

Initial Maximum Drawing: $36,199,589.80

Applicable Period Maximum DrawingAmount

From December 22, 2003 to and including January 15, 2004 $36,199,589.80







From January 16, 2007 to and including May 30, 2007 $33,307,429.80

Exhibit 10(c)9

Amendment To

Service Agreement

The parties hereto do hereby stipulate and agree to that the SERVICE AGREEMENT entered into by and between them under date of April1, 1963, and as heretofore amended on January 1, 1972, April 27, 1984, August 1, 1988, January 28, 1991, January 1, 1992, January 1, 1996,January 1, 1998, January 1, 1999, January 1, 2000, January 1, 2001, April 1, 2002 and January 1, 2003 be and the same hereby is furtheramended by substituting for the Supplement to Exhibit II to the SERVICE AGREEMENT, the attached revised Supplement to Exhibit II.This Amendment is made and entered into as of August 1, 2003.





By ___________________________Hugh T. McDonaldPresident and CEO

Exhibit E



Note: Each allocation formula will be based on data relevant to participating Client Companies to whom the services areprovided.

ENERGY SALES



CUSTOMERS

Based on a twelve-month average of residential, commercial, industrial, government, and municipal general business electricand gas customers.

Used primarily for the allocation of costs associated with the support of customer based services. Would include customerservice and support, marketing, economic forecasts, environmental services, financial and regulatory analyses and customer

information systems.

EMPLOYEES


Used primarily for the allocation of costs associated with the support of employee-based services. Would includeadministration of employee benefits programs, employee communications, employee training, and various facilities-based

benefits and information technology desktop support.


Based on the ratio of the company's load at time of system peak load. The peak load is the average of the twelve monthlyhighest clock-hour demands in kilowatts of the interconnected system occurring each month coincident with the system peak

load.




Used primarily for the allocation of costs associated with project design, maintenance and installation of Entergy transmissionlines.

SUBSTATIONS


Used primarily for the allocation of related engineering and technical support for transmission and distribution substationoperations and maintenance as well as for engineering and project management associated with substation construction.


Based on two components: Transmission Line Miles (30% weighting) and the Number of High Voltage Substations (70%weighting).

Used primarily for the allocation of the costs associated with the support of the transmission and distribution function that hasboth a transmission line component as well as a substation or load component.

GAS CONSUMPTION







Based on the power level, in kilowatts, that could be achieved if all non-nuclear generating units were operating at maximumcapability simultaneously.

Used primarily for the allocation of costs associated with the support of the fossil operations of the System. This wouldinclude services provided by plant support, environmental and purchasing.



Used primarily to allocate the costs associated with employee benefits plans, payroll taxes, departmental indirect costs andperformance based compensation plans for ESI employees.



Used primarily for the allocation of costs associated with project design, maintenance and installation of Entergy distributionlines.

COAL CONSUMPTION






SQUARE FOOTAGE






ASSET LOCATIONS






TOTAL ASSETS


Used primarily to allocate costs associated with the oversight and safeguarding of corporate assets. This would includeservices provided by financial management and certain finance functions, among others. Also used when the services

provided are driven by the relative size and complexity of the System Companies and there is no functional relationshipbetween the services and any other available allocation formula.

BANK ACCOUNTS








Used primarily for the allocation of costs associated with general ledger activities, including related information systems, andfor general accounting activities.


Based on a twelve-month average of residential, commercial, industrial, government, and municipal general business of gasand/or electric customers.

Used primarily for the allocation of costs associated with the management support of the Entergy System's strategy for andtransition to competition.

TELEPHONES



FIBER



NUCLEAR UNITS



NUCLEAR SITES






PAYCHECKS







Based on three components with weighting to each: number of transactions, stockroom count, and procurement totalspending.




Used for the allocation of costs associated with the management and operations of investment recovery, including Fossil, butexcluding Nuclear.






Used primarily for the allocation of costs associated with services provided by employees in the supply chain equipmentrefurbishment and repair department.



Used primarily for the allocation of costs associated with the maintenance, administrative activities, and technical analysis ofall Distribution Substations.




VEHICLES



MANAGED ACCOUNTS






RADIO USAGE



TOTAL IT SPEND









Exhibit 10(d)32

Amendment To

Service Agreement

The parties hereto do hereby stipulate and agree to that the SERVICE AGREEMENT entered into by and between them under date ofDecember 31, 1993, and as heretofore amended on January 1, 1996, January 1, 1998, January 1, 1999, January 1, 2000, January 1, 2001,April 1, 2002 and January 1, 2003 be and the same hereby is further amended by substituting for the Supplement to Exhibit II to theSERVICE AGREEMENT, the attached revised Supplement to Exhibit II. This Amendment is made and entered into as of August 1, 2003.





