EXHIBIT B-4(a)
SERVICE AGREEMENT
BETWEEN
ENTERGY GULF STATES, INC.
AND
ENTERGY ENTERPRISES, INC.
THIS AGREEMENT, made and entered into as of June 22, 1999
by and between Entergy Gulf States, Inc., , a corporation
organized under the laws of the State of Texas (hereinafter
sometimes referred to as "EGS") and Entergy Enterprises, Inc.,
formerly Electec, Inc., a corporation organized under the laws
of the State of Louisiana (hereinafter sometimes referred to as
"EEI").
W I T E S S E T H:
WHEREAS, EGS and EEI are both subsidiaries of Entergy
Corporation ("Entergy") and, together with Entergy's other
direct and indirect subsidiaries and Entergy, form the Entergy
System; and
WHEREAS, EGS is organized, staffed and equipped and is
authorized by the Securities and Exchange Commission (the
"Commission") under Section 13(b) of the Public Utility Holding
Company Act of 1935, as amended (the "Act"), to render to EEI
services as herein provided; and
WHEREAS, in the course of its operations, EGS has acquired
and will acquire certain properties and other resources; and
WHEREAS, subject to the provisions set forth herein, EEI
is authorized by orders of the Commission dated July 8, 1993
(HCAR No. 25848), June 30, 1995 (HCAR No. 26322), June 22, 1999
(HCAR No. 27039) and June 22, 1999 (HCAR No. 27040) (the "1999
Order") to utilize those services, properties and resources of
EGS, as well as those provided by other companies of the
Entergy System, (i) to conduct preliminary development
activities with respect to potential investments by Entergy in
various energy, energy-related and other non-utility
businesses, (ii) to provide various management, administrative
and support services to certain of its associate companies,
(iii) to provide consulting services to certain of its
associate companies and to non-associate companies, and (iv) to
provide , directly or indirectly, through one or more special
purpose subsidiary companies of Entergy or EEI, power project
operations and maintenance services to non-associate companies
and to certain of its associate companies; and
WHEREAS, economies and increased efficiencies benefiting
the Entergy System will result from the performance by EGS of
services for EGS and the provision of certain property and
resources to EGS as herein provided; and
WHEREAS, subject to the terms and conditions herein
described, EGS is willing, upon request by EEI, to render such
services and provide such property and resources to EEI, taking
into consideration the fulfillment of EGS's utility
responsibilities; and
WHEREAS, pursuant to settlement arrangements entered into
by Entergy with certain of its state and local regulators in
1992 and 1993 (collectively, the "Settlement Agreements"),
Entergy has agreed (subject to the receipt of any requisite
Commission authorization) to implement certain special
provisions pertaining to affiliate transactions between
Entergy's Regulated Utilities and Nonregulated Businesses (each
as defined in Article 1 of this Agreement), including, without
limitation, (i) a provision requiring that any services
rendered by Entergy's Regulated Utilities (including EGS) to
Nonregulated Businesses (including EEI), be priced at cost plus
5%, and (ii) a provision incorporating a methodology for the
allocation of profits derived by EEI from its marketing to non-
affiliates of intellectual property developed or otherwise
acquired by Entergy's Regulated Utilities (including EGS); and
WHEREAS, pursuant to the 1999 Order, the Commission
granted Entergy application requesting, among other things, an
exemption from the "at cost" requirements of Section 13(b) of
the Act to permit implementation of the provision of the
Settlement Agreement requiring that services rendered by EGS to
EEI be rendered at cost plus 5%, and (to the extent
jurisdictional under the Act) implementation of the profit
sharing methodology required under the Settlement Agreements in
connection with the marketing by EEI of EGS developed or
acquired intellectual property.
NOW, THEREFORE, in consideration of the premises and of
the mutual agreements herein, the parties hereto hereby agree
as follows:
1. Definitions
As used hereinafter, the following terms, in addition to
those elsewhere defined in this Agreement, shall have the
following meanings unless the context otherwise requires:
A. "Services" shall mean those services described in Articles
3, 4 and 5 hereof.