By ___________________________Joseph F. Domino

President and CEO - Texas

Amendment To

Service Agreement

The parties hereto do hereby stipulate and agree to that the SERVICE AGREEMENT entered into by and between them under date ofDecember 31, 1993, and as heretofore amended on January 1, 1996, January 1, 1998, January 1, 1999, January 1, 2000, January 1, 2001,April 1, 2002 and January 1, 2003 be and the same hereby is further amended by substituting for the Supplement to Exhibit II to theSERVICE AGREEMENT, the attached revised Supplement to Exhibit II. This Amendment is made and entered into as of August 1, 2003.





By ___________________________Renae Conley

President and CEO - Louisiana

Exhibit E




ENERGY SALES



CUSTOMERS




EMPLOYEES






load.





SUBSTATIONS






GAS CONSUMPTION















COAL CONSUMPTION






SQUARE FOOTAGE






ASSET LOCATIONS






TOTAL ASSETS




BANK ACCOUNTS












TELEPHONES



FIBER



NUCLEAR UNITS



NUCLEAR SITES






PAYCHECKS
























VEHICLES



MANAGED ACCOUNTS






RADIO USAGE



TOTAL IT SPEND









Exhibit 10(e)9

Amendment To

Service Agreement






By ___________________________Renae Conley

President and CEO

Exhibit E




ENERGY SALES



CUSTOMERS




EMPLOYEES






load.





SUBSTATIONS






GAS CONSUMPTION















COAL CONSUMPTION






SQUARE FOOTAGE






ASSET LOCATIONS






TOTAL ASSETS




BANK ACCOUNTS












TELEPHONES



FIBER



NUCLEAR UNITS



NUCLEAR SITES






PAYCHECKS
























VEHICLES



MANAGED ACCOUNTS






RADIO USAGE



TOTAL IT SPEND









Exhibit 10(f)9

Amendment To

Service Agreement






By ___________________________Carolyn C. ShanksPresident and CEO

Exhibit E




ENERGY SALES



CUSTOMERS




EMPLOYEES






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SUBSTATIONS






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COAL CONSUMPTION






SQUARE FOOTAGE






ASSET LOCATIONS






TOTAL ASSETS




BANK ACCOUNTS












TELEPHONES



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NUCLEAR UNITS



NUCLEAR SITES






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VEHICLES



MANAGED ACCOUNTS






RADIO USAGE



TOTAL IT SPEND









Exhibit 10(f)48

EMPLOYMENT AGREEMENT

This Agreement ("Agreement") is entered into between Entergy Mississippi, Inc. ("Employer"), a Delaware corporation, and Carolyn C.Shanks ("Executive"). The effective date of this Agreement shall be the date upon which both parties have executed this Agreement, whetherin multiple originals or otherwise ("Effective Date"). The effective date of Executive's assignment to a special project coordinator positionshall be October 28, 2011 ("Assignment Commencement Date") and, except as otherwise provided herein, Executive's last day of activeemployment within the Entergy System shall be October 28, 2016 ("Final Employment Date"). The details of employment under thisAgreement are set forth below and supercede any other oral or written employment offers, representations, agreements or contractsExecutive may have received from, or entered into with, Employer, Entergy Corp oration, or any other affiliate or subsidiary of EntergyCorporation (each, an "Entergy System Company," and collectively, the "Entergy System") prior to the execution of this Agreement, whichprior offers, agreements or contracts Executive acknowledges are without effect.

WHEREAS, Executive is currently employed by Employer and serves the Entergy System in the position of President and Chief ExecutiveOfficer, Entergy Mississippi, Inc.;

WHEREAS, Employer desires to promote the best interests of the Entergy System and to encourage the continued attention and dedication ofExecutive;

NOW THEREFORE, in consideration of the premises and the mutual covenants herein contained, Employer and Executive agree as follows:

I. Employment and EMPLOYMENT PERIOD:

A. Employment. Executive and Employer agree that their employment relationship shall continue on the terms and conditions set forth inthis Agreement. The employment contemplated by this Agreement refers to employment by Employer or any other Entergy SystemCompany. Entergy System Companies other than Executive's immediate employer shall be third party beneficiaries of Executive'sobligations under this Agreement. Moreover, Employer may assign this Agreement, and Executive's employment, to any successor

company or business. Executive's assignment to a special project coordinator position from and after the Assignment CommencementDate and her duties in such position shall not require Executive to relocate either her residence or her Entergy System work location as

of the Assignment Commencement Date. Executive shall at all times continue to comply with and be subject to such policies andprocedures as the Entergy System or Employer may establish from time to time, including, but not limit ed to, the Code of Entegrity

and all policies or practices referenced therein, as may be amended from time to time.

B. Employment Period. The period during which Executive is employed under this Agreement shall commence on the Effective Date and,subject to earlier termination in accordance with this Agreement, the term of Executive's employment under this Agreement (the

"Term") shall end on Executive's Final Employment Date.

II. DUTIES, COMPENSATION AND BENEFITS:

A. During the Term. Except as otherwise provided in Section III herein, during the Term and while Executive is employed in accordancewith this Agreement:

1. Subject to approval by the Personnel Committee, shortly after the Effective Date, Executive shall be granted 3,000 RestrictedUnits (each Unit representing the cash equivalent of one share of Entergy Corporation common stock) under the terms and

conditions of the 1998 Equity Ownership Plan of Entergy Corporation and Subsidiaries ("EOP"). Restrictions on these Units(without dividends) will be lifted at the rate of 40% (i.e., 1,200 Units, without dividends) on October 28, 2006; and 60% (i.e., 1,800

Units, without dividends) on October 28, 2011, subject to the terms and conditions of the EOP.

2. Between the Effective Date and the Assignment Commencement Date:

a. Executive agrees to devote all of her full working time, attention, and energy to the performance of her current duties asPresident and Chief Executive Officer, Entergy Mississippi, Inc., or such other duties and activities, including changes in title

(position), as the Chief Executive Officer of Entergy Corporation (the "CEO") may hereafter approve and shall faithfully renderher best efforts to promote, advance, and conduct the business of the Entergy System. Except in the case of a business

reorganization or for performance reasons, as determined in the sole discretion of the CEO, any such change in title (position)approved by the CEO shall result in Executive being employed as an executive in the Entergy System at an executive position

equal to or greater than her current position as President and Chief Executive Officer of Entergy Mississippi, Inc. and at a salarylevel equal to or greater than afforded to Executive by Employer at the time of such change. Executive agrees that s he may notengage, directly or indirectly, in any other business, investment, or activity that interferes with Executive's performance of her

duties hereunder, is contrary to the interests of any Entergy System Company, or requires any significant portion of Executive'sbusiness time. Executive further acknowledges and agrees that Executive owes a fiduciary duty of loyalty, fidelity and allegiance

to the Entergy System to act at all times in the best interests of the Entergy System Companies and to do no act which wouldinjure the business, interests, or reputation of any Entergy System Company; and

b. Subject to Section IIA3(b) below, Executive shall continue to participate in all executive plans, programs and arrangements inwhich Executive is eligible to participate on the Effective Date, but only for as long as she remains eligible to participate in suchplans, programs and arrangements in accordance with their terms and conditions. Except in the case of business reorganizationor for performance reasons, as determined in the sole discretion of the CEO, Employer shall not demote or change Executive's

title (position) for the purpose of eliminating or reducing Executive's participation therein.

3. Beginning on Executive's Assignment Commencement Date and ending on her Final Employment Date ("Assignment Period"):

a. Executive shall transition from her role at such time with her Entergy System Company employer to a special project coordinatorposition. The CEO, in his sole discretion, shall assign Executive to those projects that the CEO believes serve the best interests ofthe Entergy System. All assignments communicated to Executive by the CEO will continue for such period and with such duties

as the CEO may direct. All special project assignments and the duties thereunder shall be consistent with Executive's capabilities

and shall not cause Executive's workload prior to such assignment to increase. For each assignment and if the CEO deemsnecessary, Employer shall provide Executive with office space and administrative support as needed to fulfill Executive's dutiesand as approved by the CEO in his sole discretion. Executive agrees to devote her full working time, attention, and energy to the

performance of her duties or such other activities as the CEO may approve and shall faithfully render her best efforts t opromote, advance, and conduct the business of the Employer. Executive agrees that she may not engage, directly or indirectly, in

any other business, investment, or activity that interferes with Executive's performance of her duties hereunder, is contrary to theinterests of Employer or any other Entergy System Company, or requires any significant portion of Executive's business time.