B. "Non-Affiliate" means any corporation, company, agency,
government, business, entity or person other than Entergy, a
direct or indirect subsidiary of Entergy, or a person employed
by Entergy or any of such subsidiaries.
C. "Intellectual Property" means any process, program or
technique which is protected by the copyright, patent or
trademark laws, or by virtue of being a trade secret, and which
has been specifically and knowingly incorporated into,
exhibited in, or reduced to a tangible writing, drawing,
manual, computer program, product or similar manifestation or
thing.
D. "Regulated Utilities" means Entergy Arkansas, Inc.,
Entergy Louisiana, Inc., Entergy New Orleans, Inc., Entergy
Mississippi, Inc., Entergy Services, Inc., System Energy
Resources, Inc., Entergy Operations Inc., System Fuels, Inc.
and EGS and such other similar subsidiaries as Entergy shall
create whose activities and operations are primarily related to
the domestic sale of electric energy at retail or at wholesale
to affiliates, or the provision of services thereto.
E. "Nonregulated Businesses" means Entergy Power,
Inc., Entergy Enterprises, Inc. and such other
subsidiaries and affiliates as Entergy shall create that
are not domestic regulated electric or combination
electric and gas utilities primarily engaged in the
business of selling electric energy or natural gas at
retail or wholesale to affiliates or are not primarily
engaged in the business of providing services or goods to
regulated electric or combination electric and gas utility
affiliates.
2. Agreement to Furnish Services
A. Upon its receipt of EEI's work order or other request
therefor, EGS will, if it has or can have available the
personnel and resources needed to fill the work order or
request, furnish to EEI upon the terms and conditions
hereinafter set forth such of the Services, at such times, for
such periods and in such manner as EEI may from. time to time
request; provided, however, that the determination of whether
EGS has the available personnel and resources to perform in
accordance with the work order or request will be entirely
within the discretion of EGS, and EGS may at its option elect
not to perform any requested Service, except that, once having
agreed to perform pursuant to a work order or request, EGS
cannot withdraw or depart from such performance without the
consent of EEI. In making its determination as to the
availability of personnel and resources, EGS may consider
whether the use thereof by EEI will interfere with its own use
of such personnel and resources.
B. The provision of Services by EGS pursuant to this
Agreement shall in all cases and notwithstanding anything
herein contained to the contrary be subject to any limitations
contained in authorizations, rules or regulations of those
governmental agencies, if any, having jurisdiction over EGS,
EEI, or such provision of Services.
3. Description of Services
The services which may be provided by EGS hereunder are
described as follows:
A. EWGs, FUCOs, Qualifying Facilities, Etc. Advise and assist
EEI regarding possible investment and participation in, and
related activities with respect to, (i) "exempt wholesale
generators" and "foreign utility companies," as such terms are
defined in Section 32 and 33, respectively, of the Act,
(ii)"qualifying facilities," including certain cogeneration
facilities and small power production facilities, as such terms
are defined under the Public Utility Regulatory Policies Act of
1978 and the rules and regulations promulgated thereunder by
the Federal Energy Regulatory Commission and (iii) other non-
exempt electric generating facilities.
B. Development of Other Business Enterprises. Advise and
assist EEI in the investigation of other business enterprises,
and the development of such other business enterprises as are
approved by the Commission or otherwise are permitted under the
Act.
C. General Engineering. Perform general engineering work,
including system production and transmission studies; prepare
and analyze apparatus specifications, distribution studies and
standards, civil engineering and hydraulic studies and
problems, and fuel supply studies; and advise and assist in
connection with analyses of operations and operating and
construction budgets.
D. Design Engineering. Perform detailed design work as
requested by EEI.