Executive further acknowledges and agrees that Executive owes a fiduciary duty of loyalty, fidelity and allegiance to the EntergySystem to act at all times in the best interests of the Entergy System and to do no act that would injure the business, interests, or

reputation of any Entergy System.

b. Except as otherwise provided in this Section IIA3(b), Executive shall continue to receive the same rate of annual base salary as ineffect on the Assignment Commencement Date. Notwithstanding anything in this Agreement, any plan sponsored or maintainedby any Entergy System Company, or any participation agreement relating thereto, to offset a portion of Executive's incrementalemployment costs during the Assignment Period, Executive hereby irrevocably agrees that the amount that would otherwise becredited to her non-qualified deferral accounts pursuant to the Defined Contribution Restoration Plan of Entergy Corporationand Subsidiaries ("DCRP"), the EOP, and the Executive Deferred Compensation Plan of Entergy Corporation and Subsidiaries("EDCP") and currently administered by T. Rowe Price ("Deferral Accounts") will be reduced by the amount projected to be

necessary to fund such annual base salary during the Assignment Period, which amount shall be determined by the present valueof an annuity formula w hereby the periodic payment amount shall be .038462 times the annual base salary rate in effect on the

date such amounts would otherwise be credited to the Deferral Accounts, the term shall be 130 and the rate of interest shall equalthe annual discount rate used to determine lump sum values under Employer's non-qualified retirement plans divided by 26. To

the extent the amount not credited to Executive's Deferral Accounts pursuant to the preceding sentence is insufficient to fundsuch annual base salary during the Assignment Period, Executive hereby agrees that the benefit Executive would otherwise

accrue under the System Executive Retirement Plan of Entergy Corporation and Subsidiaries ("SERP") shall be reduced by theamount needed to fund such difference. If, at any time, it is determined by Executive's Entergy System Company employer that

the reductions to Executive's Deferral Accounts and SERP benefit accruals in accordance with this Section IIA3(b) areinsufficient to fund Executive's then existing ra te of annual base salary during the Assignment Period, then Executive's rate of

annual base salary shall be reduced so that the reductions to Executive's Deferral Accounts and SERP benefit accruals inaccordance with this Section IIA3(b) are sufficient to fund such reduced base salary. Exhibit A attached hereto sets forth anillustration of the method of computation hereunder for such reductions to Executive's Deferral Accounts and SERP benefitaccruals pursuant to this Section IIA3(b). Exhibit A is intended to be illustrative only, is based upon various assumptions and

forecasts as to future events, and is therefore not intended to be binding upon the parties hereto or to limit, modify or amend theforegoing provisions of this Section IIA3(b).

c. Executive shall continue to be eligible to participate in all general non-executive employee benefit plans or programs as may be ineffect from time to time, which are made available by Executive's Entergy System Company employer to its non-executive

similarly situated employees, in accordance with the terms and conditions of such plans and programs ("Non-executive Plans").Such benefit plans and programs may include, without limitation, medical, dental, life insurance, disability, pension and savings

plans;

d. Executive shall not be eligible to participate in any Entergy Corporation sponsored incentive plans, programs or arrangement,including but not limited to the Entergy Executive Annual Incentive Plan, and Executive shall not accrue Years of Service under

the SERP;

e. Executive shall not be eligible to participate in the EOP or any other plans or programs that provide equity grants of any type(collectively, "Equity Plan"); provided, however, that Executive shall retain any rights with respect to and continue to vest in any

options granted to her prior to the Assignment Commencement Date under any Equity Plan to the extent Executive remainsemployed within the Entergy System on each applicable vesting date and otherwise meets the terms and conditions applicable to

such prior grants. Notwithstanding anything in this Agreement to the contrary, Executive shall not be eligible to receive anyperformance units or benefits with respect to any performance period that has not ended prior to such Assignment

Commencement Date, under the Performance Unit Program or any other performance incentive program of any Equity Plan;

f. Executive shall not be eligible to participate in the System Executive Continuity Plan of Entergy Corporation and Subsidiaries("Continuity Plan"); and

g. Executive shall not be eligible to participate in, or accrue additional benefits under, any other executive plans.

B. Retirement. Except as otherwise provided in Section III herein, if Executive remains employed in accordance with this Agreementthroughout the Term (i.e., until October 28, 2016): (1) then Executive shall commence her retirement and shall be entitled to all normalpost-retirement compensation and benefits for which Executive is eligible in accordance with the terms and conditions applicable to theNon-executive Plans and the SERP, in accordance with the terms of the SERP and Executive's Participant Application under the SERP,

but reduced, if applicable, in accordance with Section IIA3(b); and (2) Executive's Entergy System Company employer irrevocablyconsents to Executive's election to Retire at such time under the terms and conditions of the SERP.

C. No Greater Rights. Nothing in this Agreement shall be construed or interpreted to provide greater rights, participation, coverage, orbenefits under such benefit plans and programs than provided pursuant to the terms and conditions of such plans and programs.

Unless specifically provided for in a written plan document properly adopted pursuant to such plan, none of the benefits orarrangements described in this Agreement shall be secured or funded in any way, and each shall instead constitute an unfunded and

unsecured promise to pay money in the future exclusively from the general assets of Executive's System Company employer.Notwithstanding any other provision to the contrary, Executive acknowledges that benefits provided under this Agreement are in lieu of

participation in, and any payment that might otherwise have been payable under, any Entergy System severance or retention plan orprogram and, with respect to the period following the Assignment Commencement Date, those plans and prog rams set forth in SectionIIA3 for which Executive is identified as ineligible, and Executive hereby waives any right to participate in any such plans or programs.

III. TERMINATION PRIOR TO EXPIRATION OF TERM:

A. Early Termination. Upon the occurrence of any one of the following termination events prior to the expiration of the Term, and exceptas otherwise provided in this Section III, Executive shall no longer be an employee of any Entergy System Company employer and shall

forfeit all remaining unpaid compensation and all benefits otherwise granted or due Executive under this Agreement and any and all

future compensation and benefits for which Executive is eligible, including individual bonuses or incentive compensation not yet paid toExecutive at the date of such event, unless the terms and conditions of an applicable Entergy System plan or program specifically

provide otherwise:

1. if there should occur a Change in Control (as defined in the Continuity Plan) prior to the Assignment Commencement Date, andExecutive should become eligible for benefits under the Continuity Plan;

2. if there should occur any of the following events that do not result in eligibility for benefits as described in IIIA1 or IIIA3:

a. Resignation. Executive resigns her employment, other than for the purpose of transferring to another Entergy System Company,in which case Executive shall be entitled only to any monthly base salary that was earned by Executive prior to her resignation

but not yet paid to Executive;b. Cause. Executive is terminated by her Entergy System Company employer for Cause, which termination shall be immediately

effective upon the giving of written notice thereof to Executive, or at such later time as the notice may specify. Cause fortermination shall mean (i) Executive's engagement in embezzlement, theft, material fraud, or other acts of dishonesty; (ii)

Executive's material violation of any agreement between Executive and any Entergy System Company; (iii) Executive's neglect orintentional disregard of the duties and services required of Executive under this Agreement; (iv) Executive's material violation of

the Code of Entegrity or any policies therein referenced; (v) Executive's conviction of or entrance of a plea of guilty or nolocontendere to a felony; (vi) Executive's absence from work for five consecutive days for any reason other than vacation, approvedleave of absence (such approval not to be unreasonably withheld) or disability or illness pursuant to System Company p olicy orlaw; (vii) Executive's gross or repeated insubordination; or (viii) Executive's unauthorized disclosure of the confidences of any

Entergy System Company as defined in Section V of this Agreement. No act or failure to act by the Executive shall be consideredCause unless the Entergy System Company employer has given detailed written notice thereof to the Executive and, whereremedial action is feasible, she has failed to remedy the act or omission, or failed to act in good faith (as determined by the

Entergy System Company employer) to remedy the act or omission, within twenty business days after Executive's Entergy SystemCompany employer has forwarded such notice to Executive in accordance with the notice procedures of this Agreement.

c. Death. Executive dies, in which case only any monthly base salary that was earned by Executive prior to her death but not yetpaid to Executive shall be paid to Executive's estate; or

d. Disability. Executive becomes disabled so as to entitle Executive to benefits under her Entergy System Company employer's long-term disability plan.

3. if there should occur a Change in Control (as defined in the Continuity Plan) on or after the Assignment Commencement Dateand before the Final Employment Date, and Executive's Entergy System employer or its successor either refuses to honor thisAgreement or breaches, without Executive's express written consent, any obligations owed to Executive under this Agreement

during the Change in Control Period (as defined in the Continuity Plan), then subject to the same forfeiture provisions set forth inSection 6.01 of the Continuity Plan, Executive will be entitled to the following benefits:

a. an immediate lump sum cash payment equal to the remaining unpaid base salary that would have been paid to Executive had heremployment under this Agreement continued until the Final Employment Date; and

b. all other benefits to which Executive would have been entitled had she continued her employment under this Agreement until theFinal Employment Date, under the terms and conditions of those plans and programs in which Executive participates in

accordance with this Agreement; andc. all legal fees and expenses incurred by Executive in disputing in good faith any issue hereunder relating to whether Executive

experienced a payment event under this Section IIIA3 or in seeking in good faith to obtain or enforce any benefit or rightprovided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application ofsection 4999 of the Code to any payment or benefit provided hereunder. Any such payments shall be made within thirty (30)business days after delivery of Executive's written request for payment accompanied with such evidence of fees and expenses

incurred as Employer reasonably may require.d. As a condition to receiving the change in control benefits, if any, payable under this paragraph, Executive agrees to comply fully

with Section V and VI of this Agreement and further agrees that upon violation of either section, in addition to the remediesavailable to Employer as therein described, Executive shall repay to Employer or its successor, within 30 (thirty) business days of

written request therefor, any amounts previously paid to Executive pursuant to this Section IIIA3, and Executive shall have nofurther entitlement to receive any additional payments or benefits under this Agreement.