E. Accounting and Statistical. Advise and assist EEI in
connection with the installation of accounting systems and
similar problems, requirements of regulatory bodies with
respect to accounting, studies of accounting procedures and
practices to improve efficiency, book entries resulting from
unusual financial transactions, internal audits, employment of
independent auditors, preparation and analyses of financial and
operating reports and other statistical matters relating to EEI
or its customers, preparation of reports to regulatory
commissions, insurance companies and others, standardization of
accounting and statistical forms in the interest of economy,
and other accounting and statistical matters.
F. Budgeting. Advise and assist EEI in matters involving the
preparation and development of capital and operating budgets,
cash and cost forecasts, and budgetary controls.
G. Business Promotion and Public Relations. Advise and assist
EEI in the development of marketing and sales programs, in the
preparation and use of advertising and sales materials, and in
the determination and carrying out of promotional programs.
H. Systems and Procedures. Advise and assist EEI in the
establishment of good operating practices and methods of
procedure, the standardization of forms, the purchase, rental
and use of mechanical and electronic data processing, computing
and communications equipment, in conducting economic research
and planning and in the development of special economic
studies.
I. Access to and Use of Resources. Subject to those
conditions with respect to EGS's discretion not to perform any
requested Service set forth in Article 2A, make available to
EEI in the conduct of its business and/or, to the extent
necessary or appropriate as required in the performance of its
services to its customers access to, use of, or rights in all
EGS's resources, including facilities, products, processes,
techniques, computer hardware and software, technical
information, training aids and properties, vehicles, equipment,
machines and other property, whether owned, leased, licensed or
otherwise available to, EGS.
J. Training. Assist EEI in providing training to personnel of
EEI or its customers; develop and make available training
procedures, materials and facilities, and provide instructors.
K. General. Make available services in the areas of
construction planning and supervision, design, management
programs, quality assurance, licensing matters, research and
development, and communications systems and procedures.
L. Other Services. Render advice and assistance in connection
with such other matters as EEI may request and EGS may be able
to perform with respect to EEI's business and operations.
4. Provision of Personnel
Where specifically requested by EEI, EGS may loan its
employees to EEI. In that event, such loaned employees will be
under the sole supervision and control of EEI for such period
or periods of time as are necessary to complete the work to be
performed by such employees. Such employees may be withdrawn
by EGS from tasks assigned by EEI only with the consent of EEI.
EEI will be responsible for the actions and activities of such
employees while engaged in the performance of the work to the
same degree as though such persons were employees of EEI.
However, as part of Services, EGS during periods when such
employees are loaned to EEI will continue to provide to, and
with respect to such employees those same payroll, pension,
savings, tax withholding, Social Security, unemployment,
bookkeeping and other personnel support services then being
utilized by EGS in connection with compensating and benefiting
such employees.
5. Exchange of Intellectual Property
A. Should EEI in the course of its business develop
Intellectual Property, it will make such Intellectual Property
available for utilization by EGS without charge (except the
actual expenses incurred by EEI in connection with making such
new Intellectual Property available to EGS);provided, however,
that such availability shall be dependent upon and subject to
any contractual commitments of EEI to Non-Affiliates,
applicable laws and regulations, and the legal rights and
entitlements of others.
B. As part of the Services, EGS will make available to EEI
for utilization by it all Intellectual Property heretofore or
hereafter developed or obtained by EGS without charge (except
for the actual expenses incurred by EGS in making the same
available to EEI, and except as otherwise provided in Article 8
below); provided, however, that such availability shall be
dependent upon and subject to any contractual commitments of
EGS to Non-Affiliates, applicable laws and regulations, and the
legal rights and entitlements of others.
6. Compensation of EGS
As compensation for Services actually requested by EEI and
rendered to it by EGS, EEI hereby agrees to pay to EGS (except
as described in Article 5B) an amount equal to (a) all costs
properly chargeable or allocable thereto, as controlled through
a work order procedure, computed in accordance with applicable
rules and regulations (including, but not limited to, Rules 90
and 91) under the Act and appropriate accounting standards,
plus (b) a charge of five percent (5%) of such costs. Such
costs shall be determined as outlined on Exhibit A attached
hereto and incorporated herein by reference.