4. In no event shall Executive or her beneficiaries be entitled to payments and benefits under more than one subsection of IIIA ofthis Agreement, nor shall Executive or her beneficiaries be entitled to payments and benefits under more than one subparagraphof IIIA2. The provisions of IIIA1 or IIIA3, as applicable, shall control any and all benefits that may be payable to Executive as a

result of a Change in Control (as defined in the Continuity Plan), and payment under one such subsection shall precludeentitlement to any other compensation and benefit available under this Agreement.

B. Offset. In all cases, the compensation and benefits payable to Executive under this Agreement upon termination of the employmentrelationship shall be offset against any amounts to which Executive may otherwise be entitled under any and all severance plans, or

programs or policies of her terminating Entergy System Company employer.

C. Sole Remedy. In the event Executive's employment is terminated in accordance with Section IIIA prior to expiration of the Term,Executive's rights as outlined in this Section III are (1) Executive's sole and exclusive rights against her Entergy System Company

employer or any other Entergy System Company and (2) the sole and exclusive liability to Executive by any Entergy System Companyemployer under this Agreement, in contract, tort, or otherwise, for any termination of the employment relationship. Executive

covenants not to lodge against any Entergy System Company any claim, demand, or cause of action based on termination of theemployment relationship for any monies allegedly due under this Agreement other than those specified in this Section III.

D. Continuing Obligations. Termination of the employment relationship shall not terminate those obligations imposed by this Agreementwhich are continuing in nature, including, without limitation, Executive's continuing obligations of confidence, Executive's continuing

obligations with respect to business opportunities that were entrusted to Executive during the employment relationship, and specificallyExecutive's obligations under Sections V and VI of this Agreement.

IV. CONTINUATION OF EMPLOYMENT BEYOND TERM:

Should Executive remain employed by Employer or any other Entergy System Company employer beyond the expiration of the Term,such employment shall convert to an at will employment relationship, terminable at any time by either the Entergy System Companyemployer or Executive for any reason whatsoever, with or without Cause. Section III of this Agreement shall not apply if Executive'stermination should occur after expiration of the Term.

V. PROTECTION OF INFORMATION:

A. Position of Confidence. Executive acknowledges that her employment with Employer or any other Entergy System Company hasplaced her in a position to have access to or develop trade secrets or confidential information of any one or all of the Entergy System

Companies and has placed Executive in a position to develop business good will on behalf of any one or all of the Entergy SystemCompanies.

B. Information Obtained During Employment. All information, ideas, concepts, improvements, discoveries, and inventions, whetherpatentable or not, which were or are conceived, made, developed, or acquired by Executive, individually or in conjunction with others,

during Executive's employment with any Entergy System Company employer, whether during business hours or otherwise and whetherat the work site or otherwise, which relate to Entergy System Company business, products, or services (including, without limitation, all

such information relating to corporate opportunities, research, financial and sales data, pricing and trading terms, evaluations,opinions, interpretations, acquisition prospects, the identity of customers or their requirements, the identity of key contacts within thecustomer's organizations or within the organization of acquisition prospects, or marketing and merchandising techniques, prospectivenames, and marks) shall be disclosed to Executive's Entergy System Company em ployer and are and shall be such employer's sole and

exclusive property. All documents, drawings, memoranda, notes, records, files, correspondence, manuals, models, specifications,computer programs, e-mail, voice mail, electronic databases, maps and all other writings or materials of any type embodying any ofsuch information, ideas, concepts, improvements, discoveries, and inventions are and shall be the sole and exclusive property of theExecutive's Entergy System Company employer. Upon termination of Executive's employment with her Entergy System Company

employer, for any reason, Executive shall promptly deliver the items referenced in this Section VB, and all copies thereof, to her lastEntergy System Company employer.