7. Work Orders
The Services will be performed in accordance with work
orders or requests issued or made by or on behalf of EEI and
accepted by EGS, and all Services will be assigned an
applicable work order number to enable specific work to be
properly allocated by project or other appropriate basis. Work
orders shall be as specific as practicable in defining the
Services requested to be performed and will set forth the scope
and duration of the Services to be performed and the specific
employees to be loaned to EEI pursuant to the work order. EEI
shall have the right from time to time to amend, alter or
rescind any work order, provided that (i) any such amendment or
alteration which results in a material change in the scope of
the work to be performed or equipment to be provided is agreed
to by EGS; (ii) the costs for the Services covered by the work
order will include any expense incurred by EGS as a direct
result of such amendment, alteration or rescission of the work
order; and (iii) no amendment, alteration or rescission of a
work order will release EEI from liability for all such costs
already incurred or contracted for by EGS pursuant to the work
order, regardless of whether the work associated with such
costs is discontinued by such amendment, alteration or
rescission.
8. Disposition of Intellectual Property
In the event EEI with the express written consent of EGS
markets to Non-Affiliates Intellectual Property heretofore or
hereafter developed or otherwise acquired by EGS for its own
use, and such Intellectual Property is actually used by EGS,
all profits derived by EEI from such marketing transactions
shall be divided equally by EGS and EEI, after deducting all of
EEI's incremental costs associated with making the Intellectual
Property available for sale, including the cost of marketing
such Intellectual Property; provided, however, that in the
event any Intellectual Property developed or otherwise acquired
by EGS for its own use is not actually so used, and is
subsequently marketed by EEI to Non-Affiliates, EEI shall fully
reimburse EGS for all of its costs incurred to develop or
otherwise acquire such Intellectual Property before any profits
derived from its marketing of such Intellectual Property shall
be so divided.
9. Limitation of Liability and Indemnification
In performing the Services hereunder (except to the extent
such Services are being performed by employees loaned to and
under the supervision of EEI), EGS will exercise due care to
assure that the Services are performed in a workmanlike manner,
meet the standards and specifications set forth in the
applicable work order or request with respect to such Services,
and comply with applicable standards of law and regulation.
However, failure to meet these obligations shall in no event
subject EGS to any claims or liabilities other than to
reperform the work and be compensated in accordance with this
Agreement for such reperformance such that it fully complies
with the work order, request or standard, as the case may be.
EGS makes no other warranty with respect to its performance of
the Services, and EEI agrees to accept such Services without
further warranty of any nature. EEI shall and does hereby
indemnify and agree to save harmless and defend EGS from
liabilities, taxes, losses, obligations, claims, damages,
penalties, causes of action, suits, costs and expenses or
judgments of any nature, on account of, or resulting from: (i)
injuries to or the death of any person; (ii) damage to or loss
of any property; (iii) any alleged or actual violation of law,
court order, or governmental agency rule or regulation
committed by or existing with respect to EEI or its employees,
agents or subcontractors; (iv) any alleged or actual breaches
of contract by EEI; (v) any claims by or on account of any
employee, agent or subcontractor of EEI; (vi) services or labor
performed, labor force, materials, provisions or supplies
furnished or allegedly contracted for by or on behalf of EEI,
its employees, agents or subcontractors; and/or (vii) other
damages; which, in all cases, are attributable to or arise out
of the performance and prosecution of any project or work
performed by or on behalf of EEI, whether or not the same
results or allegedly results from the claimed or actual
negligence or breach of warranty of, or breach of contract or
willful conduct by, EEI or of its employees, agents or
contractors or its or their subcontractors or any combination
thereof.
10. Miscellaneous
This Agreement shall be binding upon the successors and
assigns of the parties hereto, provided that EGS shall not be
entitled to assign or subcontract out any of its obligations
under this Agreement or under any purchase order or work order
issued hereunder without the prior written approval of EEI.
This Agreement may not be modified or amended in any respect
except in writing executed by the parties hereto. This
Agreement shall be construed and enforced under and in
accordance with the laws of the State of Louisiana. This
Agreement may be executed in counterparts, each one of which
when fully executed shall be deemed to have the same dignity,
force and effect as an original. No provision of this
Agreement shall be deemed waived nor breach of this Agreement
consented to unless such waiver or consent is set forth in
writing and executed by the party hereto making such waiver or
consent.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed in their respective corporate
names by their respective Presidents or one of their respective
Vice Presidents as of the day and year first above written.
ENTERGY GULF STATES, INC.
By: /s/ C. ▇▇▇▇ ▇▇▇▇▇▇
C. ▇▇▇▇ ▇▇▇▇▇▇
Executive Vice President and
Chief Financial Officer
ENTERGY ENTERPRISES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President and Treasurer
EXHIBIT A
ENTERGY ENTERPRISES, INC.
Accounting/Billing Procedures by Entergy Gulf States Inc.
I. Introduction
This procedure establishes the guidelines for determining the
cost of Services for, and ▇▇▇▇▇▇▇▇ by, Entergy Gulf States,
Inc. (EGS) to Entergy Enterprises, Inc. (EEI). These ▇▇▇▇▇▇▇▇
will include direct and indirect costs normally incurred by EGS
in its operations, plus a charge of five percent (5%) of the
total of such costs. Revenues and costs related to these
▇▇▇▇▇▇▇▇ will be recorded in the accounting records of EGS in
accordance with generally accepted accounting principles and
FERC guidelines.
The procedures to be employed in determining costs for Services
performed for EEI, and rendering billing for such Services,
will closely follow the procedures used to ▇▇▇▇ other System
Companies for work performed.
II. Method of ▇▇▇▇▇▇▇▇
Each Service provided by EGS is accounted for using a job order
system. Direct costs charged to each job will be made using
the current accounting system's source documents (time reports,
expense accounts, journal entries, vendor invoices). Charges
for Services (including the cost of Services plus the 5% adder)
will be billed on a monthly basis. All amounts will be payable
in accordance with agreed upon procedures between EGS and EEI.
III. Calculation of Cost
The cost of Services provided to EEI will be calculated, based
on individual projects or jobs, according to the following
guidelines:
A. Labor
Labor costs billed for Services provided include
salaries and related direct labor costs for
employees.
1. Direct Labor
Direct labor costs will be based on actual
gross wage rates of employees assigned to
perform services multiplied by the actual
number of hours actually worked. These
direct labor hours will be recorded on time
reports.
2. Indirect Labor Off-Duty Wages and Benefits
A labor overhead rate (calculated annually)
will be applied to each direct labor hour
for the following:
Vacations
Holidays
Sick
Off-duty time
Pensions
Savings plan
Insurance
Salary related taxes (FICA, FUTA,
SUTA, etc)
All other employee benefits and salary
taxes
B. Employee Travel, Subsistence and Other Related
Expenses
It is likely in the normal course of providing
Services to EEI that travel, meals, lodging and
related expenses will be incurred. Such expenses will
be accumulated at cost on an expense account form.
C. Vehicle and Equipment Usage
When vehicles or equipment are used by EGS in the
course of providing services, a standard rate (miles
or hours) by vehicle or equipment class will be
applied to recover all costs of operation of the
vehicle or equipment.
D. Materials
The cost of materials purchased by EGS in connection
with direct services rendered will be determined
based on the total net purchase price of such
materials, plus applicable stores overheads and
taxes.
E. Administrative and Engineering Overheads
An overhead rate will be applied to total expenses in
items A-D above to compensate for indirect
administrative and engineering overheads.