C. Confidentiality. Executive will not, at any time during or after Executive's employment with any Entergy System Company employer,make any unauthorized disclosure of any confidential business information or trade secrets of any Entergy System Company, or makeany use thereof, except in the carrying out of Executive's employment responsibilities under this Agreement. As a result of Executive's

employment under this Agreement, Executive may, from time to time, have access to, or knowledge of, confidential businessinformation or trade secrets of third parties, such as customers, suppliers, partners, or joint venturers of Employer or other EntergySystem Companies, and Executive agrees to preserve and protect the confidentiality of such third party confidential information and

trade secrets to the same extent, and on the same basis, as Employer's confidential business information and trade secrets.

D. Terms of the Agreement. Executive understands and acknowledges that the terms and conditions of this Agreement constituteconfidential information. Executive shall keep confidential the terms of this Agreement and shall not disclose this confidential

information to anyone other than Executive's attorneys, tax advisors, or as required by law.

E. Assignment of Rights. Executive agrees to and hereby does assign to Executive's Entergy System Company employer all rights in and toall inventions, business plans, work models or procedures, whether patentable or not, which are made or conceived solely or jointly byExecutive at any time during Executive's Entergy System Company employment or with the use of any Entergy System Company timeand materials. Executive will disclose to such Entergy System Company all facts known to Executive concerning such matters and, at

the Entergy System Company's expense, do everything reasonably practicable to aid it in obtaining and enforcing proper legalprotection for, and vesting the Entergy System Company in title to, such matters. Both during Executive's employment and thereafter,

Executive shall assist her Entergy System Company employer and its nominee, at any time, in the protection of her employer'sworldwide right, title, and interest in and to information, ideas, concepts, improvements, dis coveries, and inventions, and its

copyrighted works, including, without limitation, the execution of all formal assignment documents requested by employer or itsnominee and the execution of all lawful oaths and applications for patents and registration of copyright in the United States or foreign

countries.

F. Breach. Executive acknowledges and understands that Executive's breach of any provision of this Section V would constitute a materialbreach of this Agreement and could subject Executive to disciplinary action, including, without limitation, termination of employment

for Cause under Section III. Executive acknowledges that money damages would be an insufficient remedy for any breach of thisSection V by Executive, and Employer or any other Entergy System Company employer shall be entitled to enforce the provisions ofthis Section V by terminating any payments then owing to Executive under this Agreement and/or to seek specific performance and

injunctive relief as remedies for a breach or threatened breach of this Section. Such remedies shall not be deemed the exclusiveremedies for a breach of this Section, but shall be in addition to all remedies available at law or in equity.

VI. Non-Compete Obligations:

A. Fiduciary Obligations. As part of the consideration for the compensation and benefits to be paid to Executive hereunder, in keepingwith Executive's duties as a fiduciary, and in order to protect Employer's interest in the trade secrets of Employer, and as an additionalincentive for Employer to enter into this Agreement, Employer and Executive agree to the non-competition provisions of this Section.Executive agrees that she will not engage in any employment or other activity (without the prior written consent of her last Entergy

System Company employer) either in her individual capacity or together with any other person, corporation, governmental agency orbody, or other entity, that is (1) listed in the Standard & Poor's Electric Index or the Dow Jones Utilities Index; or (2) in competitionwith, or similar in nature to, any business conducted by any System Company at any time during such period, where such competing

employer is located in, or servicing in any way customers located in, those parishes and counties in which any System Company servicescustomers during such period. Executive further agrees not to take any action or make any statement, written or oral, to any current or

former employee of any Entergy System Company, or to any other person, which disparages any Entergy System Company, itsmanagement, directors or shareholders, or its practices, or which disrupts or impairs their normal operations, including actions or

statements (i) that would harm the reputation of any Entergy System Company with its clients, suppliers, employees or the public; or(ii) that would interfere with existing or prospective contractual or employment relationships with any Entergy System Company or its

clients, suppliers or employees. The non-competition and non-disparagement obligations in this Section shall extend throughout theTerm of this Agreement and, to the greatest extent allowed by law, shall extend for one (1) year after Executive's employment has

ended.

B. Breach of Covenant. Executive acknowledges that Executive's breach of any provision of this Section VI would constitute a materialbreach of this Agreement and could subject Executive to disciplinary action, including, without limitation, termination of employmentfor Cause. Executive understands that the foregoing restrictions may limit Executive's ability to engage in certain businesses anywhere

in the world during the period provided for above, but acknowledges that Executive will receive sufficiently high remuneration andother benefits to justify such restriction. Executive acknowledges that money damages would not be a sufficient remedy for any breachof this Section VI by Executive, and Employer shall be entitled to enforce the provisions of this Section VI by terminating any paymentsthen owing to Executive under this Agreement and/or to specific performance and injunctive relief as remedies for such breach or anythreatened breach. Such remedies shall not be deemed the exclusive remedies for a breach of this Section, but shall be in addition to all

remedies available at law or in equity to Employer, including, without limitation, the recovery of damages from Executive and her orher agents involved in such breach.

C. Modification by Court. It is expressly understood and agreed that Employer and Executive consider the restrictions contained in thisSection VI to be reasonable and necessary to protect the proprietary information of the Entergy System. Nevertheless, if any of theaforesaid restrictions are found by a court having jurisdiction to be unreasonable, or overly broad as to geographic area or time, or

otherwise unenforceable, the parties intend for the restrictions therein set forth to be modified by such courts so as to be reasonable andenforceable and, as so modified by the court, to be fully enforced.

VII. Additional Provisions

A. Representations and Warranties. Executive and Employer represent and warrant that neither is under a restriction or obligationinconsistent with the execution of this Agreement or the performance of either party's obligations hereunder and neither knows of any

reason why the performance due under this Agreement should be hindered in any way.

B. Notices. Any notice required under this Agreement shall be in writing and deemed received (a) on the date delivered if hand-delivered,or (b) on the fifth business day after being deposited in the mail, first class, registered or certified, return receipt requested, with properpostage prepaid, and shall be addressed as follows, unless changed otherwise by any party in accordance with the notice provisions of

this Section:

If to an Entergy System Company, If to Executive, addressed as follows:

General Counsel Entergy Services, Inc. 639 Loyola Avenue, 26th Floor New Orleans, LA 70113

Carolyn C. Shanks710 Oak TrailCanton, MS 39046

C. Binding Agreement. Upon its Effective Date, this Agreement is binding upon Executive and her heirs and upon Employer and itssuccessors, agents, heirs or assigns. Executive expressly acknowledges the right of Employer to assign this Agreement to any Entergy

System Company successor.

D. Sole Agreement. This Agreement contains the entire understanding between Executive and Employer relating to Entergy SystemCompany employment, unless otherwise specifically provided as in the case of written company policies promulgated by, and in the

applicable written benefit plans and programs of, Employer or any other Entergy System Company. Executive acknowledges that uponexecution of this Agreement and in consideration of the benefits provided herein, notwithstanding any other provision of this

Agreement to the contrary, Executive will not be entitled to any retention, severance, termination or similar benefit otherwise payableto Executive under any plan, program, arrangement or agreement of or with the Entergy System, except as otherwise specifically

provided for in this Agreement.

E. Nonassignability. This Agreement or the right to receive benefits hereunder may not be assigned, encumbered or alienated by Executivein any manner. Any attempt to so assign, encumber or alienate shall constitute a material violation of this Agreement.

F. Applicable Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of theState of Delaware without regard to its conflicts of law principles.

G. Headings. Section headings contained in this Agreement are for reference only and shall not affect in any way the meaning orinterpretation of this Agreement.

H. No Inducements. Each party to this Agreement acknowledges that no representation, inducement, promise, or agreement, oral orwritten, has been made by either party with respect to such subject matters, which is not embodied herein, and that no agreement,

statement, or promise relating to the Entergy System Company employment of Executive that is not contained in this Agreement shallbe valid or binding.

I. Modifications and Waivers. No provision of this Agreement may be modified, amended or waived except in a writing signed by bothparties. The waiver by either party of a breach of any provision of this Agreement shall not operate to waive any subsequent breach of

the Agreement.

J. Severability. Should any part of this Agreement be found to be invalid or in violation of law, such part shall be of no force and effectand the rest of this Agreement shall survive as valid and enforceable to the fullest extent permitted by law.

IN WITNESS WHEREOF, Employer and Executive have duly executed this Agreement, which may be executed in multiple originals, to beeffective on the Effective Date herein provided.

ACCEPTED BY EMPLOYER: Entergy Mississippi, Inc.By its Duly Authorized Agent:

_________________________________William E. MadisonSr. Vice-President,Human Resources and AdministrationExecuted this 24th day of July 2003.

ACCEPTED BY EXECUTIVE:

_________________________________Carolyn C. ShanksSocial Security No. Executed this 24th day of July, 2003.

Exhibit 10(g)9

Amendment To

Service Agreement






By ___________________________Daniel F. Packer

President and CEO

Exhibit E




ENERGY SALES



CUSTOMERS




EMPLOYEES






load.





SUBSTATIONS






GAS CONSUMPTION















COAL CONSUMPTION






SQUARE FOOTAGE






ASSET LOCATIONS






TOTAL ASSETS




BANK ACCOUNTS












TELEPHONES



FIBER



NUCLEAR UNITS



NUCLEAR SITES






PAYCHECKS





